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Rule

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

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Start Preamble Start Printed Page 5864

AGENCY:

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

ACTION:

Final rule.

SUMMARY:

This final rule will revise regulations for the Medicare Advantage (Part C) program, Medicare Prescription Drug Benefit (Part D) program, Medicaid program, Medicare Cost Plan program, and Programs of All-Inclusive Care for the Elderly (PACE) to implement certain sections of the Bipartisan Budget Act of 2018 and the Substance Use Disorder Prevention that Promotes Opioid Recovery and Treatment—(SUPPORT) for Patients and Communities Act (hereinafter referred to as the SUPPORT Act), enhance the Part C and D programs and the PACE program, codify several existing CMS policies, make required statutory changes, implement other technical changes, and make routine updates. As stated in the final rule that appeared in the Federal Register on June 2, 2020, CMS is fulfilling its intention to address the remaining proposals from the February 2020 proposed rule here. Although the provisions adopted in this second final rule will be in effect during 2021, most provisions will apply to coverage beginning January 1, 2022.

Notwithstanding the foregoing, for proposals from the February 2020 proposed rule that would codify statutory requirements that were already in effect prior to this rule's appearance in the Federal Register, CMS reminds organizations, plan sponsors, and other readers that the statutory provisions apply and will continue to be enforced. Similarly, for the proposals from the February 2020 proposed rule that would implement the statutory requirements in sections 2007 and 2008 of the SUPPORT Act, CMS intends to implement these statutory provisions consistent with their effective provisions.

DATES:

Effective Date: These regulations are effective March 22, 2021.

Applicability Dates: Most of the provisions in this rule will be applicable to coverage beginning January 1, 2022, except as noted below.

The Part D Income Related Monthly Adjustment Amount (IRMAA) calculation update in § 423.286(d)(4)(ii) is applicable March 22, 2021. The provision defining targeted beneficiaries for MTM at § 423.153(d)(2) is applicable March 22, 2021. The provisions on automatic escalation to the independent outside entity under a Medicare Part D drug management program (DMP) at §§ 423.590(i) and 423.600(b) and the related provisions on information on appeal rights in the beneficiary notices at §§ 423.153(f)(5)(ii)(C)(3), 423.153(f)(6)(ii)(C)(4), and 423.153(f)(8)(i) are applicable March 22, 2021. The provisions defining the term “parent organization” for MA and Part D plans at §§ 422.2 and 423.4 are applicable March 22, 2021. The General Requirements for Applicable Integrated Plans and Continuation of Benefits provisions at §§ 422.629 and 422.632 are applicable March 22, 2021.

In order to help ensure that Part D sponsors have sufficient implementation time, the beneficiary real time benefit tool (RTBT) (§ 423.128(d)(4)) requirement will not be applicable until January 1, 2023.

Due to operational considerations, revisions to the Special Needs Plan Model of Care requirements in § 422.101(f) are intended for implementation (that is, applicability) for models of care for contract year 2023. Plans that are required to submit models of care for contract year 2022 are due to submit MOCs by February 17, 2021; those submissions will be evaluated based on the regulations in effect at that time (that is, without the amendments adopted here) and SNPs must implement and comply with their approved MOCs in connection with coverage in 2022. Moving the applicable implementation of the SNP MOC provisions to contract year 2023 will allow SNPs and CMS to construct the necessary processes for full implementation and enforcement of the final rule. When MOCs for contract year 2023 are submitted for review and approval in early 2022, the regulations in this final rule will be used to evaluate those MOCs for approval.

End Preamble Start Supplemental Information

SUPPLEMENTARY INFORMATION:

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

Start Further Info

FOR FURTHER INFORMATION CONTACT:

Cali Diehl, (410) 786-4053, Theresa Wachter, (410) 786-1157, or Christopher McClintick, (410) 786-4682—General Questions.

Kimberlee Levin, (410) 786-2549—Part C Issues.

Lucia Patrone, (410) 786-8621—Part D Issues.

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

Daniel Deisroth, (443) 431-4171—PACE Issues.

Debra Drew, (410) 786-6827—Program Integrity Issues.

Tobey Oliver, (202) 260-1113—D-SNP Appeals and Grievances.

I. Executive Summary and Background

A. Executive Summary

1. Purpose

The primary purpose of this final rule is to implement certain sections of the following federal laws related to the Medicare Advantage (MA or Part C) and Prescription Drug Benefit (Part D) programs:

  • The Bipartisan Budget Act of 2018 (hereinafter referred to as the BBA of 2018), and
  • The Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act (hereinafter referred to as the SUPPORT Act).

The rule also includes a number of changes to: Strengthen and improve the Part C and D programs and the PACE program, codify in regulation several CMS interpretive policies previously adopted through the annual Call Letter and other guidance documents, make required statutory changes, implement other technical changes, and make routine updates.

In the June 2020 final rule (85 FR 33796), CMS addressed a selection of proposals from the February 2020 proposed rule (85 FR 9002). In this final rule, CMS is addressing the remaining proposals from the February 2020 proposed rule with two exceptions: (1) Start Printed Page 5865Maximum Out-of-Pocket (MOOP) Limits for Medicare Parts A and B Services (§§ 422.100 and 422.101) and (2) Service Category Cost Sharing Limits for Medicare Parts A and B Services and per Member per Month Actuarial Equivalence Cost Sharing (§§ 422.100 and 422.113). Therefore, we may address the two remaining proposals from the February 18, 2020, proposed rule (85 FR 9002) not included in this final rule in subsequent rulemaking.

In so doing, the final rule addresses the following needs for federal regulatory action as set forth below:

  • The regulations implementing the provisions of BBA of 2018 relating to Medicare Advantage Special Needs Plans address, as directed by law, care management requirements through the development and implementation of models of care. Given the context of these provisions is a federal program, Congress has mandated a federal regulatory approach with respect to these provisions.
  • The provisions implementing the provisions of BBA of 2018 relating to the Coverage Gap Discount Program and the Part D Income Related Monthly Adjustment Amount (IRMAA) improve the operation of government programs by ensuring the regulations conform to the statute and the distribution of resources determined by Congress in statute. Given the context of these provisions is a federal program, Congress has mandated a federal regulatory approach with respect to these provisions.
  • The provisions implementing the SUPPORT Act address the misuse and abuse of opioids in the manners directed by Congress. This includes the provisions related to Mandatory Drug Management Programs, Beneficiaries with History of Opioid-Related Overdose Included in Drug Management Programs, Automatic Escalation to External Review under a Medicare Part D Drug Management Program for At-Risk Beneficiaries, Suspension of Pharmacy Payments Pending Investigations of Credible Allegations of Fraud and Program Integrity Transparency Measures, Section 2008 of the SUPPORT Act, Section 6063 of the SUPPORT Act, Beneficiaries' Education on Opioid Alternatives, and Beneficiaries with Sickle Cell Disease. Given the context of these provisions is a federal program or impacts on several federal programs, Congress has mandated a federal regulatory approach with respect to these provisions.
  • The provisions which strengthen and improve the PACE program with respect to Service Delivery Request Processes under PACE improve the operation of government programs by ensuring documentation is available for oversight required by statute. Given the context of these provisions is a federal program, a federal regulatory approach is appropriate with respect to these provisions.
  • The provisions relating to Beneficiary Real Time Benefit Tools address inadequate and incomplete information available to Part D beneficiaries with regards to the choices they have for prescription drugs. Given the context of these provisions is a federal program, a federal regulatory approach is appropriate with respect to these provisions.
  • The provisions relating to permitting a second, “preferred,” specialty tier in Part D address externalities caused by the current specialty tier regulation—specifically the absence of negotiation leverage and incentives within the Part D specialty tier. Given the context of these provisions as a federal program, a federal regulatory approach is appropriate with respect to these provisions.
  • The provisions relating to the Medicare Advantage (MA) and Part D Prescription Drug Program Quality Rating System improve the operation of government programs by making updates to reflect changes in measures (thereby ensuring the government program does not use outdated methodologies) and clarifying existing regulations (thereby answering questions regulated parties may have). These and other provisions also codify sub-regulatory guidance, which is an improvement in that regulated parties and CMS have greater clarity regarding the application of these policies as a rule. Given the context of these provisions is a federal program, a federal regulatory approach is appropriate with respect to these provisions.

2. Summary of the Major Provisions

a. Mandatory Drug Management Programs (DMPs) (§ 423.153)

Section 704 of the Comprehensive Addiction and Recovery Act of 2016 (hereinafter referred to as CARA) included provisions permitting Part D sponsors to establish drug management programs (DMPs) for beneficiaries at-risk for misuse or abuse of frequently abused drugs (FADs). Under the DMPs in place today, Part D sponsors engage in case management of potential at-risk beneficiaries (PARBs) through contact with their prescribers to determine whether the beneficiary is at-risk for prescription drug misuse or abuse. If a beneficiary is determined to be at-risk, after notifying the beneficiary in writing, the sponsor may limit their access to coverage of opioids and/or benzodiazepines to a selected prescriber and/or network pharmacy(ies) and/or through a beneficiary-specific point-of-sale (POS) claim edit.

While the majority of Part D sponsors have already voluntarily implemented DMPs, CMS proposed regulations to implement section 2004 of the SUPPORT Act which require Part D sponsors to establish DMPs for plan years beginning on or after January 1, 2022.

CMS is finalizing the requirement for mandatory DMPs with an additional modification so that plans without a Pharmacy and Therapeutics (P&T) committee can comply with the DMP regulation.

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

A past overdose is the risk factor most predictive for another overdose or suicide-related event.[1] In light of this fact, in section 2006 of the SUPPORT Act, Congress required CMS to include Part D beneficiaries with a history of opioid-related overdose (as defined by the Secretary) as PARBs under a Part D plan's DMP. CMS is also required under this section to notify the sponsor of such identifications. In line with this requirement, in lieu of modifying the definition of “potential at-risk beneficiary” at § 423.100 as proposed, CMS is finalizing the clinical guideline criteria at new paragraph § 423.153(f)(16)(ii)(2) to include a Part D eligible individual who is identified as having a history of opioid-related overdose, beginning January 1, 2022. Inclusion of beneficiaries with a history of opioid-related overdose as PARBs in DMPs will allow Part D plan sponsors and providers to work together to closely assess these beneficiaries' opioid use and determine whether any additional action is warranted. The clinical guideline criteria CMS is finalizing at § 423.153(f)(16)(ii)(2) specify that both a principal diagnosis of opioid-related overdose and a recent Part D opioid prescription are required components to meet the definition of a PARB based on the history of opioid-related overdose. Additionally, CMS is making some revisions to the terminology used in the clinical Start Printed Page 5866guideline criteria at § 423.153(f)(16)(ii)(2) from what was initially proposed in the definition at § 423.100 to better characterize the data sources and opioid prescription criteria to be used to identify beneficiaries meeting the definition of a PARB based on a history of opioid-related overdose. The clinical guideline criteria mirror the definition of “potential at-risk beneficiary” that was initially proposed but relocated to § 423.153(f)(16)(ii)(2) to improve clarity of the regulation text.

c. Beneficiaries' Education on Opioid Risks and Alternative Treatments (§ 423.128)

Sponsors of Part D prescription drug plans, including MA-PDs and standalone PDPs, must disclose certain information about their Part D plans to each enrollee in a clear, accurate, and standardized form at the time of enrollment and at least annually thereafter under section 1860D-4(a)(1)(a) of the Act. Section 6102 of the SUPPORT Act amended section 1860D-4(a)(1)(B) of the Act to require that Part D sponsors also must disclose to each enrollee information about the risks of prolonged opioid use. In addition to this information, with respect to the treatment of pain, MA-PD sponsors must disclose coverage of non-pharmacological therapies, devices, and non-opioid medications under their plans. Sponsors of standalone PDPs must disclose coverage of non-pharmacological therapies, devices, and non-opioid medications under their plans and under Medicare Parts A and B. Section 6102 also amended section 1860D-4(a)(1)(C) to permit Part D sponsors to disclose this opioid risk and alternative treatment coverage information to only a subset of plan enrollees rather than disclosing the information to each plan enrollee. We are finalizing our proposal with only one modification to make the requirement applicable beginning January 1, 2022, rather than January 1, 2021 as proposed.

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

CMS proposed that, if on reconsideration a Part D sponsor affirms its denial of a DMP appeal, the case shall be automatically forwarded to the independent outside entity for review and resolution by the expiration of the adjudication timeframe applicable to the plan level appeal. We also proposed conforming revisions to the notices that are sent to beneficiaries. In the February 2020 proposed rule, we solicited feedback on these proposals. As a result, we received several comments related to the timeframe in which a plan sponsor has to forward the case file to the IRE. Specifically, commenters requested that plan sponsors have additional time beyond the applicable adjudication timeframe in which to assemble and forward the administrative case file to the IRE. As a result of this feedback, we are finalizing the automatic escalation provision with a modification to reflect that plan sponsors must forward the case file to the independent outside entity no later than 24 hours following the expiration of the adjudication timeframe applicable to the plan level appeal. This approach is consistent with regulations applicable to cases that must be forwarded to the IRE if the plan sponsor is untimely in its decision making and, we believe, remains consistent with the enrollee protections set forth in the SUPPORT Act. We are also finalizing the provisions related to beneficiary notices. The following provisions of this final rule are applicable 60 days after the publication date of this final rule: §§ 423.590(i) and 423.600(b) related to auto-forwarding redeterminations made under a DMP to the IRE and the provisions related to information on appeal rights in the beneficiary notices at §§ 423.153(f)(5)(ii)(C)(3), 423.153(f)(6)(ii)(C)(4), and 423.153(f)(8)(i).

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

In the proposed rule, CMS proposed to undertake rulemaking to implement the provisions outlined in sections 2008 and 6063 of the SUPPORT Act, which are summarized in the following sections (1) and (2). Implementing these provisions will allow CMS, MA organizations and Medicare Part D plan sponsors (including MA organizations offering MA-PD plans) to share data and information regarding unscrupulous actors, take swift action based on such data and information, and achieve enhanced outcomes in our efforts to fight the opioid crisis. In addition, this regulation will provide the means for more effective referrals to law enforcement based on plan sponsor reporting, ultimately resulting in reduced beneficiary harm and greater savings for the Medicare program.

(1) Section 2008 of the SUPPORT Act

Title XVIII of the Social Security Act (the Act) provides authority for CMS to suspend payments to Medicare fee-for-service (FFS) providers and suppliers pending an investigation of a credible allegation of fraud, unless a good cause exception applies. While Part D plan sponsors currently have the discretion to suspend payments to pharmacies in the plans' networks, section 2008 requires that plan sponsors' payment suspensions based on credible allegations of fraud be implemented in the same manner as CMS implements such payment suspensions in FFS Medicare. Under this provision, plan sponsors are required to notify the Secretary of the imposition of a payment suspension that is based on a credible allegation of fraud and may do so using a secure website portal. The reporting requirement applicable to plan sponsors will only apply to suspended payments based on credible allegations of fraud as required by section 2008 and will not extend to other payment suspensions for which plan sponsors already have authority. Section 2008 also clarifies that a fraud hotline tip, without further evidence, is not considered a credible fraud allegation for payment suspension purposes. The statutory effective date for section 2008 is for plan years beginning on or after January 1, 2020.

(2) Section 6063 of the SUPPORT Act

Section 6063 requires, effective not later than 2 years after the date of enactment, the Secretary to establish a secure internet website portal to enable the sharing of data among MA plans, prescription drug plans, and the Secretary, and referrals of “substantiated or suspicious activities” of a provider of services (including a prescriber) or a supplier related to fraud, waste, or abuse to initiate or assist with investigations conducted by eligible entities with a contract under section 1893 of the Act, such as a Medicare program integrity contractor. The Secretary is also required to use the portal to disseminate information to all MA plans and prescription drug plans on providers and suppliers that were referred to CMS for fraud, waste, and abuse in the last 12 months; were excluded or the subject of a payment suspension; are currently revoked from Medicare; or, for such plans that refer substantiated or suspicious activities to CMS, whether the related providers or suppliers were subject to administrative action for similar activities. The Secretary is required to define what constitutes substantiated or suspicious activities. Section 6063 specifies that a Start Printed Page 5867fraud hotline tip without further evidence shall not be treated as sufficient evidence for substantiated fraud, waste, or abuse.

Section 6063 also requires the Secretary to disseminate quarterly reports to MA plans and prescription drug plans on fraud, waste, and abuse schemes and suspicious activity trends reported through the portal. The Secretary's reports are to maintain the anonymity of information submitted by plans and to include administrative actions, opioid overprescribing information, and other data the Secretary, in consultation with stakeholders, determines important.

Beginning with plan year 2021, section 6063 also requires Part D plan sponsors to submit to the Secretary information on investigations, credible evidence of suspicious activities of providers or suppliers related to fraud, and other actions taken by the plans related to inappropriate opioid prescribing. The Secretary is required to issue regulations that define the term inappropriate prescribing with respect to opioids, identify a method to determine if providers are inappropriately prescribing, and identify the information plan sponsors are required to submit.

The applicability date of the section 2008 and section 6063 provisions will be for plan years beginning on or after January 1, 2022 because of several factors. The first factor is the need to ensure that the web-based portal is complete and operational for plan sponsor's use. While the development of the web-based portal began when the legislation was enacted, CMS was unable to complete the development of the portal in time for its full implementation in plan year 2021. In addition, the portal has required several key updates to reflect the requirements in this regulation. Additional factors include the time needed for plan sponsors to determine internal procedures to meet the requirements outlined in this rule; the need for CMS to obtain feedback from plan sponsors to address any challenges encountered with the web-based portal; and the need to provide plan sponsors with the opportunity to address any other operational challenges with implementing these provisions, including potential changes that may be needed due to the COVID-19 public health emergency. Furthermore, the applicability date is later than the effective dates in the SUPPORT Act because the publication of this final rule is occurring after the bid deadline for plan year 2021. However, where the statute is self-implementing, the delay in applicability of these regulations is not a barrier to enforcement of the statutory provisions.

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

In the Medicare Program; Contract Year 2019 Policy and Technical Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-for-Service, the Medicare Prescription Drug Benefit Programs, and the PACE Program Final Rule (hereinafter referred to as the April 2018 final rule), we codified the methodology for the Star Ratings system for the MA and Part D programs, respectively, at §§ 422.160 through 422.166 and §§ 423.180 through 423.186. We have stated we will propose through rulemaking any changes to the methodology for calculating the ratings, the addition of new measures, and substantive measure changes.

At this time we are codifying additional existing rules for calculating the ratings used for MA Quality Bonus Payments, implementing updates to the Health Outcomes Survey measures, adding new Part C measures, clarifying the rules around contract consolidations and application of the adjustment for extreme and uncontrollable circumstances when data are missing due to data integrity concerns, and making additional technical clarifications. Unless otherwise stated, data will be collected and performance measured using these rules and regulations for the 2022 measurement period and the 2024 Star Ratings.

g. Permitting a Second, “Preferred,” Specialty Tier in Part D (§§ 423.104, 423.560, and 423.578)

We are finalizing regulations to allow Part D sponsors to establish up to two specialty tiers and design an exceptions process that exempts drugs on these tiers from tiering exceptions to non-specialty tiers. Under this final rule, Part D sponsors will have the flexibility to determine which Part D drugs are placed on either specialty tier, subject to the ingredient cost threshold established according to the methodology we proposed and the requirements of the CMS formulary review and approval process under § 423.120(b)(2). To maintain Part D enrollee protections, we will codify a maximum allowable cost sharing that would apply to the higher cost-sharing specialty tier. Further, we will require that if there are two specialty tiers, one must be a “preferred” tier that offers lower cost sharing than the proposed maximum allowable cost sharing.

We note that we did not propose to revise and are not revising § 423.578(c)(3)(ii), which requires Part D sponsors to provide coverage for a drug for which a tiering exception was approved at the cost sharing that applies to the preferred alternative. Because the exemption from tiering exceptions for specialty tier drugs under § 423.578(a)(6)(iii) as proposed would apply only to tiering exceptions to non-specialty tiers, the existing requirement at § 423.578(c)(3)(ii) will require Part D sponsors to permit tiering exception requests for drugs on the higher cost-sharing specialty tier to the lower cost-sharing, specialty tier.

To improve transparency, we will codify current methodologies for cost sharing and calculations relative to the specialty tier, with some modifications. First, we will codify a maximum allowable cost sharing permitted for the specialty tiers of between 25 percent and 33 percent, depending on whether the plan includes a deductible, as described further in section IV.E.4. of this final rule. We determine the specialty-tier cost threshold—meaning whether the drug has costs high enough to qualify for specialty tier placement—based on a 30-day equivalent supply. Additionally, we base the determination of the specialty-tier cost threshold on the ingredient cost reported on the prescription drug event (PDE). We will also maintain a specialty-tier cost threshold for both specialty tiers that is set at a level that, in general, reflects drugs with monthly ingredient costs that are in the top 1 percent, as described further in section IV.E.6. of this final rule. Finally, we will adjust the specialty-tier cost threshold, in an increment of not less than 10 percent, when an annual analysis of PDE data shows that an adjustment is necessary to recalibrate the specialty-tier cost threshold so that it only reflects Part D drugs with the top one percent of monthly ingredient costs. We will determine annually whether the adjustment would be triggered and announce the specialty-tier cost threshold annually via an HPMS memorandum or a comparable guidance document.

We are finalizing these provisions as proposed, except that we are not finalizing our proposal to specify a specialty-tier cost threshold of $780. Additionally, in response to comments, we are finalizing new paragraph § 423.104(d)(2)(iv)(A)(6), which describes the eligibility for placement on the specialty tier of newly-FDA-Start Printed Page 5868approved Part D drugs. These provisions will apply for coverage year 2022.

To retain the policies in effect before coverage year 2022, we are amending the definition of specialty tier at § 423.560 by adding paragraph (i) to clarify that the existing definition will be in effect before coverage year 2022, and paragraph (ii) to cross reference the definition which appears in § 423.104(d)(2)(iv), which will apply beginning coverage year 2022. Additionally, as discussed in section IV.E.2. of this final rule, we are amending § 423.578(a)(6)(iii) by adding paragraph (A) to cross reference the definition of specialty tier which will apply before coverage year 2022, and paragraph (B) to cross reference placement of the definition of specialty tier at § 423.104(d)(2)(iv) which will apply beginning coverage year 2022. Additionally, paragraph (A) will remove the phrase “and biological products,” and paragraph (B) will (1) reflect the possibility of a second specialty tier, and (2) clarify that Part D sponsors may design their exception processes so that Part D drugs on the specialty tier(s) are not eligible for a tiering exception to non-specialty tiers.

h. Beneficiary Real Time Benefit Tool (RTBT) (§ 423.128)

This rule finalizes regulations to require that Part D plan sponsors implement a beneficiary real-time benefit tool (RTBT) by January 1, 2023. The RTBT must allow enrollees to view the information included in the prescriber RTBT system, which will include accurate, timely, and clinically appropriate patient-specific real-time formulary and benefit information (including cost, formulary alternatives and utilization management requirements). This rule permits plans to use existing secure patient portals to fulfill this requirement, to develop a new portal, or use a computer application. Plans are required to make this information available to enrollees who call the plan's customer service call center.

In order to encourage enrollees to use the beneficiary RTBT, plans are permitted to offer rewards and incentives (RI) to their enrollees who log onto the beneficiary RTBT or seek to access this information via the plan's customer service call center, provided the value of the RI offered is a reasonable amount.

i. Service Delivery Request Processes Under PACE (§§ 460.104 and 460.121)

Currently, PACE participants or their designated representatives may request to initiate, eliminate or continue a service, and in response, the PACE organization must process this request under the requirements at § 460.104(d)(2). These requests are commonly referred to by CMS and the industry as “service delivery requests.” In response to feedback from PACE organizations and advocacy groups, and based on our experience monitoring PACE organizations' compliance with our current requirements, we proposed moving the requirements for processing service delivery requests from § 460.104(d)(2) and adding them to a new § 460.121 in order to increase transparency for participants and reduce confusion for PACE organizations. We also proposed modifying these provisions in order to reduce unnecessary burden on PACE organizations and eliminate unnecessary barriers for participants who have requested services that a PACE organization would be able to immediately approve. Specifically, we proposed to more clearly define what constitutes a service delivery request, and provide transparent requirements for how those requests would be processed by the PACE organization, including who can make a request, how a request can be made, and the timeframe for processing a service delivery request. We also proposed allowing the interdisciplinary team (IDT) to bypass the full processing of a service delivery request under the new proposed requirements in § 460.121 when the request can be approved in full by an IDT member at the time it is made. For all other service delivery requests that are brought to the IDT, we proposed maintaining the requirement that an in-person reassessment must be conducted prior to a service delivery request being denied, but we proposed eliminating the requirement that a reassessment (either in-person or through remote technology) be conducted when a service delivery request can be approved. Lastly, we proposed adding participant protections; specifically, we proposed increasing notification requirements in order to ensure participants understand why their request was denied, and we proposed adding reassessment criteria in order to ensure reassessments are meaningful to the service delivery request, and that the IDT takes them into consideration when rendering a decision.

We are finalizing these provisions as proposed, with some minor modifications. For example, all references to “service delivery requests” in §§ 460.104, 460.121 and 460.122 have been replaced with the term “service determination request.” In addition, we have modified § 460.121(d)(2) to limit service determination requests to requests that are received by PACE organization employees and contractors who provide direct care in the participant's residence, the PACE center, or while transporting participants.

j. Beneficiaries With Sickle Cell Disease (SCD) (§ 423.100)

Beneficiaries with active cancer-related pain, residing in a long-term care facility, or receiving hospice, palliative, or end-of-life care currently meet the definition of “exempt beneficiary” with respect to DMPs in § 423.100. Section 1860D-4(c)(5)(C)(ii)(III) of the Act provides the Secretary with the authority to elect to treat other beneficiaries as exempted from DMPs. Due to concerns of misapplication of opioid restrictions in the sickle cell disease (SCD) patient population, CMS proposed that beneficiaries with SCD be classified as exempt beneficiaries. CMS is finalizing the definition of an exempted beneficiary to include beneficiaries with SCD as proposed with one modification to clarify that this definition is applicable starting in plan year 2022.

3. Summary of Costs and Benefits

ProvisionDescriptionPrimary impact to plans and sponsors, enrollees, and medicare trust fund as applicable
a. Mandatory Drug Management Programs (DMPs) (§ 423.153)This provision will codify the SUPPORT Act requirement making it mandatory that Part D sponsors implement DMPs, starting in plan year 2022.There is a 10 year cost of $4.0 million. Part D sponsors will incur s a special first year cost of 3.2 million with ongoing costs of $0.1 million in later years.
Start Printed Page 5869
b. Beneficiaries with History of Opioid-Related Overdose Included in Drug Management Programs (DMPs) (§ 423.153)As finalized, this provision will require that, starting in plan year 2022, CMS identify beneficiaries enrolled in Medicare Part D with a history of opioid-related overdose (as defined by the Secretary) and include such individuals as PARBs for prescription drug abuse or misuse under sponsors' DMPs.Part D beneficiaries with a history of opioid-related overdose have higher than average drug costs. CMS estimates that as a result of reduced utilization of drugs for beneficiaries participating in DMPs, there will be a savings of 5 percent of the current annual drug costs for enrollees with a history of opioid overuse. After the first year, the reduction in drug utilization may result in an annual savings of $7.7 million to the Medicare Trust Fund resulting from reduced drug spending by beneficiaries. The costs for case management and related paperwork is estimated at $10.1 million annually.
c. Beneficiaries' Education on Opioid Risks and Alternative Treatments (§ 423.128)CMS is finalizing requirements that Part D sponsors and MA-PDs must provide information on the risks of opioids and alternative therapies to all Part D beneficiaries with modification starting in plan year 2022.The requirements set forth under 1860D-4(a)(1)(B) will cost approximately $0.5 million in the first year to account for one-time programming costs and $0.4 million in the following years.
d. Automatic Escalation to External Review under a Medicare Part D Drug Management Program (DMP) for At-Risk Beneficiaries (§§ 423.153, 423.590, and 423.600)Under this final rule, if a Part D sponsor denies a DMP appeal, the case shall be automatically forwarded to the independent outside entity for review and resolution. A plan sponsor must forward the case to the independent outside entity no later than 24 hours following the expiration of the adjudication timeframe applicable to the plan level appeal. Finally, this final rule establishes conforming revisions to the notices that are sent to beneficiaries.We estimate there will be about 28,600 appeals per year, of which 0.08 percent will be denied and automatically escalated to the independent review entity (IRE). Therefore, there are approximately 23 cases (0.08 percent * 28,600) annually affected by this provision. Since most IRE cases are judged by a physician at a wage of $202.46, and typically an IRE will take at most 1 hour to review, the total burden is about $4,656.58 (23 cases * $202.46 * 1 hour).
e. Suspension of Pharmacy Payments Pending Investigations of Credible Allegations of Fraud and Program Integrity Transparency Measures (§§ 405.370, 422.500, 422.503, 423.4, 423.504, and 455.2)CMS is finalizing policies to implement two sections of the SUPPORT Act, which will—(1) require Part D plan sponsors to notify the Secretary of the imposition of a payment suspension on pharmacies that is based on a credible allegation of fraud, impose such payment suspensions consistent with the manner in which CMS implements payment suspensions in fee-for service Medicare, and report such information using a secure website portal; (2) define inappropriate prescribing with respect to opioids; (3) require plan sponsors to submit to the Secretary information on investigations and other actions related to inappropriate opioid prescribing; (4) define “substantiated or suspicious activities” related to fraud, waste, or abuse; and (5) establish a secure portal which would enable the sharing of data and referrals of “substantiated or suspicious activities” related to fraud, waste, or abuse among plan sponsors, CMS, and CMS's program integrity contractors.While we believe there may be savings generated through actions taken by plans that will conduct their own due diligence from the reporting and sharing of administrative actions between CMS and plans sponsors, as well as additional law enforcement actions, we cannot estimate the impact at this time. The Part C and Part D sponsors will incur an initial aggregate cost of $15.2 million with level subsequent year aggregate costs of $9.6 million.
f. Medicare Advantage (MA) and Part D Prescription Drug Program Quality Rating System (§§ 422.162, 422.164, 422.166, 422.252, 423.182, 423.184, and 423.186)We are codifying additional existing rules for calculating MA Quality Bonus Payments ratings, implementing updates to the Health Outcomes Survey measures, adding new Part C measures, clarifying the rules around contract consolidations and application of the adjustment for extreme and uncontrollable circumstances when data are missing due to data integrity concerns, and making additional technical clarifications.There will be no, or negligible, impact on the Medicare Trust Fund from these provisions.
g. Permitting a Second, “Preferred,” Specialty Tier in Part D (§§ 423.104, 423.560, and 423.578)CMS is finalizing regulations to (1) allow Part D sponsors to establish a second, “preferred,” specialty tier at a lower cost-sharing threshold than the current specialty tier; (2) codify the existing maximum cost sharing for the highest specialty tier; (3) codify a methodology to determine annually the specialty-tier cost threshold using ingredient cost and increase the threshold when certain conditions are met; (4) require sponsors to permit tiering exceptions between the two specialty tiers; and (5) permit sponsors to determine which drugs go on either specialty tier.Permitting Part D sponsors to establish a second, “preferred,” specialty tier is unlikely to have a material impact on Part D costs to either the government or Part D enrollees.
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h. Beneficiary Real Time Benefit Tool (RTBT) (§ 423.128)CMS is finalizing regulations to require that each Part D plan implement a beneficiary real time benefit tool by January 1, 2023. he RTBTl must enable enrollees to have the information included in the prescriber RTBT system which includes accurate, timely, and clinically appropriate patient-specific real-time formulary and benefit information (including cost, formulary alternatives and utilization management requirements).Adoption of a beneficiary RTBT will be an additional cost and burden on Part D sponsors. Based on our estimates, we believe this will cost Part D plans about $4.0 million for all plans in the first year based on the costs for them to reprogram their computer systems. Additionally, the voluntary provision of rewards by Part D sponsors to enrollees using RTBT will have an impact of $0.7 million in the first year, in order to implement the program, and $0.4 million in subsequent years in order to maintain the program. These are maximum impacts assuming all Part D sponsors choose to implement the rewards and incentives, and it remains to be seen whether or not this will be the case.
i. Service Delivery Request Processes under PACE (§§ 460.104 and 460.121)CMS is finalizing the process by which PACE organizations address service determination requests. Currently the IDT must determine the appropriate member(s) of the IDT to conduct a reassessment, perform a reassessment, and render a decision on each service determination request. However, our experience shows that approximately 40 percent of all requests could be immediately approved in full by an IDT member. We are therefore removing the obligation for a request to be brought to the IDT or for a reassessment to be conducted when a member of the IDT receives and can approve a service determination request in full at the time it is made. We are also removing the requirement to conduct a reassessment in response to a service determination request except when a request would be partially or fully denied.The proposed revisions create efficiencies which are estimated to create cost savings of $16.8 million in the first year and gradually increase to $ 21.3 million in 2031. The net savings over 10 years is $193.8 million. The savings are true savings to PACE organizations as a result of reduced administrative burden.
j. Beneficiaries with Sickle Cell Disease (SCD) (§ 423.100)CMS is finalizing that beneficiaries with SCD are classified as exempted from DMPs starting in plan year 2022.We estimate that the impact of this provision is negligible because it will result in under 70 beneficiaries (i.e., beneficiaries with SCD who meet DMP inclusion criteria by meeting the definition of a PARB) being exempted from DMPs.

B. Background

We received approximately 667 timely pieces of correspondence containing multiple comments for the provisions implemented within this final rule from the proposed rule titled “Medicare and Medicaid Programs; Contract Year 2021 and 2022 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly” which appeared in the Federal Register on February 18, 2020 (85 FR 9002) (February 2020 proposed rule). Comments were submitted by MA health plans, Part D sponsors, MA enrollee and beneficiary advocacy groups, trade associations, providers, pharmacies and drug companies, states, telehealth and health technology organizations, policy research organizations, actuarial and law firms, MACPAC, MedPAC, and other vendor and professional associations. As mentioned previously, we are finalizing the policies from the February 2020 proposed rule in more than one final rule. The first part titled “Medicare Program; Contract Year 2021 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, and Medicare Cost Plan Program” appeared in the Federal Register on June 2, 2020 (85 FR 33796), and contained a subset of regulatory changes that impacted MA organizations and Part D sponsors more immediately, including information needed to submit their bids by the statutory deadline (the first Monday in June). The majority of the remaining provisions are addressed here in this final rule.

The proposals we are finalizing in this final rule range from minor clarifications to more significant modifications based on the comments received. Summaries of the public comments received and our responses to those public comments are set forth in the various sections of this final rule under the appropriate headings.

We also note that some of the public comments received for the provisions implemented in this final rule were outside of the scope of the proposed rule. CMS did not make any proposals in the February 2020 proposed rule on these topics, and as such, these out-of-scope public comments are not addressed in this final rule. The following paragraphs summarize the out-of-scope public comments.

We received comments about how CMS will assess compliance with PACE regulatory requirements, recommendations for changes to PACE grievance requirements, and a recommendation to require plan sponsors to automatically escalate all adverse Part D benefit appeals to the independent review entity. Related to Star Ratings, we received comments that CMS should only apply the Categorical Adjustment Index if it positively impacts a contract's Star Rating, and that we adopt completely new Star Ratings measures or change HEDIS measures during the COVID-19 pandemic. Related to establishing pharmacy performance measure reporting requirements, we received comments in favor of abolishing Direct and Indirect Remunerations, applying 100 percent of direct pharmacy price concessions at the point-of sale, prohibiting use of a scoring method that Start Printed Page 5871solely uses contractual pay-for-performance metrics, and the inclusion of clinical data as part of any standardized performance measures.

With regard to our proposals to permit Part D sponsors to maintain up to two specialty tiers, several commenters expressed that, in general, tiered-formulary structures have misaligned incentives, and that specialty tiers (particularly a second specialty tier), exacerbate the impact of such misaligned incentives. These commenters expressed concerns over the transparency of Part D rebate mechanisms and suggested that Part D sponsors have incentives to grant more expensive products with preferred status even when preferred products are not always the least expensive products, which the commenters posited increases costs for both Part D enrollees and the government. Some commenters suggested that CMS should eliminate the specialty tier, reasoning that elimination of the specialty tier would only produce modest increases in premiums and cost sharing in other tiers. Some commenters also suggested that the tiers should be relabeled and reordered in the hierarchy relative to Part D enrollee cost sharing to be more consistent with current industry practices. Some commenters suggested that CMS should mandate that denials at the pharmacy counter trigger the appeals process. Other commenters suggested that Part D enrollees stabilized on a specialty drug be exempt from unfavorable coverage changes (for example, increased cost sharing) resulting from a secondary specialty tier. Some commenters suggested that CMS should adjust the Part D rebate sharing formulas to remove plan incentives for high-cost, high-rebate brand drugs. Some commenters encouraged CMS to investigate alternative catastrophic reinsurance models to incent the most savings for health plans implementing a preferred specialty tier. Some commenters suggested that, like private insurance plans with more than one specialty tier, CMS should establish an out-of-pocket max in Part D. Some commenters suggested a comprehensive reform of the Part D program. Some commenters suggested that transitioning to a biosimilar biological product on a lower specialty tier may have negative clinical implications for a patient stabilized on a reference product. (We refer readers to the Food and Drug Administration (FDA) regarding the safety and efficacy of biosimilar biological products, and their use in patients who have previously been treated with the reference product, as well as in patients who have not previously received the reference product.) Some commenters took the opportunity to suggest that CMS should expand the scope of our mid-year formulary change policy to include biosimilar biological products, reasoning that they are “equivalent” to the reference biological products. Some commenters suggested that CMS should improve the exceptions and appeal process. Some commenters suggested that CMS should ensure independent pharmacies cannot be excluded from providing non-preferred specialty tier drugs. Finally, some commenters suggested that CMS should institute conflict of interest provisions for pharmacy chains owned by PBMs. (We note that this rule, as we are finalizing it, would not provide Part D sponsors with any additional basis to exclude independent pharmacies from their networks.)

In response to proposed changes to the Coverage Gap Discount Program (CGDP), two commenters offered suggestions about how the Part D program could be more cost effective. One of these commenters urged CMS to prohibit Part D plans from using utilization management tools to steer utilization away from lower cost biosimilar products. The other commenter suggested that Congress change the CGDP in a way that would result in greater use of lower cost drugs throughout the program and suggested that the program's existence shifts the lower net cost determinations of generic and biosimilar products.

With regard to Medication Therapy Management (MTM), one commenter expressed concern about how pharmacists are paid for providing services, while another questioned the overall cost benefit of the MTM program.

A commenter recommended that CMS align exemption criteria for the Pharmacy Quality Alliance's Initial Opioid Prescribing Measures with DMP exemption criteria; however, these measures are not developed by CMS and are outside the scope of the proposed rule. We also received a number of comments that did not refer specifically to our Part D opioid proposals but more generally (1) referenced the opioid epidemic, (2) cited concerns that existing restrictions on opioid access may drive chronic pain patients to illicit markets and/or reduce their quality of life and functional status, (3) raised questions about Drug Enforcement Agency (DEA) actions against opioid prescribers and whether they address the root cause of the opioid epidemic, and (4) opined that interventions should be focused on illegal drugs.

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

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

Congress authorized special needs plans (SNPs) as a type of Medicare Advantage (MA) plan designed to enroll individuals with special needs. The three types of SNPs are those designed for: (1) Institutionalized individuals (defined in § 422.2 as an individual continuously residing, or expecting to continuously reside, for 90 days or longer in specified facility) or institutionalized-equivalent (defined in § 422.2 as living in the community but requiring an institutional level of care, which is determined using a specified assessment instrument and conducted consistent with specified standards); (2) individuals entitled to medical assistance under a State Plan under title XIX of the Act; or (3) other individuals with severe or disabling chronic conditions that would benefit from enrollment in a SNP. As noted in the proposed rule (85 FR 9013 through 9014), there have been a number of changes to the requirements for MA SNPs since their initial authorization. We proposed changes to § 422.101(f) to implement and extend the latest of those statutory changes, made by the Bipartisan Budget Act of 2018 (BBA).

As of July 2019, there were 321 SNP contracts with 734 SNP plans that had at least 11 members. These figures included 208 Dual Eligible SNP contracts (D-SNPs) with 480 D-SNP plans with at least 11 members, 57 Institutional SNP contracts (I-SNPs) with 125 I-SNP plans with at least 11 members, and 56 Chronic or Disabling Condition SNP contracts (C-SNPs) with 129 C-SNP plans with at least 11 members. For more discussion of the history of SNPs, please see Chapter 16b of the Medicare Managed Care Manual (MMCM).[2] The proposed rule summarized current processes and requirements for the models of care that all SNPs must use and follow under current law. (85 FR 9014)

The Bipartisan Budget Act of 2018 (BBA), enacted into law on February 9, 2018, amended section 1859(f) of the Act to include new care management requirements for C-SNPs. We proposed, and are finalizing here, regulations to Start Printed Page 5872implement the provisions of the BBA of 2018 and establishes new care management requirements at § 422.101(f) for all SNPs, including minimum benchmarks for SNP models of care. Due to operational considerations, the requirements we are finalizing at § 422.101(f) are intended for implementation for coverage beginning contract year 2023. Plans that are required to submit MOCs for contract year 2022 are due to submit MOCs by February 17, 2021; those submissions will be evaluated based on the regulations in effect at that time (that is, without the amendments adopted here) and SNPs must implement and comply with their approved MOCs in connection with coverage in 2022. Moving the applicable implementation of the SNP MOC provisions to contract year 2023 will allow SNPs and CMS to construct the necessary processes for the full implementation and enforcement of this final rule. When MOCs for contract year 2023 are submitted for review and approval in early 2022, the regulations in this final rule will be used to evaluate those MOCs for approval.

Specifically, we proposed the following:

  • First, we proposed to implement the requirement in section 1859(f)(5)(B)(i) of the Act regarding the interdisciplinary team, or sometimes called the interdisciplinary care team (ICT), in an amendment to § 422.101(f)(1)(iii) that would require the team to include providers with demonstrated expertise, including training in an applicable specialty, in treating individuals similar to the targeted population of the plan, and in addition to implementing the statutory requirement for C-SNPs, extend the requirement to all SNPs.
  • Second, we proposed to implement the requirement in section 1859(f)(5)(B)(ii) of the Act requiring compliance with requirements (developed by CMS) to provide a face-to-face encounter with each enrollee in a new paragraph (f)(1)(iv) of § 422.101 that would extend the requirement to all SNPs. Under our proposal, face-to-face encounters would have to be between each enrollee and a member of the enrollee's ICT or the plan's case management and coordination staff on at least an annual basis, beginning within the first 12 months of enrollment, as feasible and with the individual's consent; we also proposed that a face-for-face encounter must be either in-person or through a visual, real-time, interactive telehealth encounter.
  • Third, we proposed to codify the requirement in section 1859(f)(5)(B)(iii) of the Act that, as part of the C-SNP model of care, the results of the initial assessment and annual reassessment required for each enrollee be addressed in the individual's individualized care plan. As with the other provisions in section 1859(f)(5)(B) of the Act, we proposed to extend this requirement to the model of care for all SNPs, in revisions to § 422.101(f)(1)(i).
  • Fourth, we proposed to codify the requirement in section 1859(f)(5)(B)(iv) of the Act that the evaluation and approval of the model of care take into account whether the plan fulfilled the previous MOC's goals and to extend this evaluation component to all SNP models of care, rather than limiting it to C-SNPs. We proposed a new provision at § 422.101(f)(3)(ii) to require that, as part of the evaluation and approval of the SNP model of care, National Committee for Quality Assurance (NCQA) must evaluate whether goals were fulfilled from the previous model of care. We also proposed, in new paragraphs (f)(3)(ii)(A) through (C) that: (A) Plans must provide relevant information pertaining to the MOC's goals as well as appropriate data pertaining to the fulfillment of the previous MOC's goals; (B) plans submitting a new model of care must provide relevant information pertaining to the MOC's goals for review and approval; and (C) if the SNP model of care did not fulfill the previous MOC's goals, the plan must indicate in the MOC submission how it will achieve or revise the goals for the plan's next MOC. We also proposed to move an existing regulation at § 422.101(f)(2)(vi) that requires all SNPs must submit their MOC to CMS for NCQA evaluation and approval in accordance with CMS guidance to a new paragraph at § 422.101(f)(3)(i), using the same language.
  • Lastly, we proposed to implement new regulation text at § 422.101(f)(3)(iii) to impose the requirement for benchmarks to be met for a MOC to be approved. Section 1859(f)(5)(B)(v) of the Act requires that the Secretary establish a minimum benchmark for each element of the C-SNP model of care, and that the MOC can only be approved if each element meets a minimum benchmark. The proposed regulation in § 422.101(f)(3)(iii) would extend these benchmarks for all SNP models of care.

We proposed to extend the new requirements enacted by the BBA of 2018 to all SNP plan types for several reasons. We explained that these additional requirements are consistent with current regulations and sub-regulatory guidance CMS provides to all SNPs regarding care management and MOC compliance. Second, we believe that these proposed regulations are important safeguards to preserve the quality of care for all special needs individuals, including those enrolled in D-SNPs and I-SNPs and not just those enrolled in C-SNPs. Given the prevalence of medically complex chronic conditions among I-SNP and D-SNP enrollees, we believe the proper application of these new care improvement requirements would improve care for enrollees with complex chronic conditions. Finally, we stated that the application of multiple, different MOC standards would be operationally complex and burdensome for MA organizations that sponsor multiple SNP plan types, for instance, a D-SNP and a C-SNP. Our proposal would streamline operational and administrative obligations by making the different SNPs have similar requirements as well as establish minimum standards to benefit all special needs individuals in these plans.

In the proposed rule, we solicited comment on the extension of the new care management and MOC requirements for C-SNPs to the care management and MOC requirements for all SNP types and then discussed each of the specific proposed policies in turn. We address comments about the extension of the requirements to all SNP types first, followed by a review of each proposed policy and the relevant comments and the response to such comments. 1. Extension of the C-SNP requirements to all SNP types

Comment: CMS received a number of comments in support of or in opposition to the extension of C-SNP requirements, added to section 1859(f)(5) of the Act by the BBA of 2018, to apply to all SNP types, instead of limiting the applicability of these requirement to just C-SNPs. A handful of commenters were concerned about the applicability of several of the proposed regulations to I-SNP and D-SNP care management protocols with some arguing that the proposed rule would result in requirements that are duplicative of the current MOC approval process requirements. Several commenters specifically noted that SNPs of all types have existing processes and practices that cover the areas discussed in the proposed rule. They contend that the NCQA Model of Care, review, and scoring guidelines comprehensively cover the coordination of care, provider, and quality requirements outlined in the proposed rule. In addition, commenters noted that CMS audits include review of Start Printed Page 5873performance by SNPs on these processes.

Response: Regarding the extension of section 1859(f)(5) of the Act to include all SNP types, we agree this rule is consistent with current CMS policy, including several current regulations implementing section 1859; the statute and several regulations establish similar requirements for all SNPs regardless of type. Specifically, section 1859(f)(5)(A) of the Act requires that MA organizations offering a SNP implement an evidence-based model of care. The MOC and other SNP-specific requirements have been incorporated into the MA application for MAOs that wish to offer a SNP so that these MAOs can demonstrate that they meet CMS' SNP specific requirements and are capable of serving the vulnerable special needs individuals who enroll in SNPs. In the Medicare Program; Medicare Advantage and Prescription Drug Benefit Programs: Negotiated Pricing and Remaining Revisions (74 FR 1493), known hereafter as the January 2009 final rule, CMS outlined the overarching purpose of section 422.101(f) and noted that SNPs, regardless of type, are required to meet the same requirements including that each plan must have networks with clinical expertise specific to the special needs population of the plan; use performance measures to evaluate models of care; and be able to coordinate and deliver care targeted to people with disabilities, frail older adults, and those near the end of life based on appropriate protocols. (74 FR 1498 through 1450) CMS's belief that these measures are critical to providing care to the types of special needs populations served by SNPs has not changed in the intervening years since finalizing § 422.101(f) in 2009. As noted in this section of this rule, for each specific provision we proposed and are finalizing at § 422.101(f), CMS is codifying certain requirements that are part of the current SNP MOC approval process. Rather than forcing a duplication of processes, we believe that SNPs have already implemented many of these new requirements into their MOC. Understanding this, we proposed and are finalizing these provisions in line with current MOC review and scoring guidelines, covering all facets of the MOC including care coordination, provider, and quality requirements.

As discussed in the proposed rule, extending the statutory requirements for C-SNPs to all SNPs will provide improvements to the care coordination model in all SNPs. For example, section 1859(f)(5)(B)(ii), as added by the BBA of 2018, requires C-SNPs to provide face-to-face encounters with each enrollee on an annual basis, consistent with standards adopted by CMS. We proposed and are finalizing, at § 422.101(f)(1)(iv), that all SNPs provide for face-to-face encounters between each enrollee and a member of the enrollee's interdisciplinary team or the plan's case management and coordination staff on at least an annual basis, beginning within the first 12 month of enrollment, as feasible and with the individual's consent. Face-to-face encounters are appropriate to require for all SNP enrollees because these SNP enrollees have similar healthcare needs, including the need for treatment of multiple chronic conditions and for services such as care coordination.

Comment: Another comment supported the proposal, but added that CMS should explore the application of a more rigorous set of requirements focused on person-centered care to strengthen the MOC and meet the needs of SNP enrollees.

Response: We thank the commenter for their comment and suggestions. As proposed and finalized, the new provisions in § 422.101(f) provide both a structure for creating a care management process specifically designed to provide targeted care to individuals with special needs and allow flexibilities enabling plans to create innovative approaches to person-centered care. As noted in the Interim Final Rule with comment, titled “Medicare Program; Revisions to the Medicare Advantage and Prescription Drug Benefit Programs” (CMS-4138-IFC), issued in September 2008 (“September 2008 IFC”) (73 FR 54225, 54228), we expect the MA organizations that have the commitment and resources to serve vulnerable special needs beneficiaries through SNPs will perpetually evaluate their own model of care by collecting and analyzing performance data to continually improve their model of care. We also noted in the September 2008 IFC that CMS would continue to evaluate models of care through the analysis of SNP performance data and monitoring visits, the review of scientific research on the efficacy of other care models, and feedback from beneficiaries, advocacy groups, and healthcare professionals (73 FR 54228). The revisions to § 422.101(f) adopted in this final rule represent a continuation of this process to evaluate and refine SNP care management.

This final rule establishes and clarifies delivery of care standards for SNPs and codifies standards which we have included in other CMS guidance and instructions. As such, we are finalizing the revisions to paragraph (f) to § 422.101 generally as proposed to extend certain statutory requirements to all SNPs.

1. The Interdisciplinary Team (ICT) in the Management of Care

As amended by the BBA of 2018, section 1859(f)(5)(B)(i) of the Act requires the interdisciplinary team (ICT) of each C-SNP to include providers with specified expertise and training. We proposed to implement this through an amendment to § 422.101(f)(1)(iii) that would apply the requirement to all SNPs. We proposed to require that each MA organization offering a SNP plan must provide each enrollee with an ICT that includes providers with demonstrated expertise and training, and, as applicable, training in a defined role appropriate to their licensure in treating individuals similar to the targeted population of the plan.

We explained in the proposed rule that MIPPA required SNPs to conduct initial and annual comprehensive health risk assessments, develop and implement an individualized plan of care, and implement an ICT for each beneficiary. Specifically, Section 1859(f)(5)(A)(ii)(III) of the Act requires all SNPs to use ICTs as part of offering a specialized MA plan for special needs individuals. As stated in the proposed rule, we believe that the combination of MIPPA's statutory elements and our regulatory prescription for the SNP model of care establishes a standardized architecture for effective care management while giving plans the flexibility to design the unique services and benefits that enable them to meet the needs and preferences of their target population. We believe our proposal, which amends paragraph (f)(1)(iii) and applies the additional requirements pertaining to demonstrated expertise and training of interdisciplinary team providers to all SNPs, is consistent with the MIPPA requirements and the rulemakings that first adopted requirements for the use of interdisciplinary teams (73 FR 54228, 74 FR 1498).

All SNPs must have an ICT to coordinate the delivery of services and benefits, but the current regulation provides flexibility as necessary for each SNP: One SNP may choose to contract with an ICT to deliver care in community health clinics; and another SNP may hire its team to deliver care in the home setting. Under the current rule, and our proposal, all SNPs must coordinate the delivery of services and benefits through integrated systems of communication among plan personnel, providers, and beneficiaries. However, as we explained in the proposed rule, one SNP may coordinate care through a Start Printed Page 5874telephonic connection among all stakeholders and another SNP may coordinate care through an electronic system using Web-based records and electronic mail accessed exclusively by the plan, network providers, and beneficiaries. All SNPs must coordinate the delivery of specialized benefits and services that meet the needs of their most vulnerable beneficiaries. However, D-SNPs may need to coordinate Medicaid services while an institutional SNP may need to facilitate hospice care for its beneficiaries near the end of life. We provided these examples in the proposed rule to demonstrate the variety of ways SNPs currently implement their systems of care and how we believe all SNP enrollees should have access to a team of providers with expertise and training that are appropriate for each individual enrollee.

We received the following comments and our responses follow:

Comment: A commenter recommended that CMS clarify that “providers,” as used in this section, follows the definition of “provider” in 42 CFR 422.2, and also recommended that CMS provide additional details about what constitutes “demonstrated expertise and training.” Specifically, the commenter requested that CMS clarify whether there are minimal expertise or training requirements that the provider must meet or whether each special needs plan would have discretion to make this determination.

Response: As proposed and finalized, § 422.101(f)(1)(iii) requires SNPs to use an interdisciplinary team that includes a team of providers with demonstrated expertise and training, and, as applicable, training in a defined role appropriate to their licensure in treating individuals similar to the targeted population of the plan. Our current guidance for the MOC approval process provides that a SNP's MOC describe the composition of the ICT, including how the SNP determines ICT membership and the roles and responsibilities of each member. Additional information can be found in Chapter 5 of the MMCM, section 20.2.2, specifically guidance on MOC 2, Element D.[3] A compliant and well-developed MOC includes a description that specifies how the expertise and capabilities of the ICT members align with the identified clinical and social needs of the SNP beneficiaries. As proposed and as finalized, the requirement in § 422.101(f)(1)(iii) to have training in a defined role appropriate to their licensure in treating individuals similar to the targeted population of the plan means that individual providers and providers in one type of SNP (compared to other SNPs) may have training and expertise that differ based on the SNP-type or each individual enrollee's needs. For example, a C-SNP that targets diabetes mellitus may seek to establish an ICT for each enrollee that has a specialist with training and expertise in endocrinology while a D-SNP may want to establish ICTs for individual enrollees that focus on a particular set of chronic conditions or focus on specific service delivery needs for an enrollee, such as long-term services and supports. This is consistent with our current guidance and we believe that any additional burden here for SNPs will be minimal.

As defined in § 422.2, a provider is: (1) An individual who is engaged in the delivery of health care services in a State and is licensed or certified by the State to engage in that activity in the State; or (2) an entity that is engaged in the delivery of health care services in a State and is licensed or certified to deliver those services if such licensing or certification is required by State law or regulation. Therefore, the providers in the ICT must be licensed or certified to furnish the health care services they deliver. Under this new regulation, providers in an ICT must also be trained in a defined role appropriate to their licensure in treating individuals similar to the targeted population of the plan, when applicable. We expect that plans are already meeting this requirement that members of the ICT have training and expertise specific to the SNP's target population based on MOC scoring guidelines provided to all SNPs by NCQA; for example, MOC submissions specify how the expertise and capabilities of the ICT members align with the identified clinical and social needs of the SNP enrollees and describe how specific care plans for enrollees are used to determine the composition of the ICT.[4] In conclusion, under the amendment to paragraph (f)(1)(iii) that we are finalizing here, all members of the ICT must be licensed or certified to deliver the applicable health care furnished to enrollees of the SNP in compliance with § 422.2 and all of the members of the ICT must have demonstrated expertise and training, and, as applicable, training in a defined role appropriate to their licensure in treating individuals similar to the targeted population of the plan. The revisions at § 422.101(f)(1)(iii) are being finalized as applicable beginning with 2023 so MOCs for that period will be reviewed and approved based on demonstrated compliance with this final rule. The specifics of the expertise and necessary training will vary with the SNP and the covered population, and we are not adopting specific, uniform minimum requirements for all providers in all SNPs ICTs.

The revisions at § 422.101(f)(1)(iii) are being finalized as applicable beginning 2023 so MOCs for that period and subsequent years will be reviewed and approved based on demonstrated compliance with the amendments to the regulation that we are finalizing here.

Comment: CMS received several comments regarding the extension of the new statutory interdisciplinary team requirements to D-SNPs and I-SNPs. Some commenters believed that plan implementation of additional ICT requirements would be unnecessarily burdensome because some D-SNPs have difficulty contracting with and requiring specialists to take part in the ICT process. Other commenters noted that the new rule would be redundant, given existing regulations and policies are already in place, including regulations applying to the institutional settings in which I-SNP beneficiaries reside. Some of these commenters noted that adding ICT requirements will increase the burden on long-term care facilities and may require some patients to be managed to different standards than others. Others noted that this provision could interfere with plans' current practices that promote the identification of providers from disciplines that are most relevant to the beneficiary's needs. Another commenter noted that for D-SNPs, there are credentialing and network adequacy standards already in place to ensure appropriate access for D-SNP enrollees to high-quality providers. Lastly, CMS received a comment stating that the ICT should include the enrollee's managed care long term services and supports (MLTSS) care manager in cases where the enrollee receives those services.

Response: We believe the revisions we proposed and are finalizing at § 422.101(f)(1)(iii) are consistent with the current review and approval process for each MOC submission under MOC 2, Element D. While there might be overlap and redundancies for § 422.101(f)(1)(iii) and existing standards either for SNPs and SNP MOCs or for institutional providers that furnish services to SNP enrollees, that only reinforces that finalizing Start Printed Page 5875§ 422.101(f)(1)(iii) as proposed is appropriate. As SNPs are designed to furnish services and coordinate care based on the needs of its target population, ensuring that the providers and ICT that deliver that care have expertise that is specific to the target population is consistent with the overall goals of SNPs.

As noted in Chapter 5 of the MMCM, section 20.2.2, the role and conditions of MOC approval for the ICT are described in MOC 2 Element D. All SNPs are required in §  422.101(f) to implement an evidence based model of care (MOC) that has been evaluated and approved by the NCQA. As part of the approval process, SNPs are also required to meet ICT requirements under Element D. Each SNP must describe how its organization determines the composition of ICT membership. Under factor 1 of MOC 2, Element D, all SNPs must explain how the SNP facilitates the participation of beneficiaries and their caregiver(s) as members of the ICT. In addition, each SNP must describe how the beneficiary's Health Risk Assessment Tool (HRAT) and ICP are used to determine the composition of the ICT for each enrollee, including where additional team members are needed to meet the unique needs of a beneficiary. Lastly, SNPs must explain how the ICT uses health care outcomes to evaluate processes established to manage changes or adjustments to the beneficiary's health care needs on a continuous basis. The new regulation text concerning the ICT and the need to include providers with certain expertise and training are similar to these existing requirements and standards for the MOC, so any additional burden should be minimal. To the extent that a SNP is already using the needs and assessments of each enrollee to identify ICT members that are qualified and trained to meet that individual enrollee's unique needs (and does this for each enrollee), this new standard may require some additional documentation from the SNP about the demonstrated expertise, licensure and training of the ICT. CMS believes plans will be able to implement the new ICT provisions without significant changes to current processes based on two critical factors: (1) All SNPs are already required under §  422.101(f)(1)(iii) to establish an ICT for each enrollee, and thus, plans have in place steps for reviewing ICT composition and qualification; and (2) more importantly, SNPs are currently employing a process similar to the new provision for establishing an ICT as part of the MOC application approval process. Again, the new ICT provision is a natural extension of and generally codifies elements of the current MOC approval process covering the ICT, which should facilitate a seamless transition for SNPs as they implement the necessary processes to comply with new ICT requirements. These changes to the MOC, and the others contained in the amendments to §  422.101(f) will apply to MOCs and SNP performance for 2023. This means that SNPs submitting MOCs for 2023 will need to develop and implement their MOCs for 2023 based on the amendments in this final rule. However, CMS will not require SNPs that currently employ MOCs that have been approved by NCQA and are not due for review and approval in 2023 to resubmit their MOCs to demonstrate compliance with § 422.101(f)(1)(iii) as amended in this rule; so long as the SNP and its MOC meets all other requirements, the SNP may continue to operate under its current MOC based on how similar the ICT provision of this final rule is to current law and policy. We strongly encourage D-SNPs and I-SNPs that do not have MOCs up for review and approval for 2023 to review their MOCs and implement changes as necessary to ensure the interdisciplinary team for each enrollee includes a team of providers with demonstrated expertise and training, and, as applicable, training in a defined role appropriate to their licensure in treating individuals similar to the targeted population of the plan.

While the commenter states that some SNPs may face obstacles when seeking ICT participation from some providers (including certain types of specialists), CMS has not seen evidence suggesting such difficulties. Due to the similarity of § 422.101(f)(1)(iii) as revised in this rule to CMS's current policy and the standards used in NCQA reviews, it is likely that any difficulty that would lead to an inability to comply with this provision would have been apparent in past reviews of MOCs.

As we noted in the preamble of the proposed rule, SNPs are in the best position to identify an ICT with the appropriate expertise and training necessary to meet the clinical needs for each enrollee, based on the medical and behavioral health conditions of their member population and the SNP's developed expertise. We expect that an MA organization that offers a SNP for a particular population based on a chronic condition, on residence in an institution or needing a similar level of care as those who reside in an institution, or on eligibility for both Medicare and Medicaid, will have considered the needs of such populations in designing the plan and the network of providers. MA organizations are not required to offer SNPs and those that choose to do so must be capable of meeting the unique needs of the targeted population, including gaining the participation of specialists and other health care providers that have the most or best expertise for serving these vulnerable populations, consistent with the regulatory requirements. With respect to the inclusion of the enrollee's MLTSS care manager, we again defer to SNPs to determine the appropriate composition of the beneficiary's ICT in compliance with the MOC standards, which includes consultation with the beneficiary. This final rule is based on and reflects a policy that while all SNPs must develop and use an ICT to coordinate the delivery of services and benefits for each enrollee, the construction of the ICT must recognize and be built to address the needs and wishes of each individual enrollee.

After consideration of the comments and for the reasons outlined in the response to comments and in the proposed rule, we are finalizing the amendment to § 422.101(f)(1)(iii) regarding ICT expertise and training as proposed without modification.

2. Face-to-Face Annual Encounters

We proposed to implement section 1859(f)(5)(B)(ii) of the Act requiring compliance with requirements (developed by CMS) to provide a face-to-face encounter with each enrollee. We proposed that the face-to-face encounter be between each enrollee and a member of the enrollee's interdisciplinary team or the plan's case management and coordination staff on at least an annual basis, beginning within the first 12 months of enrollment, as feasible and with the individual's consent. We also proposed to codify that a face-for-face encounter must be either in-person or through a visual, real-time, interactive telehealth encounter. We proposed to adopt this in a new paragraph (f)(1)(iv) in § 422.101 that would extend the requirement to all SNPs. Under our proposal, SNPs would be required to provide an annual face-to-face visit that is in-person or by remote technology and occurs starting within the first 12 months of enrollment within the plan. For instance, a plan enrolling a beneficiary on October 1 would need to facilitate a face-to-face encounter with that enrollee by September 30th of the following year. We indicated in the proposed rule that SNPs should implement this requirement in a manner that honors Start Printed Page 5876any enrollee's decision not to participate in any qualifying encounter.

We received the following comments and our responses follow:

Comment: CMS received a number of comments both supporting and opposing the requirement for SNPs to provide a face-to-face encounter with each enrollee. Some plans noted that this is already part of their program. Some commenters, however, were concerned that implementation could be a burden for enrollees, while others were concerned that the requirements would be particularly difficult for SNP types with larger enrollments, such as D-SNPs. Still others believed that the new regulation would be hard for plans to track encounters between enrollees and providers. Others suggested that CMS allow SNPs to use encounters with non-ICT plan contracted providers to meet this requirement.

Response: We are finalizing the proposal to add § 422.101(f)(1)(iv) to require each SNP to provide an annual face-to-face encounter with each enrollee, with some modifications to address concerns raised by the commenters. As proposed and finalized, the required face-for-face encounter must be either in-person or through a visual, real-time, interactive telehealth encounter. The final rule requires, as proposed, that the MA organization provide for face-to-face encounters between each enrollee and a member of the enrollee's interdisciplinary team or the plan's case management and coordination staff. And finally, we are also finalizing that the face-to-face encounter occur on at least an annual basis, beginning within the first 12 month of enrollment, as feasible and with the individual's consent. However, we are finalizing additional flexibility as well for SNPs in connection with § 422.101(f)(1)(iv) by including that the required face-to-face encounter may also be with a contracted health plan provider and clarification as to the type of encounter that is required.

As we noted in the proposed rule, we intend for this requirement to be met in a number of different ways. In the proposed rule, we provided examples of encounters that would meet the requirement, including a visit to or by a member of an individual's interdisciplinary team or the plan's case management and coordination staff that perform clinical functions, such as direct beneficiary care. We agree with commenters that have requested that encounters with health care providers contracted with the enrollee's SNP qualify under the implementation of the final rule. This would include the enrollee's regular primary care physician, a specialist related to the enrollee's chronic condition, a behavioral health provider, health educator, social worker, and MLTSS plan staff or related MLTSS health care providers provided that such providers are (i) a member of the enrollee's interdisciplinary team; (ii) part of the plan's case management and coordination staff; or (iii) contracted plan healthcare providers. Requiring at a minimum that a healthcare provider with a contractual relationship with the SNP be part of the annual face-to-face encounter in this way will ensure that the annual encounter is a meaningful one from the perspective of the enrollee's overall health and wellbeing. We also believe that a healthcare provider with a contractual relationship will facilitate the sharing of critical health information among the plan, the ICT, and other key healthcare providers, and thus ensure coordination of care for the enrollee under § 422.112(b), and result in increased care coordination and facilitate any necessary follow-up care or referrals. Therefore, we are finalizing the new regulation at § 422.101(f)(1)(iv) with additional text to list contracted plan healthcare providers as well as members of the ICT and the plan's care coordination team. We defer to each SNP to identify which providers are part of the plan's case management and coordination staff or contracted plan healthcare providers so long as the SNP's policies are reasonable and not a means to evade compliance with the rule.

We intend for this mandatory face-to-face encounter to serve a clinical or care coordination/care management purpose. Ensuring that a special needs individual has been contacted by the SNP at least once a year and that there has been a face-to-face encounter that pertains to the individual's health care is a way of ensuring that the goals of a SNP are met. Examples of the necessary services or engagement happening during the required encounter include: (i) Engaging with the enrollee to manage, treat and oversee (or coordinate) their health care (such as furnishing preventive care included in the individualized care plan (ICP)); (ii) annual wellness visits and/or physicals; (iii) completion of a health risk assessment (HRA), such as the one annually required for all SNPs under the current regulation at § 422.101(f)(1); (iv) care plan review or other similar care coordination activities; or (v) health related education whereby the enrollee receives information or instructions critical to the maintenance of their health or implementing processes for maintaining the enrollee's health, such as the administration of a medication. These examples are not the only activities that satisfy the new regulatory requirement. Encounters may also address any concerns related to the enrollee's physical, mental/behavioral health, or overall health status, including functional status. Plans may also use qualifying encounters—those that meet qualifications as stipulated in this final rule—that are the result of plan efforts to satisfy state-mandated Medicaid or MTLSS requirements. We believe many SNPs would already meet this standard in current practice and have sufficient encounters on at least an annual basis with each enrollee that this new regulation will not be burdensome. Encounters that are sufficient to meet the regulatory requirement we are finalizing could occur either through regular visits by the enrollee to a member of the beneficiary's interdisciplinary team or through the care coordination process established by the plan's staff or contracted plan healthcare providers. We anticipate that, consistent with good clinical practice, concerns are addressed and any appropriate referrals, follow-up, and care coordination activities provided or scheduled as necessary as a result of these face-to-face encounters.

We are cognizant that enrollees should have the final authority over their health care and our proposed regulation text reflected this by requiring that these face-to-face encounters be as feasible and with the enrollee's consent. A SNP must comply with this requirement in a manner that honors any enrollee's decision not to participate in a face-to-face (either in-person or virtual) encounter. If an enrollee does not consent to the encounter required by § 422.101(f)(1)(iv), the plan should document that in order to demonstrate compliance with the regulation. The rule addresses feasibility barriers to a SNP providing for the required annual encounter, such as where a SNP enrollee may be non-responsive to plan outreach or the state of the member's health (such as if the member is dealing with a hospitalization) prohibits a face-to-face encounter with the type of provider or staff that are described in the final regulation. In these circumstances, CMS recognizes that a SNP may not be able to comply with the rule's mandate of an annual face-to-face encounter and we intend the “as feasible” standard in the regulation to address such situations. Since the enrollee has refused or because the SNP could not reach the enrollee after reasonable attempts, the plan has Start Printed Page 5877complied with the requirement despite the lack of a qualified encounter. However, plans should document the basis or reason that a face-to-face encounter is not feasible in order to demonstrate that where there are no face-to-face encounters in the year, that failure is not a violation of the regulation. Note that a feasibility barrier does not include a SNP having to provide a reasonable accommodation, such as interpreter services, in order for the enrollee to participate in the encounter.

Lastly, restricting the manner of face-to-face encounters to those that are in-person or as a visual, real-time, interactive telehealth encounter is consistent with section 1859(f)(5)(B)(ii) of the Act as amended by section 50311 of the Bipartisan Budget Act of 2018. The statute requires CMS to set requirements for face-to-face encounters that must happen on an annual basis for C-SNPs; and in extending that requirement to I-SNPs and D-SNPs, we do not believe there is reason to develop different standards. For this specific requirement, we believe that a real-time, interactive, visual telehealth encounter permits face-to-face interaction even though electronic or telecommunications technology is used to facilitate the encounter. The real-time, interactive, visual encounter serves the same function and permits sufficiently similar engagement between the enrollee and the required member of the ICT, the SNP's case management or care coordination staff, or other contracted provider of the SNP as an in-person encounter for purposes of this specific requirement; our regulation here does not address when or how telehealth encounters may be clinically appropriate or sufficient but only specifically addresses the need for SNPs to ensure there is one annual encounter of a certain type for each enrollee. While not all covered services are necessarily appropriate to furnish through electronic means, MA plans (including SNPs) have broader flexibility in this regard under § 422.135. Therefore, face-to-face encounters required for all SNPs under this new rule may include visual, real-time, interactive telehealth encounters. As we noted in the Medicare and Medicaid Programs; Policy and Technical Changes to the Medicare Advantage, Medicare Prescription Drug Benefit, Programs of All Inclusive Care for the Elderly (PACE), Medicaid Fee-For-Service, and Medicaid Managed Care Programs for Years 2020 and 2021 Final Rule (hereinafter referred to as the April 2019 final rule), we believe MA additional telehealth benefits will increase access to patient-centered care by giving enrollees more control to determine when, where, and how they access benefits.

Comment: A few commenters suggested that in the implementation of the face-to-face encounter requirement that SNPs should be allowed to develop their own technical specifications for capturing compliance with this requirement. For example, An MAO recommended that SNPs be allowed to capture verbal confirmation from members or providers of completed face-to-face encounters from external parties and/or telehealth encounters as evidence of compliance.

Response: CMS believes plans are in the best position to develop the processes and technical specifications for documenting how they meet this requirement and that a face-to-face encounter for purpose of satisfying this regulation has taken place. While § 422.101(f)(1)(iv) imposes some parameters for these encounters, there is a broad range of flexibility for how SNPs may meet the requirement. However, we clarify that our guidance here is specific to § 422.101(f)(1)(iv) and does not address any other Medicare program requirements. Because an encounter must pertain to the delivery of health care to the enrollee, we encourage SNPs to take the information from these encounters into account and to document them consistent with how other health care visits are documented. Lastly, CMS will monitor compliance with the requirement and consider additional rulemaking if necessary.

Comment: Several commenters suggested the addition of the face-to-face requirement would create additional reporting burden for plans associated with capturing compliance to the rule.

Response: We are also cognizant that new regulations sometimes include additional reporting or record keeping requirements. The final rule does not create any additional, explicit reporting requirements. However, SNPs are required under § 422.503(b)(4)(vi) to adopt and implement an effective compliance program, which must include measures that prevent, detect, and correct non-compliance with CMS' program requirements as well as measures that prevent, detect, and correct fraud, waste, and abuse. CMS will be monitoring compliance by SNPs with this requirement. In addition, SNPs should have information about all health care encounters and deliveries of covered services for many purposes, including: Payment to providers for furnishing services; complying with the existing data submission requirements in § 422.310; and meeting the requirements of § 422.112(b)(4), which requires procedures for plans and their provider networks to have the information necessary for effective and continuous patient care and quality review.

Comment: Several commenters stated that some enrollees lack access to technology that would provide visual, real-time, interactive telehealth encounter, which may create a barrier to beneficiary participation in such encounters. Others requested that CMS allow telephonic encounters to count towards the annual face-to-face requirement under the new regulation.

Response: We are cognizant that enrollees should have the final authority over their health care and our proposed regulation text reflected this by requiring that these face-to-face encounters be as feasible and with the enrollee's consent. First, SNPs have the flexibility to meet the requirement for a face-to-face encounter, either in-person or virtually. We believe that many beneficiaries are already meeting the requirement through in-person face-to-face encounters with qualified healthcare providers, which we believe will create minimal additional burden for plans implementing this final rule. The final rule does not mandate that SNPs utilize a visual, real-time, interactive telehealth encounter, though it is a permissible option when appropriate. Second, the SNP must comply with this requirement in a manner that honors any enrollee's decision not to participate in a face-to-face (either in-person or virtual) encounter. If an enrollee does not consent to the encounter required by § 422.101(f)(1)(iv), the plan should document that in order to demonstrate compliance with the regulation. The rule addresses feasibility barriers to a SNP providing for the required annual encounter, such as where a SNP enrollee may be non-responsive to plan outreach or the state of the member's health (such as if the member is dealing with a hospitalization in an out-of-network facility) prohibits a face-to-face encounter. In these circumstances, CMS recognizes that a SNP may not be able to comply with the rule's mandate of an annual face-to-face encounter and we intend the “as feasible” standard in the regulation to address such situations. By clarifying that a face-to-face encounter for delivery of health care services by a contracted provider will satisfy this requirement, it seems likely that most SNPs will be able to meet this requirement for most enrollees, as most enrollees in SNPs receive health care Start Printed Page 5878services at some point each year. If the enrollee has refused or because the SNP could not reach the enrollee after reasonable attempts, the plan would be considered to have complied with the requirement despite the lack of a qualified encounter.

This final rule allows many types of face-to-face encounters, including visual, real-time, interactive telehealth encounters, to suffice for meeting the requirement. We do not believe that telephonic encounters should count towards the fulfilling the requirements of § 422.101(f)(1)(iv) for several reasons. First, the statute at section 1859(f)(5)(B)(ii) of the Act is specific in requiring that the encounters provided annually must be face-to-face with individuals enrolled in the plan. An audio-only encounter does not meet the statutory requirement that the encounter be face-to-face. Even though the statutory requirement is for C-SNPs, we believe that requiring all SNPs to meet this standard is appropriate in light of the health care needs and characteristics of the other populations of special needs individuals. Second, an audio-only encounter does not permit the provider to see the patient to use visual clues (for example, bruising, physical symptoms, or lack of focus) that could indicate something is wrong with the patient. This is a requirement for only one visit of this type a year and does not prohibit the use of audio-only encounters when those are appropriate for addressing other health care needs or visits. Further, for enrollees who do not use telehealth or lack the technological resources for such encounters, in-person delivery of health care services from one of the types of providers described in the regulation satisfies this requirement; there is no requirement for telehealth-based encounters to be used instead of in-person encounters. However, we will continue to monitor the ability of beneficiaries to take part in virtual encounters, the applicability of non-telephonic face-to-face encounters, and to assess the adequacy of substituting telephonic encounters in addition to the set of qualifying face-to-face encounters for I-SNPs and D-SNPs through future rulemaking.

After consideration of the comments and for the reasons outlined in the response to comments and in the proposed rule, we are finalizing § 422.101(f)(1)(iv) regarding face-to-face encounters substantially as proposed, but with modifications to clarify that the required face-to-face encounters pertain to the delivery of certain kinds of services (health care or care coordination services or care management) and must be with a contracted health care provider or certain SNP staff (a member of the enrollee's interdisciplinary team or the plan's case management and coordination staff). In addition, our final regulation text at paragraph (f)(1)(iv) is somewhat reorganized from the proposed rule to improve the readability of the provision.

3. Health Risk Assessments and the SNP Enrollee's Individualized Care Plan

We proposed to codify the requirement in section 1859(f)(5)(B)(iii) of the Act that, as part of the C-SNP model of care, the results of the initial assessment and annual reassessment required for each enrollee be addressed in the individual's individualized care plan. We also proposed to extend this requirement to the model of care for all SNPs in revisions to § 422.101(f)(1)(i). Currently, MA organizations offering SNPs must conduct a comprehensive initial health risk assessment of the individual's physical, psychosocial, and functional needs as well as an annual HRA, using a comprehensive risk assessment tool that CMS may review during oversight activities. The proposed revision to paragraph (f)(1)(i) would also require the MA organization to ensure that results from the initial assessment and annual reassessment conducted for each individual enrolled in the plan are addressed in the individual's individualized care plan required under § 422.101(f)(1)(ii).

We received the following comments and our responses follow:

Comment: Several commenters sought clarification concerning what type of information must be included in the ICP from the HRA. In addition, a few commenters wanted to know what information plans could omit from the ICP while adhering to the regulation. Another commenter asked if D-SNPs would be permitted to align the HRA with other beneficiary assessments that some D-SNPs are required to submit for a state's requirement that enrollees be assessed as to Medicaid managed long-term services and supports (MLTSS) needs.

Response: Existing CMS guidance addresses the first part of these comments—pertaining to the information from the HRA that must be incorporated into the ICP—and that guidance is consistent with the regulatory provision being finalized at § 422.101(f)(1)(i). Chapter 5 of the Medicare Managed Care Manual, section 20.2.2, addresses how each SNP's MOC includes a clear and detailed description of the policies and procedures for completing the health risk assessment tool (HRAT).[5] Because this existing guidance adequately describes how information from the annual HRA is incorporated into the enrollee's ICP, the guidance remains applicable. Part of NCQA's review of SNP MOCs is an evaluation of MOC 2, Element B, which includes the following subfactors:

  • How the organization uses the HRAT to develop and update the Individualized Care Plan (ICP) for each beneficiary (Element 2C).
  • How the organization disseminates the HRAT information to the Interdisciplinary Care Team (ICT) and how the ICT uses that information (Element 2D).
  • How the organization conducts the initial HRAT and annual reassessment for each beneficiary.
  • The detailed plan and rationale for reviewing, analyzing and stratifying (if applicable), the HRA results.

Under Element B, the content of and methods used to conduct the HRAT have a direct effect on the development of the ICP and ongoing coordination of ICT activities. The HRAT must assess the medical, functional, cognitive, psychosocial and mental health needs of each SNP beneficiary, as noted in Chapter 5 of the MMCM, section 20.2.2.

To meet the requirements of the first 2 factors of MOC 2, Element B, the SNP's MOC must include a description of how the HRAT is used to develop and update, in a timely manner, the ICP for each beneficiary and how the HRAT information is disseminated to and used by the ICT. Under factor 3, the description must include the methodology used to coordinate the initial and annual HRAT for each beneficiary (for example, mailed questionnaire, in-person assessment, phone interview) and the timing of the assessments. There must be a provision in the MOC for reassessing beneficiaries if and when warranted by a health status change or care transition (for example, hospitalization or a change in medication). The SNP must describe in the MOC the SNP's process for attempting to contact beneficiaries and have them complete the HRAT, including provisions for beneficiaries that cannot or do not want to be contacted or complete the HRAT. This approach in our current guidance provides plans the flexibility to develop an ICP that is appropriate for each beneficiary based on and using HRA information; the requirement added to Start Printed Page 5879§ 422.101(f)(1)(i) that each SNP ensure that results from the initial assessment and annual reassessment conducted for each enrollee are addressed in the individual's individualized care plan would be met by a SNP that does these things in its development of the MOC and the ICP. CMS intends to implement and enforce the revisions to § 422.101(f)(1)(i) consistent with existing CMS guidance regarding the information from the HRA and HRAT that must be incorporated into the ICP.

We understand that some D-SNPs may be required to complete and use other assessments related to the Medicaid program. Integrated D-SNPs may choose to combine Medicaid and Medicare assessments as long as the assessment includes a review of the medical, functional, cognitive, psychosocial and mental health needs of each SNP beneficiary and is described in the MOC. Other assessments may (or may not) require the same elements or scope as the HRA required of MA SNPs so alignment and overlap of the assessments and how they are used depends on the specifics of each situation. As we implement § 422.101(f)(1)(i), we will continue to monitor the alignment of multiple assessments on SNP enrollees to determine whether further rulemaking is necessary. However, plans have created an HRA process as part of their approved MOC in the past, so we do not anticipate that SNPs will have difficulty complying with the changes we are finalizing to § 422.101(f)(1)(i). To the extent that there is overlap and the HRA required by § 422.101(f)(1)(ii) can be aligned with other assessments conducted by the SNP, the MOC should include a description of that alignment, consistent with the standards in MOC 2, Element B of Chapter 5, § 20.2.2.

We believe the current factors outlined in MOC 2, Element B allows SNPs the flexibility to align a MOC-approved HRAT with other assessment tools (as noted above), and is consistent with the intent of the changes being finalized here in § 422.101(f)(1)(i). Current guidance will be the basis for how CMS will implement and enforce § 422.101(f)(1)(i) to ensure that SNPs incorporate and address the results from the initial assessment and annual reassessment conducted for each individual enrolled in the individual's individualized care plan.

After consideration of the comments and for the reasons outlined in the response to comments and in the proposed rule, we are finalizing the amendment to § 422.101(f)(1)(i) as proposed without modification.

4. SNP Fulfillment of the Previous Year's MOC Goals

We also proposed to codify the requirement in section 1859(f)(5)(B)(iv) of the Act that the evaluation and approval of the model of care take into account whether the plan fulfilled the previous MOC's goals and to extend this evaluation component to all SNP models of care, rather than limiting it to C-SNPs. We proposed new regulation text at § 422.101(f)(3)(ii) to provide that, as part of the evaluation and approval of the SNP model of care, NCQA must evaluate whether goals were fulfilled from the previous model of care and plans must provide relevant information pertaining to the MOC's goals as well as appropriate data pertaining to the fulfillment of the previous MOC's goals. Under our proposal, if the SNP MOC did not fulfill the previous MOC's goals, the plan must indicate in its MOC submission how it will achieve or revise those goals for the plan's next MOC. We also proposed to move an existing regulation at § 422.101(f)(2)(vi) that requires all SNPs to submit their MOC to CMS for NCQA evaluation and approval in accordance with CMS guidance to a new paragraph at § 422.101(f)(3); our proposed paragraph (f)(3)(i) contains the same language as current § 422.101(f)(2)(vi).

We also proposed at paragraph (f)(3)(ii)(A) through (C) specific provisions regarding how NCQA would evaluate the MOC in terms of achievement of goals from the prior MOC. We explained how we intended that NCQA would determine whether each SNP, as part of NCQA's process for evaluation and approval of MOCs, provided adequate information to perform the evaluation required by § 422.101(f)(3)(ii) as well as whether the SNP met goals from the previous MOC submission. After stating that it is implicit in the evaluation of the MOC and the requirement for the SNP to submit relevant information that the information submitted by the SNP must be adequate for NCQA to use to evaluate the MOC, we solicited comment whether more explicit requirements on this point should be part of the regulation text.

We received the following comments on the proposal regarding evaluation of outlining and fulfillment of the MOC's goals and our responses follow:

Comment: CMS received several suggestions related to providing information for evaluation whether the SNP achieved the goals from the prior MOC. One commenter proposed CMS look to the Healthcare Effectiveness Data and Information Set (HEDIS) reporting and measures for direction. Another commenter suggested that CMS evaluate plan performance monitoring and evaluation metrics included in the MOC, and not goals included in the Individual Care Plan.

Response: We appreciate these suggestions as to the type and scope of information that should be used to evaluate whether a SNP has fulfilled the goals of its prior MOC. We clarify that it is the goals of the MOC (and whether those goals have been met) and not the goals of the ICP that are to be evaluated by NCQA under § 422.101(f)(3)(ii) as proposed and finalized.

We explained in the proposed rule that proposed § 422.101(f)(3)(ii) would align with our current guidance on the MOC submission and review process regarding SNP fulfillment of goals and summarized the current review process. (85 FR 9016) This includes the type of information submitted by SNPs and used by NCQA in evaluating whether the goals of a prior MOC have been fulfilled. Currently, all SNPs are required to identify and clearly define measurable goals and health outcomes as part of their model of care under MOC 4, Element B: Measurable Goals and Health Outcomes for the MOC, as addressed in Chapter 5 of the MMCM. It is critical for all SNPs to use the results of the quality performance indicators and measures to support ongoing improvement of the MOC, and all SNPs should continuously assess and evaluate plan quality outcomes. This is reflected in current guidance in Chapter 5, § 20.2.2 of the Medicare Managed Care Manual. MOC 4, Element B currently contains the following subfactors:

  • Identify and define the measurable goals and health outcomes used to improve the health care needs of SNP beneficiaries.
  • Identify specific beneficiary health outcome measures used to measure overall SNP population health outcomes at the plan level.
  • Describe how the SNP establishes methods to assess and track the MOC's impact on SNP beneficiaries' health outcomes.
  • Describe the processes and procedures the SNP will use to determine if health outcome goals are met.
  • Explain the steps the SNP will take if goals are not met in the expected timeframe.

The measures identified in the MOC as part of addressing these subfactors are the measures that should be used in evaluating whether the goals of the prior MOC have been fulfilled. Current CMS guidance permits the SNP to identify Start Printed Page 5880and describe the measures and data used by the SNP and does not require specific quality measures, such as HEDIS, be used. SNPs may use data and quality performance that CMS measures for the Star Ratings program or through the HEDIS surveys (or other surveys and required quality performance data) but are not limited to those measures and data sources. Subfactors 3 and 4 of Element B provide for descriptions of how the SNP assesses and tracks the impact of the MOC and determines if health outcome goals are met. As proposed and finalized, paragraph (f)(3)(ii)(A) does not list specific types of data or information but requires submission of relevant information pertaining to the MOC's goals and whether those goals were fulfilled. For example, a SNP may submit plan-level health or clinical goals such as controlling diabetes or improving mental health screening access, and provide data showing progress towards these goals. This means that the type and scope of data required are tied to what the MOC's goals are and how the previous MOC addressed MOC 4, Element B. At a minimum, the data and measures described in the previous MOC should be submitted under § 422.101(f)(3)(ii)(A) for determining whether the MOC's goals have been fulfilled but other data may be relevant and pertinent. We expect SNPs to make reasonable determinations about what other data could be submitted as relevant and pertinent for the NCQA evaluation that is required under § 422.101(f)(3)(ii).

For SNPs submitting their initial MOC, NCQA will evaluate the information under MOC 4 Element B as whether the SNP has set clearly definable and measurable goals and health outcomes in the MOC for the upcoming MOC period of performance. For the following submission year, the SNP MOC will be evaluated on whether the measurable goals and health outcomes set in the initial MOC were achieved. We proposed specific regulation text at § 422.101(f)(3)(ii)(B) that plans submitting an initial model of care must provide relevant information pertaining to the MOC's goals for review and approval and are finalizing that provision. This new regulation is consistent with our existing regulation and we intend that similar standards will be used going forward as those that are used now regarding the amount of information required from SNPs.

Comment: CMS received several comments expressing concern regarding the incorporation of MOC performance information and data from the previous MOC into the next submission. Commenters noted that plans would need to have complete information on the achievement of goals from the previous year before submission of the next year's MOC in order to meet the new requirement 42 CFR 422.101(f)(3)(ii), and that this short timeframe may prevent plans from being able to provide a complete representation of their performance from the previous year. Others sought further clarification regarding how plans should operationalize the regulation or specific metrics to be evaluated by NCQA.

Response: While we understand the commenters' concern about sufficient information being available each year about the previous year's MOC and performance, we believe that SNPs and NCQA can meet the requirements of the regulation. For SNPs submitting a MOC renewal after one year (because an annual review and approval is necessary), preliminary data from the immediately prior year can provide evidence to the level of fulfillment of the previous MOC's goals. For many I-SNPs and D-SNPs, they will be able to share findings from multiple years of data as part of this requirement because their MOCs will not necessarily need to be reviewed and approved on an annual basis. C-SNPs, which must submit annually under section 1859(f)(5)(B)(iv) of the Act, will be able to select preliminary findings each year from measures that provide evidence of progress on the MOC's goals. Further, for goals that are tied to building on prior performance or making incremental progress in the same or similar area each year, information about performance in more than one prior year may be relevant and pertinent to show how the SNP is fulfilling the MOC's goals. Under MOC 4, Element B of the MOC, SNPs must currently provide a description of the processes and procedures the plan will use to determine if health outcome goals are met. By sharing the findings from these processes, SNPs can outline achievable steps toward long term goals so that small steps using limited data year to year can be evaluated. Therefore, we believe that SNPs can effectively demonstrate progress to meet the requirements of § 422.101(f)(3)(ii).

As proposed and finalized, § 422.101(f)(3)(ii) requires, as part of the evaluation and approval of the SNP model of care, that NCQA evaluate whether goals were fulfilled from the previous model of care. To serve this purpose, the regulation also requires that:

  • Plans must provide relevant information pertaining to the MOC's goals as well as appropriate data pertaining to the fulfillment the previous MOC's goals.
  • Plans submitting an initial model of care must provide relevant information pertaining to the MOC's goals for review and approval.
  • If the SNP model of care did not fulfill the previous MOC's goals, the plan must indicate in the MOC submission how it will achieve or revise the goals for the plan's next MOC.

In each MOC submission and evaluation of the MOC, the SNP must be able to demonstrate that it is continuing to work towards achieving the MOC goals even if the SNP requires additional time or metrics to evaluate the progress. Each MOC should reflect modification of the SNP's strategies to meet the goals of the MOC as needed. Again, under MOC 4 Element B, SNPs are currently submitting health outcome measures used to measure overall SNP population health outcomes at the plan level. SNPs may submit final or preliminary findings from these measures in order to provide evidence of progress as part of each MOC submission.

Comment: Several commenters questioned the applicability of the proposed regulation to D-SNPs and stated that dual eligible enrollees experience changes in eligibility based on their Medicaid status, which the commenters stated impacts the plan's ability to implement and operationalize the MOC.

Response: First, we believe that the process for setting health outcome goals and choosing a set of measures to determine progress permits all SNPs, including D-SNPs, to select measures that make sense for the population that the plan serves in so far as those measures speak to benchmarks, specific time frames, and how achieving those goals will be determined. A SNP that believes it suffers from disproportionate rates of disenrollment can seek to align outcome measures in a way that recognizes these perceived challenges; however, any measures that the plan selects must be approved by NCQA as part of the MOC approval process. Second, we also believe that the extension of the provision in this rule requiring fulfillment of the previous MOC's goals is consistent with current MOC approval requirements as outlined in Chapter 5, section 20.2.2 (Model of Care Scoring Criteria), as applied currently to all MOC types. The goal of performance improvement and quality measurement is to improve the SNP's ability to deliver high-quality health care services and benefits to its SNP enrollees; our commitment to this is Start Printed Page 5881reflected in how it is explicitly stated in section 20.2.2 under MOC 4: MOC Quality Measurement and Performance Improvement, Element B: Measurable Goals and Health Outcomes for the MOC. This goal may be achieved as a result of increased organizational effectiveness and efficiency through incorporation of quality measurement and performance improvement concepts that drive organizational change. The leadership, managers and governing body of a SNP must have a comprehensive quality improvement program in place to measure its current level of performance and determine if organizational systems and processes must be modified, based on performance results.

In addition, section 20.2.2 of Chapter 5 of the Medicare Managed Care Manual provides additional information for plans to identify and clearly define measurable goals and health outcomes for the MOC in listing the five subfactors for Element B of MOC 4. Under factor 1, the SNP's description of measurable goals must include benchmarks, specific time frames, and how achieving goals will be determined. For factor 2, the SNP must include the specific data sources it will use for measurement for the stated health outcome measures. SNPs have flexibility in setting health outcome goals, particularly flexibility to align those goals with the population being served by the plan, but such measures must be approved by NCQA in its review of the MOC. The rule we are finalizing at §§ 422.101(f)(3)(ii) maintains the current level of flexibility for different SNP types in setting goals and the measures and data used to determine if the goals are met. By allowing such flexibilities, the regulation permits SNPs to take into account unique challenges facing their plan (such as potential changes in enrollment due to changes in eligibility for enrollees) and to set goals that allow SNPs to measure progress against these challenges.

For factor 2, the SNP must identify in the MOC the specific data sources it will use for measurement for the stated health outcome measures. We believe that the process for setting health outcome goals and choosing a set of measures to determine progress permits D-SNPs, and all SNPs, to select measures that makes sense for the population of beneficiaries that the plan serves in so far as those measures speak to benchmarks, specific time frames, and how achieving goals will be determined. The regulation we are finalizing at § 422.101(f)(3)(ii) maintains the level of flexibility for different SNP types as it is currently constructed through NCQA's MOC approval process. By allowing such flexibilities, plans can take into account unique challenges facing their plan and to set goals that allow SNPs to measure progress against these challenges.

After consideration of the comments and for the reasons outlined in the response to comments and in the proposed rule, we are finalizing the amendment to § 422.101(f)(3)(ii) as proposed without modification.

5. Establishing a Minimum Benchmark for Each Element of the SNP Model of Care

Finally, we proposed a new regulation at § 422.101(f)(3)(iii) imposing the requirement that benchmarks for each MOC element set by CMS must be met for a MOC to be approved. Section 1859(f)(5)(B)(v) of the Act requires that the Secretary establish a minimum benchmark for each element of the C-SNP model of care and that the MOC can only be approved if each element meets a minimum benchmark. We proposed to implement this requirement and a minimum 50% benchmark for all SNP models of care because medically complex conditions are found in enrollees across all SNP types and implementation of the benchmark requirement only for C-SNPs would be operationally challenging for MA organizations that operate more than one SNP. In the proposed rule, we stated that each SNP model of care would be evaluated based on a minimum benchmark for each of the four elements and how that was consistent with our current policy. Currently, each subfactor of a MOC element is valued at 0-4 points with the score of each element based on the number of factors met for that specific element; the aggregate total of all possible points across all elements equals 60, which is then converted to percentage scores based on the number of total points received. We proposed that each element of the MOC must meet a minimum benchmark of 50 percent of total points as allotted, and a plan's MOC would only be approved if each element of the model of care meets the applicable minimum benchmark.

We received the following comments and our responses follow:

Comment: CMS received several comments that, while receptive to the establishment of the minimum benchmark as proposed, were concerned about the timing of the implementation of the rule. Commenters sought implementation to begin in Contract Year 2022.

Response: We are finalizing the changes to § 422.101(f) as being applicable for contract year 2023 and subsequent years. While this final rule will have an earlier effective date, making these provisions applicable for the period beginning January 1, 2023 provides time for MA organizations to plan and time for NCQA to implement these new standards for use in evaluating MOCs developed and submitted for 2023. Plans that are required to submit MOCs for contract year 2022 are due to submit MOCs by February 17, 2021; those submissions will be evaluated based on the regulations in effect at that time (that is, without the amendments adopted here) and SNPs must implement and comply with their approved MOCs in connection with coverage in 2022. Moving the applicable implementation of the SNP MOC provisions to contract year 2023 will allow SNPs and CMS to construct the necessary processes for the full implementation and enforcement of this final rule. When MOCs for contract year 2023 are submitted for review and approval in early 2022, the regulations in this final rule will be used to evaluate those MOCs for approval.

Comment: A number of commenters asked for additional clarity regarding how CMS will implement the scoring of each MOC sub-element.

Response: First, we clarify that NCQA evaluates and scores the MOCs, as part of the NCQA approval requirement that has been in place since 2012 and that will be codified at § 422.101(f)(3) under this final rule. Second, we intend that scoring using the 50 percent benchmarks will be consistent with how MOCs are evaluated and scored now with the addition that the MOC submitted by the SNP must score at least 50% on each element; the scope, content and number of elements and the points available for each element remain the same as outlined in Chapter 5 of the Medicare Managed Care Manual, section 20.2.2.

Currently, the MOC narrative in Chapter 5 addresses four overarching categories: (1) Description of the SNP Population, (2) Care Coordination, (3) SNP Provider Network, and (4) MOC Quality Measurement & Performance Improvement. Each of the four categories is then comprised of a set of required elements, such as Element B: Subpopulation—Most Vulnerable Beneficiaries under the MOC 1 category. These elements and their various factors are reviewed and scored by NCQA and contribute to the overall score for that element. All total, there are 15 elements among the 4 MOC categories. A full list of categories, elements, and factors, as Start Printed Page 5882well as additional guidance pertaining to MOC submission requirements and structure, can be found in Chapter 5 of the MMCM. As we explained in the proposed rule, there are a total of 60 points available, across all categories and elements. Each element is scored by NCQA on a range of 0 to 4. To meet the new standard at § 422.101(f)(3)(iii), each MOC must earn at least 2 points for each element.

As proposed and finalized, § 422.101(f)(3)(iii) does not alter the current characteristics or the number of categories, elements, and factors and the mandatory benchmarks will be applied at the element level. For example, the category MOC 2: Care Coordination is made up of five elements:

  • Element A: SNP Staff Structure;
  • Element B: Health Risk Assessment Tool (HRAT);
  • Element C: Individualized Care Plan (ICP);
  • Element D: Interdisciplinary Care Team (ICT); and
  • Element E: Care Transition Protocols.

A SNP will need to meet a minimum benchmark score of 50 percent for each of Elements A-E. Failing to meet the minimum score in any one element would result in disapproval of the MOC by NCQA during the first round of evaluation. The current process and procedures for the evaluation is not changing under this final rule, so the SNP would be able to resubmit a revised MOC during the cure period after having an opportunity to address the failures identified by NQCA and to revise how the MOC addresses the applicable element(s).

Starting with the MOC for contract year 2023, each SNP will need to meet a minimum benchmark score of 50 percent for each element, and a plan's model of care will only be approved if each element of the model of care meets the minimum benchmark. CMS and NCQA will provide an overview of any category and/or element deficiencies in our correspondence to plans at the completion of NCQA's MOC evaluation. In addition, each SNP MOC will need to meet an overall score in order to meet NCQA approval, as is the case now.

Comment: CMS received one comment concerned that the introduction of this new scoring process at the element level would potentially derail an otherwise worthy MOC submission.

Response: We believe the final rule is largely consistent with existing regulations and guidance regarding review of SNP MOC standards as plans already receive scores at the element level, though under our current policy approval is based only on the aggregate score. However, use of minimum benchmarks for each element serves important policy goals by ensuring that each MOC is minimally compliant and that each MOC addresses all of the elements. We also have concerns that the current system potentially allows a MOC to pass while containing a significant deficiency in a specific element. We believe continued guidance and training by CMS and NCQA will mitigate disruption that may stem from the changes associated with the new scoring process under § 422.101(f)(3)(iii).

As we noted in the proposed rule, we anticipate that there will be some impact to the number of MOC submissions that will not pass NCQA's initial MOC review. Looking at MOC score data for contract year 2020, our proposed element benchmark of 50 percent would have impacted 20 of the 273 MOCs submitted, or 7.3 percent. Meaning 20 of the 273 MOCs in 2020 would have been required to resubmit during the cure period of the approval process. For comparison, for contract year 2020, under our current aggregate scoring system, seven plans were required to submit revised MOCs based on the current scoring system and an additional seven plans decided to withdraw their MOCs before the revision process, for a total of 14 MOCs. CMS intends to work with NCQA to ensure that the transition for SNPs to using the new scoring benchmarks for each element is as seamless as possible. Further, the cure period will provide an opportunity to make revisions to address deficiencies identified by NCQA for SNPs that must submit their MOCs for review and approval by NCQA for 2023.

Comment: A commenter expressed concerns that the amended scoring process would be particularly problematic for D-SNPs that enroll beneficiaries with significant and complex medical and social needs.

Response: We believe the MOC review and approval processes are structured to provide a uniform apparatus that already takes into account differences among SNP types and the populations that they serve. As a quality improvement tool, the MOC acts as an important roadmap for ensuring that the unique needs of SNP enrollees are addressed and is a fundamental component of SNP quality improvement. NCQA uses a review process that scores a MOC based on how well a plan has addressed process details and narrative descriptions. Each MOC renewal is an opportunity for a SNP to plan for, lay out, and implement improvements to its processes for each specific element and factor. Even when the MOC guidelines focus on quality improvement and enrollee health outcomes, the MOC review is centered on the SNP's processes and procedures used to determine if those health outcome goals are met. Under the MOC rubric, CMS does not intend for SNPs to meet specific metric thresholds denoting quality. For example, under MOC, Element B, factor 4, the MOC must describe how it determines if the goals described in factor 1 are met rather than address performance on a specific metric set by CMS. Regardless of SNP type, NCQA applies the review standards uniformly across each MOC submission under this regulation.

Comment: A commenter noted concern that the MOC benchmark was duplicative of the reporting and tracking of plan performance under the Star Rating system.

Response: The MOC requirement is distinct from the goals and purpose of the Star Ratings system so even though there may be some overlap in MA organization and SNP processes in order to successfully implement the MOC and achieve high Star Ratings, we do not believe that these are duplicative or that one should be eliminated in favor of the other.

Section 1859(f)(5)(A)(i) of the Act requires that all SNPs be approved by NCQA based on standards developed by the Secretary; this requirement was added by section 164 of the Medicare Improvements for Patients and Providers Act (hereinafter referred to as MIPPA) (Pub. L. 110-275) and became effective with the 2012 contract year. As provided in §§ 422.4(a)(1)(iv), 422.101(f), and 422.152(g), the NCQA approval process is based on evaluation and approval of the SNP MOC. Therefore, all SNPs must submit their MOCs to CMS for NCQA evaluation, and an MA organization must develop separate MOCs to meet the needs of the targeted population for each SNP type it offers. NCQA, based on guidance from CMS, has applied scoring standards applicable to all SNP types. The MOC is a forward-looking tool used by SNPs to design processes to perform and improve their performance over a set time period. The Star Ratings system, on the other hand, is used to measure and provide comparative information about the performance of MA organizations on defined measures. Under sections 1853(o) and 1854(b) of the Act, Star Ratings are used in determining payment and beneficiary rebates for MA plans; CMS has adopted provisions, at §§ 422.504(a)(17) and 423.505(a)(26), to use historical, sustained poor Start Printed Page 5883performance on the Star Ratings to evaluate compliance with MA and Part D program requirements and, thus, whether an MA contract should be terminated. In this way, the Star Ratings are retrospective and provide information about past performance, not the MA organization's intentions or plans for improvement and to address enrollee needs in the coming year. Even if past performance can sometimes predict future performance, the Star Ratings program is not the duplicative of a quality improvement program like the MOC. There are other differences between the Star Ratings program and the MOC review and approval process, but these differences in purpose are fundamental and sufficient to conclude that it is appropriate to use a minimum benchmark for approval of all SNP MOCs. Therefore, we are finalizing § 422.101(f)(3)(iii) as proposed to require use of a 50 percent minimum benchmark for each MOC element.

After consideration of the comments and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing amendments to § 422.101(f)(1) introductory text, (f)(1)(i), (f)(1)(iii), and (f)(2) introductory text and adding § 422.101(f)(1)(iv) and (f)(3). These provisions are finalized substantially as proposed with a modification in paragraph (f)(1)(iv) to set standards for the required face-to-face encounter.

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

We proposed to amend our regulations at §§ 423.100 (definition of applicable drug) and 423.2305 (determination of coverage gap discount) to reflect changes to the relevant statutory provisions made by the BBA of 2018. Sections 53113 and 53116 of the BBA of 2018 amended section 1860D-14A of the Act to (a) increase the coverage gap discount for applicable drugs from 50 to 70 percent of the negotiated price beginning in plan year 2019, and (b) revise the definition of an applicable drug to include biosimilar biological products, also beginning in plan year 2019.

Specifically, section 53116 of the BBA of 2018 revised the definition of “discounted price,” meaning the price provided to the beneficiary, in section 1860D-14A(g)(4)(A) of the Act to mean, for a plan year after 2018, 30 percent of the negotiated price. This means that the coverage gap discount is 70 percent, rather than 50 percent. To make our regulations consistent with this change, we proposed to amend the definition of “applicable discount” in § 423.2305 to provide that, with respect to a plan year after plan year 2018, the applicable discount is 70 percent of the portion of the negotiated price (as defined in § 423.2305) of the applicable drug of a manufacturer that falls within the coverage gap and that remains after such negotiated price is reduced by any supplemental benefits that are available.

Section 53113 of the BBA of 2018 amended section 1860D-14A(g)(2)(A) of the Act to specify that biological products licensed under subsection (k) of section 351 of the Public Health Service Act (that is, biosimilar and interchangeable biological products) are excluded from the coverage gap discount program only with respect to plan years prior to 2019. Accordingly, CMS has treated biosimilar biological products as applicable drugs under the Discount Program since 2019. Therefore, we proposed to revise the definition of applicable drug at § 423.100 to specify that such biological products are excluded only for plan years prior to 2019. [6]

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

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

Section 3308 of the Affordable Care Act amended section 1860D-13(a) of the Act and established an income-related monthly adjustment amount for Medicare Part D (hereinafter referred to as Part D-IRMAA) for beneficiaries whose modified adjusted gross income (MAGI) exceeds the same income threshold amount tiers established under section 1839(i) of the Act with respect to the Medicare Part B income-related monthly adjustment amount (Part B-IRMAA). The Part D-IRMAA is an amount that a beneficiary pays in addition to the monthly plan premium for Medicare prescription drug coverage under the Part D plan in which the beneficiary is enrolled when the beneficiary's MAGI is above the specified threshold.

The Part D-IRMAA income tiers mirror those established for the Part B-IRMAA. As specified in section 1839(i) of the Act, when the Part B-IRMAA went into effect in 2007, individuals and joint tax filers enrolled in Medicare Part B whose modified adjusted gross income exceeded $80,000 and $160,000, respectively, were assessed the Part B-IRMAA on a sliding scale. As specified in section 1839(i)(5) of the Act, each dollar amount within the income threshold tiers shall be adjusted annually based on the Consumer Price Index (CPI). As a result of the annual adjustment, for calendar year 2010, the income threshold amounts had increased to reflect four income threshold amount tiers for individuals and joint tax filers whose modified adjusted gross income exceeded $85,000 and $170,000, respectively. (We note that section 3402 of the Affordable Care Act froze the income thresholds for 2011 through 2019 at the level established for 2010.)

Consistent with section 3308 of the Affordable Care Act, the Part D-IRMAA is calculated using the Part D national base beneficiary premium (BBP) and the applicable premium percentage (P) as follows: BBP × [(P − 25.5 percent)/25.5 percent]. The premium percentage used in the calculation will depend on the level of the Part D enrollee's modified adjusted gross income.

Section 3308 of the Affordable Care Act required CMS to provide the Social Security Administration (SSA) with the national base beneficiary premium amount used to calculate the Part D-IRMAA no later than September 15 of each year, starting in 2010. Also, effective in 2010, CMS must provide SSA no later than October 15 of each year, with: (1) The modified adjusted gross income threshold ranges; (2) the applicable percentages established for Part D-IRMAA in accordance with section 1839 of the Act; (3) the corresponding monthly adjustment amounts; and (4) any other information SSA deems necessary to carry out Part D-IRMAA.

To determine a beneficiary's IRMAA, SSA considers the beneficiary's MAGI, together with their tax filing status, to determine the percentage of the: (1) Unsubsidized Medicare Part B premium the beneficiary must pay; and (2) cost of basic Medicare prescription drug coverage that the beneficiary must pay.Start Printed Page 5884

Since the implementation of the Part D-IRMAA in 2011, subsequent revisions to the statute have modified the associated income tiers used in IRMAA calculations:

  • Section 402 of the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015, revised the income thresholds for the Part B- and Part D-IRMAA income groups such that beneficiaries with incomes greater than $85,000 but not more than $107,000 were required to pay 35 percent of Part B and Part D program costs; beneficiaries with incomes greater than $107,000 but not more than $133,500 would pay 50 percent of Part B and Part D program costs; beneficiaries with incomes greater than $133,500 but not more than $160,000 would pay 65 percent of Part B and Part D program costs; while beneficiaries with incomes greater than $160,000 were required to pay 80 percent of Part B and Part D program costs.
  • Section 53114 of the Bipartisan Budget Agreement (BBA) of 2018 revised the income thresholds again such that, beginning in 2019, beneficiaries with incomes greater than $500,000 ($750,000 for joint tax filers) are required to pay 85 percent of program costs (an increase from 80 percent).

We proposed to revise § 423.286(d)(4)(ii) for consistency with the changes made by section 53114 of the BBA of 2018 and to make other technical changes to ensure that the calculations used in the methodology for updating Part D-IRMAA are described correctly. We proposed to remove the language “the product of the quotient obtained by dividing the applicable premium percentage specified in § 418.2120 (35, 50, 65, or 80 percent) that is based on the level of the Part D enrollee's modified adjusted gross income for the calendar year reduced by 25.5 percent and the base beneficiary premium as determined under paragraph (c) of this section” and replace it with “the product of the standard base beneficiary premium, as determined under paragraph (c) of this section, and the ratio of the applicable premium percentage specified in 20 CFR 418.2120, reduced by 25.5 percent; divided by 25.5 percent (that is, premium percentage−25.5)/25.5).”

We received no comments on this proposal and are finalizing the proposed revisions to § 423.286(d)(4)(ii) without modification. Although we are finalizing this provision as applicable 60 days after publication, it codifies current policies so we anticipate that there will be no change in operations or administration of the MA and Part D programs and encourage MA organizations and Part D sponsors to take this final rule into account immediately. We note that the revisions to this provision that we are finalizing in this final rule simply codify the Part D-IMRAA calculation that is currently used by SSA.

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

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

Section 2004 of the SUPPORT Act requires that all Part D sponsors must have established DMPs no later than January 1, 2022. We proposed to amend regulatory language at § 423.153(f) to reflect this requirement. As discussed in the proposed rule preamble, the Overutilization Monitoring System (OMS) criteria used to identify “potential at-risk beneficiaries” (PARBs) (defined in § 423.100) are based on a history of filling opioids from multiple doctors and/or multiple pharmacies. While implementation of DMPs has been optional since codified for 2019, 85.9 percent of Part D contracts in calendar year 2019 and 87.2 percent in calendar year 2020 have established DMPs to address opioid overutilization among their enrollees. Thus, of about 49 million beneficiaries who were enrolled in the Medicare Part D program in 2019, about 48.5 million enrollees (99 percent) are covered under Part D contracts that offer a DMP already. We received the following comments on this proposal and our responses follow:

Comment: CMS received numerous comments that were generally supportive of our proposal to codify the statutory requirement that all Part D plans implement a DMP.

Response: We thank commenters for their support.

Comment: Several commenters expressed concerns that enrollees being treated for pain would be forced, through mandatory DMPs, to see a new doctor or use a new pharmacy and that the proposed regulation would undermine the doctor-patient relationship.

Response: The concerns expressed in some of these comments appeared to reflect a misunderstanding of the requirements in section 2004 of the SUPPORT Act. Although section 2004 mandates the establishment of DMPs for all Part D sponsors beginning January 1, 2022, section 2004 did not expand DMPs' scope. Thus, it is not the case that a “mandatory” DMP would now require all Part D beneficiaries taking opioids to be subject to coverage limitations or quantity limits. Rather, the statute and the regulations we are finalizing in this rule will now require the few Part D sponsors who have not already established a DMP to do so. DMPs identify a subset of opioid users in the Part D program who may be at the highest risk of an adverse health event, for example, due to uncoordinated care. As mentioned in the proposed rule, CMS' internal analysis estimated that only 158 additional PARBs will be identified per year by applying the current minimum OMS criteria across all Part D contracts that do not already have DMPs in place. CMS expects that only a few of these additional beneficiaries will be subject to a coverage limitation after case management with their opioid prescribers.

CMS does not agree that DMP activities undermine the doctor-patient relationship. In fact, the goal of case management under a DMP is for Part D sponsors to assist prescribers in coordinating care for PARBs to ensure their opioid use is appropriate and medically necessary. The case management process increases safety and accountability within the doctor-patient relationship, as prescribers may or may not be aware that there are other prescribers of opioids or benzodiazepines for their patients. Any potential coverage limitation under a DMP is put in place only after the plan conducts case management, solicits the views of the enrollee's prescriber(s), and provides advance written notice to the enrollee. If a Part D sponsor implements a prescriber and/or a pharmacy limitation, the affected beneficiary is provided opportunities to select their preferred pharmacy and prescriber when they receive an Initial Notice of their PARB status and a Second Notice of their at-risk beneficiary (ARB) status, as described in regulation at § 423.153(f)(5)(ii)(4) and § 423.153(f)(6)(ii)(5). The sponsor is required to consider the beneficiary's preferences consistent with § 423.153(f)(9). These aspects of DMPs safeguard beneficiary's access to coverage of opioids, prescriber and pharmacy choice, and the integrity of the doctor/patient relationship.

Comment: Several commenters requested that PACE organizations be exempt from the requirement to establish a DMP. These commenters noted that drug utilization management programs, quality assurance measures, and medication therapy management (MTM) program requirements Start Printed Page 5885(§ 423.153(a) through (d)) are currently waived for PACE under § 423.458(d). Commenters also stated that the PACE model of care already addresses opioid overutilization through use of a closed provider network; care coordination through primary care providers and the interdisciplinary team; proactive drug utilization review; and in-person health assessments already required for PACE enrollees.

Some of these commenters noted that, while the majority of PACE participants do not reside in an LTC facility, PACE participants are required to meet their state's eligibility criteria for nursing home care and therefore share characteristics with beneficiaries who are exempt from DMPs because they are residents of LTC facilities. They also state that PACE organizations typically contract with a single pharmacy which inherently coordinates access and achieves the goals of a DMP. One commenter noted that many PACE organizations do not have formularies and therefore no Pharmacy and Therapeutic (P&T) committee to develop and carry out DMP policies and procedures.

Response: CMS thanks these commenters for their feedback, but disagrees that PACE organizations should be exempt from the statutory requirement to establish a DMP. While the DMP statute does outline certain exempted beneficiaries, such as individuals with cancer or who reside in a LTC facility, it does not specify or contemplate exemptions based on Part D plan type. CMS notes that MA-PDs that require enrollees to access routine care from contracted and/or employed prescribers through an HMO or integrated care model are similarly required under Part 422 to provide coordinated care, but are not exempt from the DMP requirement. As commenters noted, PACE participants are an especially vulnerable Medicare population, and for those who live in the community, additional monitoring will serve as a valuable safeguard to help prevent misuse of opioids. Depending on the frequency of engagement between the participant and PACE organization, as well as participant preferences, the in-person assessments required under §§ 460.104 and 460.121 may not always coincide with identification through the OMS, and may present missed opportunities to intervene.

Under the existing regulatory framework where DMPs are voluntary, approximately 40 percent of PACE contracts have reported to CMS that they already have a DMP in place. In 2019, PACE enrollees accounted for 0.03 percent of all Part D enrollees belonging to a plan with a DMP, and 0.07 percent of Part D enrollees identified in OMS as PARBs because they met the minimum OMS criteria. Based on CMS' analysis used in the proposed rule, PACE enrollees account for 0.14 percent of total Part D enrollees identified as PARBs because they meet the criteria for history of opioid overdose (see discussion in this section of this rule), which is proportional to the number of PACE enrollees in Part D (for January 2020, 0.1 percent of all Part D enrollment). In other words, the likelihood of a PACE participant being identified as a PARB, either based on OMS criteria or history of opioid overdose, is at least as high as the likelihood of any Part D enrollee to meet those criteria. Therefore, a PACE participant is as likely as any other Part D enrollee to benefit from case management and should not be deprived of this aspect of the Part D program. As discussed in the proposed rule preamble, Part D sponsors with DMPs infrequently implement coverage limitations after case management. This reflects the goals of case management as a means through which Part D sponsors engage prescribers, gather relevant patient-specific information not available to CMS, such as more recent medical or prescription claims data, and seek to coordinate care tailored to the unique needs of the beneficiary. CMS expects the volume of PARBs identified through minimum OMS criteria in the PACE organizations that have not yet implemented a DMP will continue to be minimal and present a low overall burden for these organizations. As with other Part D plans, such burden includes conducting case management, implementing any needed coverage limitations, and reporting of case management outcomes and coverage limitations back to CMS via OMS. Reporting outcomes of case management provides CMS with valuable information to help track the safe use of opioids and benzodiazepines in the Part D program and serves as a means to document that case management occurred.

CMS agrees with commenters that a PACE organization, or for that matter, any Part D plan sponsor, that does not have a P&T committee would not be in compliance with existing § 423.153(f)(1), which requires approval of DMP policies and procedures by the “applicable P&T committee.” As specified in § 423.120(b), only Part D sponsors that use formularies must have a P&T committee, and CMS did not propose to broaden that requirement to apply to Part D sponsors that do not use formularies. For this reason, after consideration of the comments, CMS is amending the language at § 423.153(f)(1) to account for Part D sponsors, including PACE organizations, that do not have their own or a contracted P&T committee (for example, through their PBM) because they do not use a formulary. Such sponsors can comply with this requirement by having written DMP policies and procedures that are approved by the Part D sponsor's medical director and applicable clinical and other staff or contractors, as determined appropriate by the medical director. We have also added cross references to the existing regulations requiring that Part D sponsors have a medical director at § 423.562(a)(5), and for PACE organizations, at § 460.60(b).

Comment: Several commenters stated general concerns or recommendations regarding DMPs. Commenters expressed concerns regarding the misapplication of the CDC Guideline for Prescribing Opioids for Chronic Pain [7] and recommended that CMS direct sponsors towards appropriate disease-specific pain management guidelines. Additional recommendations included facilitating or encouraging providers to refer patients to non-pharmacologic therapies for pain; ensuring provider education about overdose and naloxone prescribing, including evaluation for substance use disorder; ensuring shared decision-making between beneficiaries and prescribers such that access to medically necessary opioids is not impeded; ensuring beneficiaries with a coverage limitation are not forced to use a pharmacy in which the sponsor has a financial interest; and generally ensuring DMP activities are non-punitive or stigmatizing.

Response: CMS appreciates the concerns and recommendations commenters shared regarding case management activities. We note that the recommendations are not inconsistent with the current DMP requirements.

In finalizing the regulatory framework for DMPs (83 FR 16440), CMS made a conscious effort that DMP activities would not be punitive or stigmatizing and would not inappropriately limit access or result in abrupt opioid tapering. This is consistent with the CDC's commentary [8] published in 2019, Start Printed Page 5886which advised against the misapplication of the Guideline for Prescribing Opioids for Chronic Pain, including the inflexible application of the Guideline's dosage recommendations and policies that encourage abrupt tapering, sudden discontinuation, or dismissal of the patient from their physician.

CMS agrees that many of the suggestions proposed could be of value in many cases, and encourages sponsors to incorporate them, as appropriate, into their DMP policies and procedures, as well as protect against the unintended consequences identified by the CDC. Finally, CMS notes that beneficiaries are provided opportunities to select their preferred pharmacies and prescribers, if their plan intends to apply a pharmacy or prescriber limitation under the DMP. See § 423.153(f)(5)(ii)(4) and § 423.153(f)(6)(ii)(5).

Comment: A few commenters stated that mandatory DMPs are redundant with existing prescription drug monitoring programs (PDMPs).

Response: CMS disagrees that DMPs are redundant with PDMPs. PDMPs are state-level electronic databases that are used to collect information on all controlled substance prescriptions in a state. While PDMPs, which allow providers to access their patients' prescription history, are one tool to combat the opioid epidemic, PDMPs do not exist in all states, and health plans may not have access to them. Also, while CMS encourages providers to use PDMPs prior to issuing prescriptions for controlled substances, it is not mandatory for providers to do so in all states.[9] Therefore, CMS believes that DMPs provide additional value for ensuring safe opioid prescribing in the Part D program through the initiation of case management and care coordination activities. Moreover, the CARA statute required CMS to establish a regulatory framework for DMPs.

Comment: Several commenters requested CMS clarify existing guidance with regard to identification of PARBs, criteria for identifying exempt beneficiaries, reporting requirements for ARBs, and notice requirements for exempt beneficiaries. Several commenters provided additional recommendations, including suggestions to expand the list of frequently abused drugs to drugs beyond opioids and benzodiazepines (for example, other central nervous system depressants such as gabapentin) and allowing beneficiaries with existing beneficiary-specific POS edits that were implemented prior to 2019 be integrated into the DMP.

Response: CMS' proposal was to implement the statutory requirement that Part D sponsors establish DMPs as of January 1, 2022. As discussed in section VII.L, CMS also proposed to designate beneficiaries with sickle cell disease as exempted individuals in the regulation for purposes of a Part D sponsor's DMP. CMS did not propose any changes to the other existing requirements, except to solicit comment about case management for PARBs with a history of opioid related-overdose, which is discussed later in this section. CMS will consider revisions to the guidance and OMS criteria as appropriate. CMS also regularly reviews data submitted into OMS and MARx and will update guidance and/or communicate with sponsors if needed.

After consideration of the comments received, CMS is finalizing the proposal to make DMPs mandatory at § 423.153(f) with a modification at § 423.153(f)(1) to accommodate Part D plans, such as PACE organizations, that do not have a P&T committee, as described earlier.

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

Under section 2006 of the SUPPORT Act, CMS is required to identify Part D beneficiaries with a history of opioid-related overdose (as defined by the Secretary) and notify the sponsor of such identification, as those individuals must be included as PARBs for prescription drug abuse under their Part D plan's DMP. In line with this requirement, CMS proposed to modify the definition of “potential at-risk beneficiary” at § 423.100 to include a Part D eligible individual who is identified by CMS as having a history of opioid-related overdose, which is also defined in this regulation.

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

CMS received numerous comments on this provision, which were largely supportive of the proposal, with several commenters expressing concerns or requesting clarification on various aspects as discussed in this section of this rule.

Comment: A few commenters pointed out that the regulatory text defining potential at-risk beneficiary at § 423.100 was unclear with regard to whether both an overdose diagnosis and an opioid PDE were necessary to meet the new definition of a PARB based on the proposed regulation.

Response: In response to these comments, CMS clarifies that both criteria are required to meet the definition of a PARB with a history of opioid-related overdose. In order to improve overall clarity in this final rule, in lieu of revising the PARB definition at § 423.100 as proposed, we are incorporating the elements of the proposed definition into the clinical guideline regulation as criteria in a new paragraph at § 423.153(f)(16)(ii)(2). That is, the criteria initially proposed in the definition of PARB at § 423.100 have been relocated to the DMP clinical guidelines section of the regulation at § 423.153(f)(16)(ii)(2). CMS has also made some technical changes to the criteria now located at § 423.153(f)(16)(ii)(2) to clarify that a plan can use its own data to identify PARBs. Specifically, instead of referring to “PDE,” the criteria will refer to Start Printed Page 5887“claim” and the words “has been submitted” are struck from the criteria.

Comment: A few commenters expressed concern with identification of overdose based on diagnosis code, citing anecdotal reports that the codes are unreliable due to being assigned inappropriately or over-diagnosed in beneficiaries taking opioids who present for emergency care for other health conditions.

Response: CMS disagrees and was unable to find evidence to substantiate this claim specific to opioid-related overdose in the published literature. In the event a situation such as this does occur, during the case management process the prescriber will likely review the diagnosis and determine whether to discuss it with their patient on a case by case basis. Such review and discussion will present an opportunity for the provider to evaluate whether the diagnosis appears to be inaccurate and to communicate this information back to the sponsor's DMP.

Comment: A commenter suggested CMS include both primary and secondary diagnosis codes for opioid-related overdose to avoid under-reporting.

Response: CMS believes the principal diagnosis code is the most reliable means to identify overdoses in order to meet the statutory requirement for the reasons that follow.

According to the ICD-10-CM Official Guidelines for Coding and Reporting,[11] the principal diagnosis code is the condition, after study, to be chiefly responsible for occasioning the admission of a patient to the hospital. The terms principal and primary are used interchangeably to define the diagnosis that is sequenced first on a claim. Other diagnoses, including secondary diagnoses, are conditions that may coexist at the time of admission, or develop subsequently. As such, secondary diagnoses may capture overdoses not directly related to the beneficiary's recent use of opioids that triggered the overdose event. CMS' proposed criteria for identification of a PARB based on history of opioid overdose specifies “recent” overdose so that DMP activities can be the most relevant and impactful. Since secondary diagnoses may be historical, CMS does not believe that they as reliably reflect “recent” opioid-related overdoses as do principal diagnoses.

Taking program size into account, focusing on the principal or primary diagnosis chiefly responsible for the admission or event is most appropriate to capture overdoses related to a beneficiary's recent use of opioids and increase the likelihood that the beneficiary would benefit from case management. Using the same time period, diagnosis codes, PDE, and lookback period criteria described in the proposed rule methodology, CMS evaluated the number of PARBs that would be identified by the proposed definition, both including and excluding secondary diagnoses. Including secondary diagnosis codes for identification of opioid-related overdoses was found to increase the number of PARBs identified by about 40 percent (for a total of 25,566) relative to the number of PARBs identified only on the basis of principal diagnosis (18,268, as described in burden estimates). However, due to the limitations of secondary diagnoses themselves, described earlier, CMS believes the additional PARBs identified solely on the basis of a secondary diagnosis would not necessarily be those with the most relevant history of opioid-related overdose. Therefore, CMS does not believe that the increased program size due to including secondary diagnosis codes for the purpose of identifying PARBs is a cost-effective use of DMP resources, when these resources would be better focused on beneficiaries at highest risk of misuse or abuse.

In evaluating this comment, CMS noticed that the proposed regulatory language in the definition of PARB at § 423.100 was not sufficiently broad to include data sources and methodology discussed in the proposed rule. As mentioned in response to a prior comment, the criteria initially proposed in the definition of PARB at § 423.100 have been relocated to § 423.153(f)(16)(ii)(2). Specifically, in the clinical guideline criteria for identifying PARBs on the basis of history of opioid-related overdose at § 423.153(f)(16)(ii)(2), the words “Medicare fee-for-service” and “code” were stuck from what was in the initially proposed definition at § 423.100. This revised language, which CMS is finalizing, better reflects CMS' intention to use claims, including encounter data, resulting from healthcare visits involving opioid-related overdoses. With this modification, the broader criteria will encompass both inpatient and outpatient locations of care.

Comment: A commenter requested addition of the ICD-10 code Z91.5 for method suicide attempt to capture intentional overdose in the methodology CMS will use to identify PARBs based on history of opioid-related overdose.

Response: CMS disagrees, as the ICD-10 code Z91.5 indicates a history of self-harm, and does not specify self-harm via opioid use. Although the literature CMS cited in the proposed rule preamble does reference history of opioid-related overdose being a risk factor for future overdoses or suicide-related events, the SUPPORT Act directs CMS to identify beneficiaries with a history of opioid-related overdose. Thus, including the ICD-10 code for history of self-harm would be overly inclusive. Other ICD-10 codes are more specific to identify injury due to opioid-related poisoning or overdose, and are used in the methodology applied by CMS and described in more detail in the February 2020 proposed rule. CMS believes the ICD-10 codes used in this methodology will capture both intentional and unintentional overdoses.

Comment: A commenter pointed out that using Medicare data will not capture overdose history from new Medicare enrollees.

Response: CMS acknowledges this is a limitation to the methodology; however, it is not feasible to gather all non-Medicare claims data for Medicare beneficiaries. We believe using Medicare claims data strikes the right balance to permit inclusion of beneficiaries with a history of opioid-related overdose in DMPs without undue burden.

Comment: A commenter expressed the opinion that for beneficiaries with overdoses due to illicit opioids, coverage limitations on prescription opioids would not likely impact future overdose risk.

Response: CMS disagrees with the commenter's assertion given the criteria CMS has proposed for identifying a PARB based on history of opioid-related overdose. The statute requires that beneficiaries with a history of opioid-related overdose be included as PARBs without specifying that the overdose involve a prescription opioid; therefore, we believe it is appropriate to include beneficiaries with a history of illicit opioid overdose. In the methodology presented in the proposed rule, CMS discussed the fact that in some cases, it is not possible to identify whether an opioid that contributed to overdose was obtained legally or illicitly. CMS also notes that any beneficiaries identified in OMS due to a history of opioid overdose, regardless of whether such overdose was illicit, will have also received an opioid prescription, consistent with the proposed criteria. Thus, there is still a potential role for case management, including conveying the overdose diagnosis to the beneficiary's prescriber(s), who may Start Printed Page 5888consider this information for ongoing opioid prescribing or referral for other health services, with or without the implementation of a coverage limitation for Part D prescription opioids. For example, a prescriber may refer the beneficiary for medication-assisted treatment, if appropriate, based on evaluation of their patient.

Comment: A commenter suggested that CMS' proposal may discourage overdose patients who self-treated with naloxone from seeking follow-up medical care to avoid an overdose diagnosis and potential DMP enrollment.

Response: CMS appreciates the commenter's concerns for these beneficiaries, and recognize the stigma they may face because of such diagnosis. However, the statute requires including these beneficiaries as PARBs, and the commenter's concerns do not obviate the need for CMS, Part D plan sponsors, or health care providers from engaging in rigorous patient safety programs, especially for this vulnerable population. CMS encourages plan sponsors, prescribers, and advocacy organizations to assist in efforts to educate beneficiaries about the risks and benefits of opioid use, as well as their options for opioid use disorder treatment. See section III.D of this final rule for additional information about CMS' efforts, as well as the “Information for Patients” resource provided on the Drug Management Program page of the CMS website.[12]

Comment: A commenter requested clarification if a beneficiary would no longer be considered a PARB once they no longer meet the overdose criteria.

Response: It depends. Once a beneficiary is identified as a PARB based on a history of opioid-related overdose and reported to Part D sponsors, sponsors must review the case and submit responses through the OMS. CMS will update the guidance, including the OMS user guide, to account for scenarios appropriate to PARBs identified based on a history of opioid-related overdose, including where these beneficiaries simultaneously or at a different time meet the definition of a PARB based on the existing OMS criteria, or where the situation changes while the plan is engaged in review/case management.

Comment: Many commenters, while supportive of the proposed regulation, asked CMS to clarify expectations for case management, outline expectations for case management outcomes, and provide guidance for management of PARBs identified by a history of opioid-related overdose.

Response: CMS acknowledges these comments about Part D plans conducting case management with prescribers who are treating PARBs with a history of opioid-related overdose. Case management is an integral part of the DMP process. It serves the purpose of engaging in clinical contact with the prescribers of FADs, verifying whether the beneficiary is at risk for abuse or misuse of FADs, and obtaining agreement to a coverage limitation on FADs, if a limitation is deemed necessary. The goal of case management under a DMP is to improve patient safety and care coordination, while protecting beneficiary access to coverage of needed medications.

CMS expects that the overall elements of case management should be similar for all PARBs, regardless of whether identified by existing OMS criteria based on use of multiple opioid prescribers and/or pharmacies or on a history of opioid-related overdose. CMS continues to recognize that every case is unique and that the approach to case management will vary depending on many factors, such as the complexity of the case and the promptness with which prescribers respond to sponsors' outreach. CMS continues to encourage sponsors to use flexibility and clinical discretion depending on prescriber input and patient-related variables. Case management activities should align with desired goals of the DMP, for example, reducing multiple opioid prescribers and/or reducing risk of a subsequent overdose. In estimating the burden for this provision in the proposed rule, CMS estimated that beneficiaries with a history of opioid-related overdose would potentially have a higher rate of coverage limitations imposed by sponsors than beneficiaries meeting minimum or supplemental OMS criteria because a history of overdose is the most predictive risk factor for another overdose or suicide-related event.[13] However, this is only a pre-implementation estimate and CMS continues to emphasize that the implementation of coverage limitations should be based on individual risk factors and goals identified through case management.

Plan sponsors should continue to refer to CMS guidance on elements that may be incorporated into case management, including prescriber education on opioid overutilization, encouraging prescribers to perform or refer their patients for substance use disorder screening and/or assessment, referral for follow-up treatment with pain specialists or addiction treatment providers, if indicated, and encouraging prescribers to utilize PDMPs to which they have access.

DMPs should notify providers and patients of the coverage of naloxone and its availability through their plan. The U.S. Department of Health and Human Services also issues guidance for safe opioid prescribing, including naloxone co-prescribing.[14]

Comment: Many commenters inquired about sponsor flexibility with regard to identification of PARBs based on a sponsor's own claims data, applying the criteria to identify PARBs with a history of opioid-related overdose more frequently than the OMS quarterly reports, or using criteria beyond those proposed by CMS to identify beneficiaries at risk of overdose at the time of their first opioid fill.

Response: CMS appreciates these comments. Just as currently permitted with the minimum OMS criteria, sponsors are permitted to identify PARBs with a history of opioid-related overdose more frequently than the CMS-generated reports through OMS. CMS expects that Part D sponsors identify PARBs consistent with the revised clinical guidelines CMS is finalizing at § 423.153(f)(16)(ii)(2). The clinical guidelines specify a recent (that is, within the past 12 months) claim containing a principal diagnosis indicating opioid overdose and a recent claim (that is, within the past 6 months) for an opioid medication. Sponsors are required by regulation to submit responses through OMS within 30 days of the most recent OMS report for all CMS-identified or sponsor-identified beneficiaries. Sponsors do not need to wait to receive an OMS report from CMS to initiate case management for sponsor-identified cases and send beneficiary notices, if applicable. Also, as we previously noted, the clinical guidelines for identifying PARBs that we are finalizing in this rule no longer require that history of opioid-related overdose be determined by CMS. This better reflects sponsors' ability to identify PARBs meeting the clinical guidelines using their own data.

Comment: A commenter requested CMS report Part D beneficiaries to sponsors through OMS with overdose diagnoses, but without a subsequent Start Printed Page 5889opioid claim, to proactively target these additional beneficiaries who may be at risk. Another commenter stated that beneficiaries with a history of overdose are already being managed outside of DMPs and therefore DMP activities may be duplicative.

Response: CMS does not agree with the request to report beneficiaries with an overdose diagnosis but no subsequent opioid claim. As discussed in detail in the proposed rule preamble (85 FR 9026), it is essential that all Part D plan sponsors, including standalone PDPs, can identify a prescriber with whom to conduct case management.

Without the presence of an opioid claim, Part D DMPs are not implicated. This does not preclude plans from conducting outreach towards beneficiaries with a history of opioid-related overdose who have not received a Part D prescription opioid, if they are able to identify them. A plan may offer services or interventions tailored to these beneficiaries, as the purpose of the DMP is not to supplant other health care activities that may be of benefit to the beneficiary, but rather to promote safe opioid prescribing practices and utilization in the Part D program. However, these beneficiaries should not be included in DMPs unless they meet the clinical guidelines specified in § 423.153(f)(16).

Comment: Some commenters suggested a 6-month, as opposed to a 12-month, lookback to identify opioid-related overdoses. Commenters suggested this would enable more timely engagement with beneficiaries and align with the Pharmacy Quality Alliance's (PQA) Initial Opioid Prescribing (IOP) measure.

Response: CMS agrees that identifying beneficiaries as soon as possible after their opioid-related overdose is likely to make DMP activities most impactful; however, we disagree with changing the lookback to 6 months for two reasons. First, CMS describes the rationale for the 12-month lookback. Second, CMS describes why it is not relevant to align the lookback with PQA's IOP measure.

Using a 12-month lookback, CMS anticipates that the first report will contain the largest proportion of overdoses occurring greater than 6 months prior to the report being generated. Going forward, however, CMS anticipates that subsequent quarterly reports will reflect a greater proportion of more recent, and thus, more timely, claims and a smaller proportion of earlier claims that were delayed due to processing errors or late submissions.[15] CMS expects that with regular reporting, the majority of PARBs with a history of opioid-related overdose will be identified on a timely basis. As discussed in the proposed rule, 12 months allows CMS to identify the majority of overdoses and appears to reflect the window of time necessary to capture the majority of processed claims or encounters. CMS will evaluate the implementation of the new clinical guidelines to identify PARBs based on history of opioid-related overdose and revise the operational specifications in the future if needed.

The PQA's IOP measure set includes three separate measures. CMS has included one of these measures, IOP-LD (Initial Opioid Prescribing—Long Duration), in Part D sponsors' patient safety reports. The IOP-LD measure does not consider opioid overdoses; rather, it evaluates when there has been no other opioid prescription in the 90-day lookback period prior to the start of an opioid with a long duration of therapy. Because the IOP-LD measure is largely unrelated to the overdose lookback window, CMS is not persuaded to change the overdose lookback to align with the IOP-LD measure.

Comment: A commenter recommended that CMS exclude beneficiaries with only one opioid prescription during the lookback period from the definition of PARB with a history of opioid overdose. Specifically, the commenter raised concerns about the efficacy of using plan resources to engage emergency department prescribers in case management based on a one-time, short-term opioid prescription.

Response: While CMS understands the commenter's concerns about engaging emergency department prescribers in case management, CMS disagrees with the recommendation to exclude beneficiaries with only one opioid prescription during the lookback period. Given the level of risk to beneficiaries with a history of opioid-related overdose, CMS strongly believes the best policy approach is for plans to attempt to engage their opioid prescribers through case management, even if the prescriber only ordered a single prescription for the beneficiary. CMS does not believe it is appropriate to presume that all such opioid prescribers would decline to engage in case management, given the statutory requirement to include this population in DMPs. Additionally, the DMP regulation at § 423.153(f)(4)(ii) specifies the circumstances under which sponsors may implement a coverage limitation for FADs in the event prescribers are not responsive. Thus, reporting these beneficiaries in OMS as PARBs despite there only being one PDE provides the opportunity for prescriber engagement, but still maintains plan flexibility through the DMP in the event outreach is unsuccessful.

Comment: A commenter cited their concerns with including PARBs with a history of opioid-related overdose in DMPs in light of the Substance Abuse and Mental Health Services Administration's (SAMSHA) 42 CFR part 2 (“part 2”) regulations regarding disclosure of substance use disorder (SUD) information. The commenter expressed concern that because Part D sponsors would have to conduct case management with prescribers of all PARBs, which will include beneficiaries with a history of opioid-related overdose, CMS is in effect requiring Part D sponsors to disclose SUD information about beneficiaries to providers and that such disclosure would be in violation of the part 2 regulations. The commenter requested that CMS provide guidance and/or a safe harbor for sponsors making such disclosures to protect them from any compliance issues.

Response: CMS thanks the commenter for the comment. SAMSHA's part 2 regulations protect the confidentiality of SUD treatment records by restricting the circumstances under which part 2 programs or other lawful holders can disclose such records without the patient's consent. CMS considered these regulations in the development of our February 2020 proposed rule. The requirement to include beneficiaries with a history of opioid-related overdose as PARBs does not require Part D sponsors to disclose SUD information to providers under a DMP; rather, they are communicating to the prescriber as part of case management that the beneficiary has a history of opioid-related overdose. A diagnosis of overdose is not synonymous with SUD or SUD treatment, and CMS will not be reporting SUD treatment records, nor the specific overdose diagnosis code, to Part D plans via the OMS report. We anticipate reporting overdose history in the form of a binary indicator (e.g. “yes/no,” “0/1,” or other code) on the OMS report if the PARB was identified based on having a history of opioid-related overdose. Additional information, such as the date of overdose, may be provided as well. CMS will provide the updated OMS report file layout and Start Printed Page 5890OMS technical guidance in advance of the 2022 contract year. The information CMS will provide in the OMS report will be limited such that 42 CFR part 2 does not apply to the disclosures required under this rule. The restrictions on disclosure and use of SUD information only apply to such information that “would identify a patient as having or having had a substance use disorder either directly, by reference to publicly available information, or through verification of such identification by another person.” (42 CFR 2.12(a)(1)(i)). Furthermore, under part 2, overdose information that does not reveal the identity of an individual as a SUD patient is not covered by the part 2 rule. The rule does not apply to “[a] diagnosis of drug overdose or alcohol intoxication which clearly shows that the individual involved does not have a substance use disorder (e.g., involuntary ingestion of alcohol or drugs or reaction to a prescribed dosage of one or more drugs).” (42 CFR 2.12(e)(4)(2)). As detailed in the proposed rule preamble, the diagnosis codes that CMS will use to identify PARBs with a history of opioid-related overdose do not capture the nature of the intent or circumstances of the overdose. CMS is making no assumptions as to the factors that contributed to the overdose, but rather, is deferring to the providers who will be engaged in case management to appropriately evaluate and triage their patients as necessary.

CMS has suggested in the previously cited November 20, 2018 DMP guidance memo that an element of case management could be encouraging prescribers to consider performing or referring their patients for SUD screening and/or assessment. The sponsor should not presume a beneficiary has SUD on the basis of the opioid overdose diagnosis.

Comment: A commenter recommended that beneficiaries with a history of opioid-related overdose be excluded from the criteria for identifying a PARB if there was a subsequent medical claim for opioid treatment program (OTP) services or a PDE for medication-assisted treatment (MAT). The commenter stated that case management through the DMP would not likely offer benefit since presence of either scenario would suggest that an intervention had already been made and risk factors are being addressed.

Response: CMS disagrees that beneficiaries with a claim for OTP services or MAT should be automatically excluded from the criteria for identifying a PARB. Referral to an OTP or initiation of MAT are not the only goals of case management through a DMP. While a claim for OTP services or MAT indicate that an intervention has begun, it does not necessarily mean that the intervention has been successful. CMS believes beneficiaries may still benefit from other elements of the DMP. For example, a coverage limitation on future opioid prescriptions may be beneficial for an individual while in treatment.

In reviewing this comment, CMS realized that the proposed rule had not specified how prescriptions for MAT were treated in the context of requiring an opioid prescription claim in addition to the opioid-related overdose diagnosis to meet the new PARB criteria. The methodology that CMS used to identify PARBs based on the proposed criteria excluded PDEs for MAT. Only PDEs for non-MAT opioids were included in the analysis and corresponding burden estimates. This is how CMS plans to operationalize the clinical guideline criteria for the purposes of reporting PARBs with a history of opioid-related overdose via OMS. CMS has revised the clinical guidelines at § 423.153(f)(16)(ii)(2) to clarify that prescriptions for MAT will not satisfy the opioid prescription claim criteria for identification of PARBs on the basis of history of opioid-related overdose. Therefore, a beneficiary who has at least one claim with a principal diagnosis indicating opioid overdose, but only has prescription claims for MAT and no other opioids, will not be included as a PARB in the OMS report.

Comment: A few commenters requested that CMS conduct outreach and education to prescribers regarding DMPs and the new criteria for identifying PARBs based on history of opioid-related overdose.

Response: CMS will update educational materials and guidance as appropriate.

Comment: Several commenters requested CMS provide updated model documents to reflect the new criteria for identifying PARBs based on opioid-related overdose history.

Response: Revisions have been made in accordance with the Paperwork Reduction Act (PRA) model notice revision process. Revised notices will be published in the Federal Register for public comment before being finalized and posted on the CMS website.[16]

Comment: Many commenters requested that CMS provide technical specifications, such as OMS report file layout and response codes, well in advance (that is, 6 months) of the expected implementation date so that sponsors would have sufficient time to update internal systems.

Response: CMS appreciates that plans will need time to make operational changes to incorporate this new beneficiary population into their DMPs, and intends to issue guidance and technical specifications to ensure such changes are in place prior to the compliance deadline.

Comment: A commenter recommended that naloxone prescribing should be mandatory.

Response: In the proposed rule, CMS stated that the provider should consider prescribing the beneficiary an opioid-reversal agent if they are newly aware of the beneficiary's history of opioid-related overdose and DMPs should notify providers and patients of the coverage of naloxone and its availability through their plan. CMS does not have statutory authority to mandate naloxone prescribing in Part D.

Comment: A commenter suggested that naloxone education be added to model beneficiary notice letters.

Response: CMS will consider this recommendation during the PRA model notice revision process. Revised notices will be published in the Federal Register for public comment before being finalized and posted on the CMS website.[17]

Comment: Some commenters requested clarification that the DMP exemptions still apply to PARBs identified based on history of opioid-related overdose.

Response: Section 1860D-4(c)(5)(C)(v)(I) of the Act specifies that beneficiaries who are not exempted individuals and who have a history of opioid-related overdose must be included as PARBs. Therefore, even if a beneficiary has a history of opioid-related overdose, if the beneficiary also meets the regulatory definition of an exempted beneficiary, as codified at § 423.100, that beneficiary is not to be included in a DMP. Beneficiaries with a known exemption will not be reported via OMS; however, it is possible that it will not be known whether a beneficiary is exempt until case management takes place. Thus, beneficiaries may initially be reported as PARBs but will later be found to be exempt. In this scenario, the beneficiary would no longer be considered a PARB. In response to this comment, CMS is making a technical change to the definition of potential at-risk beneficiary at § 423.100 to clarify that it excludes exempted beneficiaries. Start Printed Page 5891This technical change is described in more detail in section VI.M.

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

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

Section 6103 of the SUPPORT Act amends section 1852 of the Act by adding a new subsection (n). Section 1852(n)(1) requires MA plans to provide information on the safe disposal of prescription drugs that are controlled substances when furnishing an in-home health risk assessment. Section 1852(n)(2) requires us to establish, through rulemaking, criteria that we determine appropriate with respect to information provided to an individual during an in-home health risk assessment to ensure that he or she is sufficiently educated on the safe disposal of prescription drugs that are controlled substances.

In order to implement the requirements of Section 1852(n)(1) for MA plans, CMS in its proposed rule (CMS 4190-P) proposed to revise the §  422.111, Disclosure Requirements, to add a paragraph (j), which would require MA plans that furnish an in-home health risk assessment on or after January 1, 2022, to include both verbal (when possible) and written information on the safe disposal of prescription drugs that are controlled substances in such assessment. Consistent with Section 1852(n)(1), we proposed that information must include details on drug takeback programs and safe in-home disposal methods.

In educating beneficiaries about the safe disposal of medications that are controlled substances, we proposed that MA plans would communicate to beneficiaries in writing and, when feasible, verbally. We proposed that MA plans must do the following to ensure that the individual is sufficiently educated on the safe disposal of controlled substances: (1) Advise the enrollee that unused medications should be disposed of as soon as possible; (2) advise the enrollee that the US Drug Enforcement Administration allows unused prescription medications to be mailed back to pharmacies or other authorized sites using packages made available at such pharmacies or other authorized sites; (3) advise the enrollee that the preferred method of disposing of controlled substances is to bring them to a drug take back site; (4) identify drug take back sites that are within the enrollee's MA plan service area or that are nearest to the enrollee's residence; and (5) instruct the enrollee on the safe disposal of medications that can be discarded in the household trash or safely flushed. Although we did not propose to require MA plans to provide more specific instructions with respect to drug disposal, we did propose that the communication to enrollees would provide the following additional guidance: If a drug can be safely disposed of in the enrollee's home, the enrollee should conceal or remove any personal information, including Rx number, on any empty medication containers. If a drug can be discarded in the trash, the enrollee should mix the drugs with an undesirable substance such as dirt or used coffee grounds, place the mixture in a sealed container such as an empty margarine tub, and discard in the trash.

We also proposed that the written communication include a web link to the information available on the United States Department of Health and Human Services website identifying methods for the safe disposal of drugs available at the following address: https://www.hhs.gov/​opioids/​prevention/​safely-dispose-drugs/​index.html. We noted in our proposed rule that the safe disposal of drugs guidance at this website can be used for all medications not just medications that are controlled substances. We stated in our proposed rule that we believed that plan communications consistent with the standard on this website would furnish enrollees with sufficient information for proper disposal of controlled substances in their community. We thank commenters. We received 35 comments on this proposal; we summarize these comments and our responses to the comments follow.

Comment: A commenter expressed concern about the significant operational burden required in performing a health risk assessment in person. This commenter also recommends that CMS allow risk assessments through telehealth such as video conference or a phone call particularly in rural areas where access is an issue.

Response: In-home HRAs are performed in-person where the beneficiary resides and not via telehealth. However, we clarify that this rule is not requiring MA plans to conduct in-home HRAs. In-home HRAs are optional and MA plans may choose to conduct HRAs in this manner. Specifically, the information on the safe disposal of controlled substances is only required to be furnished when an MA plan chooses to conduct an in-home HRA. In this final rule, in consideration of the comments received, we have sought to minimize unnecessary plan burden while also ensuring consistency with the statutory requirement that enrollees who receive an in-home HRA are furnished useful and accessible information on the safe disposal of controlled substances. With the exception of MA SNP plans, all other MA plans are required under § 422.112(b)(4)(i) to make a best effort to conduct an HRA annually and generally do so as part of an enrollee's covered annual wellness visit (see 42 CFR 410.15), but there is no requirement that the HRA be conducted in-home. We note that MA special needs plans (SNPs), as part of their model of care, are required to conduct annual HRAs for their enrollees (42 CFR 422.101(f)(1)(i), but are also not required to conduct in-home HRAs.

Comment: A commenter asked us to clarify whether the requirement to furnish information about safe drug disposal during an in-home risk assessment applies to risk assessments conducted at other locations where seniors reside, such as senior-living centers, nursing homes or assisted living facilities.

Response: If the enrollee's primary residence is in an institutional setting (such as a nursing home) the enrollee typically will not be responsible for the disposal of unused medications. Therefore, for purposes of this requirement, we would not consider a health risk assessment furnished to an individual who is residing in an institutional setting such as a nursing facility to be an “in-home” health risk assessment, and the MA plan is not required to furnish the enrollee with the guidance on the safe disposal of controlled substances during the HRA as required at § 422.111(j). We have added language to § 422.111(j) clarifying this exception.Start Printed Page 5892

Comment: Several commenters questioned how CMS will confirm compliance with these disclosure requirements. The commenter asked CMS to clarify any member material requirements regarding confirming receipt of this information. For example, the commenter questioned whether enrollee attestations would be required. A commenter asked that CMS provide additional clarity about what must be included in the health risk assessment to be compliant with this requirement.

Response: MA plans conducting an in-home HRA must document the visit and their provision of the required disclosure to the enrollee as described at § 422.111(j). However, we are not imposing any additional requirements beyond written documentation that would otherwise be available to CMS upon review or audit that the safe disposal instructions have been met.

Comment: A commenter recommend that CMS explore additional methods to improve take-back programs, such as allowing direct-to-consumer incentives for returning unused opioids. The commenter proposed that rewards and incentives (R&I) could take the form of coupons, gift cards, and electronic deposits to a digital wallet, or other options chosen by the consumer. Another commenter also proposed that CMS explore mechanisms that reverse distributors use to return prescription drugs from healthcare providers and pharmacies back to manufacturers could be leveraged to enable manufacturer-funded incentives that could be shared with consumers. These commenters stated they believed R&I would help spur individuals to return substantially more unused prescription opioids.

Response: This comment is outside of the scope of this regulation. MA plans may offer R&I programs as specified in our regulations at § 422.134 in section V.D of this final rule.

Comment: A commenter stated that they will be furnishing free kits in a retail pharmacy chain that can be used to dispose of medications in the home. The commenter asked that CMS require plans to inform MA enrollees about this option. Another commenter indicated that they would be selling in-home drug deactivation kits and that CMS should inform MA enrollees of this option. This commenter recommended that CMS require that patient education include information about commercially available in-home disposal products that may be used in disposing of unused medications. Another commenter cited a report indicating that the use of in-home drug deactivation kits is a particularly effective way to facilitate the safe in-home disposal of controlled medications. This commenter also noted that drug deactivation kits would be particularly useful in rural areas where an authorized collector may not be nearby, and that the use of such kits would complement Take Back Day events and give consumers more options.

Response: We recognize that other technologies, such as drug deactivation kits, have been developed and can provide additional options for the safe disposal of unused medications in the home. Accordingly, we are revising the regulation text at § 422.111(j) (5) to add that the written and verbal information on the safe disposal of controlled medications may also include information about the availability of drug deactivation kits for in-home disposal of unused medications. Because these products may not be available to all enrollees and may have varying associated costs for the enrollee, CMS defers to MA organizations to determine whether and how to include such information. As we discuss in more detail in this section of this rule, MA plans have the flexibility to amend the information they furnish on the safe disposal of controlled substances to reflect innovations such as home drug disposal kits that may become available.

Comment: Several commenters asked that CMS develop a model document that all MA plans could present to enrollees regarding the safe disposal of controlled substances and identification of community Rx take back sites. Several commenters also recommend that this model information be developed and provided in a format, reading level, and use appropriate visuals to ensure understanding by Medicare beneficiaries. A commenter also asked that CMS consider including in the model general information on drug take-back sites. Another commenter states that with thousands of health plans offering Medicare Advantage products and thousands of health professionals providing HRAs, the need for a common educational document is clear.

Response: We do not believe that developing a model document will allow MA plans the flexibility to tailor their information to the local needs or changes in this rapidly evolving area. For example, the use and expanding availability of drug deactivation kits for in-home use is a relatively new development, and may vary in cost and availability across plans and depending on location. Other new developments or changes in how medications can be safely disposed may become available and we want to preserve the flexibility of MA plans to respond to possible future innovations in drug disposal methods by updating their information without depending on a CMS model document to make those changes. We believe that within the parameters we have established in this regulation, MA plans will have the flexibility to tailor their information to the specific conditions present in the rural, urban or metropolitan community where the enrollee receiving an in-home HRA resides. We expect that as with all written information furnished to MA enrollees that MA plans will use a format, reading level, and use appropriate visuals to aid understanding by Medicare beneficiaries consistent with § 422.2267, which we are adopting elsewhere in this rule.

Comment: Several commenters expressed concern about the burden of the proposed enrollee disclosure requirement. These commenters specifically mentioned that a verbal explanation of the safe disposal options and also the proposed requirement of identifying local take back sites are particularly burdensome. This commenter stated it would be impractical to tailor local takeback information for every individual nationwide who receives an in-home HRA. Rather, this commenter urges CMS to adopt a rule that the health professional's reference to the safe disposal website, where local takeback locations can be found, satisfies the requirement to provide such information.

Response: The regulations we are finalizing in this final rule will require the verbal instructions to supplement the written guidance on the safe disposal of medications when possible. However, verbal instruction is not required if the enrollee is impaired to a degree where they are unable to receive verbal information. To assist plans in furnishing a verbal communication to enrollees and reduce the burden we are revising the final rule to specify that MA plans will inform enrollees in writing and verbally of two or more drug take back sites that are consistent with the community pattern of access to drug take back sites where the enrollee resides. The verbal instructions should also note that the written instructions contain the DEA website where the enrollee can identify other community drug take back sites through a search engine where the enrollee can also find current information on the safe disposal of drugs. If the enrollee's spouse or caregiver is the responsible party it would be appropriate to furnish this information (written and verbal) to them when conducting an in-home HRA of an impaired enrollee. We have amended Start Printed Page 5893§ 422.111(j) to clarify the information that should be shared with the enrollee when a verbal summary of the instructions is possible. We believe providing this information in both written and verbal format is important for the effective transmission of this information to help enrollees appreciate the importance of disposing of unused medications that are controlled substances and that the written document can be used for more details on how to dispose of these unused medications. With respect to identifying local take back sites we recognize that simply referencing a website would be less burdensome. However, as previously noted, in response to these comments, we are modifying our proposal and will require a written and verbal disclosure of at least two drug take back locations that are consistent with the enrollee's community pattern of access to drug take back sites. Specifically, the identified drug take back sites must be among the drug take back sites that are generally utilized by people residing in the same community as the enrollee receiving the in-home HRA. That is, drug take back sites that are physically located within the shortest travel times. While the identification of two drug take back sites available to the enrollee identifies two choices we encourage plans to identify additional community take back sites.

Comment: A commenter asked that rather than furnishing written guidance on the safe disposal of controlled substances the information could be furnished to all MA enrollees in ANOC/EOC documents. Another commenter states that adding this information to the MA plan website would also be less burdensome for members and health plans. One commenter recommends that CMS promote inclusion of safe disposal information within a member's enrollment welcome packet.

Response: We are implementing the statutory requirement at section 1852(n)(1), which requires that specific information on the safe disposal of controlled medications must be provided to MA enrollees who are furnished an in-home HRA. While we acknowledge that this information could be beneficial to other enrollees, given the specific statutory language referencing this subset of enrollees, we are not requiring the inclusion of this information in other MA plan communications, nor are we adding it to the EOC template. While not required, we recognize that information on safe disposal may be useful for all Medicare beneficiaries, and therefore we encourage MA plans to make it available to other plan enrollees, for example by posting it on their website.

Comment: Another commenter asks that CMS maintain flexibility for plans to provide beneficiary education and outreach in a way that best suits the needs of individual members while minimizing burden. A commenter asks that CMS allow plans the flexibility to determine what information to provide, including relying on existing, externally validated sources. For example, the U.S. Drug Enforcement Agency (DEA) website at www.deatakeback.com already hosts an up-to-date, searchable database of locations for safe disposal (located specifically at https://apps2.deadiversion.usdoj.gov/​pubdispsearch/​spring/​main?​execution=​e2s1), and local law enforcement stations routinely collect controlled substances or can direct beneficiaries elsewhere as needed.

Response: The proposed regulation at § 422.111(j)(1)(vi) (which we are renumbering as § 422.111(j)(6)) requires that MA plans include in their written guidance a link to the United States Department of Health and Human Services website identifying methods for the safe disposal of drugs available at the following address: https://www.hhs.gov/​opioids/​prevention/​safely-dispose-drugs/​index.html.

However, we agree that the previously identified DEA website is a useful tool for locating drug take back sites available in specific communities. We will require that MA plans include a link to the DEA website in their written instructions and will require MA plans to provide a verbal summary of the written instruction noting the availability of the DEA website as a source for locating drug take back sites. Therefore, we are amending § 422.111(j)(2) to include the DEA link.

Comment: Several commenters stated that pharmacists are trusted and qualified and should be the source of information to inform enrollees about methods for the safe disposal of medications. The commenters stated that delivering this information to the beneficiary at the point of sale where the beneficiary gets or refills their prescription could be more effective . The commenter believed that at these times, information on safe disposal is more likely to be understood, and the drugs are more likely to be disposed of safely as part of the beneficiary's care routine (for example, expired medications can be disposed of at or near the same location where a new prescription is filled).

Response: As we have previously noted in this preamble, we are implementing the statutory requirement at Section 1855(n), which requires MA plan to furnish information on the safe disposal of controlled substances when conducting an in-home HRA. Elsewhere in this rule we discuss the statutory requirement for this information to be furnished as part of a Part D MTM program.

Comment: A commenter expressed concern that the various requirements for providing beneficiaries with safe disposal information may result in a beneficiary receiving multiple and varied messages with the adverse effect of beneficiary confusion and/or beneficiary resistance to the safe disposal message. This commenter recommends that CMS and plans make certain such efforts are coordinated with pharmacies to ensure consistent messaging, particularly around treatment alternatives.

Response: As we have previously discussed we are laying out parameters rather than mandating model language with respect to the information that MA plans must furnish to enrollees during an in-home HRA. We believe the parameters we are finalizing at § 422.111(j) give MA plans the flexibility to ensure that their written information remains reasonably consistent with the current drug disposal options available in the communities where their enrollees reside.

We thank the commenters for sharing their concerns and recommendations regarding our proposed implementation of Section 1855(n)(1) in the MA regulations at §  422.111(j). After careful examination of all comments received and for the reasons set forth in the proposed rule and our responses to comments, we are finalizing §  422.111(j) with the following modifications from the proposal. We are renumbering § 422.111(j). We recognized the that DEA website is a useful tool for locating drug take back sites available in specific communities. We will require that MA plans include a link to the DEA website in their written guidance and note the availability of the DEA website as part of the verbal instructions to enrollee's when conducting in-home HRAs. Therefore, we are amending § 422.111(j)(2) (as renumbered) to include the DEA link at: www.deatakeback.com which includes a page with a searchable database where drug take back sites nearest to a person's home can be identified at the following web link: h t t ps://apps2.deadiversion.usdoj.gov/pubdispsearch/spring/main?execution=e2s1.

We are also amending § 422.111(j)(4) to require that the written and verbal Start Printed Page 5894instructions identify two or more drug take back sites available in the community where the enrollee resides. We are adding a new provision at § 422.111(j)(5) specifying that as part of its educational information on the safe disposal of controlled medications, the plan may inform enrollees in writing and verbally about the availability of drug disposal kits for the in-home disposal of unused medications. Finally, we are revising § 422.111(j) to clarify that for purposes of this requirement, a health risk assessment is not considered “in home” if the enrollee's primary place of residence, such as a nursing facility, manages the disposal of unused medications.

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

Sponsors of Part D prescription drug plans, including MA-PDs and standalone PDPs, must disclose certain information about their Part D plans to each enrollee in a clear, accurate, and standardized form at the time of enrollment and at least annually thereafter under section 1860D-4(a)(1)(a) of the Act. Section 6102 of the SUPPORT Act amended section 1860D-4(a)(1)(B) of the Act to require that Part D sponsors also must disclose to each enrollee, with respect to the treatment of pain, information about the risks of prolonged opioid use. In addition to this information, with respect to the treatment of pain, MA-PD sponsors must disclose coverage of non-pharmacological therapies, devices, and non-opioid medications under their plans. Sponsors of standalone PDPs must disclose coverage of non-pharmacological therapies, devices, and non-opioid medications under their plans and under Medicare Parts A and B. Section 6102 also amended section 1860D-4(a)(1)(C) to permit Part D sponsors to disclose this opioid risk and alternative treatment coverage information to only a subset of plan enrollees, such as enrollees who have been prescribed an opioid in the previous 2-year period, rather than disclosing the information to each plan enrollee.

To implement section 6102, we proposed to amend our regulations at § 423.128 to require Part D sponsors to send information on opioid risks and alternative treatment information to all Part D enrollees, with the option to provide such information to a subset of such enrollees, in accordance with section 1860D-4(a)(1)(C), in lieu of providing it to all enrollees.

Paragraph (a) of section 423.128 requires Part D sponsors to disseminate specific plan information to enrollees, under which a sponsor must disclose the information specified in paragraph (b) of this section in the manner specified by CMS. Paragraph (b) lays out information requirements the plan must include for qualified prescription drug coverage offered under the Part D plan. We proposed to revise these requirements by adding paragraph subsection (b)(11) to mandate that Part D sponsors send information about the risks associated with prolonged opioid use, coverage of non-pharmacological therapies, devices, and non-opioid medications, for MA-PDs, coverage under the plan, and for PDPs, coverage under Parts A and B. Additionally, we proposed to add subsection (b)(11)(ii), which gives Part D sponsors the option of sending these resources to a subset of enrollees, in lieu of providing it to every enrollee. In the proposed rule, as shown in Table C1, we suggested 6 different enrollee subsets to whom sponsors could send the required opioid risk and alternate pain treatment coverage information, generally grouped by retrospective review of prescription opioid fills using several different timeframes, with the exception of the subgroup that contains all Part D enrollees. The lookback periods ranged from use of any opioids in last 2 years to greater than 90 days continuous use with a 7-day gap or less in the past year. Table C1 also shows the estimated number of enrollees in each suggested subgroup, as well as the estimated percent of total opioid users in Part D that each subgroup constitutes.

Table C1—Suggested Subset Options To Receive Education on Opioid Risks and Alternate Treatments *

SubsetSuggested subsetNumber of enrollees in this subsetPercent of total Part D opioid users
1All Part D Enrollees46,759,911N/A
2Any opioid use in last 2 years16,134,063100
3Any opioid use in past year11,027,271100
47 days continuous opioid use7,163,61565
5Greater than 30 days continuous opioid use, 7 day or less gap3,816,73135
6Greater than 90 days continuous opioid use, 7 day or less gap2,698,06424
* All figures based on 2018 PDE data as of 7/6/2019, except subset 2 which is based on 2017 and 2018 PDE data. Beneficiaries were excluded from the opioid use subsets if they were in hospice, in a resident facility, or had a palliative care diagnosis (07/01/2018-12/31/2018). Beneficiaries were also excluded if they had a cancer diagnosis (01/01/2018-12/31/2018). No exclusions were applied to the all Part D enrollees figure (subset 1).

We specifically solicited comments from stakeholders on the various suggested subsets of enrollees to whom the required information could be sent, in order to determine if there was any consensus that might inform sponsors' decisions, whether based on our suggested subsets or otherwise.

Comment: Many commenters were supportive of our proposal as an additional means to support efforts to address the national opioid crisis.

Response: We thank these commenters for their support of the proposed provision.

Comment: A few commenters expressed concern about overreach in sending the required information to all Part D enrollees. They highlighted the potentially negative reactions enrollees may have if they receive this information without having record of a previous opioid prescription. Conversely, other commenters believed that it was important for all enrollees to receive the information whether or not they had a record of a prior opioid prescription, noting that successful public health campaigns are not always tailored to specific populations. Other commenters supporting that the information be disclosed to all Part D enrollees noted that some beneficiaries may have paid cash for opioids or used illicit ones, and thus would be missed in any subset based on prescription opioid use. A few commenters believed that plans could focus their efforts on beneficiaries who have received an opioid in the last 7 days, so as to not Start Printed Page 5895be over-inclusive with the information disseminated to them. No other commenters suggested a different subset of enrollees to whom the information should be provided.

Response: We appreciate the commenters' feedback. Although some commenters offered their opinion on the enrollee population that might be the best group to receive the information, there was no consensus to inform sponsors' ultimate decisions on to whom to send the information. As we have noted, the statute leaves this decision to the sponsor's discretion.

Comment: Several commenters encouraged CMS to develop a model document for sponsors to use for consistent messaging about the risk of opioid use and coverage of alternative pain treatments.

Response: We do not believe a model document is appropriate or necessary. Both MA-PDs and standalone PDPs should be able to describe the risks of prolonged opioid use without a model document, as they possess the expertise in both the coverage and clinical use of drugs and their associated risks. In addition, Part D sponsors have available to them federal government websites as resources for consistent messaging. For example, the U.S. Department of Health and Human Services website (https://www.hhs.gov/​opioids/​) contains information about opioid risks and pain management options, and CMS' Pain Management website (https://www.medicare.gov/​coverage/​pain-management) also contains information about the risks of opioids and pain management.

Moreover, we anticipate that sponsors will require some flexibility when it comes to developing the content for these beneficiary notices, given that they have the discretion to choose a subset of enrollees to whom they will send the notices. Also, coverage of alternative pain treatments will likely vary among plans. Additionally, a plan's beneficiary population can be unique and opioid issues may vary regionally and over time. Thus, the degree of flexibility any model document would require to allow each plan to tailor its message and information to its specific plan population in terms of coverage of the risks of prolonged opioid use and alternate pain treatments would decrease the utility of a model document.

Comment: A commenter suggested that this information could be conveyed to Part D enrollees through the EOC.

Response: We respectfully disagree. While the EOC does contain information about plan coverage of alternate pain treatments, such as coverage of physical therapy services in an MA-PD, it is a very large document containing hundreds of pages of material, which is not the best method to provide the specific, cohesive, and concise information on opioid alternatives that is required under this provision.

Moreover, given that Section 6102 of the SUPPORT Act provides for specific opioid education to Part D beneficiaries, we do not believe that adding opioid risk and alternative pain treatment coverage to a lengthy technical document would draw sufficient attention to the required information. For this reason, we believe that a separate beneficiary communication is a more effective means of conveying this information. We may consider revising the EOC template in future years so that a plan may include this information; however, our current focus is on implementing the statutory requirement and believe it is best implemented as we proposed.

Comment: Some commenters requested clarification on whether Part D plans are permitted to send the required information electronically without prior consent of the beneficiary, based on requirements they referenced from § 423.128(b), which allowed for electronic delivery of EOCs without prior beneficiary authorization. Specifically, the regulation allowed plans to meet the disclosure and delivery requirements for certain documents by relying on notice of electronic posting and provision of the documents in hard copy when requested, when previously the documents, such as the EOC, had to be provided in hard copy.

Response: As stated under § 423.2267(d)(2)(ii), which we are finalizing as discussed elsewhere in this rule, we will not allow for electronic delivery without prior approval from the beneficiary for this type of material. Part D sponsors may only mail new and current enrollees a notice for electronic access to the EOC, Provider and Pharmacy Directories, and Formulary without beneficiary authorization. Conversely, the separate beneficiary notice on opioid risk and coverage of alternate pain treatment is a new document that will convey important safety information related to a national epidemic, and we want to make sure that beneficiaries will see the information. For this reason, we are not making any exceptions to § 423.2267(d) for this information, and Part D plans must obtain the beneficiary's consent before they may provide this information electronically.

Comment: As we noted earlier in section A, we received many general comments expressing concern that the opioid provisions of the proposed rule would limit access to pain medicine, including opioids.

Response: We are not persuaded that educating beneficiaries about the risks of opioid use and coverage of alternative pain treatments will prevent people who need opioids for treatment of their pain from receiving them. It is commonly accepted that beneficiaries should discuss their health care treatment choices and the potential risks associated with each choice with their health care providers, and that the more education beneficiaries have about their options and the associated risks when they have these conversations, the better able they will be to make the best choice for themselves in consultation with their providers.

After consideration of the comments received, we are finalizing the new requirement at § 423.128(b)(11) to disclose information to enrollees about opioid risks and alternatives without modification except thatthis provision will be applicable beginning on January 1, 2022 rather than January 1, 2021 as initially proposed. However, given the ongoing national opioid epidemic and public health emergency, we strongly encourage Part D sponsors to disclose this information to their enrollees in 2021, if possible. We also encourage sponsors to include information in these notices, as they deem appropriate, to help increase awareness among Part D enrollees about access to medication-assisted treatment (MAT) and naloxone. In this regard, we note that the CMS web page (https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​Opioid-Treatment-Program/​Index) includes information about the dispensing and administration of MAT medications (if applicable) now covered under the new Opioid Treatment Program (OTP) benefit under Medicare Part B. We also note that in the CY 2020 Call Letter, CMS previously encouraged Part D sponsors to engage in targeted education of enrollees on co-prescribing of naloxone,[18] and that this beneficiary notice may be an ideal avenue to include such information.

E. Eligibility for Medication Therapy Management Programs (MTMPs) (§ 423.153)

We proposed to amend Part D Medication Therapy Management Start Printed Page 5896(MTM) program requirements in § 423.153 to conform with the relevant SUPPORT Act provisions. The SUPPORT Act modifies MTM program requirements for Medicare Part D plans by expanding the population of beneficiaries who are targeted for MTM program enrollment (“targeted beneficiaries”) to include at-risk beneficiaries (ARBs), and by adding a new service component requirement for all targeted beneficiaries. Section 6064 of the SUPPORT Act amended section 1860D-4(c)(2)(A)(ii) of the Act by adding a new provision requiring that ARBs be targeted for enrollment in the Part D plan's MTM program. We proposed to codify this requirement at § 423.153(d)(2). Section 6103 of the SUPPORT Act amended the MTM program requirements in section 1860D-4(c)(2)(B) of the Act by requiring Part D plans to provide MTM enrollees with information about the safe disposal of prescription drugs that are controlled substances, including information on drug takeback programs, in-home disposal, and cost-effective means for safe disposal of such drugs. We proposed to codify this requirement by adding new paragraphs at § 423.153(d)(1)(vii)(E) and (F).

1. ARBs and MTM

Under our proposed revisions to § 423.153(d), ARBs would be targeted for enrollment in a sponsor's MTM program. The existing criteria that Part D sponsors currently use to target beneficiaries for MTM program enrollment would remain unchanged, so that two groups of enrollees would now be targeted for enrollment: (1) Enrollees who meet the existing criteria (multiple chronic diseases, multiple Part D drugs and Part D drug costs); and (2) enrollees who are determined to be ARBs under § 423.100.

Under our proposal, Part D sponsors would be required to automatically enroll all ARBs in their MTM programs on an opt-out only basis as required in § 423.153(d)(1)(v). We did not propose to change any existing MTM program requirements for targeted beneficiaries enrolled in a Part D sponsor's MTM program, including service requirements such as annual comprehensive medication reviews (CMRs) and targeted medication reviews (TMRs). Accordingly, the MTM program requirements would be the same for all targeted beneficiaries enrolled in a Part D sponsor's MTM program, regardless of whether they are targeted for enrollment based upon the existing criteria or because they are ARBs.

As discussed in detail in the February 2020 proposed rule (85 FR 9031), CMS encourages sponsors to design MTM interventions for this new population of targeted beneficiaries to reflect their simultaneous inclusion in the sponsors' DMPs. CMS also encourages sponsors to consult existing clinical guidelines, such as those issued by the Centers for Disease Control and Prevention for Prescribing Opioids for Chronic Pain,[19] when developing MTM strategies and materials. CMS solicited input into how sponsors can best coordinate DMPs and MTM programs and effectively perform outreach to offer MTM services. We also solicited feedback on how to leverage MTM services to improve medication use and reduce the risk of adverse events in this population, how to measure the quality of MTM services delivered, and how to increase meaningful engagement of the new target population in MTM. Lastly, we solicited comments on the type of information that we should use to monitor the impact of MTM services on ARBs, who will now be targeted for MTM services.

CMS also sought comment in the proposed rule on how the CMS Standardized Format (CMS-10396; OMB control number 0938-1154) might be modified in order to accommodate the new population of ARBs that will be enrolled in Part D sponsors' MTM programs. Additionally, CMS posted the CMR Standardized Format with rule-related changes in conjunction with the proposed rule. A version reflecting non-rule related revisions was posted in the Federal Register on February 24, 2020 (85 FR 10444) through the Paperwork Reduction Act (PRA) process with a 60-day public comment period. We also solicited feedback on whether using Health Level Seven (HL7®)-enabled CMRs could positively impact the sharing of CMR data with the prescriber for an MTM enrollee, and the value of encouraging Part D MTM providers to use FHIR-enabled platforms when providing MTM to Part D enrollees to facilitate integration of the MTM service elements into prescribers' EHRs.

Comment: CMS received multiple comments expressing concerns about the timing of the proposed requirements to include ARBs in MTM programs and to provide information on safe disposal of controlled substances to beneficiaries enrolled in MTM. Commenters requested that CMS postpone implementation of the requirement to add ARBs to MTM programs until 2022, citing the time involved to develop an effective MTM program that would serve the new population, including the need to coordinate between MTM providers, behavioral health teams, DMPs, and others. They stated that plans will need time to create the systems required for information exchange to facilitate care coordination. One commenter pointed out that resources are currently being consumed by COVID-19 needs.

Response: Recognizing the impact of the COVID-19 public health emergency on plans and other stakeholders, we are modifying the regulation text at § 423.153(d)(1)(vii)(E) and § 423.153(d)(2)(ii) to specify that these changes to MTM programs must be implemented by Part D plan sponsors beginning January 1, 2022, rather than January 1, 2021 as initially proposed. The applicability date for § 423.153(d)(2) is 60 days after the date of publication of this final rule.

Comment: Many commenters opined on the usefulness of targeting ARBs for enrollment in the Part D MTM program. Some commenters believe that these beneficiaries would benefit from MTM interventions that would create additional opportunities to provide counseling and education to a generally underserved population. Other commenters expressed concern that targeting these beneficiaries for MTM would make this vulnerable population believe they are being singled out or stigmatized, or would increase the size of MTM programs. A commenter questioned CMS' authority to propose this requirement, calling our proposal “bureaucratic over-reach.” Other commenters stated that providing ARBs with both DMP and MTM services would be duplicative and potentially confusing; a commenter pointed out that plans often use one vendor to perform DMP-related services and another for MTM which could lead to a lack of coordination between service providers. A few commenters suggested alternative mechanisms to provide services to the ARBs such as enhancing DMPs or making a beneficiary's at risk status another condition to be considered when developing MTM targeted population.

Response: Section 6064 of the SUPPORT Act, as codified at section 1860D-4(c)(2)(A)(ii) of the Act, requires that Part D plan sponsors include ARBs in their MTM programs. As discussed in the proposed rule, the MTM program requirements are the same for all targeted beneficiaries enrolled in a Part D sponsor's MTM program, regardless of whether they are targeted for enrollment based upon the existing criteria or because they are ARBs. In order to Start Printed Page 5897provide services for ARBs, plans will need to coordinate services across both their DMP and MTM program without regard for which vendors furnish such services. Part D plan sponsors are ultimately responsible for ensuring that all delegated functions are compliant with CMS requirements. See 42 CFR 423.505(i)(1). This includes making sure that downstream entities used to provide a plan's DMP and/or MTM program coordinate, as necessary, to ensure that communications with and services furnished to plan enrollees comply with applicable Part D requirements. To the extent that MTM can be provided within a plan's DMP while meeting all MTM service requirements, this approach would be permissible provided it complies with all other applicable Part D requirements. Further, if a plan wishes to target all PARBs for enrollment in its MTM program instead of only targeting ARBs, it is permitted to do so, provided that the plan meets all CMS requirements for both DMPs and MTM services. The criteria specified in the regulation reflect what is required under the Act, and do not preclude plans from electing to offer MTM services to an expanded population of beneficiaries who do not meet the eligibility criteria under § 423.153(d).[20]

Comment: Several commenters asked CMS for more direction in developing MTM programs that will meet the needs of the new cohort of beneficiaries.

Response: CMS typically gives plans the latitude to develop MTM programs that meet their beneficiaries' needs within the framework of the applicable statutory and regulatory requirements. Most Part D plans have gained experience with their ARB population through DMPs and earlier Part D opioid overutilization policy, and we expect plans to draw on this experience when working with their clinical teams, including any downstream entities, in developing clinically appropriate MTM interventions for these individuals. Consistent with section 1860D-4 (c)(2)(E) of the Act, MTM programs must be developed in cooperation with licensed and practicing pharmacists and physicians.

Comment: Multiple commenters expressed concerns that the addition of ARBs to the MTM population could impact the Part D MTM Program Completion Rate for CMR Star Rating measure, and expressed concerns that including the new population of MTM-eligible beneficiaries in the CMR completion rate might adversely affect a plan's overall Star rating. A commenter cited internal data indicating an expected CMR acceptance rate of 23 percent for current MTM-eligible beneficiaries who also meet the DMP criteria for ARBs. Commenters requested that CMS proactively implement safeguards in the scoring of this measure—some commenters suggesting the measure be excluded from Star Ratings and others asking that ARBs be excluded from the measure—in order to ensure plans with a high population of ARBs are not adversely and unintentionally affected.

Response: CMS appreciates these comments but believes it is premature to assume that ARBs will be less receptive to offers of MTM services than other beneficiaries prior to gaining program experience. Congress enacted a statutory requirement that Part D plans engage with this population through their MTM programs, and CMS expects plans to develop effective engagement strategies based on their beneficiary population and business model.

The MTM CMR completion rate is a Pharmacy Quality Alliance (PQA) endorsed measure. The denominator currently used to derive the measure includes all individuals who met the MTM eligibility criteria; therefore, while the methodology for the measure is outside the scope of our proposal, as currently defined, the measure would include ARBs beginning with the 2022 measurement period. The extent to which any potential change in a plan's rating on this measure may affect its overall Star Rating would also depend on that plan's performance on all other Star Ratings measures. Lastly, CMS codified the methodology for the Part C and D Star Ratings program in the CY 2019 Medicare Part C and D Final Rule (83 FR 16519 through 16589), published in April 2018, for performance periods beginning with 2019; that final rule lays out the methodology for the 2021 Star Ratings and beyond. If the measure steward changes the specifications for the MTM CMR completion rate measure, the process for CMS to update the Star Ratings measures is codified at § 423.184(d).

Comment: A few commenters expressed concerns about the types of reporting requirements that may be included when ARBs are enrolled into MTM programs, and requested that CMS clarify what those requirements will be. A few commenters urged CMS to consider reducing reporting elements in view of the additional beneficiaries that will be added to MTM programs.

Response: We are requiring plans to comply with the requirement to extend MTM to ARBs beginning on January 1, 2022, and therefore this requirement will not impact plan reporting until the 2022 plan year data, which is collected in early 2023. Part D reporting requirements for the 2021 plan year (CMS-10185; OMB control number: 0938-0992 expires December 31, 2023) have been approved by OMB and are available at https://www.cms.gov/​Medicare/​Prescription-Drug-Coverage/​PrescriptionDrugCovContra/​RxContracting_​ReportingOversight.

Comment: A commenter voiced support for conducting CMR sessions via telemedicine.

Response: We appreciate the reminder that the CMR can be provided via telemedicine, which may be preferable in many situations. The regulation at § 423.153(d)(1)(vii)(B)(1)(i) specifies that the annual CMR must be provided by an interactive, person-to-person, or telehealth consultation.

Comment: A few commenters requested additional information on when a beneficiary may be considered to be “unable to accept the offer to participate” in a CMR. These commenters contend that it may be necessary to conduct outreach to a provider in cases where barriers due to social determinants of health (SDOH) may prevent the beneficiary from accepting the offer of a CMR, while conducting the CMR with the prescriber would allow the member to receive the benefits that go with MTM programs.

Response: As we explained in the proposed rule, the only situation in which CMS would consider a beneficiary to be unable to accept an offer to participate in a CMR is when the beneficiary is cognitively impaired and cannot make decisions regarding his or her medical needs. The CMS Standardized Format provides instructions for those circumstances. The flexibility to perform the CMR with a prescriber, caregiver or other authorized individual does not apply to situations where the sponsor is unable to reach the beneficiary (such as no response by mail, no response after one or more phone attempts, or lack of phone number or address), if there is no evidence of cognitive impairment, or where the beneficiary declines the CMR offer. Further, perceived barriers due to a beneficiary's SDOH does not mean that the beneficiary is unable to participate in a CMR. MTM providers are expected to make sure that they engage the target population in a manner that these beneficiaries can Start Printed Page 5898understand and use, regardless of any language or other barriers that exist. We also want to caution that the failure to provide services to beneficiaries disadvantaged by poverty, language, or other SDOH suggests discriminatory practices, which may be in violation of the Social Security Act or other federal requirements regarding access to services.

Comment: A commenter asked CMS to clarify the definition of an ARB.

Response: An ARB, as defined at § 423.100, means a Part D eligible individual (1) who is: (i) Identified using clinical guidelines (also 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 (FADs) under a Part D sponsor's drug management program in accordance with the requirements of § 423.153(f); or (2) with respect to whom a Part D sponsor receives a notice upon the beneficiary's enrollment in such sponsor's plan that the beneficiary was identified as an ARB (as defined in paragraph (1) of this definition) under the prescription drug plan in which the beneficiary was most recently enrolled and such identification had not been terminated upon disenrollment.

Comment: A commenter asked whether CMS expects to “grandfather” existing ARBs who have an active coverage limitation placed prior to January 1, 2021 that extends into the 2021 plan year, or whether the new MTM requirement would apply only to ARBs who are newly identified after January 1, 2021.

Response: As discussed earlier, under the regulation we are adopting in this final rule, Part D plan sponsors must comply with the requirement to include ARBs in MTM programs by January 1, 2022. Accordingly, all existing ARBs—that is, enrollees with an active limitation under a DMP as of January 1, 2022, although such limitation may have commenced prior to January 1, 2022—as well as ARBs identified on or after January 1, 2022, must be targeted for enrollment in MTM.

Comment: CMS received a number of comments on how to improve the Standardized Format including suggestions on the content and format. Most commenters indicated that electronic sharing of completed CMRs to the prescriber's EHR would promote continuity of care. These commenters urged CMS to produce a template that encouraged HL7®-enabled submissions. A commenter asked when a new MTM Standardized Format will be available for use and when MTM providers will be required to start using any newly developed format.

Response: We thank all commenters for their suggestions. Comments received in response to this regulation will be considered when finalizing the Standardized Format along with those received in response to the PRA package for the CMS Standardized Format (CMS-10396; OMB control number 0938-1154) that was published separately from the rule. An additional 30-day notice for CMS-10396 will be published for public comment following publication of this final rule, and a package will be delivered for OMB review. The 30-day notice will address the comments received in response to the rule- and non-rule solicitations, provide additional proposed revisions if applicable to address the comments, and propose a date for when the changes would become effective. The finalized Standardized Format will be released after approval by the OMB.

Comment: A commenter was concerned that the pecuniary interest of the sponsor will be the primary driver for MTM reviews and that it would create an incentive to “say no” to appropriate and safe opioid therapies for hundreds of thousands of pain patients.

Response: It appears that the commenter may be unfamiliar with the use and purpose of Part D MTM programs. The goal of MTM is to improve medication use and therapeutic outcomes driven by the individual beneficiary clinical needs and does not result in any denials of medications or services.

2. Information on Safe Disposal of Prescription Drugs That Are Controlled Substances for MTM Enrollees

Section 6103 of the SUPPORT Act added a new requirement that Part D plans provide beneficiaries enrolled in their MTM programs with information about the safe disposal of prescription drugs that are controlled substances, including information on drug takeback programs, in-home disposal, and cost-effective means for safe disposal of such drugs. To implement this new requirement, we proposed that Part D sponsors would be required to provide this information to all beneficiaries enrolled in their MTM programs at least annually, as part of the CMR or through the quarterly TMRs or follow up. Furthermore, while not required, we encouraged sponsors to provide information on safe disposal of all medications, not just controlled substances, to MTM enrollees.

Section 6103 of the SUPPORT Act states that the information provided to beneficiaries regarding safe disposal of prescription drugs that are controlled substances must meet the criteria established in section 1852(n)(2) of the Act, including information on drug takeback programs that meet such requirements determined appropriate by the Secretary and information on in-home disposal. Section 1852(n)(2) states that the Secretary shall, through rulemaking, establish criteria the Secretary determines appropriate to ensure that the information provided to an individual sufficiently educates the individual on the safe disposal of prescription drugs that are controlled substances. We described our proposed criteria and requirements for MA plans to furnish information on safe disposal of controlled substances when providing an in-home health risk assessment and our proposal to codify these requirements in a new provision of the regulations at § 422.111(j) in section III.C. of the proposed rule. In section III.E.2 of the proposed rule, we proposed that Part D plans would be required to furnish materials in their MTM programs regarding safe disposal of prescription drugs that are controlled substances that meet the criteria specified in § 422.111(j). Under this proposal, Part D plans, like MA plans, would retain the flexibility to refine their educational materials based on updated information and/or on beneficiary feedback, so long as the materials meet the proposed criteria. Section 1860D-4(c)(2)(B)(ii) of the Act expressly directs that the information on safe disposal furnished as part of an MTM program meet the criteria established under section 1852(n)(2) of the Act for MA plans. Accordingly, to ensure consistency and to avoid burdening MA-PD plans with creating separate documents addressing safe disposal for purposes of conducting in-home health risk assessments and their MTM programs, we explained our belief that it is appropriate to apply the same criteria that would apply under the proposed provision at § 422.111(j) to MTM programs by including a reference to the requirements of § 422.111(j) in the regulation at § 423.153(d) governing MTM programs.

Specifically, we proposed to revise § 423.153(d)(1)(vii) to include a requirement that all MTM enrollees receive at least annually, as part of the CMR, a TMR, or another follow up service, information about safe disposal of prescription drugs that are controlled substances, take back programs, in-home disposal, and cost-effective means of safe disposal that meets the criteria in § 422.111(j).Start Printed Page 5899

Comment: A few commenters suggested that plans be allowed to include information on safe disposal in documents other than the TMR or CMR, or on a plan website. Another commenter suggested that the MTM program welcome letter (or written initial offer of the CMR) be used to convey safe disposal information as well, and asked if doing so would meet the intent of this requirement. This commenter stated that plans may have difficulty reaching beneficiaries after enrollment in the MTM program if they have disenrolled from the plan for any reason, and it would be useful for plans to have more ways to provide this important information.

Response: As an initial matter, we note that plans have no obligation to provide MTM services to beneficiaries once they have disenrolled from the plan. Given the importance of information on the safe disposal of medicines, we support posting the information on plan or network pharmacy websites, but we do not believe that website postings alone will fulfill the statutory requirement that the information be provided to individual MTM recipients. However, we do agree with the comment recommending that safe disposal information could be provided in an MTM program welcome letter. While the statutory language at section 1860D-4(c)(2)(B)(ii) of the Act does not identify a specific format for providing this information, CMS believes that using the MTM welcome letter meets the statutory intent. Beneficiaries would then have an opportunity to ask any clarifying questions during a follow-up MTM service, including during the CMR. While not specifically addressed in the comments received, we would also support sending the safe disposal information electronically, for example through a member portal, provided the plan can document that the individual received the information. Accordingly, in this final rule we are modifying the proposed regulation text at § 423.153(d)(1)(vii)(E) by including a reference to “other MTM correspondence or service” to give plans the flexibility to provide this information in the manner they determine is most effective for reaching the beneficiaries enrolled in their MTM program.

Comment: All those who commented on the proposed requirement to include materials on safe disposal were supportive of the concept. A few commenters expressed appreciation that the proposed requirements in § 423.153(d) echoed those proposed in § 422.111(j). Some also commented that newly-developed disposal technologies that make the medications unusable, such as in-home deactivation kits, provide a viable option for safe disposal of controlled substances, and supported requiring information about these options in the educational materials.

Response: We appreciate commenters' support for the concept of furnishing information on safe disposal to MTM enrollees. We agree that the types of products referenced by the commenters may present additional means for safe disposal of prescription drugs that would complement the approaches described in the proposed rule. Therefore, as discussed in section III.C of this preamble, in this final rule we are modifying the proposed regulation text at § 422.111(j)(5) to permit plans to include information about the availability of in-home deactivation kits in the enrollee's community, where applicable. MA-PD plans will be able to use the same communication materials on safe disposal to educate MTM enrollees as they use for enrollees receiving this information as part of an in-home health risk assessment under MA.

After consideration of the comments received, we are finalizing the proposed changes to the Part D MTM program requirements with the modifications discussed. We are finalizing our proposal to expand the definition of beneficiaries targeted for enrollment in MTM programs at § 423.153(d)(2) to include ARBs, as defined in § 423.100. We are finalizing the provision at § 423.153(d)(1)(vii)(E) with modifications to allow plans to meet the safe-disposal educational requirement through use of a CMR, TMR, or other MTM correspondence or service, such as an MTM welcome letter. We are finalizing as proposed the requirement at § 423.153(d)(1)(vii)(F) specifying that the information provided must comply with all requirements of § 422.111(j). Lastly, we are modifying the regulation text at § 423.153(d)(1)(vii)(E) and § 423.153(d)(2)(ii) to specify that these requirements are applicable beginning on January 1, 2022. As noted in the Executive Summary of this final rule, the revisions to § 423.153(d)(2) as a whole are applicable 60 days from the date of publication in the Federal Register.

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

CARA amended the Act to include new authority for Medicare Part D drug management programs effective on or after January 1, 2019. If an enrollee is identified as at-risk under a drug management program (DMP), the individual has the right to appeal an at-risk determination under the rules in part 423, subparts M and U. In addition to the right to appeal an at-risk determination, an enrollee has the right to appeal the implementation of point-of-sale claim edits for frequently abused drugs that are specific to an ARB or a limitation of access to coverage for frequently abused drugs to those that are prescribed for the beneficiary by one or more prescribers or dispensed to the beneficiary by one or more network pharmacies (lock-in). Section 2007 of the SUPPORT Act amended section 1860D-4(c)(5) of the Act to require that, if on reconsideration a Part D sponsor affirms its denial of a DMP appeal, in whole or in part, the case shall be automatically forwarded to the independent outside entity contracted with the Secretary for review and resolution.

To implement the changes required by the SUPPORT Act, we proposed to revise the requirements related to adjudication timeframes and responsibilities for making redeterminations at § 423.590 by adding paragraph (i) to state that if on redetermination the plan sponsor affirms, in whole or in part, its decision related to an at-risk determination under a DMP in accordance with § 423.153(f), the plan sponsor must forward the case to the IRE by the expiration of the applicable adjudication timeframe under paragraph (a)(2), (b)(2), or (d)(1) of § 423.590. We also proposed revisions to the requirements for the content of the initial notice at § 423.153(f)(5)(ii)(C)(3) and the requirements for the second notice at § 423.153(f)(6)(ii)(C)(4)(iii). Specifically, we proposed that these notices explain that if on redetermination a plan sponsor affirms its at-risk decision, in whole or in part, the enrollee's case shall be automatically forwarded to the IRE for review and resolution.

Finally, we proposed to revise § 423.600(b) to clarify that the requirement that the IRE solicit the views of the prescribing physician or other prescriber applies to decisions that are auto-forwarded to the IRE.

We summarize the comments we received on these proposals related to automatic escalation and respond to them as follows.

Comment: Several commenters expressed support for our proposal that if on redetermination a plan sponsor affirms, in whole or in part, its denial related to an at-risk determination under a DMP in accordance with § 423.153(f), Start Printed Page 5900the plan sponsor must forward the case to the IRE for review and resolution. One commenter noted that it has been their experience in general that most patients do not formally contest their at-risk determination status, but the commenter supports a beneficiary's right to appeal. Some of the commenters that supported the proposal related to auto-escalation of these cases to the IRE also expressed specific concerns. A few commenters noted that requiring denied cases to be forwarded to the IRE by the expiration of the applicable adjudication timeframe will significantly decrease the amount of time that plans have to review at-risk redeterminations. These commenters stated that these types of cases generally take longer to complete due to more outreach and coordination between providers than other types of redetermination cases and that reducing the timeframe to complete these cases in order to prepare a case for the IRE will decrease the quality of the plan's review. One commenter stated the belief that CMS's proposed timeframe for auto-escalation is not realistic or achievable, noting that DMP cases are complicated, and multiple delegated entities must coordinate to prepare a complete case file for forwarding. Commenters stated that plans need time to prepare case files and to ensure their completeness by acquiring the complete case management information from the DMP team, and that plans should have the full adjudication time for review of these cases.

Commenters noted that, in situations where a plan affirms its denial of an at-risk determination, it would pose operational burden and challenges to complete a thorough investigation, reach a determination, and automatically forward the case to the IRE within the 72-hour adjudication timeframe for expedited determinations and the 7-day timeframe for standard at-risk determinations. A couple of commenters noted that plans are afforded 24 hours after the expiration of the adjudication timeframe to prepare and forward the case file to the IRE in those Part D benefit appeal cases in which the plan misses its adjudication timeframe. Some of the commenters suggested that plans be afforded 24 hours to prepare and send the case file to the IRE and other commenters suggested 48 or 72 hours from the end of the adjudication timeframe. A commenter believes that the process of automatic escalation to external review should be consistent with Part D requirements for standard or expedited requests, so as to mitigate any additional administrative burden and requests that CMS ensure that this process mirror Part D requirements so that the systems and policies in place are seamless.

Response: We thank the commenters for their overall support and agree with those commenters who expressed concern that requiring the administrative case file to be assembled and forwarded to the IRE within the applicable adjudication timeframe could unnecessarily curtail the amount of time a plan has to conduct a thorough review of the case. The regulations at § 423.590(c) and (e) that govern Part D benefit redeterminations require a case to be auto-forwarded to the IRE when the plan misses the adjudication timeframe. Specifically, a plan has 24 hours from the end of the applicable adjudication timeframe to send the case file to the Part D IRE. For consistency with how cases currently subject to auto-forwarding to the IRE are handled, we believe it is reasonable and permissible under the statute to allow plans up to an additional 24 hours after the expiration of the applicable redetermination adjudication timeframe to assemble and forward the administrative case file to the IRE. In this final rule, the proposed regulation text at § 423.590(i) has been modified to state that if on redetermination the plan sponsor affirms, in whole or in part, its denial related to an at-risk determination under a drug management program in accordance with § 423.153(f), the Part D plan sponsor must forward the case to the IRE contracted with CMS within 24 hours of the expiration of the applicable adjudication timeframe under paragraph (a)(2), (b)(2), or (d)(1) of this section.

Comment: A few commenters disagreed with the proposals related to the DMP notices. Commenters stated that providing the appeal notification on the first notice does not add value to the beneficiary, since the first notice has a 30-day window to gain additional information, if necessary, before a final decision is made to implement a lock-in or POS edits. These commenters recommend that appeal language only be included on the second notice. To reduce member confusion, a few commenters urged CMS to consider addressing escalation to the IRE only in the second notice as it relates to redeterminations specifically, and to ensure that it is clear the IRE escalation process will only apply when a redetermination in whole or in part is denied. Commenters also noted that if CMS is going to update member notices for the DMP, it is critically important for plans to receive updates to the notices in a timely manner to allow plans sufficient time to revise, implement, and test new notices. A few commenters also requested that CMS update the model redetermination denial notice to account for auto-forwarding of an adverse DMP case to the Part D IRE.

Response: We thank the commenters for their perspective on the notices intended to inform at-risk beneficiaries of their rights under a plan sponsor's DMP. We proposed that the initial and second notice explain that if on redetermination a plan sponsor affirms its at-risk decision, in whole or in part, the enrollee's case shall be automatically forwarded to the IRE for review and resolution. SUPPORT Act section 2007 specifically requires that notice of the automatic escalation of adverse decisions be included on the initial and second notice. Therefore, we do not believe we have the discretion to omit information on this right from the initial notice, as suggested by some of the commenters. With respect to the model redetermination notice, we plan to update that model consistent with this final rule. However, we note that this notice is a model that plan sponsors have the discretion to modify.

Comment: A few commenters requested that CMS train the IRE appropriately to ensure consistent reviews of drug management cases. One commenter noted that these are unique case reviews and cannot simply be overturned by the IRE based on a provider attestation of medical necessity. The commenter also stated that the IRE should have specific criteria in place to conduct these reviews and, further, that plans should also have recourse to address instances when the IRE overturns a plan decision.

Response: We thank the commenter for these comments and note that the IRE is already conducting reviews of DMP cases based on published regulations and guidance that govern plan sponsor activities with respect to drug management programs. The IRE review function is a beneficiary protection set forth in statute and there may be instances where the independent review performed by the IRE will result in a plan's decision being overturned based on a finding of medical necessity given the facts and circumstances of the enrollee's case, including clinical information furnished by the enrollee's prescriber. If a plan believes the IRE has made an error in its decision making, the IRE's reconsideration decision may be reopened consistent with the rules at § 423.1980.

Comment: A couple of commenters expressed support for the proposal to require automatic escalation of DMP to Start Printed Page 5901external review, but also urged the Secretary to either exercise his authority or support legislation to extend such auto-escalation to external review for all adverse appeal decisions regarding Part D drugs, similar to the rules applicable to Medicare Advantage appeals.

Response: We appreciate the commenters' support for the proposed rules related to automatic escalation of DMP appeals, but note that the comment related to extending automatic escalation to all Part D benefit appeals is outside the scope of this rule.

Comment: While recognizing that the automatic escalation provision is required under the SUPPORT Act, some commenters expressed specific concerns with this proposal. One commenter encouraged CMS to find a path that allows the beneficiary to exercise their appeal rights following the standard appeals process outlined in Part C and D guidance, as must all other Medicare beneficiaries who receive an adverse redetermination. The commenter stated that the SUPPORT Act creates a discrepancy in the uniformity of the Medicare benefit by devising a unique process for ARBs to have their denied redeterminations automatically auto-forwarded to the IRE. The commenter stated that CMS should clarify how the IRE might reach a decision other than the decision the plan reached in consultation with the at-risk beneficiary's prescriber and requested that CMS share with plans the additional data sources the IRE may have that plans will not. The commenter also requested that CMS provide plans any training materials that may be provided to the IRE to help process these reconsiderations. Another commenter expressed concern that the process of automatic escalation to an external reviewer sets up the patient's care for review involving third parties who may be unreasonably biased with an anti-opioid mindset and incentivized by institutional conflicts of interest, such as the reduction of costs to insurance companies. This commenter also noted that it has been his experience that outside reviews fail to reflect adequate perspective on the patient, their problems, and their care and that the process inevitably involves the patient or their doctor negotiating a complex and time consuming phone triage system and may require an hour or more of a physician's time.

Response: We appreciate the comments, but note that the automatic escalation of a beneficiary's case to the IRE is a statutory provision that creates a protection for beneficiaries who are in a DMP. Part of the competitive process of contracting with an outside independent entity involves consideration of any potential institutional conflicts of interest. The very nature of an outside independent review means that there may be cases where the IRE reaches a different decision from that reached by a plan, based on clinical information supplied by the enrollee's prescriber. The IRE is required to follow the same regulations and guidance related to DMPs as is followed by plan sponsors. There may be instances where the IRE's review of supporting documentation received from an enrollee's prescriber reasonably supports a different decision from that reached by the plan sponsor. With respect to the time an enrollee or prescriber may have to expend, automatic escalation to IRE review should reduce the time a beneficiary has to spend disputing a limitation on access under a DMP because, under this final rule, the beneficiary will no longer have to request IRE review. In addition, the IRE is required to solicit the views of the prescribing physician or other prescriber when it receives a case from a plan sponsor, which may reduce the time a physician or other prescriber will have to expend providing necessary clinical information to the IRE.

Comment: A commenter asked CMS to clarify how an ARB will exercise his or her appeal rights and whether the auto-forwarded denied appeal be considered the first level of appeal.

Response: As with Part D benefit appeals, an ARB exercises his or her right to appeal by requesting a redetermination from the plan, which is the first level of appeal. The IRE review is the second level of appeal, including those DMP cases that will be subject to auto-forwarding under this final rule.

Comment: A commenter questioned what the impact will be if the plan does not auto-forward the denied appeal within the required timeframe.

Response: The SUPPORT Act requires plans to auto-forward to the IRE for review and resolution those redeterminations where a plan affirms its denial, in whole or in part. As with other regulatory requirements, CMS can exercise enforcement authority to ensure plan compliance. Pursuant to contract provisions at § 423.505(b)(7), plan sponsors must comply with all requirements of 42 CFR part 423, subpart M governing coverage determinations, grievances, and appeals, and formulary exceptions and CMS may impose sanctions on any plan sponsor with a contract for violations listed in § 423.752(a).

Comment: A commenter questioned how these auto-forwarded redeterminations will be differentiated by CMS from other reviews forwarded to the IRE and requested that CMS clarify whether the auto-forwarded denial or the IRE's decision on the auto-forwarded redetermination will be included in reporting or audit universes.

Response: Adverse redetermination decisions related to coverage limitations imposed under a plan sponsor's DMP that will be auto-forwarded to the IRE consistent with this final rule will be reported by plan sponsors as adverse redetermination decisions. For purposes of any necessary data gathering, the Part D IRE will be able to distinguish cases that are auto-forwarded for untimeliness from the DMP appeals auto-forwarded to the Part D IRE. With respect to the audit universes, if a plan sponsor's decision was made during the relevant universe period, those redeterminations will be reported in the redeterminations universe. If the determination was fully or partially overturned by the IRE, ALJ, or MAC during the relevant universe period, the overturn decision will be reported in the Part D effectuations of overturned decisions universe.

Comment: Some commenters suggested that CMS define what a plan sponsor is to include in a case packet for auto-forwarded denials.

Response: We appreciate the commenters' suggestion and note that the Part D IRE's reconsideration procedures manual and case file transmittal form lists the documents that should be included by plan sponsors as part of the administrative case file. These documents will be updated, as necessary. For example, the case file transmittal form will be modified so that a plan sponsor can clearly indicate that a case is being automatically forwarded to the Part D IRE as a result of an adverse DMP redetermination.

Comment: A commenter asked whether the plan is required to notify the ARB, their prescriber(s) or others and, if so, questioned if there is a required timeframe to complete the notification.

Response: Redetermination decisions related to a denied redetermination involving a DMP are subject to existing notice requirements at §§ 423.590(a)(d) and (g).

Comment: A commenter who expressed support for the proposal requested clarification on whether the Part D sponsor or the Part C plan would be responsible for making this determination when the member is enrolled in a standalone PDP. The commenter requested clarification on whether it is the Part D sponsor's responsibility to forward a redetermination to IREs for all drugs for Start Printed Page 5902any member enrolled in a DMP. We believe the commenter is asking about a situation where an individual is enrolled in an MA plan and a separate, standalone Part D drug plan and whether it is the responsibility of the standalone Part D drug plan to forward an adverse DMP plan appeal to the IRE.

Response: Consistent with section 1860D-4(c)(5)(E) of the Act, it is the responsibility of an enrollee's Part D plan sponsor to auto-forward to the IRE an adverse redetermination decision related to an individual's identification as an ARB, a coverage determination made under a DMP, the selection of prescriber or pharmacy under the DMP and information to be shared for subsequent plan enrollment.

Comment: A commenter that expressed support for automatically escalating redeterminations associated with DMP appeals to the Part D independent review entity (IRE) noted that automatically escalating an appeal for an at-risk determination to an IRE without having to wait for the enrollee or prescriber on their behalf to request a review will serve to reduce the lag time in final determinations being issued and enable patients to access needed care sooner. This commenter also noted support for proposed changes to the required initial and second notice in addition to adjudication timeframes and redetermination responsibilities. This commenter encouraged us to reiterate the need for the prescribing physician to provide all requested information associated with the adverse decision to the IRE within a timely manner. Further, the commenter urged us to consider requiring the IRE to make a good faith effort to obtain relevant information from the prescribing physician in instances in which there is not an automatic escalation as well to ensure consistency in the resolution of all cases involving Part D appeals.

Response: We appreciate the support for these proposals and agree that it is important for the prescriber to submit the clinical information necessary for a thorough adjudication of the case. In this final rule, we are finalizing our proposal to modify the existing regulations at § 423.600(b) such that the requirement that the IRE solicit the views of the prescribing physician or other prescriber and include a written account of the prescriber's views in the IRE's record will apply to adverse DMP redeterminations that will be auto-forwarded to the IRE.

Comment: A commenter expressed the belief that automatic escalation to the IRE weakens the authority of Part D plans as partners to CMS in the fight against the opioid epidemic. An ARB appealing a decision to lock them into a specific pharmacy for opioid prescriptions would essentially “skip the line” if a plan denies their appeal and then upholds the denial upon review. The commenter stated the belief that this is unfair to non-ARBs, who must then wait behind ARBs for an IRE decision. The commenter also believes that this diminishes the ability of the plan to impact the behavior of providers and that rather than making changes to prescribed therapies, providers will wait for the result of the redetermination. Further, commenter believes that automatic escalation removes the ability of the plan to reconsider its decision when more information is submitted to it. The commenter also believes that automatic escalation will increase denials because the turnaround time clock will expire prior to the IRE having full information, and the beneficiary's denial is likely to be upheld. The commenter recommends, to the extent that CMS cannot relax the requirements in this final rule, that CMS provide the IRE with opioid-specific training prior to receiving these automatically escalated cases, to minimize process-related denials. The commenter recommends that CMS broadly consider a creative approach to meeting the statutory intent behind this provision and delay its implementation, or at least enforcement, until it can implement a policy that does not punish Part D plans and does not punish beneficiaries (at-risk and otherwise) while appropriately administering the pharmacy lock-in program.

Response: As previously stated, the SUPPORT Act requires plan sponsors to auto-forward adverse DMP redeterminations to the IRE for review and resolution. We do not believe we have the discretion to interpret the statutory language in a manner that results in a plan sponsor not being required to auto-forward a denied DMP redetermination to the IRE for review and resolution. We continue to believe that, given the extensive case management involved in these types of cases, there will be very few cases that will be subject to auto-forwarding. We note that the IRE is already performing reviews of DMP cases based on existing regulations and guidance. We believe the intent of the SUPPORT Act provision requiring automatic escalation to the IRE is to enhance protections for at-risk beneficiaries and not intended to “punish” plans or beneficiaries. We disagree that this requirement weakens a plan sponsor's authority to partner with CMS in the fight against the opioid epidemic. As we've previously noted, the extensive case management involved with DMPs affords plans ample opportunity to work with an ARB to ensure appropriate limitations and will likely result in a very low volume of appeals.

Based on the comments we received, we are finalizing, with modification, our proposal to require a Part D plan sponsor to auto-forward to the IRE those redeterminations where a plan sponsor affirms, in whole or in part, its denial related to an at-risk determination under a DMP in accordance with § 423.153(f). Consistent with existing processes for untimely cases that are auto-forwarded to the IRE, we are modifying our proposal to state in this final rule that plans will be required to forward adverse DMP redetermination decisions to the IRE within 24 hours after expiration of the applicable adjudication timeframe. In addition, we are finalizing the proposed revision at § 423.600(b) that will apply the requirements related to the IRE soliciting the views of the prescribing physician or other prescriber if a case is forwarded to the IRE by a Part D plan sponsor. We are also finalizing the proposed requirements for the content of the initial notice at § 423.153(f)(5)(ii)(C)(3) and the requirements for the second notice at § 423.153(f)(6)(ii)(C)(4)(iii) to require that these notices explain that if on redetermination a plan sponsor affirms its at-risk decision, in whole or in part, the enrollee's case shall be automatically forwarded to the IRE for review and resolution. Finally, necessary modifications will be made to the Part D IRE's contract consistent with these final rules and related operational issues will be addressed in the IRE's reconsideration procedures manual. Pursuant to section 2007 of the SUPPORT Act, the automatic escalation provisions being finalized in this rule—at § 423.153(f)(5)(ii)(C)(3), § 423.153(f)(6)(ii)(C)(4)(iii), § 423.590(i), and § 423.600(b)—apply 60 days following publication of this final rule.

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

1. Medicare Parts C and D Anti-Fraud Efforts

CMS's role in overseeing the Medicare program includes ensuring that payments are made correctly and that fraud, waste, and abuse are prevented and detected. Failure to do so endangers the Trust Funds and may result in harm Start Printed Page 5903to beneficiaries. CMS has established various regulations over the years to address potentially fraudulent and abusive behavior in Medicare Parts C and D. For instance, 42 CFR 424.535(a)(14)(i) addresses improper prescribing practices and permits CMS to revoke a physician's or other eligible professional's enrollment if he or she has a pattern or practice of prescribing Part B or D drugs that is abusive or represents a threat to the health and safety of Medicare beneficiaries, or both.

2. SUPPORT Act—Sections 2008 and 6063

a. Background

Opioid use disorder (OUD) and deaths from prescription and illegal opioid overdoses have reached alarming levels. The Centers for Disease Control and Prevention (CDC) estimated 47,000 opioid overdose deaths in 2017, and 36 percent of those deaths involved prescription opioids.[21] On October 26, 2017, the Acting Health and Human Services Secretary, Eric D. Hargan, declared a nationwide public health emergency on the opioid crisis as requested by President Donald Trump.[22] This public health emergency has since been renewed several times by Secretary Alex M. Azar II.[23]

Section 2008 of the SUPPORT Act amends and adds several sections of the Act to address the concept of a “credible allegation of fraud.” Specifically:

  • Sections 2008(a) and (b) of the SUPPORT Act amends sections 1860D-12(b) and 1857(f)(3) of the Act, respectively, by adding new requirements for Medicare Part D plan sponsors and MA organizations offering MA-PD plans. Specifically, the provisions—

++ Apply certain parts of section 1862(o) of the Act, regarding payment suspensions based on credible allegations of fraud, to Medicare Part D plan sponsors and MA organizations offering MA-PD plans, allowing them to impose payment suspensions on pharmacies in the same manner as these provisions apply to CMS.

++ Require these Part D plan sponsors and MA organizations offering MA-PD plans to notify the Secretary regarding the imposition of a payment suspension on a pharmacy pending an investigation of a credible allegation of fraud (but does not extend the requirement to report to the Secretary other payment suspensions for which plan sponsors already have authority).

++ Require this notification to be made such as via a secure internet website portal (or other successor technology) established under section 1859(i).

  • Section 2008(d) of the SUPPORT Act, which amended section 1862(o) of the Act, states that a fraud hotline tip (as defined by the Secretary) without further evidence shall not be treated as sufficient evidence for a credible allegation of fraud.

Although the effective date for these provisions of section 2008 of the SUPPORT Act is for plan years beginning on or after January 1, 2020, we will be implementing these provisions with an applicability date that is for plan years beginning on or after January 1, 2022. This applicability date is necessary due to several factors. The first factor is the need to ensure that the web-based portal is complete and operational for plan sponsor's use. While the development of the web-based portal began when the legislation was enacted, CMS was unable to complete the development of the portal in time for its full implementation in plan year 2021. In addition, the portal has required several key updates to reflect the requirements in this regulation. Additional factors include the need to ensure the web-based portal is complete and operational for plan sponsor's use; the time needed for plan sponsors to determine internal procedures to meet the requirements outlined in this rule; the need for CMS to obtain feedback from plan sponsors to address any challenges encountered with the web-based portal; and the need to provide plan sponsors with the opportunity to address any other operational challenges with implementing these provisions, including potential changes that may be needed due to the COVID-19 public health emergency. Furthermore, the applicability date is later than the effective dates in the SUPPORT Act because the publication of this final rule is occurring after the bid deadline for plan year 2021. However, where the statute is self-implementing, the delay in applicability of these regulations is not a barrier to enforcement of the statutory provisions.

Section 6063(a) of the SUPPORT Act, which added a new paragraph (i)(1) to section 1859 of the Act, requires the following:

  • The Secretary, after consultation with stakeholders, shall establish a secure web-based program integrity portal (or other successor technology) that would allow secure communication among the Secretary, MA plans, and prescription drug plans, as well as eligible entities with a contract under section 1893, such as Medicare program integrity contractors. The purpose is to enable, through the portal:

++ The referral by such plans of substantiated or suspicious activities (as defined by the Secretary) of a provider of services (including a prescriber) or supplier related to fraud, waste, or abuse for the purpose of initiating or assisting investigations conducted by the eligible entity; and

++ Data sharing among such MA plans, prescription drug plans, and the Secretary.

  • The Secretary shall disseminate the following information to MA plans and prescription drug plans via the portal: (1) Providers and suppliers referred for substantiated or suspicious activities during the previous 12-month period; (2) providers and suppliers who are currently either excluded under section 1128 of the Act or subject to a payment suspension pursuant to section 1862(o) or otherwise; (3) providers and suppliers who are revoked from Medicare, and (4) in the case the plan makes a referral via the portal concerning substantiated or suspicious activities of fraud, waste, or abuse of a provider or supplier, the Secretary shall notify the plan if the related providers or suppliers were subject to administrative action under title XI or XVIII for similar activities.
  • The Secretary shall, through rulemaking, specify what constitutes substantiated or suspicious activities of fraud, waste, or abuse, using guidance such as that provided in the CMS Pub. 100-08, Medicare Program Integrity Manual (PIM), chapter 4, section 4.8. In section 4.8 of the PIM, CMS provides guidance to its Medicare program integrity contractors on the disposition of cases referred to law enforcement. Similar to what is stated in section 2008(d) of the SUPPORT Act, a fraud hotline tip without further evidence does not constitute sufficient evidence for substantiated fraud, waste, or abuse.
  • On at least a quarterly basis, the Secretary must make available to the plans information on fraud, waste, and abuse schemes and trends in identifying suspicious activity. The reports must include administrative actions, pertinent information related to opioid overprescribing, and other data determined appropriate by the Secretary in consultation with stakeholders. This information must be anonymized data submitted by plans without identifying the source of such information.Start Printed Page 5904

Although the effective date for these provisions of section 6063(a) of the SUPPORT Act is beginning not later than 2 years after the date of enactment, or by October 24, 2020, we will be implementing these provisions with an applicability date that is for plan years beginning on or after January 1, 2022. This applicability date is necessary for the same reasons described previously in this section related to the provisions in section 2008 of the SUPPORT Act.

Furthermore, section 6063(b) of the SUPPORT Act, which amended section 1857(e) of the Act, requires MA organizations and Part D plan sponsors to submit to the Secretary, information on investigations, credible evidence of suspicious activities of a provider of services (including a prescriber) or supplier related to fraud, and other actions taken by such plans, related to inappropriate prescribing of opioids. The Secretary shall, in consultation with stakeholders, establish a process under which MA organizations and Part D plan sponsors must submit this information. In addition, the Secretary shall establish a definition of inappropriate prescribing, which will reflect the reporting of investigations and other corrective actions taken by MA organizations and Part D plan sponsors to address inappropriate prescribing of opioids and the types of information that must be submitted.

Although the effective date for these provisions of section 6063(b) of the SUPPORT Act is for plan years beginning on or after January 1, 2021, we will be implementing these provisions with an applicability date that is for plan years beginning on or after January 1, 2022. This applicability date is necessary for the same reasons described previously in this section related to the provisions in section 2008 of the SUPPORT Act.

b. Need for Additional Measures

Existing regulations for MA and Part D plan sponsors in §§ 422.503(b)(4)(vi)(G)(3) and 423.504(b)(4)(vi)(G)(3) specify that plan sponsors should have procedures to voluntarily self-report potential fraud or misconduct related to the MA and Part D programs to CMS or its designee. (We note that § 422.503(b) generally outlines requirements that MA organizations must meet. Section 423.504(b) outlines conditions necessary to contract as a Part D plan sponsor.) Presently, MA organizations and Part D plan sponsors voluntarily report such data to CMS through either—(1) direct submissions to CMS, or (2) communication with the Investigations Medicare Drug Integrity Contractor (IMEDIC). Given the gravity of the nationwide opioid epidemic and the need for CMS and the plans to have as much information about potential and actual prescribing misbehavior as possible in order to halt such misbehavior, we are taking further regulatory action consistent with sections 2008 and 6063. Sections 2008 and 6063 of the SUPPORT Act provide the authority to establish regulations to implement a requirement for plans to report certain related data.

3. Proposed Provisions

Consistent with the foregoing discussion, we proposed the following regulatory provisions to implement sections 2008 and 6063 of the SUPPORT Act. As explained, some of our proposals modify or supplement existing regulations, while others establish new regulatory paragraphs altogether. Regulations related to Part C are addressed in 42 CFR part 422; those pertaining to Part D are addressed in 42 CFR part 423. Regulations pertaining to or contained in other areas of title 42 will be noted as such.

a. Definitions

The definitions outlined in this section of this rule will be effective following the required statutory deadlines for each reporting piece described in the SUPPORT Act. In the proposed rule, we proposed the definitions of substantiated or suspicious activities of fraud, waste or abuse and fraud hotline tip would be effective beginning October 24, 2020, and the definitions of inappropriate prescribing of opioids and credible allegations of fraud would be effective beginning January 1, 2021.

(1) Substantiated or Suspicious Activities of Fraud, Waste, or Abuse

We indicated earlier that section 6063(a) of the SUPPORT Act added a new section 1859(i)(1) to the Act requiring the establishment of a regulatory definition of “substantiated or suspicious activities of fraud, waste, or abuse,” using guidance such as that in CMS Pub. 100-08, PIM, chapter 4, section. 4.8. To this end, we proposed to add to §§ 422.500 and 423.4 a definition specifying that substantiated or suspicious activities of fraud, waste or abuse means and includes, but is not limited to allegations that a provider of services (including a prescriber) or supplier: Engaged in a pattern of improper billing; submitted improper claims with suspected knowledge of their falsity; submitted improper claims with reckless disregard or deliberate ignorance of their truth or falsity; or is the subject of a fraud hotline tip verified by further evidence. Consistent with the reference in section 6063(a) of the SUPPORT Act to chapter 4 of the PIM, our proposed definition largely mirrored that in section 4.8 of the PIM. We also believe that this definition is, importantly, broad enough to capture a wide variety of activities that could threaten Medicare beneficiaries and the Trust Funds. We solicited public comment on this definition.

We received several comments on the definition of “substantiated or suspicious activities of fraud, waste or abuse” and our responses to those comments follow.

Comment: A professional organization supported this definition and mentioned that it would ensure targeted streamlined fraud reporting.

Response: We appreciate the comment and support of the definition and we are finalizing the definition as proposed.

Comment: Several commenters raised concerns with the definition of substantiated and suspicious activity. Some commenters requested additional information regarding the scope of the definition. One commenter recommended that CMS provide additional guidance on the definition of “pattern of improper billing.” Other commenters wanted to know what specific criteria will be used for substantiated and suspicious reporting. Another commenter was concerned with CMS's use of language such as “substantiated” and “suspicious.”

Response: In defining what constitutes substantiated or suspicious activities of fraud, waste, and abuse, we looked to guidance currently in the Medicare Program Integrity Manual 4.8. Section 6063 of the SUPPORT Act further clarifies that a fraud hotline tip without further evidence shall not be treated as sufficient evidence for substantiated fraud, waste, or abuse. We believe the definition that we are finalizing will address the commenters' concerns as it reflects the SUPPORT Act requirement to establish the definition using guidance such as that provided in the Medicare Program Integrity Manual 4.8. In an effort to be consistent across our programs, we believe the definition as proposed provides a similar context for what is to be reported as the PIM outlines for fee-for-service. Based on the comments received and our responses we are finalizing the proposed definition without modification; however, the applicability date for this definition will be for plan years beginning on or after January 1, 2022 for reasons previously discussed in this section.Start Printed Page 5905

(2) Inappropriate Prescribing of Opioids

Section 6063(b) of the SUPPORT Act, as mentioned previously, states the Secretary is required to establish: (1) A definition of inappropriate prescribing; and (2) a method for determining if a provider of services meets that definition. MA organizations and Part D Plan Sponsors must report actions they take related to inappropriate prescribing of opioids. We accordingly proposed to add the following definition of inappropriate prescribing with respect to opioids to §§ 422.500 and 423.4. We proposed that inappropriate prescribing means that, after consideration of all the facts and circumstances of a particular situation identified through investigation or other information or actions taken by MA organizations and Part D Plan Sponsors, there is an established pattern of potential fraud, waste and abuse related to prescribing of opioids, as reported by the Plan Sponsors.

In determining whether inappropriate prescribing of opioids has occurred we proposed that plan sponsors may consider any number of factors including, but not limited to the following: Documentation of a patient's medical condition; identified instances of patient harm or death; medical records, including claims (if available); concurrent prescribing of opioids with an opioid potentiator in a manner that increases risk of serious patient harm; levels of Morphine Milligram Equivalent (MME) dosages prescribed; absent clinical indication or documentation in the care management plan, or in a manner that may indicate diversion; State level prescription drug monitoring program (PDMP) data; geography, time and distance between a prescriber and the patient; refill frequency and factors associated with increased risk of opioid overdose.

We believe the many steps that CMS, the CDC, and HHS have taken in response to the nation's opioid crisis have had an overall positive impact on clinician prescribing patterns, resulting in safer and more conscientious opioid prescribing across clinician types and across the settings where beneficiaries receive treatment for pain, and have also resulted in heightened public awareness of the risks associated with opioid medications. For example, recent HHS guidance [24] highlights the importance of judicious opioid prescribing that minimizes risk and; urges collaborative, measured approaches to opioid dose escalation, dose reduction, and discontinuation; furthermore, a 2019 HHS Task Force report [25] outlines best practices for multimodal approaches to pain care. In this definition, we recognized that there are legitimate clinical scenarios that may necessitate a higher level of opioid prescribing based on the clinician's professional judgement, including, the beneficiary's clinical indications and characteristics, whether the prescription is for an initial versus a subsequent dose, clinical setting in which the beneficiary is being treated, and various other factors. We sought public comments on specific populations or diagnoses that could be excluded for purposes of this definition, such as cancer, hospice, and/or sickle cell patients. Based upon widely accepted principles of statistical analysis and taking into account clinical considerations mentioned previously, we noted that CMS may consider certain statistical deviations to be instances of inappropriate prescribing of opioids. We requested evidence from clinical experts regarding evidence based guidelines for opioid prescribing across clinical specialties and care settings that could be considered to develop meaningful and appropriate outlier methodologies. Therefore, we proposed that inappropriate prescribing of opioids should be based on an established pattern as previously described in this section utilizing many parameters.

We solicited public comment on other reasonable measures of inappropriate prescribing of opioids.

We received numerous comments regarding the definition of inappropriate prescribing and on other reasonable measures of inappropriate prescribing of opioids and our responses follow.

Comment: Two professional associations supported the definition outlined in the rule.

Response: We appreciate the comments from prescribing professionals that also support our proposed definition. We will be finalizing the definition, as described in this final rule.

Comment: We received comments from one advocacy group which criticize the definition of “inappropriate prescribing”. The comments made by the advocacy group were also referred to by several other individual commenters who endorsed their concerns. The advocacy group asserted that CMS's proposal contains an inappropriate view of the “risks” of opioid prescribing for people in pain, which could be used for denial of pain treatment.” As an alternative, they recommend better training of physicians in the management of chronic pain. Furthermore, the commenters noted that HHS' actions have focused on “what is likely to be a minor problem (physician overprescribing)” instead of illegal drug use and abuse.

Response: Section 6063 of the SUPPORT ACT required us to adopt a definition of inappropriate prescribing of opioids. In response to the statement that overprescribing may be a minor problem, we disagree and cite a real example of how prescribing authority can be used inappropriately. In September 2019, federal law enforcement officials announced “charges against 13 individuals across five Appalachian federal districts for alleged offenses relating to the over prescription of controlled substances through `pill mill' clinics. Of those charged, 12 were charged for their role in unlawfully distributing opioids and other controlled substances and 11 were physicians. The alleged conduct resulted in the distribution of more than 17 million pills.” [26] In relation to concerns raised about provider education and training, we would note that the subject is out of scope for this regulation.

Comment: One commenter stated that CMS should consider certain statistical outliers and/or individual beneficiary cases of overutilization while another commenter stated that the definition of inappropriate prescribing must be limited to suspected fraud, not only outlier prescribing patterns. Another commenter noted that CMS should amend the proposed definition of inappropriate prescribing to “potential” with “material and repeated intentional acts of”. Another commenter recommended that CMS add reasonable measures of inappropriate prescribing of opioids- for example, CMS should consider including any off-guideline use, including prescriptions for large quantities to opioid-naïve members. Another commenter believed that a peer physician from the same specialty, after considering specific patient needs, is most qualified to determine whether opioids have been prescribing appropriately. Another commenter was concerned that without specifically defining “inappropriate prescribing” a subjective approach may be taken in initiating actions involving suspicious Start Printed Page 5906activities that may warrant investigation.

Response: We believe the proposed rule was clear in that plan sponsors may consider a number of factors when determining what constitutes inappropriate prescribing of opioids. The list of factors is not meant to be exhaustive list of factors that would contribute to the identification of fraud waste and abuse related to inappropriate prescribing of opioids. The information provided in the definition is sufficient and will assist the agency in identifying providers with patterns of potential fraud, waste and abuse related to opioid prescribing. It is important to note that most Part D plan sponsors already have detection and prevention measures in place to address cases of inappropriate prescribing of opioids.

Comment: A few commenters believe the insurance companies' authority is too broad in determining inappropriate prescribing.

Response: The Medicare prescription drug benefit is delivered through Medicare Part D plans and many of the plan sponsors are insurance companies. We have considered industry guidelines and policies in defining inappropriate prescribing. Most Part D plan sponsors already have Special Investigative Units which have detection and prevention procedures in place to address cases of inappropriate prescribing of opioids.

Comment: A commenter stated that although the definition of inappropriate prescribing calls for a more comprehensive review, there are concerns that the focus will be on dose and quantity without consideration of other factors that affect patients and physicians.

Response: As we have stated in our previous responses to comments, we believe the proposed rule was clear in that plan sponsors may consider a number of factors when determining what constitutes inappropriate prescribing of opioids. The list of factors is not meant to be an exhaustive list that would contribute to the identification of fraud waste and abuse related to inappropriate prescribing of opioids. In addition to the list of factors, we have also considered industry guidelines and policies in defining inappropriate prescribing. We believe the information provided is sufficient in assisting plans to identify established patterns of potential fraud, waste and abuse related to prescribing of opioids. As we stated previously in this section, most Part D plan sponsors already have detection and prevention measures in place to address cases of inappropriate prescribing of opioids. However, under section 6063 of the SUPPORT Act, plans will now be required to report any information related to the inappropriate prescribing of opioids and concerning investigations, credible evidence of suspicious activities of a provider of services (including a prescriber) or supplier, and other actions taken by the plan.

Comment: There were numerous commenters who suggested that CMS consider exceptions such as Long Term Care, cancer survivors, high risk surgical patients, chronic pain, end stage chronic lung disease and rare genetic disorders, when reviewing for inappropriate prescribing. There were also comments that recommended that CMS consider prescriber specialties when defining inappropriate prescribing. One commenter suggested that CMS specify that the factors listed does not include an exhaustive list of patterns that would contribute to inappropriate opioid prescribing. A commenter also expressed concern that CMS creating blanket exclusions from the analysis has the potential for fraud and recommended that CMS not exclude any drug type, specific populations or diagnosis.

Response: As mentioned in the preamble, we recognize that there are legitimate clinical scenarios that may necessitate a higher level of opioid prescribing. Cancer, hospice, and sickle cell patients have been identified as exclusions in other sections of the regulation, such as the updated drug management program provisions at § 423.100. To ensure that vulnerable populations continue to have access to care, we are finalizing the proposed definition of inappropriate prescribing with a modification such that beneficiaries with cancer and sickle-cell disease, as well as those patients receiving hospice and long term care (LTC) services will be exempt from consideration for the inappropriate prescribing of opioids. We clarify that LTC, in this context, means a skilled nursing facility as defined in section 1819(a) of the Act, or a medical institution or nursing facility for which payment is made for an institutionalized individual under section 1902(q)(1)(B) of the Act. These exemptions were added to be consistent with other areas of the proposed regulation as well as the current regulatory exemptions at § 423.100. However, just as plan sponsors may consider a number of factors such as MME levels, concurrent prescribing of opioids with an opioid potentiator, and time and distance between the prescriber and the patient when determining inappropriate prescribing of opioids, plan sponsors may also apply the same judgment when considering other diseases or clinical factors or scenarios that have not been listed in the definition. Plan sponsors should use all information available to them in determining inappropriate opioid prescribing. These exclusions also do not preclude plan sponsors from reporting on a voluntary basis under §§ 422.503(b)(4)(vi)(G)(3) and 423.504(b)(4)(vi)(G)(3).

Comment: Several comments were received in response to use of MME levels as a factor in determining opioid overprescribing. Commenters were concerned that CMS does not exempt opioid use disorder treatment from MME guidelines. Another commenter stated a consensus definition of MME dosages does not exist and expressed concern with a policy that allows Plan Sponsors to rely on MME dosages. Another commenter mentioned that the MME is not an appropriate factor in determining abuse. A commenter suggested excluding MME levels as a factor in any analysis of inappropriate prescribing.

Response: We believe the proposed rule is clear in that plan sponsors may consider a number of factors when determining what constitutes inappropriate prescribing of opioids. Most Part D plan sponsors already have detection and prevention measures in place to address cases of inappropriate prescribing of opioids. It is our understanding that MME are already utilized as part of many plan sponsors measures to address FWA. As such, we believe MME is an important factor that might be considered when identifying inappropriate prescribing of opioids. The list of factors is not meant to be an exhaustive list of factors that would contribute to the identification of fraud waste and abuse related to inappropriate prescribing of opioids. The information provided in the definition is sufficient in assisting plans to identify established patterns of potential fraud, waste and abuse related to prescribing of opioids.

Comment: There were comments seeking clarification regarding if a pharmacy would be considered a provider and could be identified as having “Inappropriate Prescribing of Opioids,” or if this proposed policy would only refer to actual medical professionals who can prescribe opioids.

Response: Based on the comments, there may be some misunderstanding of the reporting requirements cited in section 2008 of the SUPPORT Act versus section 6063 of the SUPPORT Act. Section 2008 of the SUPPORT Act requires plan sponsors to notify the Secretary of the imposition of a pharmacy payment suspension that is Start Printed Page 5907based on a credible allegation of fraud. That reporting will be done using a secure website portal. Section 6063 of the SUPPORT Act requires reporting information on investigations, credible evidence of suspicious activities of providers or suppliers related to fraud, and other actions taken by the plans related to inappropriate opioid prescribing. For purposes of section 6063(b), plan sponsors may consider a pharmacy a supplier.

Comment: Commenters expressed concern with the use of geography, time and distance between the prescriber and the patient as a factor for opioid overprescribing. Specifically, one commenter stated that many people are forced to travel long distances not because of doctor shopping or pharmacy hopping, but because pain clinics have been shut down and primary doctors are refusing to see pain patients. Another commenter stated that for people with complex disabilities, geographically distant specialists may be the best (or only) care providers available. Another commenter stated that absent of fraud, high dosage and distance should not be considered indicators of inappropriate prescribing.

Response: We realize that there may be some circumstances in which a beneficiary may travel a considerable distance for access to a pharmacy or provider, for legitimate reasons. Plan sponsors may consider any number of factors when determining what constitutes inappropriate prescribing of opioids, in addition to geography time and distance. The list included in the proposed rule is not meant to be an exhaustive list of factors that may be used in the identification of fraud waste and abuse related to inappropriate prescribing of opioids.

Comment: We received several comments stating that illicit drugs, not prescription drugs, have contributed to the opioid crisis. Commenters also requested that CMS monitor to ensure that these actions do not encourage providers to be unnecessarily conservative when prescribing opioids which could limit access to older adults. Commenters also noted that CMS should encourage plan sponsors to align best practices, as published in the HHS Pain Management Best Practices Inter-Agency Task Force report.

Response: In response to the statement that illicit drugs, not prescription drugs, have contributed to the opioid, we disagree and cite a real example of how prescribing of prescription opioids can be used inappropriately. In September 2019, federal law enforcement officials announced “charges against 13 individuals across five Appalachian federal districts for alleged offenses relating to the over prescription of controlled substances through `pill mill' clinics. Of those charged, 12 were charged for their role in unlawfully distributing opioids and other controlled substances and 11 were physicians. The alleged conduct resulted in the distribution of more than 17 million pills.” [27] Our proposed provisions are to ensure that fraud, waste, and abuse are prevented and detected and our Medicare population is protected from harm from opioid prescriptions. We have established several regulations over the years to promote patient safety and address potentially fraudulent and abusive behavior in Medicare Parts C and D. We are considering ways to effectively monitor the impact of these provisions. The provisions in the SUPPORT Act that we proposed to implement will add additional ways to ensure effective monitoring and oversight of prescribing practices related to opioids.

Based on the overwhelming feedback from health plans, professional societies, advocacy groups and individuals, we have determined there is a need to add exemptions when determining inappropriate prescribing of opioids. While there is no way to include every possible disease state that could be considered, we will add beneficiaries with cancer and sickle-cell disease, as well as those patients receiving hospice and long term care (LTC) services as exclusions. These disease states were selected not only because they are clinically applicable but they align with existing exemptions in other CMS policies, such as the updated drug management program provisions at § 423.100. In addition, the applicability date for this definition will be for plan years beginning on or after January 1, 2022 for reasons previously discussed in this section.

(3) Credible Allegation of Fraud

Somewhat similar to section 6063(a) of the SUPPORT Act, section 2008(d) of the SUPPORT Act states that a fraud hotline tip (as defined by the Secretary) without further evidence shall not be treated as sufficient evidence for a credible allegation of fraud. The term “credible allegation of fraud” is currently defined at §§ 405.370 and 455.2 (which, respectively, apply to Medicare and Medicaid) as an allegation from any source including, but not limited to the following: (1) Fraud hotline complaints; (2) claims data mining; and (3) patterns identified through provider audits, civil false claims cases, and law enforcement investigations. Allegations are considered to be credible when they have indicia of reliability, and, in the case of § 455.2, the State Medicaid agency has reviewed all allegations, facts, and evidence carefully and acts judiciously on a case-by-case basis.

To address the requirements of section 2008(d) of the SUPPORT Act, we proposed to revise the term “credible allegation of fraud” in §§ 405.370 and 455.2 as follows. We proposed that the existing version of paragraph (1) in both §§ 405.370 and 455.2 would be amended to state “Fraud hotline tips verified by further evidence.” The existing version of paragraph (2) and (3) would remain unchanged. Similarly, we proposed to add in § 423.4 a definition of credible allegation of fraud stating that a credible allegation of fraud is an allegation from any source including, but not limited to: Fraud hotline tips verified by further evidence; claims data mining; patterns identified through provider audits, civil false claims cases, and law enforcement investigations. Allegations are considered to be credible when they have indicia of reliability. In the case of § 423.4, we proposed that examples of claims data mining would include, but are not limited to, prescription drug events and encounter data mining. We solicited public comment on this definition.

We received several comments on the definition of Credible Allegation of Fraud and our responses follow.

Comment: A professional organization supported the proposed revised definition of credible allegation of fraud.

Response: We appreciate the comments from prescribing professionals that also support our proposed definition. We are finalizing the definition, as proposed in this final rule.

Comment: A commenter expressed concern that a credible allegation results in damage to the professional reputations of doctors and pharmacists.

Response: We note that credible allegation of fraud in this context is used when plan sponsors are implementing payment suspensions of pharmacies. Plan sponsors already have the authority to implement a payment suspension at their discretion according to their contracts with the pharmacies. When they implement a payment suspension that is based on a credible allegation of fraud and meets the regulatory definition, now they must report it to CMS. We have defined Start Printed Page 5908credible allegations of fraud under § 405.370 in previous rulemaking. The regulations are being amended as specified in the SUPPORT Act section 2008(d). The intent is to only apply definitions for MA and Part D plans that are consistent with regulatory standards that are applied to both traditional Medicare and Medicaid. Accordingly, plan sponsors currently impose payment suspensions based on credible allegations of fraud and we recognize that MA and Part D plans currently use multiple sources in determining what may be considered “credible allegation of fraud” as part of ensuring measures have been implemented to prevent, detect and correct fraud, waste and abuse.

Comment: Some commenters requested that CMS provide examples of credible evidence and provide clarification on the standards, thresholds and responsible party for reporting. One commenter believes that examples will assist plans in determining credible allegations of fraud and address fraudulent opioid prescribing. Another commenter recommended that CMS proactively communicate with plans on fraud schemes to assist in enhancing the plans oversight efforts.

Response: The regulations are being amended as specified in the SUPPORT Act section 2008(d) to extend a consistent regulatory definition for MA and Part D plans. We have defined credible allegations of fraud under 405.370 in previous rulemaking. As noted previously, the Plans will be required to report payment suspensions of pharmacies to CMS based on credible allegations of fraud. Accordingly, we recognize that MA and Part D plans currently may use a variety of sources in determining what may be considered “credible allegation of fraud” as part of ensuring measures have been implemented to prevent, detect and correct fraud, waste and abuse. We also conduct regular training and education for Plan Sponsors on fraud detection and prevention and provides opportunities for the Plans to share information on fraud schemes. Therefore, we will continue to allow plans the flexibility in determining credible allegations of fraud and will finalize this provision without additional examples other than what is currently defined.

Comment: A commenter recommended amending the proposed definition of credible allegation to an allegation from a plan of a material and repeated pattern of intentional violations of law or regulations that has been confirmed beyond suspicion through independent evidence. Allegations by third parties, including False Claims Act cases, law enforcement investigations and provider audits shall not constitute credible allegations of fraud.

Response: We have defined credible allegations of fraud under 405.370 in previous rulemaking. The regulations are being amended as specified in the SUPPORT Act section 2008(d). The intent of this provision is to implement the SUPPORT ACT which extends a consistent definition for MA and Part D plans. Accordingly, we recognize that MA and Part D plans currently use a variety of sources in determining what may be considered “credible allegation of fraud” as part of ensuring measures have been implemented to prevent, detect and correct fraud, waste and abuse. We will proceed as noted previously in this section with finalizing the proposed definition without modification.

Comment: An association supported the proposed revision of the regulatory definition of credible allegation of fraud described in the proposed rule, changing “fraud hotline complaints” to “fraud hotline tips verified by further evidence.” Another association also specifically supported our proposal that a fraud hotline top without further evidence shall be not be treated as credible allegation of fraud.

Response: We appreciate the support for the proposal to further define credible allegation of fraud by expanding the definition of fraud hotline complaint to fraud hotline tips verified by further evidence. We believe this will further assist plans in determining cases of fraud.

Comment: A commenter recommended that CMS provide training programs for health plan fraud units and guidance regarding the definition of credible allegation.

Response: We have defined credible allegations of fraud under 405.370 in previous rulemaking. The regulations are being amended as specified in the SUPPORT Act section 2008(d). The intent is to only establish similar and consistent definitions for MA and Part D plans. We conduct regular training and education for Plan Sponsors on fraud detection and prevention and provides opportunities for the Plans to share information on fraud schemes. We recognize that MA and Part D plans currently use a variety of sources in determining what may be considered “credible allegation of fraud” as part of ensuring measures have been implemented to prevent, detect and correct fraud, waste and abuse.

Comment: A commenter specifically did not support the definition of credible allegation of fraud given that further evidence is not defined.

Response: The definition uses plain language and is intended to allow flexibility since evidence to corroborate the fraud hotline complaint or tip would vary on a case by case basis. Additionally, Part D sponsors have systems in place and experience with the evaluation and verification of fraud hotline tips.

Based on the comments received and our responses we are finalizing the provision as proposed without modification; however, the applicability date for this definition will be for plan years beginning on or after January 1, 2022 for reasons previously discussed in this section.

(4) Fraud Hotline Tip

Sections 2008(d) and 6063(a) of the SUPPORT Act require the Secretary to define a fraud hotline tip. To this end, we proposed to add to §§ 405.370, 422.500, 423.4, and 455.2 a plain language definition of this term. We proposed that a fraud hotline tip would be defined as a complaint or other communications that are submitted through a fraud reporting phone number or a website intended for the same purpose, such as the federal government's HHS Office of the Inspector General (OIG) Hotline or a health plan's fraud hotline. This definition is intended to be broad enough to describe mechanisms such as the federal government's HHS OIG Hotline or a commercial health plan's fraud hotline. Many private plans, which have their own fraud reporting hotlines, participate as plan sponsors in Medicare Part D and this definition would seek to reflect their processes for reporting information on potential fraud, waste and abuse. We solicited public comment on this definition.

We received several comments on the definition of Fraud Hotline Tip. Our responses to those comments follow.

Comment: Several commenters supported the proposed definition of a fraud hotline tip including a professional association. Commenters that were supportive agreed that this definition will assist plans on ensuring investigative measures are taken and focus on those that indicate fraud.

Response: We appreciate the support and feedback on the proposal to further define a fraud hotline tip. As mentioned in the proposed rule we believe the definition is broad enough to describe mechanisms such as the federal government's HHS OIG Hotline or a commercial health plan's hotline.Start Printed Page 5909

Comment: A commenter also recommended that CMS provide examples of other communications that may be submitted through a fraud reporting phone number or website.

Response: As mentioned in the proposed regulation, the definition is intended to be broad in an effort to allow flexibility. Part D sponsors are currently required to have systems established to receive and process fraud hotline tips. Therefore, we believe many Part D sponsors have the experience with using “other communications” which could include information such as supporting documentation submitted with the tip that may be used to support a complaint or document potential fraud.

Comment: Another commenter urged that CMS ensure tips are verified before they are used to suspend a provider or prescriber.

Response: The definition proposed does include language to state that a fraud hotline tip must be verified by further evidence. As mentioned in the proposed regulation the definition is intended to be broad in an effort to allow flexibility since many plan sponsors have a fraud hotline and systems established for receiving and verifying potential fraud.

Based on the comments received and our responses we are finalizing the provision as proposed without modification; however, the applicability date for this definition will be for plan years beginning on or after January 1, 2022 for reasons previously discussed in this section.

b. Reporting

(1) Vehicle for Reporting

We stated that we planned to utilize a module within the HPMS as the program integrity portal for information collection and dissemination. We stated that the portal would serve as the core repository for the data addressed in sections 2008 and 6063 of the SUPPORT Act. We stated that the program integrity portal would not duplicate reporting requirements and is the only source that would be used to report and disseminate information as required in the final rule. Such data and the regular submission and dissemination of this important information would, in our view, strengthen CMS' ability to oversee plan sponsors' efforts to maintain an effective fraud, waste, and abuse program. We further believe that data sharing via use of a portal would, in conjunction with our proposals, help accomplish the following objectives in our efforts to alleviate the opioid epidemic:

  • Enable CMS to perform data analysis to identify fraud schemes.
  • Facilitate transparency among CMS and plan sponsors through the exchange of information.
  • Provide better information and education to plan sponsors on potential fraud, waste, and abuse issues, thus enabling plan sponsors to investigate and take action based on such data.
  • Improve fraud detection across the Medicare program, accordingly allowing for increased recovery of taxpayer funds and enrollee expenditures (for example, premiums, co-insurance, other plan cost sharing).
  • Provide more effective support, including leads, to plan sponsors and law enforcement.
  • Increase beneficiary safety through increased oversight measures.

We received a few comments on our planned reporting vehicle and our responses follow.

Comment: Several commenters noted reporting through a new HPMS module will create duplication of information and recommended that CMS institute one consistent reporting mechanism since plans can report directly to the MEDIC or into the HPMS, allow greater access to expedite reporting and provide further clarification where Part D sponsors should report.

Response: The program integrity portal will not duplicate reporting requirements and is the only source that will be used to report and disseminate information as required in the final rule.

Comment: A commenter inquired about the difference between the new portal and existing HPMS module and also questioned how plans will be assured that CMS will investigate the allegations submitted.

Response: The current Analytics and Investigations Collaboration Environment for Fraud, Waste, and Abuse (AICE-FWA) module in HPMS will continue to serve as a repository for data projects that plan sponsors currently use as leads and a resource in conducting oversight of their fraud detection and prevention efforts. The new program integrity portal in HPMS will be the primary source for plan sponsors to submit information related to the inappropriate prescribing of opioids, payment suspensions of Part D pharmacies, and referral of substantiated or suspicious activities of a provider of services or supplier related to fraud, waste, and abuse.

(2) Type of Data To Be Reported by Plans

Sections 422.503(b)(4)(vi)(G)(3) and 423.504(b)(4)(vi)(G)(3), as noted, state that plan sponsors should have procedures to voluntarily self-report potential fraud or misconduct related to the MA and Part D programs, respectively, to CMS or its designee. To conform to the aforementioned requirements of sections 2008(a) and (b) and section 6063(b) of the SUPPORT Act, we proposed to add new regulatory language, effective beginning in 2021, in parts 422 and 423 as stated throughout this section.

First, we proposed new language at §§ 422.503(b)(4)(vi)(G)(4) and 423.504(b)(4)(vi)(G)(4) to include the new provisions. The new §§ 422.503(b)(4)(vi)(G)(4) and 423.504(b)(4)(vi)(G)(4) would state that the MA organization or Part D plan sponsor, respectively, must have procedures to identify, and must report to CMS or its designee either of the following, in the manner described in paragraphs (b)(4)(vi)(G)(4) through (6) of this section:

  • Any payment suspension implemented by a plan, pending investigation of credible allegations of fraud by a pharmacy, which must be implemented in the same manner as the Secretary does under section 1862(o)(1) of the Act; and
  • Any information concerning investigations, credible evidence of suspicious activities of a provider of services (including a prescriber) or supplier, and other actions taken by the plan related to the inappropriate prescribing of opioids.

Second, the new §§ 422.503(b)(4)(vi)(G)(5) and 423.504(b)(4)(vi)(G)(5) would require the data referenced in proposed §§ 422.503(b)(4)(vi)(G)(4) and 423.504(b)(4)(vi)(G)(4) to be submitted via the program integrity portal. We proposed that MA organizations and Part D plan sponsors would have to submit the data elements, specified later in this section, in the program integrity portal when reporting payment suspensions pending investigations of credible allegations of fraud by pharmacies; information related to the inappropriate prescribing of opioids and concerning investigations and credible evidence of suspicious activities of a provider of services (including a prescriber) or supplier, and other actions taken by plan sponsors; or if the plan reports a referral, through the portal, of substantiated or suspicious activities of a provider of services (including a prescriber) or a supplier related to fraud, waste or abuse to initiate or assist with investigations conducted by CMS, or its designee, a Medicare program integrity contractor, or law enforcement partners. The data elements, as applicable, are as follows:

Start Printed Page 5910
  • Date of Referral
  • Part C or Part D Issue
  • Complainant Name.
  • Complainant Phone.
  • Complainant Fax.
  • Complainant Email.
  • Complainant Organization Name.
  • Complainant Address.
  • Complainant City.
  • Complainant State.
  • Complainant Zip.
  • Plan Name/Contract Number.
  • Plan Tracking Number.
  • Parent Organization.
  • Pharmacy Benefit Manager.
  • Beneficiary Name.
  • Beneficiary Phone.
  • Beneficiary Health Insurance Claim Number (HICN)
  • Beneficiary Medicare Beneficiary Identifier (MBI).
  • Beneficiary Address.
  • Beneficiary City.
  • Beneficiary State.
  • Beneficiary Zip.
  • Beneficiary Date of Birth (DOB).
  • Beneficiary Primary language.
  • Beneficiary requires Special Accommodations. If Yes, Describe.
  • Beneficiary Medicare Plan Name.
  • Beneficiary Member ID Number.
  • Whether the Beneficiary is a Subject.
  • Did the complainant contact the beneficiary? If Yes, is there a Report of the Contact?
  • Subject Name.
  • Subject Tax Identification Number (TIN).
  • Does the Subject have Multiple TIN's? If Yes, provide.
  • Subject NPI.
  • Subject DEA Number.
  • Subject Medicare Provider Number.
  • Subject Business.
  • Subject Phone Number.
  • Subject Address.
  • Subject City.
  • Subject State.
  • Subject Zip.
  • Subject Business or Specialty Description.
  • Secondary Subject Name.
  • Secondary Subject Tax Identification Number (TIN)
  • Does the Secondary Subject have Multiple TIN's? If Yes, provide.
  • Secondary Subject NPI.
  • Secondary Subject DEA Number.
  • Secondary Subject Medicare Provider Number.
  • Secondary Subject Business.
  • Secondary Subject Phone Number.
  • Secondary Subject Address.
  • Secondary Subject City.
  • Secondary Subject State.
  • Secondary Subject Zip.
  • Secondary Subject Business or Specialty Description.
  • Complaint Prior MEDIC Case Number.
  • Period of Review.
  • Complaint Potential Medicare Exposure.
  • Whether Medical Records are Available.
  • Whether Medical Records were Reviewed.
  • Whether the submission has been Referred to Law Enforcement. Submission Accepted? If so, provide Date Accepted.
  • What Law Enforcement Agency(ies) has it been Referred to.
  • Whether HPMS Analytics and Investigations Collaboration Environment for Fraud, Waste, and Abuse (AICE-FWA) was Used.
  • Whether the submission has indicated Patient Harm or Potential Patient Harm.
  • Whether the submission has been Referred. If so, provide Date Accepted.
  • What Agency was it Referred to.
  • Description of Allegations/Plan Sponsor Findings.

We noted that the requirement for reporting payment suspensions pending investigations of credible allegations of fraud by pharmacies under new § 422.503(b)(4)(vi)(G)(4) would only apply to Medicare Part C in the context of Medicare Advantage Prescription Drug Plans (MA-PD plans). We stated our belief that this information is necessary to enable CMS to fully and completely understand the identity of the applicable party, the specific behavior involved, and the status of the action. We solicited public comment on these requirements.

We received several comments on the ability to impose payment suspensions on pharmacies and our responses to those comments follow.

Comment: A commenter supported CMS' implementation of the SUPPORT Act language that a fraud hotline tip, without further evidence, is not a credible fraud allegation for payment suspension purposes. However, the commenter was concerned that CMS did not include what guidelines should be taken into consideration for procedures and data collection.

Response: We appreciate the commenter's support. However, many plan sponsors currently implement payment suspensions based on credible allegations of fraud and other reasons that may be contractual in nature. We believe that plan sponsors have established procedures and data collection based on their existing internal policies and procedures and as part of their fraud, waste and abuse oversight and monitoring efforts. The data will be reported through a program integrity portal that is discussed further later in this regulation.

Comment: Commenters requested that CMS further clarify the definition of a payment suspension, such as what entities are subject to payment suspensions, whether payment suspensions are applicable to physicians, and the applicable standards and responsible parties for making determinations.

Response: We believe the proposed regulation is clear in defining that a Part D pharmacy payment suspension based on credible allegation of fraud is applicable to Part D pharmacies. Additionally, we believe the proposed regulation is clear in stating that Part D plan sponsors are responsible for determining if a payment suspension should be implemented. Part D plan sponsors currently impose payment suspensions for other reasons that may be contractual in nature. Part D plan sponsors are responsible for oversight of their contracted entities, such as pharmacy benefit managers (PBMs) and pharmacies, and have established policies and procedures in their contractual arrangements.

Comment: A commenter recommended that CMS consider a targeted approach to payment suspensions, which would include pharmacy claim adjudications suspensions that would allow non-problematic claims from suspected pharmacies to be processed and paid. Another commenter questioned if CMS will have a process to reverse or deny payments.

Response: Part D plan sponsors and MA-PD plans have the authority to impose payment suspensions based on a credible allegation of fraud. However, Part D plan sponsors and MA-PD plans also may consider a targeted approach to payment suspensions pursuant to contractual agreements. Part D plan sponsors and MA-PD plans are responsible for oversight of their contracted entities, such as PBMs and pharmacies, and have established policies and procedures in their contractual arrangements.

Comment: A commenter opposed CMS' proposal to suspend payments to fee-for-service (FFS) providers and suppliers pending a credible allegation of fraud, given that patients and providers can be at risk for an uncertain amount of time. The commenter also opposed the definition for credible allegation of fraud based on the need to establish clear guidance on how long a payment suspension will last and the concern that LTC's will be financially liable.Start Printed Page 5911

Response: We appreciate this feedback; however, although we proposed a modification to the reference to fraud hotline complains in 42 CFR 405.370, our proposal did not discuss payment suspensions for fee-for-service providers generally. Instead, the scope of this rule is limited to payment suspensions imposed on pharmacies by Part D plan sponsors. Part D plan sponsors currently conduct pharmacy payment suspensions based on credible allegations of fraud. This final rule is requiring Part D plan sponsors to report to CMS any pharmacy payment suspensions based on credible allegations of fraud through a website portal. The length of a payment suspension may vary based on the situation and the plan sponsors own business agreements.

Comment: We received a couple of comments regarding how the reporting of payment suspensions may interfere or preempt state-level requirements regarding payment to pharmacies.

Response: We have contractual agreements with the Part D plan sponsors and do not oversee contractual relationships between a plan sponsor, PBM and participating pharmacies. Part D Plan sponsors already have the authority to implement payment suspensions for pharmacies based on credible allegations of fraud. However, Section 2008 of the SUPPORT Act requires Part D plan sponsors to report those payment suspensions to the Secretary.

The requirement for Part D plan sponsors to report pharmacy payment suspensions based on credible allegations of fraud does not replace state law and this new federal requirement will not affect existing state statutes and regulations. We believe addressing specific state statutes and regulations are outside the scope of this regulation.

Comment: We received several comments expressing concerns with ensuring pharmacies have due process rights, an appeals process and advance notice prior to implementing a payment suspension. One commenter opposed this proposed regulation because it lacks fundamental due process protections for pharmacies. Another commenter noted that pharmacies should not be subject to payment suspension without greater certainty of fraud. Additionally, the commenter noted that pharmacies should receive advance notice of potential allegations of fraud and afforded an expeditious appeals process prior to any payment suspension. Commenters also noted that payment suspensions should not occur until there is legal evidence and also requested that CMS provide guidance on ensuring that plan actions against pharmacies are fully grounded with evidence and provides pharmacies the ability to quickly address complaints and prevent suspension of payment.

Response: Section 2008 authorizes Part D sponsors and MA-PD plans to suspend payments based on a credible allegation of fraud. Part D plan sponsors and MA-PD plans may currently impose payment suspensions for other reasons that may be contractual in nature. We have clarified the definition for credible allegation of fraud, fraud hotline tip, and substantiated and suspicious activities of fraud, waste and abuse. We decline to accept the recommendation because Part D plan sponsors and MA-PD plans are responsible for oversight of their contracted entities, such as PBMs and pharmacies and have established policies and procedures in their contractual arrangements.

We received a few comments on the data elements to be submitted by plans and our responses follow.

Comment: A commenter recommended that CMS allow flexibility in submitting data elements and allow Part D sponsors to enter “blank” fields if certain information is not available and not restrict the number of users. Commenter also recommended that information provided to Part D sponsors from the website portal be used for informational purposes only. However, if action is required on behalf of the Part D sponsors, then CMS should clearly specify.

Response: In response to the comment, we are clarifying that plan sponsors will be provided reporting flexibility within the portal when information is not available or not relevant to the referral being reported. The comment also allowed us the opportunity to re-evaluate the level of detail that we were requiring in the regulatory text for the data reported. We are modifying the regulatory text to reflect broad categories of information that will be collected rather than individual data elements. The data categories, as applicable, include referral information and actions taken by the plan sponsor on the referral.

Examples of the types of data to be collected in these categories include, but are not limited to, identifying information on the complainant, beneficiary, and subject of the referral, description of the referral (that is, services not rendered, prescriptions billed but the beneficiary never received, and identity theft), and any actions taken (that is, conducted an audit of the provider, referred the provider to the IMEDIC or Law Enforcement, or removed a provider from their network). The categories of data that we are making final in the regulatory text will provide flexibility.

The commenter also inquired if action is required on behalf of the Part D sponsors based on information provided from the website portal. The quarterly reports we are sharing will assist plan sponsors with their monitoring and oversight efforts. These reports themselves are not a sufficient basis for a Medicare Part D plan sponsor to take action without conducting its own supporting analysis of specific data. We urge plan sponsors to confirm potential fraud waste and abuse through a reliance upon their own established protocols. Any actions taken as a result of the reports and the Sponsors follow-up activities should be reported through the website portal. We also note, in response to the commenter, that plan sponsors will also have the ability to allow access to multiple users.

Comment: Commenters also requested that CMS clarify why the required data elements list both the HICN and the MBI. Commenters also requested clarification who should the reporting be submitted to and the method that should be utilized.

Response: In response to the comment, we are clarifying that only the MBI will be utilized, as part of the broad category of referral information, to ensure that the beneficiary's information is captured appropriately. Plan sponsors will be required to report information through the program integrity portal in HPMS.

Based on the comments received and our responses we are modifying the regulatory text regarding the data to be reported. The final regulation text reflects the broad categories of data that CMS will employ in the construction of the data that will be required for plans to submit to the program integrity portal. In addition, the applicability date for plan sponsor reporting will be for plan years beginning on or after January 1, 2022 for reasons previously discussed in this section.

(3) Timing of Plan Sponsor's reporting

We proposed in new §§ 422.503(b)(4)(vi)(G)(6)(i) and 423.504(b)(4)(vi)(G)(6)(i) MA organizations and Part D plan sponsors would be required to notify the Secretary, or its designee of a payment suspension described in §§ 422.503(b)(4)(vi)(G)(4)(i) and 423.504(b)(4)(vi)(G)(4)(i) 14 days prior to implementation of the payment suspension. This timeframe will allow Start Printed Page 5912us to provide our law enforcement partners sufficient notice of a payment suspension to be implemented that may impact an ongoing investigation into the subject. We proposed that §§ 422.503(b)(4)(vi)(G)(6)(ii) and 423.504(b)(4)(vi)(G)(6)(ii) plans would be required to submit the information described in §§ 422.503(b)(4)(vi)(G)(4)(ii) and 423.504(b)(4)(vi)(G)(4)(ii) no later than January 30, April 30, July 30, and October 30 of each year for the preceding periods, respectively, of October 1 through December 31, January 1 through March 31, April 1 through June 30, and July 1 through September 30. We proposed that plans would be required to submit information beginning in 2021. For the first reporting period (January 15, 2021), the reporting will reflect the data gathered and analyzed for the previous quarter in the calendar year (October 1-December 31). We believe that quarterly updates would be frequent enough to ensure that the portal contains accurate and recent data while giving plans sufficient time to furnish questioned information. We solicited public comment on the timing of reporting by plans

We received several comments on the timing of reporting by plans and our responses to those comments follow.

Comment: We received numerous comments regarding the 14-day advance notice to CMS for payment suspensions. Most commenters are concerned that this gives the bad actors too much time to continue the fraudulent activity which could result in millions of dollars lost, prevent overutilization of services and more importantly, beneficiary harm. A commenter suggested a 72-hour wait period instead of 14 days. Another commenter recommended allowing plans 72 hours to notify CMS after the suspension rather than 14 days prior to the suspension. One commenter recommended immediate payment suspension of pharmacies and then provide referral within 14 days to CMS. Another commenter mentioned that allowing plans to submit payment suspension immediately and provide an update monthly will reduce burden for plans sponsors and PBMs. Another commenter recommended CMS provide a list of providers for plans to review prior to initiation of a payment suspension which would require plans to notify the agency within 14 days prior to implementing. Additionally, if providers are not included in the notification plans would notify the agency within 5-10 days of the payment suspension which would align with many Medicaid state guidelines. Commenters also expressed confusion regarding whether plans were being prohibited from suspending immediately. Another commenter recommended removal of a suspension if it is determined that there is no good cause.

Response: Based on comments received requesting a reduced timeframe for advance notice of imposing payment suspensions and balancing that with concerns raised by our federal law enforcement partners to ensure deconfliction, we will finalize the provision with a 7-day advance notice requirement with a limited exception. The advance notice provides collaboration and necessary deconfliction with law enforcement but also allows an exception for instances where more immediate payment suspension is warranted. For example, the exception would allow for immediate suspension when a plan has concerns regarding a credible allegation of fraud which may involve potential patient harm.

Comment: Commenters also recommended that CMS allow exceptions from the proposed quarterly reporting when disclosure may jeopardize an ongoing investigation. Commenters also requested that CMS extend reporting to 30 days of the close of the quarter versus the proposed 15 days to allow data gathering and quality assurance before the report submission.

Response: Based on the comments received we will modify the proposed provision to extend the reporting timeframe for plan sponsors to 30 days after the close of the quarter. We will not modify to allow exceptions to the reporting requirement. Based on the comments received and our responses in this section we are finalizing the following two policies with modification.

  • We will require a 7-day advance notice with exemptions in certain cases, such as potential for beneficiary harm.
  • We will adjust the timeline for submission to 30 days after the close of the quarter. The applicability date for plan sponsor reporting has been postponed until January 1, 2022.

(4) Requirements and Timing of CMS' Reports

As mentioned earlier in this final rule, section 6063(a) of the SUPPORT Act requires the Secretary make available to the plans, not less frequently than quarterly, information on fraud, waste, and abuse schemes and trends in identifying suspicious activity. The reports must include administrative actions, pertinent information related to opioid overprescribing, and other data determined appropriate by the Secretary in consultation with stakeholders. Moreover, the information must be anonymized data submitted by plans without identifying the source of such information.

Section 6063 of the SUPPORT Act requires the Secretary provide reports no less frequently than quarterly. Consistent with this requirement, we proposed in the new §§ 422.503(b)(4)(vi)(G)(7)(i) through (iv) and 423.504(b)(4)(vi)(G)(7)(i) through (iv) that we will provide MA organizations and Part D plan sponsors with data report(s) or links to data no later than April 15, July 15, October 15, and January 15 of each year based on the information in the portal, respectively, as of the preceding October 1 through December 31, January 1 through March 31, April 1 through June 30, and July 1 through September 30. We proposed to provide this information beginning in 2021. For the first quarterly report (April 15, 2021), the report will reflect the data gathered and analyzed for the previous quarter submitted by the plan sponsors on January 15, 2021. Similar to the timing requirements related to new §§ 422.503(b)(4)(vi)(G)(6)(ii) and 423.504(b)(4)(vi)(G)(6)(ii), we believe that quarterly updates would strike a suitable balance between the need for frequently updated information while giving us time to review and analyze this data in preparation for complying with new §§ 422.503(b)(4)(vi)(G)(4) through (7) and 423.504(b)(4)(vi)(G)(4) through (7). We solicited public comment on the timing of CMS dissemination of reports to plans.

We received no comments on this proposal and therefore are finalizing this provision without modification; however, the applicability date for the quarterly reports will be for plan years beginning on or after January 1, 2022 for reasons previously discussed.

IV. Enhancements to the Part C and D Programs

A. Out-of-Network Telehealth at Plan Option

On April 16, 2019, CMS finalized requirements for MA plans offering additional telehealth benefits (ATBs).[28] Section 50323 of the BBA of 2018 created a new subsection (m) of section 1852 of the Act, authorizing MA plans to offer ATBs to enrollees starting in plan year 2020 and treat ATBs as basic benefits. In the April 2019 final rule, we finalized a new regulation at § 422.135 Start Printed Page 5913to implement that authority. As part of the parameters for the provision of ATBs, we finalized a requirement, at § 422.135(d), that MA plans furnishing ATBs only do so using contracted providers, and § 422.135 specifically provides that benefits furnished by a non-contracted provider through electronic exchange (defined in the regulation) may only be covered by an MA plan as a supplemental benefit.

In the February 2020 proposed rule, we solicited comment on whether § 422.135(d) should be revised to allow all MA plan types, including PPOs, to offer ATBs through non-contracted providers and treat them as basic benefits under MA.

We received many responses to this request for comment. We thank the commenters for the time and effort that went into developing these detailed responses and feedback for CMS. We will carefully review and consider all input received from stakeholders as we determine whether to revise § 422.135(d) to allow MA plans to offer ATBs through non-contracted providers. At this time, we are not revising any requirements at § 422.135, and any revisions regarding ATBs will be proposed through future notice and comment rulemaking.

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

In the Medicare Program; Establishment of the Medicare Advantage Program Final Rule, published in the Federal Register on January 28, 2005 (hereinafter referred to as the January 2005 MA final rule) (70 FR 4588, 4617), CMS established that an MA plan could reduce cost sharing below the actuarial value specified in section 1854(e)(4)(B) of the Act only as a mandatory supplemental benefit and codified that policy at § 422.102(a)(4). In order to clarify the scope of section 1854(e)(4)(A) of the Act, we proposed in the February 2020 proposed rule to amend § 422.102(a)(4) and add new rules at § 422.102(a)(5) and (a)(6)(i) and (ii) to further clarify the different circumstances in which an MA plan may reduce cost sharing for covered items and services as a mandatory supplemental benefit; we also proposed to specifically authorize certain flexibility in the mechanisms by which an MA plan may make reductions in cost sharing available.

Currently, reductions in cost sharing are an allowable supplemental benefit in the MA program and may include:

  • Reductions in the cost-sharing for Parts A and B benefits compared to the actuarially equivalent package of Parts A and B benefits; and
  • Reductions in cost-sharing for Part C supplemental benefits, for example provided for specific services for enrollees that meet specific medical criteria, such that similarly situated enrollees (that is, all enrollees who meet the identified criteria) are treated the same and enjoy the same access to these targeted benefits.

We proposed to codify regulation text to clarify that reductions in cost sharing for both (1) Part A and B benefits and (2) covered items and services that are not basic benefits are allowable supplemental benefits but may only be offered as mandatory supplemental benefits at § 422.102(a)(4) and (5). We proposed to revise the current language at § 422.102(a)(4) by inserting the phrase “for Part A and B benefits” after the cite to section 1854(e)(4)(A) of the Act, and to add a new paragraph (a)(5) to specify that reduced cost sharing may be applied to items and services that are not basic benefits. Under our proposal, the reductions in cost sharing for both categories may only be provided as a mandatory supplemental benefit.

We explained in the proposed rule that MA plans may currently choose to structure mandatory supplemental benefits that are in the form of cost sharing reductions in a few ways. For example, the current rules permit MA plans to offer, as a supplemental benefit, a manual reimbursement process or use of a debit card to reduce cost sharing towards plan covered services or to provide coverage of 100 percent of the cost of covered items. MA plans may also decide to offer, as a supplemental benefit, a reduction in enrollee's costs through a maximum allowance. An MA plan may establish a dollar amount of coverage that may be used to reduce cost sharing towards plan covered services and subject to a plan-established annual limit; enrollees can “spend” the allowance on cost sharing for whichever covered benefits the enrollee chooses. In both scenarios, MA plans are expected to administer the benefit in a manner that ensures the debit card and/or allowance can only be used towards plan-covered services. We proposed to codify these flexibilities in how reductions in cost sharing are offered at § 422.102(a)(6)(i) and (ii). We clarified in the proposed rule that these flexibilities are only for Part C supplemental benefits, as defined in § 422.100(c) and discussed in section VI.F. of the proposed rule (and section V.E. of this final rule) and that cost sharing for Part D drugs is not included in these flexibilities.

As proposed, the flexibilities identified would be permitted only as a mandatory supplemental benefit, which is why we proposed to codify them in § 422.102(a). Further, we explained that the flexibility was only for items and services that are identified in the MA plan's bid and marketing and communication materials as covered benefits and proposed the regulation text using the terms “covered benefits” and “coverage of items and services” to make that clear. Under our proposal and consistent with current guidance in Chapter 4 of the Medicare Managed Care Manual, § 40.3 (allowing debit cards to be used for plan-covered over-the-counter (OTC) items under the conditions that the card is exclusively linked to the OTC covered items and has a dollar limit tied to the benefit maximum), MA plans would not be able to offer use of a debit card for purchase of items or services that are not covered. We stated that a debit card could be utilized as a reimbursement mechanism or as a means for the MA plan to make its payment for an item or service; in either case, the use of the card would have to be tied to coverage of the benefit. Like all other MA coverage, the flexibilities we proposed would be limited to the specific plan year and we clarified that this authority to use debit cards or a basket of benefits up to a set value from which an enrollee can choose cannot be rolled over into subsequent years. We proposed specific text in paragraph (a)(6) limiting these forms of supplemental benefits to the specific plan year to emphasize that rolling over benefits to the following plan year is not permitted.

We explained in the proposed rule that for both benefit options, MA plans would have the flexibility to establish a maximum plan benefit coverage amount for supplemental benefits or a combined amount that includes multiple supplemental benefits, such as a combined maximum plan benefit coverage amount that applies to dental and vision benefits. We reiterated that plans may not offer reimbursement, including through use of a debit card, to pay for items and services that are not covered by the plan and that reductions in cost sharing as a supplemental benefit are subject to an annual limit that the enrollee can “spend” on cost sharing for whichever covered benefits the enrollee chooses. Under our proposal, MA plans could use a receipt-based reimbursement system or provide the dollar amount on a debit card (linked to an appropriate merchant and item/service codes) so that the enrollee may pay the cost sharing at the point of service. Our proposal was to codify and clarify existing guidance and practices and we stated that it was not expected Start Printed Page 5914to have additional impact above current operating expenses. We also stated that the proposal would not impose any new collection of information requirements.

We thank commenters for helping inform CMS' Reductions in Cost Sharing policy. We received 11 comments on this proposal; we summarize them and our responses follow:

Comment: Many comments were supportive of this proposal.

Response: We thank commenters for their feedback.

Comment: A commenter suggested CMS confirm that plans may implement allowances as a multi-year benefit.

Response: We cannot confirm this and it would not be permitted. As proposed and finalized, the changes adopted here are for benefits offered in each plan year and cannot be rolled over or spread across multiple plan years. This is necessary for a number of reasons. CMS only has one-year contracts with MAOs; as such, there is no guarantee that a particular plan will continue into the following year. Additionally, there is also no guarantee an enrollee will remain in a plan from year to year as an enrollee has the option to change plans each year. Further, and more importantly, bids must be submitted by MA organizations each year, showing the revenue requirements for furnishing benefits for the contract year; bids are compared to benchmarks that are set each year and used to determine the amount of beneficiary rebates under § 422.266. Under § 422.266, these rebates may be used to pay the premium for the supplemental benefits described in § 422.102(a)(6) or to buy down Part B or Part D premiums; use of the beneficiary rebate for payment of a premium for supplemental benefits in a different plan year is not permitted and would be inconsistent with the statutory requirement in section 1854(b)(1)(C) of the Act that MA plans provide the rebate to enrollees for the applicable year. It is not consistent with our regulations on bidding (§§ 422.250 through 422.266) for an MA plan to have a multi-year benefit.

Comment: A commenter suggested CMS allow plans to offer reductions in cost sharing for items and services that are not covered. This commenter also suggested CMS not subject reductions to cost sharing or allowances to an annual limit.

Response: In order to have a reduction in cost sharing, there has to be a covered benefit. We allow plans to have a debit card to cover cost sharing but they must identify the benefits as covered either in the plan benefit package (PBP) category or notes in the bid. Consistent with this, all the items and services for which payment may be made (in the form of a reduction in cost sharing that would otherwise apply for the item or service or in the form of the MA plan's payment of its share of the amount owed to the provider) must meet the requirements to be a supplemental benefit. These requirements are discussed in section V.C. of this final rule regarding our proposal to amend § 422.100(c)(2) to codify the requirements for supplemental benefits.

Comment: A commenter requested CMS provide additional guidance on how plans can make sure that supplemental benefits furnished in the form of an allowance meet the “primarily health related” requirement as enrollees typically have discretion in how they use these allowance-based dollars.

Response: The MA plan must ensure that its coverage, whether through reimbursement or direct payment, of items and services is consistent with the rules for supplemental benefits. The flexibility provided in this allowance benefit to permit the enrollee to choose among covered benefits does not change the rules for what may be covered. For an MA plan that uses a receipt-based reimbursement method of administering this allowance benefit, the MA plan must ensure that the receipts support a determination that reimbursement is being provided only for items and services that are covered supplemental benefits. We understand that debit and stored value cards can be programmed to permit their use only for purchase of specific items and services and at certain locations, such as cost sharing payments at a physician's office or payment for primarily health-related items such as bandages at a pharmacy. If an MA organization is unable to limit use of a debit or stored value card to the appropriate providers and covered benefits (such as through programming limits to certain merchant codes or inventory information approval system codes) to ensure compliance with §§ 422.100(c)(2) and 422.102(a), use of a debit or stored value card as a means of reimbursing or providing reductions in cost sharing may not be appropriate by that MA organization. We note that the Internal Revenue Service has provided guidance on how debit and stored value cards are permitted in connection with health savings accounts and flexible spending accounts when the cards are capable of being limited to qualified expenses; see, for example: Revenue Ruling 2003-43, 2003-21 I.R.B. 935, available at IRS.gov/pub/irs-drop/rr-03-43.pdf. We also clarify here that use of a stored value or debit card is not the covered supplemental benefit; such cards are only a means by which the MA plan makes direct payment to the provider for or reimbursement to the enrollee for the covered items and services.

The covered items and services that are paid or reimbursed this way must meet the requirements and standards to be supplemental benefits (or to be basic benefits in the case of reducing the cost sharing for a Part A or B covered benefit). Related to this, we reiterate that that payment of or reimbursement of cost sharing for Part D benefits by an MA plan is not a permissible supplemental benefit. To clarify this, we are finalizing § 422.102(a)(5) with additional text that Part D cost sharing may not be reduced or paid as a Part C supplemental benefit. MA plans may, under § 422.266, use rebates to pay the premiums for Part D benefits, including the premiums for supplemental drug coverage described at § 423.104(f)(1)(ii). For more information on the types of items and services that may be covered by an MA plan as a supplemental benefit, we direct readers to the April 27, 2018 memo titled “Reinterpretation of “Primarily Health Related” for Supplemental Benefits” and section V.C of this rule, which codifies those requirements for details.

Comment: A commenter expressed concern about potential limits on these benefits and the idea that financial need must be proven in order to allow access.

Response: Reduced cost sharing as a supplemental benefit must follow the requirements concerning supplemental benefits, which include uniformity requirements § 422.100(d) discussed in section V.C of this final rule. That is, if a plan chooses to offer reduced cost sharing as a supplemental benefit, it must be offered uniformly to plan enrollees. MA plans may not offer supplemental benefits based on financial need. Because of the unique nature of Special Supplemental Benefits for the Chronically Ill (SSBCI) and the statutory authority for those benefits to not be primarily health related, the recently adopted rule at § 422.102(f)(2)(iii) permits an MA plan to consider social determinants of health as a factor to help identify chronically ill enrollees whose health could be improved or maintained with SSBCI. (85 FR 33801, 33804) However, MA plans may not use social determinants, such as financial need, as the sole basis for determining eligibility for SSBCI.

Comment: A commenter mentioned that while stated in the preamble, CMS did not include specific regulation text stating that reduced cost sharing for basic benefits, specifically as it relates to Start Printed Page 5915the value of Part A and B benefits, is permitted.

Response: In the proposed rule, we included amendatory instructions to clarify that reductions in cost sharing for Part A and B benefits may only be offered as mandatory supplemental benefits at § 422.102(a)(4) and (5). Specifically, CMS proposed to revise the current language at § 422.102(a)(4) by inserting the phrase “for Part A and B benefits”. (85 FR 9213) Thus, specific regulation text clarifying that reduced cost sharing for basic benefits, specifically for Part A and B benefits, is permitted as a supplemental benefit was included in the proposed language. We are finalizing this language.

After consideration of the comments received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the changes to § 422.102(a)(4) and (a)(6)(i) and (ii) as proposed and are adding language to § 422.102(a)(5) further clarifying that cost sharing for Part D drugs is not included in these flexibilities.

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

In the Medicare Program; Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs Final Rule, published in the Federal Register on May 23, 2014 (79 FR 29960) (the May 2014 final rule), CMS codified rules in §§ 422.2274(h) and 423.2274(h) for MA organizations and Part D sponsors to pay agents and brokers for referrals of beneficiaries for enrollment in MA and Part D plans, also known as finder's fees. Currently, under §§ 422.2274(h) and 423.2274(h), CMS sets a referral fee limit that reflects an amount CMS determined is reasonably expected to provide financial incentive for an agent or broker to refer a beneficiary for an enrollment into a plan that is not the most appropriate to meet his or her needs. This is consistent with sections 1851(j)(2) and 1860D-1(l) of the Act, which direct that the Secretary set limits on compensation to ensure that the use of compensation creates incentives for agents and brokers to enroll individuals in the Medicare Advantage plan that is intended to best meet their health care needs. In an HPMS memo dated May 29, 2020, CMS limited referral fees to $100 for MA plans and $25 for PDP plans. Since referral fees are part of the definition of the term compensation in §§ 422.2274 and 423.2274, organizations may not pay independent agents more than the regulatory limits; CMS regulates referral fees as part of CMS's regulations on the compensation paid by the plan to an agent/broker for an enrollment, even if referral fees are paid separately from commissions or compensation for completed enrollments. CMS explained in the February 2020 proposed rule that because referral fees are already incorporated into compensation, limiting the amount of a referral fee does not impact the statutory requirement that CMS guidelines for compensation to an agent or broke incentivize the agent or broker enrolling a beneficiary in the plan that best meets their health care needs. CMS also explained in the proposed rule that for captive and employed agents and brokers, who only sell coverage for one organization, referral fees would not have any impact on how much the captive or employed agent is himself or herself paid.

Therefore, CMS proposed to remove §§ 422.2274(h) and 423.2274(h) and thereby eliminate the specific limitation on the amount a referral or finder fee paid by a plan to an agent or broker. CMS explained generally how the current regulation treats compensation as background for our proposal. As currently codified at §§ 422.2274(b) and 423.2274(b), compensation for initial enrollments may not exceed the fair market value and compensation for renewal enrollments may not exceed 50 percent of the fair market value. Compensation is defined in the same current regulation, at paragraph (a), as all monetary or non-monetary remuneration of any kind relating to the sale or renewal of a policy including, but not limited to, commissions, bonuses, gifts, prizes or awards, and referral or finder fees. By eliminating the individual referral fee limit, our proposal would restructure the regulation to only provide a limit on referral fees within the overall limit of Fair Market Value (FMV) that applies to all compensation. CMS proposed to clarify that MA organizations and Part D sponsors have the ability to compensate agents for referrals, provided that the total dollar amount does not exceed FMV. CMS explained that the primary value for this proposed additional flexibility would be in connection with independent agents, as CMS believes that for captive and employed agents, referral/finder fees do not play a factor in making sure the agent enrolls the beneficiary in the best plan, since captive and employed agents only sell for one organization. CMS therefore proposed to eliminate the current specific limit on finder or referral fees that is codified at paragraph (h). CMS also explained that because the definition of compensation already includes referral or finder fees (which CMS did not propose to change), the result of this specific proposal would be an overall limit on compensation for initial and renewal enrollments that would include finder or referral fees. In section VI.H. of the proposed rule, CMS proposed additional changes for §§ 422.2274(g) and 423.2274(g) regarding agent and broker compensation for Part C and Part D enrollments; and under those proposals, the definition of compensation would continue to include finder or referral fees. As a result, the limits on overall compensation continued to include finder or referral fees under the proposed rule. CMS solicited comment on whether removing the limit on referral/finder's fees would generate concerns such as those discussed in the 2010 Call Letter for MA organizations issued March 30, 2009; CMS's October 19, 2011, memo entitled “Excessive Referral Fees for Enrollments;” or the May 2014 final rule that codified the referral/finder's fees limits in regulation. As background, these concerns included marketing practices designed to circumvent compensation limitations.

The comments CMS received on this specific proposal regarding referral/finders' fees and our responses to them follow.

Comment: Several commenters stated that referrals and enrollments are different activities and therefore, CMS should consider payment for these activities separately. The commenters pointed out that referrals are used to generate sales leads, that not all leads result in an enrollment, and when a lead does result in enrollment, referral and finder's fees are typically not paid to the individual completing the sale. Some commenters pointed out that referral fees are not always provided to individuals as part of the compensation they are paid for an enrollment. The commenters suggested referral fees be removed from compensation and that a separate, reasonable limit be placed on referral fees. A commenter pointed out that the removal of the limit on referral fees would result in larger, well-financed health plans paying brokers more for referrals and that this would cause smaller health plans to lose out on broker referrals.

Response: CMS agrees with the commenters that referral fees and compensation are different types of payments and that plans distinguish between referral fees for sales leads and compensation to agents and brokers for enrollments. We understand that referral fees are a distinct part of market practices which we have determined, based on comments, should not be Start Printed Page 5916modified. We also realize that our proposal to remove specific limits on referral fees may put plans that can pay higher referral fees at an advantage over other plans. Based on the issues identified through comments we are maintaining the status quo. As such, CMS is finalizing a separate limit on referral fees in §§ 422.2274(f) and 423.2274(f) and is codifying the dollar figures currently used as the limits for referral fees. The current sub-regulatory policy has in place a $25 referral fee limit for PDPs and a $100 referral fee limit for MA-PDs. The proposal was to remove the current limits since referral fees are part of compensation paid to an agent for an enrollment. However, commenters pointed out that referral fees are not always provided to individuals as part of the compensation they are paid for an enrollment. Therefore, we are finalizing a specific dollar limit on fees paid for a single referral, recommendation, provision (as in providing a lead), or other means of referring a beneficiary to an agent, broker or other entity for potential enrollment in a plan instead of finalizing our proposal.

Section 1851(j)(2)(D) of the Social Security Act requires CMS to establish limitations to ensure that the use of compensation creates incentives for the agent/broker to enroll a beneficiary in a plan that best meets their needs. CMS does not require referral fees to be contingent on a beneficiary being enrolled in a plan because referral fees are essentially payments for sales leads. Plans may determine the circumstances as to when they pay referral fees (for example, based on whether the lead chooses to enroll in the plan), provided such payment is in accordance with the requirements in this final rule. Therefore, referral fees are a different type of payment than the payments that we regulate as compensation to an agent or broker for enrollment of a beneficiary in a plan. Based on this, CMS is finalizing changes to the definition of the term “compensation” (codified in §§ 422.2274(a) and 423.2274(a)) to remove referral or finder fees from the list of what compensation includes. As discussed in more detail in section V.E of this final rule, compensation as defined in paragraph (a) is regulated as payment that is based on enrollment in a plan. CMS is finalizing a new §§ 422.2274(f) and 423.2274(f) to provide that payments may be made to individuals for the referral, recommendation, provision, or other means of referring beneficiaries to an agent/broker or other entity for potential enrollment into a plan and that such payments may not exceed $100 for a referral into an MA or MA-PD plan and $25 for a referral into a standalone PDP.

Comment: A commenter requested more transparency into payment of both referral fees and renewal fees. The commenter also suggested that CMS eliminate the renewal compensation for agents, stating that 98 percent of beneficiaries remain in the same plan or make a plan change to a “like” plan (that is, a plan that is similar enough to the previous plan that it does not result in a change of the renewal payment status to the agent/broker). The commenter stated that the renewal compensation created an un-level playing field between community-based non-profit plans and national competitors.

Response: We believe that the commenter may be conflating referral fees and renewal compensation. Referral fees are paid by plans for sales leads while renewal compensation is paid by a plan to an agent or broker for enrollments. The dollar amount of the limit on referral fees under the current regulation was set by CMS in subregulatory guidance, applying the regulatory standard that referral fees not exceed an amount that could be reasonably expected to provide a financial incentive to enroll a beneficiary in a plan that is not appropriate to the beneficiary's needs. Here, we are finalizing a specific dollar amount as the limit on referral fees: $100 for a referral into an MA or MA-PD plan and $25 for a referral into a PDP plan. Plans may pay an amount per referral that is less than this limit but must not pay more than this limit. By establishing a specific dollar limit for referral fees in regulation, CMS is creating a level playing field for all plans who pay referral fees according to this policy. CMS is not including any type of increase to the referral fees since referrals do not require the same type of effort or have the same requirements that are associated with compensation.

The limit on renewal compensation is 50 percent of the fair market value (FMV) set for initial enrollment year compensation, as provided in §§ 422.2274(b)(ii) and 423.2274(b)(ii) of the current regulations and in §§ 422.2274(d)(3) and 423.2274(d)(3) of this final rule. As defined in §§ 422.2274(a) and 423.2274(a) in this final rule, FMV is calculated each year by increasing the prior year's FMV dollar amount by the MA Growth Percentage for aged and disabled beneficiaries, which is published for each year in the rate announcement issued pursuant to § 422.312. This provision permits a change each year in compensation to agents and brokers that aligns with the change in the growth of per capita costs. Agents provide valuable assistance to beneficiaries whether the beneficiary is enrolling into a plan for the first time or staying in their existing plan. Many beneficiaries depend on their agents to assist them in reviewing their choices each year and helping them make a determination on whether to remain in their existing plan or to move into a new plan. Renewal compensation provides an incentive to provide such assistance to enrollees and we believe such compensation is appropriate to limit under our statutory responsibility to regulate compensation for agents and brokers. In addition, permitting renewal compensation avoids providing an inadvertent and unintended incentive for agents and brokers to churn beneficiaries through new enrollments into different plans each year in order to generate stable income.

After consideration of the comments and for the reasons outlined in the proposed rule, we are finalizing the definition of “compensation” (§§ 422.2274(a) and 423.2274(a)) without including referral and finder's fees and are finalizing a new paragraph (f) in §§ 422.2274 and 423.2274 to impose specific limits on the payment amount for referral and finder's fees for MA and Part D enrollments.

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

1. Introduction

In the April 2018 final rule, CMS codified at §§ 422.160, 422.162, 422.164, and 422.166 (83 FR 16725 through 83 FR 16731) and §§ 423.180, 423.182, 423.184, and 423.186 (83 FR 16743 through 83 FR 16749) the methodology for the Star Ratings system for the MA and Part D programs, respectively. This was part of the Administration's effort to increase transparency and give advance notice regarding enhancements to the Part C and D Star Ratings program. In the April 2019 final rule, CMS amended §§ 422.166(a)(2)(i) and 423.186(a)(2)(i) to update the methodology for calculating cut points for non-Consumer Assessment of Healthcare Providers and Systems (non-CAHPS) measures by adding mean resampling and guardrails, codified a policy to adjust Star Ratings for disasters, and finalized some measure updates. In the June 2020 final rule, CMS finalized an increase in the weight of patient experience/complaints and Start Printed Page 5917access measures from 2 to 4 for the 2023 Star Ratings. To further increase the predictability and stability of the Star Ratings system, we also finalized our proposal to directly remove outliers through Tukey outlier deletion before applying the clustering methodology to calculate the cut points, but we delayed the application of Tukey outlier deletion until the 2022 measurement year which coincides with the 2024 Star Ratings. We also finalized the removal of the Rheumatoid Arthritis Management measure and updated the Part D Statin Use in Persons with Diabetes measure weighting category for the 2021 measurement year and the 2023 Star Ratings.

In the Medicare and Medicaid Programs; Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency Interim Final Rule placed on display at the Office of the Federal Register website on March 31, 2020 (hereinafter referred to as the March 31st COVID-19 IFC), CMS adopted a series of changes to the 2021 and 2022 Star Ratings to accommodate the disruption to data collection posed by the COVID-19 pandemic. The changes adopted in the March 31st COVID-19 IFC addressed the need of health and drug plans and their providers to adapt their current care practices in light of the public health emergency (PHE) for COVID-19 and the need to care for the most vulnerable patients, such as the elderly and those with chronic health conditions. In addition to needing to address data collections scheduled for 2020 during the initial part of the PHE, we believe that there will be changes in measure-level scores because of increased healthcare utilization due to COVID-19, reduced or delayed non-COVID-19 care due to advice to patients to delay routine and/or elective care, and changes in non-COVID-19 inpatient utilization. We realize that this will impact the data collected during the 2020 measurement year which will impact the 2022 Part C and D Star Ratings. Thus, as part of the March 31st COVID-19 IFC, we made some adjustments to account for the potential decreases in measure-level scores so health and drug plans can have some degree of certainty knowing how the Star Ratings will be adjusted and can continue their focus on patients who are most in need right now.

Specifically, the March 31st COVID-19 IFC:

  • Eliminates the requirement to collect and submit Healthcare Effectiveness Data and Information Set (HEDIS) and Medicare Consumer Assessment of Healthcare Providers and Systems (CAHPS) data otherwise collected in 2020 and replaces the 2021 Star Ratings measures calculated based on those HEDIS and CAHPS data collections with earlier values from the 2020 Star Ratings (which are not affected by the PHE for COVID-19);
  • Establishes how we would calculate or assign Star Ratings for 2021 in the event that CMS's functions had become focused on only continued performance of essential Agency functions and the Agency and/or its contractors did not have the ability to calculate the 2021 Star Ratings;
  • Modifies the current rules for the 2021 Star Ratings to replace any measure that had a systemic data quality issue for all plans due to the COVID-19 outbreak with the measure-level Star Ratings and scores from the 2020 Star Ratings;
  • Replaces the measures calculated based on HOS data collections with earlier values that are not affected by the public health threats posed by COVID-19 for the 2022 Star Ratings in the event that we were unable to complete Health Outcomes Survey (HOS) data collection in 2020 (for the 2022 Star Ratings) due to the PHE for COVID-19;
  • Removes guardrails (i.e., measure-specific caps on cut point changes from one year to the next) for the 2022 Star Ratings by delaying their application to the 2023 Star Ratings;
  • Expands the existing hold harmless provision for the Part C and D Improvement measures to include all contracts for the 2022 Star Ratings; and
  • Revises the definition of “new MA plan” so that for purposes of 2022 QBPs based on 2021 Star Ratings only, new MA plan means an MA contract offered by a parent organization that has not had another MA contract in the previous 4 years, in order to address how the 2021 Star Ratings are based in part on data for the 2018 performance period.

Please see the March 31st COVID-19 IFC for further information on these changes for the 2021 and 2022 Star Ratings. In addition, the Medicare and Medicaid Programs, Clinical Laboratory Improvement Amendments (CLIA), and Patient Protection and Affordable Care Act; Additional Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency Interim Final Rule (CMS-3401-IFC) which appeared in the Federal Register on September 2, 2020 (hereinafter referred to as the September 2nd IFC), modifies application of the extreme and uncontrollable circumstances policy for the calculation of the 2022 Part C and D Star Ratings to address the PHE for COVID-19 to: (1) Remove the 60 percent exclusion rule for cut point calculations for non-CAHPS measures; and (2) remove the 60 percent exclusion rule for the determination of the performance summary and variance thresholds for the Reward Factor. These changes were made by amending the regulations at §§ 422.166(i)(11) and 423.186(i)(9).

In the February 2020 proposed rule, in addition to the policies addressed in the June 2020 final rule, we proposed to implement substantive updates to the specifications of the Health Outcomes Survey (HOS) outcome measures, add two new Part C measures to the Star Ratings program, clarify the rules around consolidations when data are missing due to data integrity concerns, and add several technical clarifications. We also proposed to codify additional existing rules for calculating MA Quality Bonus Payment (QBP) ratings. We proposed these changes to apply to the 2021 measurement period and the 2023 Star Ratings, but as discussed in this final rule, we are finalizing these policies from the proposed rule (that is, data would be collected and performance measured) for the 2022 measurement period and the 2024 Star Ratings.

CMS appreciates the feedback we received on our proposals. In the sections that follow, which are arranged by topic area, we summarize the proposal and comments we received on each proposal and provide our responses.

2. Definitions (§ 422.252)

We proposed to amend the definition at § 422.252 for new MA plans by clarifying how we apply the definition. Under our proposed changes, New MA plan would mean a plan that: (1) Is offered under a new MA contract; and (2) is offered under an MA contract that is held by a parent organization defined at § 422.2 that has not had an MA contract in the prior 3 years. In addition, we proposed to add text to the definition to explicitly explain that the parent organization is identified as of April of the calendar year before the payment year to which the final QBP rating applies, and contracts associated with that parent organization are also evaluated using contracts in existence as of April of the 3 calendar years before the payment year to which the final QBP rating applies.

Under our current policy, we identify the parent organization for each MA contract in April of each year and then whether any MA contracts have been held by that parent organization in the immediately preceding 3 years to determine if the parent organization meets the 3-year standard. For example, Start Printed Page 5918if a parent organization is listed for an MA contract in April 2019, and that parent organization does not have any other MA contracts at any point during April 2017-April 2019, the plans under the MA contract would be considered new MA plans for 2020 QBP purposes.

We received no comments on the proposed amended definition in § 422.252 for a new MA plan and are finalizing the policy as proposed for the reasons outlined in the proposed rule and this final rule. However, we are not finalizing the last sentence included in the proposed regulation text because the proposed regulation text mistakenly included a sentence repeating how we would identify parent organizations in April of the calendar year before the payment year.[29] Although we are finalizing this provision as applicable beginning January 1, 2022, we reiterate that it codifies current policies that have been in place since 2012 (76 FR 21486). In addition, we note that the regulation text finalized here includes the language adopted in the March 31st COVID-19 IFC (CMS-1744-IFC) to govern how the definition is applied for 2021 Star Ratings (85 FR 19290).

3. Contract Consolidations (§§ 422.162(b)(3)(iv), 422.164(g)(1)(iii)(A), 423.182(b)(3)(ii), and 423.184(g)(1)(ii)(A))

The process for calculating the measure scores for contracts that consolidate is specified as a series of steps at §§ 422.162(b)(3) and 423.182(b)(3). We proposed to add a rule to account for instances when the measure score is missing from the consumed or surviving contract(s) due to a data integrity issue as described at §§ 422.164(g)(1)(i) and (ii) and 423.184(g)(1)(i) and (ii). CMS proposed to assign a score of zero for the missing measure score in the calculation of the enrollment-weighted measure score. We proposed that these rules would apply for contract consolidations approved on or after January 1, 2021. First, we proposed minor technical changes to the regulation text in §§ 422.162(b)(3)(iv)(A) and (B) and 423.182(b)(3)(ii)(A) and (B) to improve the clarity of the regulation text. Second, we proposed to redesignate the current regulation text (with the technical changes) as new paragraphs (b)(3)(iv)(A)(1) and (b)(3)(iv)(B)(1) and (b)(3)(ii)(A)(1) and (b)(3)(ii)(B)(1) of these regulations and to codify this new rule for contract consolidations approved on or after January 1, 2021 as §§ 422.162(b)(3)(iv)(A)(2) and (b)(3)(iv)(B)(2) and 423.182(b)(3)(ii)(A)(2) and (b)(3)(ii)(B)(2). We also proposed an additional rule at §§ 422.164(g)(1)(iii)(A) and 423.184(g)(1)(iii)(A) to address how the Timeliness Monitoring Project (TMP) or audit data are handled when two or more contracts consolidate. We proposed that the TMP or audit data will be combined for the consumed and surviving contracts before carrying out the methodology as provided in paragraphs B through N (for Part C) and paragraphs B through L (for Part D). We proposed that these rules would apply for contract consolidations approved on or after January 1, 2021 and the proposed regulation text included language to that effect. We proposed to redesignate the current regulation text as new paragraphs (g)(1)(iii)(A)(1) and (g)(1)(ii)(A)(1) of these regulations and to codify this new rule for contract consolidations on or after January 1, 2021 as paragraphs (g)(1)(iii)(A)(2) and (g)(1)(ii)(A)(2).

In this section of this rule, we summarize the comments we received and provide our responses and final decisions.

Comment: Commenters supported the proposals related to how to calculate scores when either the surviving or the consumed contract has a measure-level data integrity issue. A commenter recommended in these instances that the preview reports should include the combined TMP data for contracts that consolidate.

Response: We appreciate these comments and will be combining the TMP data in preview reports for the surviving and consumed contracts.

Summary of Regulatory Changes

After consideration of the comments and for the reasons set forth in the proposed rule and our responses to the related comments, we are finalizing the changes as proposed to §§ 422.162(b)(3)(iv), 422.164(g)(1)(iii)(A), 423.182(b)(3)(ii), and 423.184(g)(1)(ii)(A) with a revision to the applicable date. Given the timing of the finalization of this rule, we are finalizing the provisions as applying to contract consolidations that are approved on or after January 1, 2022.

4. Adding and Updating Measures (§§ 422.164, 423.184)

The regulations at §§ 422.164 and 423.184 specify the criteria and procedures for adding, updating, and removing measures for the Star Ratings program. As discussed in the April 2018 final rule, due to the regular updates and revisions made to measures, CMS does not codify a list in regulation text of the measures (and specifications) adopted for the MA and Part D Star Ratings Program (83 FR 16537). CMS lists the measures used for the Star Ratings each year in the Medicare Part C & D Star Ratings Technical Notes or similar guidance document with publication of the Star Ratings. In the February 2020 proposed rule, CMS proposed measure changes to the Star Ratings program for performance periods beginning on or after January 1, 2021.

a. Proposed Measure Updates—Updates to the Improving or Maintaining Physical Health Measure and Improving or Maintaining Mental Health Measure From the HOS (Part C).

In accordance with § 422.164(d)(2), we proposed substantive updates to two measures from the Medicare Health Outcomes Survey (HOS): The Improving or Maintaining Physical Health measure and Improving or Maintaining Mental Health measure.

First, we proposed to change the case-mix adjustment (CMA) for these measures. Case-mix adjustment is critical to measuring and comparing longitudinal changes in the physical and mental health of beneficiaries across MA contracts. To ensure fair and comparable contract-level scores, it is important to account for differences in beneficiary characteristics across contracts for these two measures. CMS proposed to modify the current approach used for adjusting for differences in the case-mix of enrollees across contracts for these two measures. The proposed approach would improve the case-mix model performance and simplify the implementation and interpretation of case-mix results when particular case-mix variables, such as household income, are missing. The current method for handling missing case-mix variables results in a reduced number of case-mix variables used for a beneficiary because it does not use any of the case-mix variables in a group of adjusters if one is missing from the group (see 2021 Medicare Part C & D Star Ratings Technical Notes Attachment A for a full description of the current HOS case-mix methodology). CMS stated in the proposed rule that this “all-or-nothing” approach for each group of adjusters may not be as efficient as alternative approaches for handling missing case-mix adjusters. Under the proposed change, when an adjuster is missing for Start Printed Page 5919a beneficiary, it would be replaced with the mean value for that adjuster for other beneficiaries in the same contract who also supply data for the Improving or Maintaining Physical Health and Improving or Maintaining Mental Health measures. This proposed approach has been used for the Medicare Advantage and Prescription Drug Plan CAHPS surveys for many years (see 2021 Medicare Part C & D Star Ratings Technical Notes Attachment A for a description of the CAHPS case-mix methodology). In simulation models, this approach either outperformed the current approach for predicting outcomes or matched the current approach. The proposed rule also explained how the proposed approach is easier to implement than the current approach as replacing the missing adjuster values with the contract mean scores for those adjusters rather than deleting the grouping of adjusters is less burdensome because it involves fewer steps and is easier to replicate and understand.

Second, we proposed to increase the minimum required denominator from 30 to 100 for the two measures. The proposed increase to the minimum denominator would bring these measures into alignment with the denominator requirements for the HEDIS measures that come from the HOS survey and increase the reliability for these measures compared to the current reporting threshold of 30.

In this section of this rule, we summarize the comments we received and provide our responses and final decisions.

Comment: A majority of commenters expressed support for a simplified case-mix methodology, increased minimum denominator, and CMS's continued efforts to improve the quality and transparency of HOS measures. Some commenters stated that the new methodology for dealing with missing data will make the case-mix algorithm more accurate and help ensure fair and comparable contract level results by strengthening the measures' ability to adjust for beneficiary level differences. A commenter suggested removing HOS measures from the Star Ratings entirely, but most who expressed concerns about the proposed changes recommended CMS move the two HOS outcome measures to the display page for 2 years to allow stakeholders sufficient time to review. Some commenters noted that these changes are substantive.

Response: CMS appreciates the support for the proposed methodological changes. CMS agrees that the case-mix change is a substantive update as described at § 422.164(d)(2), so the provision there for placing an updated measure on the display page for at least 2 years prior to using the updated measure to calculate and assign Star Ratings applies. Thus, CMS will move these two HOS outcomes measures, Improving or Maintaining Physical Health and Improving or Maintaining Mental Health, as updated, to the display page for the 2024 and 2025 Star Ratings. Though CMS has the option of retaining the current specifications of these outcome measures in Star Ratings while stakeholders review and study the updated measures, our regulations do not require their retention during this interim period. Given the importance of patient-reported outcome measures in the Star Ratings program, CMS is opting to let stakeholders review the updated measures on the display page without simultaneously considering an alternate specification in the Star Ratings. We explained in the April 2018 final rule that we may continue use of a legacy measure if the updated measure expands the population covered in the measure or the measure otherwise is critical to the Star Ratings (83 FR 16537).

Comment: A commenter stated that these two HOS measures reflect experiences, not outcomes, and therefore should not be weighted as outcome measures. Another commenter stated that it is inappropriate to assign self-reported measures the weight of 3. A few commenters suggested CMS reduce the weight of the two HOS outcome measures to 1.5 or 2. Several commenters requested CMS clarify the weight of the two updated measures once they are reintroduced to the Star Ratings.

Response: The Improving or Maintaining Physical Health measure and Improving or Maintaining Mental Health measure both focus on key outcomes for a health plan: Improving or maintaining the physical health and mental health of its enrollees. These measures reflect the outcomes of the plan's entire membership based on the members' perceptions of their own health. Thus, these measures do not measure patient experiences or beliefs about the health plan but measure changes over 2 years in the physical and mental health status of the enrollees in an MA contract. The weights of measures are assigned by measure type as codified at § 422.166(e). These measures (Improving or Maintaining Physical Health and Improving or Maintaining Mental Health) are considered outcome measures; thus, as codified at § 422.166(e)(1)(i), they receive a weight of 3. Under CMS's process to add, update, and remove measures used to calculate the Star Ratings codified at § 422.164, substantive updates to an existing measure result in the updated measure being on the display page for at least 2 years prior to its reintroduction to the Star Ratings. For weighting purposes, a substantively updated measure is treated as a new measure, and as described at § 422.166(e)(2), will receive a weight of 1 for the first year in the Star Ratings. In subsequent years, an updated measure is assigned the weight associated with its category. Thus, the Improving or Maintaining Physical Health and Improving or Maintaining Mental Health measures will receive a weight of 1 in the 2026 Star Ratings and a weight of 3 in the 2027 Star Ratings and beyond.

Comment: Several commenters expressed concern about the cultural relevance of the survey questions, the applicability of the two HOS outcome measures to the LIS/DE and disabled populations, and the robustness of the case-mix models to control for these differences. A commenter suggested the Improving or Maintaining Physical Health measure conflates functional status with health and pointed out that persons with functional limitations can still be in good health. Another commenter questioned the role of death in the statistical adjustment models that examine changes in expected physical health.

Response: There continues to be additional work in the research community on both identifying the impact of social risk factors on health outcomes and how to best to control for their impact on clinical quality measurement such that comparisons across contracts yield accurate representations of true differences in quality as opposed to reflections of changes in the composition of beneficiaries within a contract or across contracts over time. CMS also continues to test and refine the HOS instrument with these issues in mind to ensure that survey questions are relevant to different populations. The current longitudinal measures, Improving or Maintaining Physical Health and Improving or Maintaining Mental Health, adjust for a wide variety of beneficiary demographic and socioeconomic characteristics to control for differences in these characteristics across contracts. MA organizations are held accountable for risk-adjusted changes in functioning, including mortality, because to ignore death as a physical health outcome would result in misleading results. We agree that people with functional limitations can be in Start Printed Page 5920good health and this is accounted for in the Improving or Maintaining Physical Health measure since it examines person-level changes from a baseline period to a follow-up period 2 years later. The HOS methodology takes into account the case mix of enrollees within each plan and controls for pre-existing baseline differences, including age, sociodemographic characteristics, functional status, and chronic medical conditions as reported in the HOS survey, to statistically adjust each plan's expected outcomes, including survival rate, based on national averages when calculating the results for Improving or Maintaining Physical Health. Mortality is not considered in the calculation of Improving or Maintaining Mental Health.

Comment: Several commenters expressed concern about the HOS survey, including whether increasing the minimum denominator to 100 would improve the stability of the specific measures. A few commenters urged CMS to consider an even larger increase. Another commenter recommended that CMS not implement the change until there is clear evidence it will enhance measure stability in the Star Ratings. Several commenters suggested involving stakeholders in future changes to the survey methodology, because of their implications for measures. Many commenters noted that these are significant changes to specifications, while additional changes may also be needed to improve the measures, such as to further increase reliability and stability of the measures.

Response: We have considered stakeholder feedback in the development of measures of clinical outcomes in the Part C and Part D Star Ratings program. The HOS was developed over the course of 2 decades under the guidance of several Technical Expert Panels (TEPs) of industry experts and its survey questions are derived from well-established patient reported outcome measures (PROs) that reflect clinical standards. Patients are the ultimate source of information on patient outcomes and CMS is committed to developing meaningful measures for quality measurement and improvement that enhance outcomes for beneficiaries. CMS continues to solicit stakeholder feedback on PROs, most recently through the 2020 draft Call Letter dated January 30, 2019 and the Star Ratings TEP on April 30, 2019. Additionally, CMS routinely seeks broad stakeholder input regarding measure enhancements, while maintaining scientific objectivity and independence throughout the process.

Our analyses do not show volatility of HOS measures in the Star Ratings, and in particular of the two outcome measures, which because of their weight in the Star Ratings calculation are of most concern to plans and sponsors. As an example, most plans maintained or gained stars on HOS measures between 2019 and 2020, and while there is some movement in the Star Ratings, the change is generally not acute. Only one plan dropped from 5 stars to 1 star for Improving or Maintaining Physical Health, while 68 percent of plans had no change or an increase in stars for the measure, and 85 percent had no change or an increase in stars for Improving or Maintaining Mental Health. Analyses of movement in Star Ratings for these outcome measures do not raise concerns about stability, even over longer periods of time.

While CMS does not have concerns about the stability of the two outcome measures derived from HOS, we understand how much plans have at stake in their HOS-derived Star Ratings. Out of an abundance of caution and to be responsive to stakeholder concerns, we are taking a number of steps. One is to increase the denominator size to further increase reliability. In addition, and as CMS stated in the 2021 Rate Announcement, we are exploring alternative PROs as potential replacements for the existing HOS outcome measures in the future; we are particularly interested in less complex replacements that would facilitate MA plans directing their quality improvement efforts on a health focus relevant to their enrollee population.

Comment: A commenter suggested the HOS survey should not be fielded during the COVID-19 pandemic because of the burden the survey places on plan members and the impact of the pandemic on their health, and recommended that HOS baselines be considered unavailable through 2023.

Response: As stated in the March 31st COVID-19 IFC (CMS-1744-IFC), CMS delayed the HOS survey for 2020 until the late summer so as not to risk the health and safety of survey vendor staff during the initial stages of the pandemic. Since survey vendors have put in place procedures to safely administer the surveys, consistent with the HPMS memo released on July 20, 2020 titled “2020 Medicare Health Outcomes Survey (HOS) and HOS-Modified (HOS-M),” CMS fielded the HOS and HOS-M surveys in mid-August through mid-November of 2020. Longitudinal studies like the HOS are vital to understanding the immediate and long-term impacts of the COVID-19 pandemic on beneficiaries and health care. The survey is voluntary for plan members so they are empowered to decide whether to respond.

Comment: A commenter requested help identifying their members who complete the survey so that they can do a root-cause analysis of any issues reported or found. The commenter mentioned a long lag time of approximately 3 years between baseline survey administration and when plans receive results and requested real-time data on patient outcomes.

Response: It is by design that CMS does not provide the identity of respondents until both baseline and follow-up surveying are complete in order to preserve the integrity of the sample and reliability of the results. Patient outcomes cannot be calculated using only baseline data, since the outcomes measured through this survey are the changes in physical and mental health status over time. It is important to protect the confidentiality of the survey respondents to limit the possibility of plans focusing solely on baseline survey respondents for quality improvement (in order to achieve higher scores) rather than a broad segment of the plan enrollment (which would improve the quality of care provided to the plan's overall population). HOS is a cohort study, and each year, the survey is administered to a new cohort, or group, from each contract both at the beginning and end of a 2-year period. The analysis of longitudinal data is complex, but CMS is actively striving to decrease the timeframe between completion of follow-up survey data collection and distribution of performance measurement data while maintaining the usefulness, reliability, and accuracy of the measures. In addition, CMS is working toward improved presentation of HOS performance measurement results that will include updates to the annual baseline and performance measurement reports and enhancements to the HPMS HOS module, beginning in CY 2021.

Comment: A few commenters requested as much detail be made public about the statistics for HOS as CMS publishes for CAHPS.

Response: While the timing and presentation of HOS and CAHPS results differ, both surveys provide comprehensive information and reports to each contract describing contract-specific findings and also publish information about the methodology and case-mix adjustments. As HOS is a longitudinal survey and CAHPS is an annual, cross-sectional survey, there are differences in methodology and statistics. CMS provides stakeholders and the public with similar levels of Start Printed Page 5921transparency and detail on both surveys. HOS case-mix variables are published in each contract's Performance Measurement Report and coefficients are published on the HOS website and in Attachment A of the Star Ratings Technical Notes each year. Contract-specific baseline reports are currently distributed to plans in the spring of the year following baseline data collection. Performance Measurement reports are distributed in the summer of the year following follow-up data collection. Star Ratings data and aggregate score analysis reports are available in the HOS module in HPMS to allow easier data validation and score comparisons at the contract, state, region, and national levels for the core HOS physical and mental health outcome measures. Additional information about HOS and its methodology can be found at www.HOSonline.org. While there are differences, we believe that the extent and scope of HOS data provided to organizations is more than sufficient and comparable to the CAHPS data furnished to plans.

Comment: A commenter expressed some concern about the overlap of existing measures with the measure proposed in the 2021 Advanced Notice.

Response: In the 2021 Advance Notice, we stated that we planned to post the longitudinal Physical Functioning Activities of Daily Living (PFADL) change measure on the 2021 and 2022 display pages and that we may consider that PFADL measure for the Star Ratings in the future, pending rulemaking. Prior to potentially proposing this measure through future rulemaking, CMS would submit this measure through the Measures Under Consideration process to be reviewed by the Measure Applications Partnership which is a multi-stakeholder partnership that provides recommendations to HHS on the selection of quality and efficiency measures for CMS programs, as required by Section 3014 of the Affordable Care Act. The 2021 Advance Notice also stated that given the complexities of the existing HOS measures, CMS is committed to exploring alternative PROs to replace the existing HOS outcome measures. We are particularly interested in replacements that would be simpler and more direct for plans to use and to focus their quality improvement efforts. If we propose to add the PFADL measure to the Star Ratings in future rulemaking, we will consider using it to replace existing measures.

Summary of Regulatory Changes

After consideration of the comments and for the reasons set forth in the proposed rule and our responses to the related comments summarized in this final rule, we are finalizing the proposed specification changes for the Improving or Maintaining Physical Health measure and Improving or Maintaining Mental Health measure but for measurement year 2022 instead of 2021. These measures would be moved to display for the 2024 and 2025 Star Ratings as the case-mix specification change is substantive as described at § 422.164(d)(2) and returned to the Star Ratings program for the 2026 Star Ratings.

b. Proposed Measure Additions

As discussed in the April 2018 final rule (83 FR 16440), new measures may be added to the Star Ratings through rulemaking and §§ 422.164(c)(3) and (4) and 423.184(c)(3) and (4) provide for reporting new measures on the display page for a minimum of 2 years before they are added to the Star Ratings program. In advance of adopting new measures through rulemaking, CMS also solicits feedback using the Advance Notice and Rate Announcement process. CMS is working with the National Committee for Quality Assurance (NCQA) to expand efforts to better evaluate a plan's success at effectively transitioning care from a clinical setting to home. In the 2019 Call Letter, CMS discussed these two potential new Part C measures and finalized them in the 2020 Call Letter for the 2020 display page, which used 2018 measurement year data. In the February 2020 NPRM, CMS proposed to add the HEDIS Transitions of Care and the HEDIS Follow-up after Emergency Department Visit for People with Multiple High-Risk Chronic Conditions measures to the 2023 Star Ratings covering the contract year 2021 performance period. We stated that we would have these new Part C measures on the display page for 3 years, starting with the 2020 display page, prior to adding them to the Star Ratings program. In addition, we also discussed in the proposed rule how we would follow the pre-rulemaking process that is used in other CMS programs under section 1890A of the Social Security Act. Both of these proposed measures were submitted and reviewed through that process.

(1) Transitions of Care (Part C)

The HEDIS Transitions of Care (TRC) measure is the percent of discharges for members 18 years or older who have each of the four indicators during the measurement year: (1) Notification of inpatient admission and discharge; (2) receipt of discharge information; (3) patient engagement after inpatient discharge; and (4) medication reconciliation post-discharge. The TRC measure was first placed on the 2020 display page.

We explained in the proposed rule how NCQA, based on stakeholder input, was exploring a few non-substantive measure specification changes. The first change, for all measure indicators, is to broaden the forms of communications from one outpatient medical record to other forms of communication such as admission, discharge, and transfer record feeds, health information exchanges, and shared electronic medical records. The second is to change the notifications and receipts from `on the day of admission or discharge or the following day' to `on the day of admission or discharge or within the following two calendar days.' A third is to change one of the six criteria of the Receipt of Discharge Information indicator from `instructions to the primary care providers or ongoing care provider for patient care' to `instructions for patient care post-discharge.' We stated how these three changes are considered non-substantive since they include additional tests that would meet the numerator requirements as described at § 422.164(d)(1)(iv)(A), add alternative data sources as described at § 422.164(d)(1)(v), and do not change the population covered by the measure. Our proposal therefore was to adopt the TRC measure with or without the updates NCQA was considering at the time the proposed rule was issued. After publication of the NPRM, we also discussed this measure in the CY 2021 Advance Notice and Rate Announcement, reiterating how NCQA was considering these three non-substantive updates to the measure that we currently have on display. The comments CMS received to the CY 2021 Advance Notice and Rate Announcement were similar to those being addressed here. These include requests for clarifications and additional time to implement the measure, as well as concerns about the coordination of information especially with out-of-network providers.

The intent of this measure is to improve the quality of care transitions from an inpatient setting to home, as effective transitioning will help reduce hospital readmissions, costs, and adverse events. The TRC measure excludes members in hospice and is based on the number of discharges, not members. Currently the TRC measure is on the display page and we proposed to Start Printed Page 5922add this measure to the 2023 Star Ratings covering the contract year 2021 measurement period. On July 1, 2020, NCQA published the HEDIS® Measurement Year 2020 & Measurement Year 2021 Volume 2: Technical Specifications for Health Plans [30] which included the listed measure specification changes to be implemented for data collected in 2021 covering the 2020 measurement period. Therefore, all three non-substantive updates have been adopted by the measure steward.

In this section of this rule, we summarize the comments we received and provide our responses and final decisions.

Comment: Many commenters fully support the intent of this measure which is to improve continuity of care for MA members as they transition from inpatient to outpatient settings.

Response: CMS thanks commenters for the support of this measure. The TRC measure has been on the display page since 2020 covering the 2018 measurement period and we believe it provides important information about MA plan quality. Under this final rule, CMS will keep this measure, with the updates NCQA finalized following the publication of the proposed rule, which included these measure specification changes to be implemented for data collected in 2021 covering the 2020 measurement period. The TRC measure will remain on the 2023 display page (for the 2021 measurement year) in light of the timing of this final rule, and will move off the display page for the 2022 measurement period for use in calculating the 2024 Star Ratings.

Comment: Several commenters recommended that the measure indicators should include all providers who can appropriately support a beneficiary during a care transition, including providers other than PCPs. A commenter suggested that pharmaceutical outreach activities be included in the `patient engagement after discharge' category.

Response: The measure does allow for a variety of provider types and care providers to take action to meet the intent of the TRC indicators. However, the information that is used to meet the numerator of each indicator must be documented in the outpatient record that is accessible by the PCP or ongoing care provider. An ongoing care provider is defined as “the practitioner who assumes responsibility for the member's care.” This definition is provided in the measure specifications and is intentionally broad because NCQA recognizes there are a variety of provider types who might be coordinating patient care. As proposed and adopted, the specifications for this measure do include a variety of providers that may be taking over the responsibility of managing the patient's care. The TRC measure is for the most part focused on getting information into any outpatient record that is accessible to the PCP or ongoing care provider. Pharmaceutical outreach activities would be included in the `patient engagement after discharge' category if they are included in the patient's outpatient records. The Medication Reconciliation indicator is the only indicator where a provider type is specified for who can take action since it specifies that medications must be reconciled by a prescribing practitioner, clinical pharmacist, or registered nurse.

Comment: A commenter argued that not only a patient's PCP but their plan should be notified of an admission and a discharge. Another commenter suggested that notifications of inpatient admissions and discharges should prioritize alignment for dually eligible members (that is, both the patient's Medicare and Medicaid providers should be notified).

Response: CMS appreciates these comments and shared them with NCQA, the measure steward. Currently, the measure only focuses on notifications that go to the PCP or ongoing care provider. The measure is specified for Medicare plans, so plans will determine the provider that meets the intent of the measure (which may include Medicaid providers treating dually eligible enrollees). Although the measure only focuses on notifications that go to the PCP or ongoing care provider, there is nothing in this measure that would prevent notifications also going to the health plan, subject to otherwise applicable laws on privacy and disclosure of health information. Further, we still believe it is important to implement this measure since transitions from the inpatient setting often result in poor care coordination, including communication gaps between inpatient providers and the PCP or ongoing care provider; unplanned medication changes; incomplete diagnostic work-ups; and inadequate patient, caregiver, and provider understanding of diagnoses, medication, and follow-up needs. This measure will put more emphasis on these issues for both providers and health plans.

Comment: Some commenters suggested that the original timeframe for notifications is too short, especially for out-of-network facilities.

Response: In the proposed rule and in the 2021 Rate Announcement, we stated how NCQA is considering a revision to the timeframe for the Notification of Inpatient Admission and Receipt of Discharge Information indicators for this measure to “the day of admission or discharge, or within the following two calendar days.” This change clarifies expectations for documentation related to admissions or discharges that take place over the weekend. This change was approved by NCQA's Committee on Performance Measurement following the release of the proposed rule and is included in the HEDIS® Measurement Year 2020 & Measurement Year 2021 Volume 2: Technical Specifications for Health Plans released on July 1, 2020, to be implemented for data collected in 2021 covering the 2020 measurement period. Starting with the 2022 Display measure, the TRC measure will include the expanded timeframe for the receipt of discharge information.

Comment: Several commenters stated that the composite nature of the measure may not appropriately account for variation of performance on the different elements and may not allow for understanding of the individual components. A number of commenters suggested that the four components of the composite measure be reported as separate Star Ratings measures.

Response: To minimize the number of new Star Rating measures to lessen complexity in the Star Ratings program, CMS is planning to average the four components into one composite measure for reporting in the Star Ratings program. Currently, the four components and the composite measure that combines the four components are reported on the display page. The four components of this composite measure will continue to be reported as separate measures on the display page so as to be available to plans for use in their quality improvement projects and to other stakeholders who want an additional breakdown of the data even though only the composite measure will be used in the Star Ratings. The composite measure will be displayed on Medicare Plan Finder as one measure focused on TRC to simplify the information publicly available on the website for consumers and so as not to overwhelm them with too many measures. This approach allows CMS to publicly report all included data, while directing audiences to the most helpful level of complexity for the reported results.

Comment: Some commenters suggested the current Medication Reconciliation Post-Discharge measure should remain as a separate Star Ratings measure since they believe it drives Start Printed Page 5923improved outcomes, while others recommended retiring the current Medication Reconciliation measure after implementation of the TRC measure. Ultimately, commenters requested to know what impact the introduction of the TRC measure will have on the current Medication Reconciliation measure. A commenter suggested that if the Medication Reconciliation measure is to be incorporated into the TRC measure, NCQA should continue to permit organizations to use the hybrid data collection method.

Response: As noted in the proposed rule and the 2021 Rate Announcement, NCQA was considering revisions to the TRC measure to the requirement of using one medical record from a specific provider to, instead, allow numerator information to be captured from “the outpatient medical record as well as other information accessible to the primary care provider or ongoing care provider”. This change, which is included in the HEDIS® Measurement Year 2020 & Measurement Year 2021 Volume 2: Technical Specifications for Health Plans released on July 1, 2020, will be implemented for the 2020 measurement year and enables the specification to capture additional communication forms (for example, admissions, discharges, and transfers feeds, shared electronic medical records) that occur regularly in the field and meet the intent of the TRC measure. This change also ensures that scores for the Medication Reconciliation Post-Discharge component of the TRC measure and the scores for the standalone Medication Reconciliation Post-Discharge measure currently in the Star Ratings match exactly. As such, the additional stand-alone Medication Reconciliation Post-Discharge measure would no longer need to be separately reported by health plans. The hybrid option for reporting the Medication Reconciliation component of the TRC measure will remain for the foreseeable future.

Comment: Some commenters stated that the recent changes to the TRC measure described in the proposed rule are substantive and so the measure should remain on the display page.

Response: CMS believes that the updates to this measure are non-substantive since they add additional tests that would meet the numerator requirements as described at § 422.164(d)(1)(iv)(A), include alternative data sources as described at § 422.164(d)(1)(v), and do not change the population covered by the measure. As discussed in the April 2018 final rule, if additional codes are added that increase the number of numerator hits for a measure during or before the measurement period, such a change is not considered substantive because the sponsoring organization generally benefits from that change. In addition, the type of administrative change made here has no impact on the current clinical practices of the plan or its providers. However, CMS has decided to delay the implementation of this measure to the 2022 measurement year for the 2024 Star Ratings year given the timing of this final rule and in recognition of the challenges of implementing new measures during the COVID-19 pandemic. This will provide an additional year for plans prior to implementation in the Star Ratings program.

Comment: A few commenters recommended that the TRC measure not be included in the Star Ratings until it is further improved. Other commenters noted that processes are not always in place to provide notifications to PCPs in a consistent or timely manner, especially for out-of-network facilities. A commenter suggested that this measure is primarily a measure of data interoperability and exchange capabilities between providers, capabilities which are not under plans' control. Several commenters mentioned the substantial amount of medical review work entailed for this measure, especially for the notification of admissions and discharges. Plans often require physicians to submit records for abstraction which places a considerable burden on physician practices. In other words, although this measure is a plan measure, commenters pointed out that data collection is often the responsibility of physician groups and plans do not have sufficient control or involvement to achieve consistent high performance. Further, a commenter expressed concern that the measure moves away from NCQA's focus on moving towards more digital measures. Several commenters requested further clarity on measure specifications such as how plans should indicate the use of other acceptable communication forms for this measure.

Response: The intent of the TRC measure is to ensure a seamless transition from inpatient to outpatient settings for MA enrollees to improve the delivery and coordination of care following an inpatient stay. When a beneficiary moves from an inpatient to outpatient setting, there is often poor coordination of care, communication lapses between the inpatient and outpatient providers, inadvertent medication changes, and a lack of understanding among patients, caregivers, and providers about the follow-up and ongoing care needs following the hospitalization. Given the critical importance of a seamless transition from the inpatient to outpatient setting, CMS believes it is important to adopt the current measure and for plans to make sure their providers are ensuring that there is a seamless transition between the inpatient to outpatient setting.

This measure is intended to address the very gaps in communication and interoperability that are noted in the comments. Unfortunately, the current state of standards and coding do not support a fully administrative or digital specification at this time. NCQA is continuing to work with standards developers on addressing this issue and will assess the feasibility of converting this measure to a fully administrative specification when the standards for information sharing and coding are updated to support such an approach. The measure assesses if the notification of admission or receipt of discharge information was received and documented within the timeframe specified in the measure and is agnostic about the form of communication for the Notification of Admission and Receipt of Discharge Information indicators. CMS shared these comments with NCQA, the measure steward, for consideration as they make future updates to this measure.

Comment: Some commenters stated this measure focuses on documentation of events rather than the substance of the transition experience.

Response: CMS believes this measure does focus on the substance and purpose of the transition experience, which is to improve health outcomes. The measure is not simply about documentation but about whether notification was made, discharge information was received, patients were engaged, and medication was reconciled. Poor hospital transitions are not only associated with poor health outcomes but also increased health care utilization and cost, duplicative medical services, medication errors, and increased emergency department visits and readmissions. Incentivizing better transition experiences, where these activities take place and are documented for a treating provider who furnishes post-discharge care, is an important goal served by this measure.

Comment: A commenter suggested that I-SNP members should be excluded from the measure.

Response: I-SNP members should be receiving the same care coordination as enrollees of other plan types so CMS believes it is appropriate to use this measure for such plans as well. NCQA Start Printed Page 5924has examined an exclusion for I-SNP members in the past and discussed this exclusion with its advisory panels. The panels agreed that I-SNP members should be included in the measure because this is a vulnerable population that requires care coordination. We agree with that conclusion and will use this measure for I-SNPs as well as other MA plans.

Summary of Regulatory Changes

After consideration of the comments and for the reasons set forth in the proposed rule and our responses to the related comments, we are finalizing the addition of the Transitions of Care (Part C) measure in the Star Ratings program with a delay of 1 year in light of the timing of this final rule. That is, CMS will implement this measure using data from the 2022 measurement year for the 2024 Star Ratings year. This measure is currently on the display page with the current specifications. The Transitions of Care measure with the updates recently finalized by NCQA for the 2020 measurement year will be on the display page for 2022 and 2023 before being used in the 2024 Star Ratings. By delaying the addition of this measure to the Star Ratings program until 2024 Star Ratings, this also allows plans more time in recognition of the challenges of implementing new measures in the program during the COVID-19 pandemic.

(2) Follow-Up After Emergency Department Visit for People With Multiple High-Risk Chronic Conditions (Part C)

CMS proposed to add a new HEDIS measure assessing follow-up care provided after an emergency department (ED) visit for people with multiple high-risk chronic conditions. This measure is the percentage of ED visits for members 18 years and older who have high-risk multiple chronic conditions who had a follow-up service within 7 days of the ED visit between January 1 and December 24 of the measurement year. The measure is based on ED visits, not members. Eligible members whose ED visits are used in the measure must have two or more of the following chronic conditions: Chronic obstructive pulmonary disease (COPD) and asthma; Alzheimer's disease and related disorders; chronic kidney disease; depression; heart failure; acute myocardial infarction; atrial fibrillation; and stroke and transient ischemic attack. The following meet the criteria to qualify as a follow-up service for purposes of the measure: An outpatient visit (with or without telehealth modifier); a behavioral health visit; a telephone visit; transitional care management services; case management visits; and complex care management. Patients with multiple chronic conditions are more likely to have complex care needs, and follow-up after an acute event, like an ED visit, can help prevent the development of more severe complications. We proposed to add this measure to the 2023 Star Ratings covering the contract year 2021 measurement period.

In this section of this rule, we summarize the comments we received and provide our responses and final decisions.

Comment: Many commenters fully support the intent of this measure which is to provide continuity and coordination of care to persons with multiple chronic conditions.

Response: CMS thanks commenters for the support of this measure.

Comment: Several commenters did not support the measure. Some suggested that the 7-day time period for receipt of a follow-up service is too short. Commenters argued that it can take more than 7 days for an ED claim to be processed and submitted to a plan, actions which must occur before a PCP is aware of a patient's ED visit. They stated this situation is compounded by the fact that ED visits require no preauthorization, so a PCP has no forewarning of a potential ED visit. They stated that though there are many actions which define a follow-up service—such as outpatient or telehealth physical or behavioral health visits, phone visits, or care management services—the average time to schedule a follow-up meeting with a PCP is typically longer than 7 days.

Response: CMS continues to believe that the measure is appropriate for use in the Star Ratings. This measure is focused on a very vulnerable population that should have prompt follow-up after a visit to the ED. The 7-day timeframe was recommended by NCQA's advisory panels and chosen for its potential to improve quality of care, especially because patients with multiple chronic conditions who do not receive follow-up after visiting the ED show increased rates of hospital admissions and 30-day readmissions. In addition, the lack of real-time data exchange is a critical system issue that the NCQA advisory panels cited should be addressed by this measure.

The Medicare population includes a large number of individuals and older adults with high-risk multiple chronic conditions who often receive care from multiple providers and settings and, as a result, are more likely to experience fragmented care and adverse healthcare outcomes, including an increased likelihood of ED visits.[31 32] Medicare beneficiaries with multiple chronic conditions require high levels of care coordination, particularly as they transition from the ED to the community. During these transitions, they often face communication lapses between ED and outpatient providers and inadequate patient, caregiver and provider understanding of diagnoses, medication and follow-up needs.[33 34 35 36] This poor care coordination results in an increased risk for medication errors, repeat ED visits, hospitalizations, nursing home admissions, and death.[37 38] Medicare beneficiaries with multiple chronic conditions not only experience poorer health outcomes, but also greater health care utilization (for example, physician use, hospitalizations, ED use, and medication use) and costs (for example, medication, out-of-pocket, and total health care).[39] Medicare beneficiaries with multiple chronic conditions are some of the heaviest users of high-cost, preventable services such as those Start Printed Page 5925offered by the ED.[40 41] An estimated 75 percent of health care spending is on people with multiple chronic conditions.[42 43] Improving the timeliness of communications about ED care, as required to perform well on these measures, should not only improve care, but reduce costs as well. Because of this context, we believe that collection and use of this measure in the Star Ratings is important in order to incent contracts to provide the best care possible for vulnerable enrollees.

Comment: Some commenters noted that the measure judges plans for actions that facilities must take. Plans stated they are not always informed by facility providers of ED visits, especially by out-of-network or out-of-area facilities. Plans claimed sending notifications of an ED visit is under the sole influence of the facility. On the other hand, facility providers argued the measure puts burden on them to provide information to the plans on a very quick basis. Both plans and facility providers stated that data sharing between plans and facilities is difficult. A commenter suggested this measure might be more suited as a facility quality measure.

Response: CMS recognizes the challenges inherent in quickly and successfully communicating patient information among different types of providers. CMS believes, however, that plans are in a critical position to help coordinate the care of their members and help improve the timeliness and quality of the communications that occur among EDs, inpatient facilities, and outpatient providers. This is important because the Medicare population includes a large number of individuals and older adults with high-risk multiple chronic conditions (MCC) who often receive care from multiple providers and settings and, as a result, are more likely to experience fragmented care and adverse healthcare outcomes, including an increased likelihood of ED visits. NCQA's first year analysis results for this measure indicated that most MA contracts (approximately 92 percent) were able to report a valid rate for the measure the first year that the measure was implemented.

Comment: Some commenters wanted CMS to delay the inclusion of the measure in the Star Ratings program and suggested that it will take time to establish data sharing protocols among providers and facilities, especially with out-of-network facilities. They stated data sharing protocols are challenging.

Response: The Follow-up after Emergency Department Visit for People with Multiple High-Risk Chronic Conditions measure was placed on the 2020 display page covering the 2018 measurement year. This measure was slated to remain on the display page through 2022. This measure, however, will remain an additional year on the display page since CMS is now delaying the implementation of this measure to the 2022 measurement or performance year and the 2024 Star Ratings year given the timing of this final rule. This gives plans more time to establish data sharing protocols that allow them to facilitate timely follow-up after ED visits.

Comment: Some commenters requested modifications of the measure specifications. For example, some commenters wanted the list of services categorized as follow-up services expanded to include community resources, medication reconciliation, and services from long-term care facilities. Also, commenters suggested excluding patients released from the ED to skilled nursing facilities; not including managed long-term services and supports plans since they already have follow-up services in place; excluding inappropriate ED visits; excluding observations stays as a follow-up service; and including metabolic acidosis, cancer, and diabetes as chronic conditions.

Response: The purpose of this measure is to focus on the care provided by MA plans. CMS is working to expand efforts to better evaluate health plans' successes at effective care coordination, and we believe the addition of this measure will both add to our understanding of plan efforts to effectively coordinate care as well as encourage all plans to further focus on improving care coordination for their vulnerable enrollees. We have shared these comments with NCQA, the measure developer, and they will consider additional exclusions and inclusions for future updates to the measure, but we believe the measure as currently specified gets at the direct efforts of MA plans coordinating the care of Medicare enrollees with multiple high-risk chronic conditions following an ED visit. Therefore, we are adopting the measure for use in the Star Ratings program.

Comment: A few commenters mentioned that since psychiatric diagnoses are always coded secondary to any physical diagnosis, there are HIPAA and confidentiality concerns about disclosing information on patients with secondary substance abuse or psychiatric diagnoses. Such disclosures require patient consent. In addition, some commenters stated that it can be difficult to accurately capture data to track appropriate follow-up psychiatric care given confidentiality concerns.

Response: MA plans and providers must comply with applicable privacy and information protection laws and CMS is not providing guidance in this final rule on the specific assertions about restrictions under applicable privacy and information protection laws, such as HIPAA or 45 CFR part 2. However, the measure does not require a plan or facility to violate applicable law. CMS and NCQA will continue to monitor any issues that might arise due to patient confidentiality or consent with regard to information sharing. NCQA, in its testing protocols, has not observed this issue to cause any major barriers to reporting this measure to date.

Comment: A couple of commenters recommended risk adjustment to account for plans with large low socio-economic status, dual eligible and homeless populations.

Response: We will include this measure as one of the candidate measures for the calculation of the Categorical Adjustment Index (CAI). As stated at §§ 422.166(f)(2)(iii) and 423.186(f)(2)(iii), CAI values are determined using all measures in the candidate measure set after applying the following exclusions: The measure is already adjusted for socio-economic status, the measure focuses on a plan or provider-level issue, the measure is scheduled for retirement in the Star Ratings year that the CAI is being applied, or the measure is a SNP-only measure. It is also important to note that this measure focuses on prompt follow-up for beneficiaries with multiple chronic conditions which is a very vulnerable population. If additional risk factors such as low socio-economic status further increase these patients' levels of vulnerability, it is even more critical for this population to have Start Printed Page 5926prompt follow-up after visiting the ED. Further, this measure takes into account a wide variety of follow-up services to count, including telephone calls and telehealth visits, making it easier for the plan to tailor the follow-up to the enrollee or to specific enrollee populations. For example, if a beneficiary does not have transportation to get to an appointment with a provider, the follow-up can happen through a phone call with the provider.

Comment: A couple of comments stated that no new measures should be introduced into the Star Ratings program this year given the COVID-19 pandemic.

Response: Under our proposal this measure was slated to remain on the display page through 2022 Star Ratings and be used for the 2023 Star Ratings. This measure, however, will remain on the display page through 2023 since CMS is now delaying the implementation of this measure to the 2022 measurement year and the 2024 Star Ratings as a result of the timing of this final rule. Additionally, this will give plans an additional year to adjust to this new measure given any challenges from the COVID-19 pandemic.

Summary of Regulatory Changes

After consideration of the comments and for the reasons set forth in the proposed rule and our responses to the related comments summarized earlier in this final rule, we are finalizing the addition of the Follow-up after Emergency Department Visit for People with Multiple High-Risk Chronic Conditions (Part C) measure in the Star Ratings program beginning with the 2022 measurement year and the 2024 Star Ratings. This delay compared to our proposal addresses both the timing of this final rule and the recognition that it is more challenging to adapt to new measures during the COVID-19 pandemic.

The changes to the Star Ratings measures we are adopting in this final rule are summarized in Table D1.

Table D1—New and Revised Individual Star Rating Measures for Performance Periods Beginning On or After January 1, 2022

[The measure descriptions listed in this table are high-level descriptions. The Star Ratings measure specifications supporting document, Medicare Part C & D Star Ratings Technical Notes, provides detailed specifications for each measure. Detailed specifications include, where appropriate, more specific identification of a measure's: (1) Numerator, (2) denominator, (3) calculation, (4) timeframe, (5) case-mix adjustment, and (6) exclusions. The Technical Notes document is updated annually, consistent with the applicable final rules adopting changes to the Star Ratings system. In addition, where appropriate, the Data Source descriptions listed in this table reference the technical manuals of the measure stewards. The annual Star Ratings are produced in the fall of the prior year. For example, Star Ratings for the year 2020 are produced in the fall of 2019. If a measurement period is listed as `the calendar year 2 years prior to the Star Ratings year' and the Star Ratings year is 2020, the measurement period is referencing the 1/1/2018-12/31/2018 period.]

MeasureMeasure descriptionDomainMeasure category and weightData sourceMeasurement periodNQF endorsementStatistical method for assigning star ratingsReporting requirements by contract type
Part C Measure
Transitions of Care (TRC)Percentage of discharges for members 18 years of age and older who had each of the following: (1) Notification of admission and post-discharge: (2) receipt of discharge information, (3) patient engagement, and (4) medication reconciliationManaging Chronic (Long Term) ConditionsProcess Measure: Weight of 1HEDIS *The calendar year 2 years prior to the Star Ratings yearNot AvailableClusteringMA-PD and MA-only.
Follow-up after ED Visit for People with Multiple High-Risk Chronic Conditions (FMC)Percentage of emergency department (ED) visits for members 18 years and older who have multiple high-risk chronic conditions who had a follow-up service within 7 days of the ED visit. Eligible members must have two or more of the following chronic conditions: COPD and asthma; Alzheimer's disease and related disorders; chronic kidney disease; depression; heart failure; acute myocardial infarction; atrial fibrillation; and stroke and transient ischemic attackManaging Chronic (Long Term) ConditionsProcess Measure: Weight of 1HEDIS *The calendar year 2 years prior to the Star Ratings yearNot AvailableClusteringMA-PD and MA-only.
* NCQA HEDIS Measurement Year 2020 & Measurement Year 2021, Volume 2.

5. Extreme and Uncontrollable Circumstances (§§ 422.166(i), 423.186(i))

We proposed to modify §§ 422.166(i)(8) and 423.186(i)(6) to clarify the rules for how the adjustment for extreme and uncontrollable circumstances would apply where there are missing data, including data missing because of a data integrity issue as defined at §§ 422.164(g)(1) and 423.184(g)(1). In addition, we solicited comment in the proposed rule on a previously adopted policy regarding application of the adjustment for extreme and uncontrollable circumstances where a contract's service area was affected by disaster(s) in successive years, including whether additional changes were necessary.

We explained in the February 2020 proposed rule how we adopted the current policy for treating contracts impacted by separate disasters that occur in successive years taking into account concerns about looking back too many years for contracts affected by disasters multiple years in a row; we are also concerned about including too many measurement periods in 1 year of Star Ratings. We explained that the adjustment for extreme and uncontrollable circumstances also must consider operational feasibility, because using different thresholds for contracts affected by disasters in different ways would be very complicated for administration and for providing the necessary transparency to MA organizations, Part D plan sponsors, and beneficiaries who use and rely on the Star Ratings. We reiterated that we must balance concerns about using older data with concerns about using data based on performance that has been impacted by Start Printed Page 5927consecutive disasters. We explained as well how we believe that the current regulation achieves an appropriate balance.

We finalized in the April 2019 final rule a policy effective for the 2022 Star Ratings for contracts with at least 25 percent of enrollees in FEMA-designated Individual Assistance areas that were affected by different disasters for 2 consecutive years. Such multiple year-affected contracts will receive the higher of the current year's Star Rating or what the previous year's Star Rating would have been in the absence of any adjustments that took into account the effects of the previous year's disaster for each measure. For example, if a multiple year-affected contract reverts to their 2021 Star Rating on a given measure for the 2022 Star Ratings, the 2021 Star Rating is not used in determining the 2023 Star Rating; rather, the 2023 Star Rating is compared to what the contract's 2022 Star Rating would have been, absent any disaster adjustments.

The rule for treatment of multiple year-affected contracts was established to limit the age of data that will be carried forward into the Star Ratings. We use the measure score associated with the year with the higher measure Star Rating regardless of whether the score is higher or lower that year. We finalized this policy to address when contracts are affected by separate extreme and uncontrollable circumstances that occur in successive years for the adjustments to CAHPS, HOS, HEDIS, and other measures. The provisions at §§ 422.166(i)(2)(v), (i)(3)(v), (i)(4)(vi), and (i)(6)(iv) and 423.186(i)(2)(v) and (i)(4)(iv) include this rule for how ratings for these measures are adjusted in these circumstances. We solicited comment on this policy and whether further adjustments are necessary.

In this section of this rule, we summarize the comments we received and provide our responses and final decisions.

Comment: A commenter appreciated CMS's proposed amendment to add to §§ 422.166(i)(8) and 423.186(i)(6) to clarify that missing data include situations where there is a data integrity issue as defined at §§ 422.164(g)(1) and 423.184(g)(1).

Response: We appreciate the support for the data integrity policy. Sections 422.166(i)(8) and 423.186(i)(6) currently provide that for an affected contract that has missing data in the current or previous year, the final measure rating comes from the current year unless an exemption described elsewhere in the regulation applies. We proposed a clarification and are finalizing changes to state that the term “missing data” under the rule includes data where there is a data integrity issue as defined in §§ 422.164(g)(1) and 423.184(g)(1). Under the rules as finalized, when there is a data integrity issue in the current or previous year, the final measure rating comes from the current year.

Comment: A few commenters supported CMS's policy to adjust Star Ratings for FEMA-designated Individual Assistance area disasters for contracts that have been affected by consecutive year disasters and had at least 25 percent of enrollees residing in those areas. A commenter suggested CMS consider lowering this percentage if the situation warrants, and another requested that CMS drop the threshold for relief below the current 25 percent to determine the contracts impacted and the current 60 percent to exclude contracts from the cut point calculations for doubly-affected contracts or provide relief based on the proportion of members likely impacted.

Response: We appreciate the support for the methodology for multiple year-affected contracts codified at §§ 422.166(i)(2)(v), (i)(3)(v), (i)(4)(vi), and (i)(6)(iv) and 423.186(i)(2)(v) and (i)(4)(iv). We continue to believe that the 25 percent threshold is appropriate in the vast majority of situations where the adjustment for extreme and uncontrollable circumstances would apply. The 25 percent threshold for measure star adjustments was codified in the April 2019 final rule to ensure that disaster adjustments are limited to contracts that we believe may have experienced a real impact from extreme and uncontrollable circumstance in terms of operations or ability to serve enrollees. We believe using the same 25 percent threshold for multiple year-affected disaster adjustments as for single year disaster adjustments is appropriate for the same reasons and to ensure administrative efficiency and transparency for applying this adjustment. We addressed similar concerns about the 25 percent threshold being too high in the April 2019 final rule (84 FR 15773 through 15774). The 60 percent threshold for excluding numeric values for affected contracts from cut points and Reward Factor calculations was also codified in the April 2019 final rule; that threshold is not relevant to the adjustment for multiple year-affected contracts and we do not believe that it is necessary or appropriate to change that threshold here. We explained that threshold in the April 2019 final rule (84 FR 15771 through 15774).

Comment: A few commenters requested that CMS reconsider the current policy for adjusting Star Ratings calculations in consecutive years of extreme and uncontrollable circumstances and instead consider a multi-year lookback period, which would include the most recent period not impacted by extreme and uncontrollable circumstances. A commenter suggested CMS could use the parent organization average or the industry average instead.

Response: As we stated in the April 2019 final rule, we are concerned about looking back too many years for contracts affected by disasters multiple years in a row, as well as about including too many measurement periods in 1 year of Star Ratings. This could result in looking back different years for different contracts since we would need to look back to the latest year with no disasters for each contract. Carrying forward very old data into the Star Ratings for many years, especially in situations where large numbers of contracts are impacted by disasters in a given year or in areas that are more prone to disasters, could erode incentives for plans to provide high quality care for their beneficiaries even in the face of a disaster.

Further, using a multi-year lookback for contracts affected by disasters would be operationally very complex since for each contract we could be comparing to a different year of data that is unaffected, in particular in areas that are prone to disasters, and could put CMS at risk of not producing Star Ratings in time for open enrollment. It would also make it difficult to provide transparency to plans and could be misleading to consumers. CMS has an obligation to ensure that Star Ratings data are useful for providing comparative plan information to beneficiaries because part of the purpose and authority for the Star Ratings is to provide comparative information to beneficiaries under sections 1851(d) and 1869D-1(c) of the Act. We strive to provide as up-to-date and accurate information on plan quality and performance as possible to beneficiaries. For areas that are prone to disasters in particular, beneficiaries deserve to have some indication if that means that the plan they are considering does not perform well when a disaster strikes or maintains high quality ratings despite those challenges. We finalized the existing policy for contracts that are affected by disasters in successive years in order to balance concerns about either using older data or using data based on performance impacted by consecutive disasters.Start Printed Page 5928

As to the suggestion to assign the parent organization average or industry average for contracts that have been impacted by disasters for multiple years, we do not believe this appropriately holds contracts accountable for their performance or allows them to distinguish themselves in disaster situations. We remind contracts that §§ 422.504(o) and 423.505(p) require MA organizations and Part D sponsors to develop, maintain, and implement a business continuity plan that ensures restoration of operations following disruptions such as disasters. Contracts are still responsible for providing care to their beneficiaries during disasters, so it would not be fair or appropriate to simply award them a rating that is based on the performance of other plans. Further, the Star Ratings are used for payment purposes and using the performance of other plans as the basis to award a quality bonus increase or increased rebate percentage to a contract is inconsistent with the purpose of those payment policies to reward MA organizations that excel.

Comment: A commenter suggested CMS could consider a hold harmless provision for plans with significant losses in Star Ratings across the multi-year lookback period.

Response: The disaster policies already address how extreme and uncontrollable circumstances may have a negative impact on the Star Ratings of an MA or Part D plan. We do not believe additional hold harmless provisions are needed for multiple year-affected contracts as it could weaken plan accountability and incentives to provide high quality care in disaster situations.

Comment: Several commenters suggested CMS expand the current rule for contracts impacted by two different disasters in consecutive years to include contracts impacted by a single disaster spanning multiple years.

Response: The introductory language of paragraph (i) of both §§ 422.166 and 423.186 states that we use the incident start date to determine which year of Star Ratings can be adjusted for a particular disaster, regardless of whether the incident period lasts until another calendar year. As we explained in the April 2019 final rule (84 FR 15774), in some cases the incident period end date changes, which would make it difficult operationally to determine which Star Ratings year is impacted. We believe limiting adjustments for a single disaster to 1 year is appropriate to avoid adversely impacting CMS's operational timelines for analyzing data and calculating Star Ratings. For example, if a disaster is extended into the next measurement year we would potentially need to recalculate and reissue ratings. We also want to limit the impact and effects on contracts that do meet the definition of “affected contract.” We are concerned, for example, about the integrity of the ratings and reliability of the comparisons if cut points do not take into account the performance of an increasing number of affected contracts or if cut points have to be recalculated after they are released. We also want to preserve transparency of the Star Ratings for consumers by not using data from many different measurement years.

Comment: A couple commenters requested clarification about how CMS handles situations where a contract is affected by multiple disasters in the same year.

Response: We use the percent of enrollment impacted by qualifying disasters to determine eligibility for disaster adjustments. That is, contracts impacted by multiple qualifying disasters in the same year are eligible for the disaster relief as long as a total of 25 percent or more of their enrollees reside in Individual Assistance areas. CMS rolls up the enrollment for each contract at the state/county level; when more than one enrollment period applies (that is, because the contract was affected by more than one disaster), an average of the enrollments from each of corresponding enrollment periods where the contract was affected is used to calculate the total percent of a contract's enrollees in a FEMA-designated Individual Assistance area during extreme and uncontrollable circumstances. This is described in detail in the Medicare Part C & D Star Ratings Technical Notes Attachment Q: Identification of Contracts Affected by Disasters (https://www.cms.gov/​Medicare/​Prescription-Drug-Coverage/​PrescriptionDrugCovGenIn/​PerformanceData, page 143 of 2020 Star Ratings Technical Notes).

Comment: We received a number of comments about the impact of COVID-19 on Star Ratings, for example asking whether and how CMS would adjust for the impact of COVID-19 for 2021 Star Ratings and beyond.

Response: The public health emergency incident start date for COVID-19 was in 2020, so adjustments under the extreme and uncontrollable events policy at §§ 422.166(i) and 423.186(i) will apply to the 2022 Star Ratings. The March 31st COVID-19 IFC addressed the immediate impact of the pandemic on the Part C and D Star Ratings program and made additional modifications for the 2022 Star Ratings, in recognition that the COVID-19 pandemic may impact performance on the Star Ratings measures during the 2020 measurement period. CMS will continue to monitor the impact of COVID-19 on the healthcare system and Part C and D plans. The September 2nd COVID-19 IFC modifies the calculation of the 2022 Part C and D Star Ratings to address the application of the extreme and uncontrollable circumstances policy. We direct readers to our summary of those two interim final rules with comment in section IV.D.1 of this final rule.

Comment: Several commenters requested that CMS expand the current extreme and uncontrollable circumstance policy for single year disasters, for example to include HHS-declared public health emergencies, Fire Management Assistance Grant (FMAG) declarations, governor declarations of a state of emergency, or state-level public health emergencies that extend beyond a national emergency period. A few stated if a contract gets the same Star Rating in both years, CMS should take the higher of the 2 years' measure scores in order to ensure that plans and beneficiaries are truly held harmless in the event of a disaster. Several commenters suggested modifications to how the improvement measures are handled when there are disasters. For example, we received suggestions to hold contracts harmless in improvement when there are disasters.

Response: The changes suggested by commenters for expanding the adjustments for single year disasters are significant in scope and of the type that would require analysis and consideration by CMS before proposing changes to the current regulations. As we noted in the April 2019 final rule (84 FR 15773), we use the Star Rating for the measure-level comparison because the measure stars are used to calculate the overall Star Rating and the measure-level cut points can change each year. We use the corresponding measure scores for improvement calculations in order to maintain consistency in the years being compared. We only revert to the previous year's measure Star Rating if it is higher (§§ 422.166(i)(2)(iv), 422.166(i)(3)(iv), 422.166(i)(4)(v), 422.166(i)(6)(i), 423.186(i)(2)(iv), and 423.186(i)(4)(i)).

Summary of Regulatory Changes

After consideration of the comments received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the addition of §§ 422.166(i)(8) and 423.186(i)(6) as proposed. These changes are applicable to the 2022 measurement year and the 2024 Star Ratings. We do not believe additional Start Printed Page 5929revisions to the rules for multiple year-affected contracts described at §§ 422.166(i)(2)(v), (i)(3)(v), (i)(4)(vi), and (i)(6)(iv) and 423.186(i)(2)(v) and (i)(4)(iv) are necessary to address the impacts of the PHE for the COVID-19 pandemic in light of the September 2nd COVID-19 IFC.

6. Quality Bonus Payment Rules (§§ 422.162(b)(4) and 422.166(d)(2)(vi))

We proposed several amendments to §§ 422.162(b)(4) and 422.166(d)(2)(vi) to codify our current policies for using the Star Ratings to calculate quality bonus payment percentage increases (QBPs) and determine beneficiary rebates for MA organizations.

The Affordable Care Act amended sections 1853(n) and 1853(o) of the Act to require CMS to make QBPs to MA organizations that achieve at least 4 stars in a 5-star Quality Rating system. The Affordable Care Act also amended section 1854(b)(1)(C) of the Act to change the share of savings available to MA organizations and that they must provide to enrollees as the beneficiary rebate, mandating that the level of rebate is tied to the level of an MA organization's QBP rating. As a result, beginning in 2012, quality as measured by the 5-star Quality Rating System directly affected the monthly payment amount MA organizations receive from CMS. At the time the QBPs were implemented, CMS codified at § 422.260 an administrative review process available to MA organizations for payment determinations based on the quality bonuses. Historically, every November CMS has released the preliminary QBP ratings for MA contracts to review their ratings and to submit an appeal request under § 422.260(c) if they believe there is a calculation error or incorrect data are used.

In the April 2018 final rule, we codified at § 422.160(b)(2) that the ratings calculated and assigned under this subpart are used to provide quality ratings on a 5-star rating system used in determining QBPs and rebate retention allowances. Historically, the QBP rating rules have been announced through the Advance Notice and Rate Announcement since section 1853(b) of the Act authorizes an advance notice and rate announcement to solicit comment for proposed changes and announce changes to the MA payment methodology. The QBPs are used as part of setting the MA benchmarks and capitation rates for counties (and thus, MA service areas) each year. As we have codified in regulation the methodology for the Star Ratings over the last couple of years, we proposed in the February 2020 proposed rule to clarify the rules around assigning QBP ratings, codify the rules around assigning QBP ratings for new contracts under existing parent organizations, and amend the definition of new MA plan that is codified at § 422.252 by clarifying how we apply the definition. Our proposal was to codify current policy (for how we have historically assigned QBP ratings) as generally adopted and implemented through the section 1853(b) process, without substantive changes.

Historically, for contracts that receive a numeric Star Rating, the final QBP rating released in April for the following contract year would be the contract's highest rating as defined at § 422.162(a) (that is, overall or summary rating). Section 422.260(a) states that the QBP determinations are made based on the overall rating for MA-PDs and the Part C summary rating for MA-only contracts. We proposed to add language at § 422.162(b)(4) stating that for contracts that receive a numeric Star Rating, the final QBP rating is released in April of each year for the following contract year and that the QBP rating is the contract's highest rating, as that term is defined at § 422.162(a). We also proposed to clarify in the regulation text that the QBP rating is the contract's highest rating from the Star Ratings published by CMS in October of the calendar year that is 2 years before the contract year to which the QBP rating applies. For example, the 2020 QBPs were released in April 2019 and based on the Star Ratings published in October 2018. For MA contracts that offer Part D, the QBP rating would be the numeric overall Star Rating. For MA contracts that do not offer Part D (MA-only, MSA, and some PFFS contracts), the QBP rating would be the numeric Part C summary rating. We also proposed adding language at § 422.162(b)(4)(ii) clarifying that the contract QBP rating is applied to each plan benefit package under the contract.

We explained in the February 2020 proposed rule that if a contract does not have sufficient data to calculate and assign Star Ratings for a given year because it is a new MA plan or low enrollment contract, § 422.166(d)(2)(v) provides the rules for assigning a QBP rating. That regulation references the definitions at § 422.252. We proposed to amend the definition at § 422.252 for new MA plans by clarifying how we apply the definition. We address that proposal in section IV.D.2 of this rule.

We also proposed to add rules at § 422.166(d)(2)(vi) for contracts that do not have sufficient data to calculate and assign ratings and do not meet the definition of either low enrollment contracts or new MA plans at § 422.252. Our proposal was to codify the policy that has been in place since the 2012 Rate Announcement: Any new contract under an existing parent organization that has had MA contract(s) with CMS in the previous 3 years receives an enrollment-weighted average of the Star Ratings earned by the parent organization's existing MA contracts. We also addressed that policy in a proposed rule for CY 2012 that appeared in the Federal Register on November 22, 2010 (“Medicare Program; Proposed Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs for Contract Year 2012 and Other Proposed Changes”) (75 FR 71190, 71219) and the related final rule that appeared in the Federal Register on April 15, 2011 (76 FR 21432, 21486 through 21490). We explained in the February 2020 proposed rule that we intended for this policy to continue uninterrupted so that the calculation of QBPs remains stable and transparent to stakeholders. Codifying the policy explicitly, as well as how it is applied, would serve this purpose.

We proposed to add at § 422.166(d)(2)(vi)(A) that any new contract under an existing parent organization that has other MA contracts with numeric Star Ratings in November (when the preliminary QBP ratings are calculated for the contract year that begins 14 months later) would be assigned the enrollment-weighted average of the highest Star Rating of all other MA contracts under the parent organization that will be active as of April the following year. The Star Ratings used in this calculation would be the whole or half Star Ratings that are publicly displayed. For the 2021 QBPs, for any new contracts under an existing parent organization, we explained how the policy would be applied as follows:

(i) We identify the parent organization of the new contract in November 2019.

(ii) We identify the MA contracts held by that parent organization in November 2019, when the preliminary 2021 QBP ratings are posted for review. For preliminary QBP ratings, we use the numeric Star Ratings for those MA contracts that were held by the parent organization in November 2019 that we anticipated to still be in existence and held by that parent organization in April 2020.

(iii) Using the enrollment in those other MA contracts as of November 2019, we calculated the enrollment-weighted average of the highest Star Rating(s) of those MA contracts.

(iv) In April 2020, we update the enrollment-weighted average rating based on any changes to the parent Start Printed Page 5930organization of existing contracts, using the November 2019 enrollment in the contracts. The enrollment-weighted average rating includes the ratings of any contract(s) that the parent organization has acquired since November 2019. This enrollment-weighted average is used as the 2021 QBP rating for the new MA contract under the parent organization for payment in 2021. We release these QBP ratings in April of the year before the payment year (for 2021 QBPs, in April of 2020).

Because our proposal was to codify existing and current policy without change, we followed these steps to identify the QBP ratings for new contracts of existing MA parent organizations for 2021 QBPs.

We proposed to add at § 422.166(d)(2)(vi)(B) that if a new contract is under a parent organization that does not have any other MA contracts with numeric Star Ratings in November, CMS would look at the MA Star Ratings for the previous 3 years. The QBP rating would be the enrollment-weighted average of the MA contracts' highest-level Star Ratings from the most recent year that had been rated for that parent organization. We explained using an example: If in November 2019 there were no other MA contracts under the parent organization with numeric 2020 Star Ratings, we would go back first to the 2019 Star Ratings and then the 2018 Star Ratings. Under our existing policy, and thus under the proposal, if there were MA contract(s) in the parent organization with Star Ratings in any of the previous 3 years, the QBP rating was the enrollment-weighted average of the MA contracts' highest Star Ratings from the most recent year rated. Under our existing policy, and thus under the proposal, the Star Ratings used in this calculation would be the rounded Star Ratings (whole or half star) that are publicly displayed on www.medicare.gov.

We explained in the February 2020 proposed rule how the policy works by using another illustration for the 2021 QBPs. For a new contract(s) under a parent organization that did not have any MA contracts in November 2019:

(i) We identify the MA contracts held by that parent organization in November 2018. If the parent organization had other MA contracts in November 2018, we use the numeric Star Ratings issued in October 2018 for those MA contracts that were held by the parent organization in November 2018.

(ii) Using the enrollment in those other MA contracts as of November 2018, we calculate the enrollment-weighted average of the highest Star Rating(s) of those MA contracts.

(iii) This enrollment-weighted average is used as the 2021 QBP rating for the new MA contract for that parent organization, for payment in 2021 and is released to the MA organization for the new contract in April of 2020.

Because our proposal was to codify existing and current policy without change, we followed these steps for the 2021 QBPs where applicable. And for any new contract(s) under a parent organization that did not have any MA contracts in November 2018 and 2019, we provided an illustration (again for the 2021 QBPs) as follows:

(i) We identified the MA contracts held by that parent organization in November 2017. If the parent organization had other MA contracts in November 2017, we used the numeric Star Ratings for those MA contracts that were held by the parent organization in November 2017.

(ii) Using the enrollment in those other MA contracts as of November 2017, we calculated the enrollment-weighted average of the highest Star Rating(s) of those MA contracts.

(iii) This is used as the 2021 QBP rating for the new MA contract for payment in 2021 and is released to the MA organization for the new contract in April 2020.

We explicitly explained how if there were no MA contract(s) in the parent organization with numeric Star Ratings in the previous 3 years, the contract is rated as a new MA plan in accordance with § 422.258 (for QBP purposes) and § 422.166(d)(2)(v) (for other purposes). Our proposal was to codify existing and current policy without change, and we followed these steps for the 2021 QBPs where applicable. Under this final rule, we will follow the same steps for the 2022 QBPs.

We proposed the rules for calculating the enrollment-weighted average and addressing changes in parent organizations in new paragraphs (d)(2)(iv)(C) through (E) at § 422.166. We proposed to add at § 422.166(d)(2)(vi)(C) that the enrollment used in the enrollment-weighted calculations is the November enrollment in the year the Star Ratings are released. The enrollment data are currently posted publicly at: http://www.cms.gov/​Research-Statistics-Data-and-Systems/​Statistics-Trends-and-Reports/​MCRAdvPartDEnrolData/​index.html.

We also proposed at § 422.166(d)(2)(vi)(D) that the QBP ratings would be updated for any changes in a contract's parent organization prior to the release of the final QBP ratings in April of each year. We explained that under our proposal, the same rules described at § 422.166(d)(2)(vi)(A), (B), and (C) would be applied to the new contract using the new parent organization information. We provided an example, again using the 2021 QBPs: In April 2020 when the final QBP ratings were released, the enrollment-weighted average rating would include the ratings of any MA contract(s) that the parent organization had acquired since November 2019. Thus, if a parent organization buys an existing contract it would be included in the enrollment-weighted average. We also proposed at § 422.166(d)(2)(vi)(E) to codify our current practice that once the QBP ratings are finalized in April of each year for the following contract year, no additional parent organization changes are possible for QBP purposes.

In this section of this rule, we summarize the comments we received and provide our responses and final decisions.

Comment: Several commenters expressed support for codifying the QBP rating policies in regulation and provided support for the existing policies.

Response: CMS appreciates the support.

Comment: A commenter expressed concern that the QBP rating is based on too many measures and should be based on a small set of measures related to patient experience and outcomes at the geographic level.

Response: The regulation at § 422.260(b), revised in the April 2018 final rule, provides that the QBP determination methodology is the quality ratings system specified in subpart 166 of part 422 for assigning quality ratings to provide comparative information about MA plans and evaluating whether MA organizations qualify for a QBP. The methodology for the quality ratings system was codified for the 2019 measurement year and 2021 Star Ratings in the April 2018 final rule. Further, that amendment to § 422.260(b) was merely codification of a longstanding policy, discussed in the CY 2012 proposed rule (75 FR 71219, 71221) and the CY 2012 final rule (76 FR 21486 through 21490). We did not propose to change that rule and do not believe it is necessary or appropriate at this time.

In the April 2018 final rule, we stated that the Star Rating system provides information in a summary fashion that is a true reflection of the plan's quality and encompasses multiple dimensions of high quality care and is based on a delicate balance of measuring numerous aspects of quality and the need for a Start Printed Page 5931small data set that minimizes reporting burden on the industry (83 FR 16520). Most commenters supported the principles underlying the Star Ratings program as described in the April 2018 final rule and made various suggestions for additional measure concepts to include. We do not believe that a change to the ratings used for QBP purposes is appropriate at this time and, even if we did, we believe that such a significant change from current practice as suggested in the comment should be subject to additional analysis and the opportunity for public comment via the rulemaking process. Our current Part C and D Star Ratings contractor, RAND Corporation, is currently soliciting input from their Technical Expert Panel on suggested potential changes to the mix and number of measures included in the Star Ratings program for consideration in the future. For more information about the Technical Expert Panels, please see https://www.rand.org/​health-care/​projects/​star-ratings-analyses.html.

Comment: A couple of commenters suggested that all new contracts be treated as qualifying contracts and received the 3.5 percentage increase in the benchmark, regardless of whether the parent organization has other MA contracts. A commenter focused on this being fairer to new entrants, while another commenter focused on the statutory provision at 1857(c)(4) of the Social Security Act that guards against contracts leaving and then immediately re-entering the MA program.

Response: Historically, we have followed the rules to assign QBP ratings for a new contract under an existing parent organization that were first adopted in the 2012 Advance Notice and Rate Announcement and the April 2011 final rule that codified the definition of a new MA plan. New contracts under existing parent organizations have traditionally received the weighted average of the ratings of the contracts under the parent organization to minimize the incentive to create new contracts to qualify for a QBP. If the overall performance of an organization is poor, that organization otherwise would have incentives to game the system to be treated as a qualifying plan for QBP purposes for 3 years. This would ignore information that CMS has about the overall performance of the contracts under the parent organization given at least some of the administrative systems are shared across contracts within a parent organization. If there were no MA contract(s) in the parent organization with numeric Star Ratings in the previous 3 years, the contract is rated as a new MA plan in accordance with § 422.258 since CMS does not have recent experience with the organization.

New contracts under existing parent organizations do not necessarily qualify for a QBP; thus, this policy is not unfair to new entrants. Additionally, new entrants where the parent organization does not have recent experience as an MA contract are treated as qualifying plans for 3 years until they have enough data to assess their performance. For the 2021 QBP ratings, 47 percent of the new contracts under existing parent organizations received 3.5 stars or less; thus, these new contracts did not qualify for QBPs. We understand that 1857(c)(4) guards against contracts leaving and immediately entering the MA program, but we believe it is still important to guard against existing contracts opening up new contracts primarily to be treated as qualifying contracts for QBP purposes.

Summary of Regulatory Changes

After consideration of the comments and for the reasons set forth in the proposed rule and our responses to the related comments summarized earlier in this final rule, we are finalizing the methodology to calculate the QBP ratings as proposed at §§ 422.162(b)(4) and 422.166(d)(2)(vi) with a slight revision of the text to further clarify that the enrollment figures used in the enrollment-weighted QBP rating calculations are the November enrollment in the year the Star Ratings are released. Our proposal was to codify existing and current policy without change, and under this final rule, we will follow the same steps as prior years for calculating the 2022 QBPs.

E. Permitting a Second, “Preferred,” Specialty Tier in Part D (§§ 423.104, 423.560, and 423.578)

1. Overview and Summary

Section 1860D-2(b)(2) of the Act, which establishes the parameters of the Part D program's Defined Standard benefit, allows for alternative benefit designs that are actuarially equivalent to the Defined Standard benefit, including the use of tiered formularies. Although not required, Part D sponsors are permitted to include a specialty tier in their plan designs. Use of a specialty tier provides the opportunity for Part D sponsors to manage high-cost drugs apart from tiers that have less expensive drugs. Our policy for the specialty tier has aimed to strike the appropriate balance between plan flexibility and Part D enrollee access to drugs, consistent with our statutory authority.

Section 1860D-4(g)(2) of the Act requires Part D sponsors to have an exceptions process under which a beneficiary who is enrolled in a Part D plan offering a prescription drug benefit for Part D drugs through the use of a tiered formulary may request an exception to the plan's tiered cost-sharing structure. The statute provides that under the exception, a non-preferred drug could be covered under the terms applicable for preferred drugs if certain conditions are met. The statute grants CMS authority to establish guidelines under which Part D enrollees may request exceptions to tiered cost-sharing structures and under which a determination with respect to such a request is made. Under § 423.578(a), we require each Part D sponsor that manages its benefit through the use of a tiered formulary to establish and maintain reasonable and complete exceptions procedures subject to our approval. The Part D sponsor must grant an exception when it determines that the requested non-preferred drug for treatment of the enrollee's condition is medically necessary, consistent with the physician's or other prescriber's statement that the preferred drug: (i) Would not be as effective for the enrollee as the requested drug; (ii) would have adverse effects for the enrollee; or (iii) both.

However, if Part D sponsors were to permit tiering exceptions to allow Part D enrollees to obtain drugs on specialty tiers at a lower cost sharing applicable to non-specialty tiers, they would also likely increase Part D premiums as well as cost sharing for non-specialty tiers. In other words, the ability to get lower cost sharing on specialty-tier Part D drugs through tiering exceptions means that costs would likely go up elsewhere—such as by increasing the cost sharing on generic drug tiers—in order to keep the benefit design actuarially equivalent to the Defined Standard. Consequently, in permitting Part D sponsors to maintain a specialty tier, we also implemented a regulation (most recently § 423.578(a)(6)(iii)) that permits (but does not require) Part D sponsors to exempt Part D drugs placed on the specialty tier from their tiering exceptions processes.

Accordingly, to restrict the specialty tier to only the highest-cost Part D drugs, beginning in 2007,[44 45] we Start Printed Page 5932developed a minimum dollar-per-month threshold amount to determine which Part D drugs are eligible, based on relative high cost, for inclusion on the specialty tier.[46] Additionally, to prevent discriminatory formulary structures, in particular to protect Part D enrollees with certain disease types that are treated only by specialty-tier eligible drugs, our guidance [47] has set the maximum allowable cost sharing for specialty-tier Part D drugs between 25 and 33 percent coinsurance (25/33 percent).

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

Improving Part D enrollee access to needed drugs and lowering drug costs are central goals for CMS. Accordingly, in the hopes of providing flexibility that will promote these goals, we proposed to allow (but not require) Part D sponsors to establish up to two specialty tiers and design an exceptions process that exempts Part D drugs on these tiers from tiering exceptions to non-specialty tiers. Under this policy, Part D sponsors would have the flexibility to determine which Part D drugs are placed on either specialty tier, subject to the specialty-tier cost threshold that would be established according to the methodology we proposed and the requirements of our formulary review and approval process under § 423.120(b)(2). To maintain Part D enrollee protections, we proposed to codify a maximum allowable cost sharing that would apply to a single specialty tier, or, if a Part D sponsor has a plan with two specialty tiers, to the higher cost-sharing, specialty tier. Further, we proposed to require that if a Part D sponsor has a plan with two specialty tiers, one must be a “preferred” tier that offers lower cost sharing than the higher cost-sharing, specialty tier.

We note that we did not propose any revisions to § 423.578(c)(3)(ii), which requires Part D sponsors to provide coverage for a Part D drug for which a tiering exception was approved at the cost sharing that applies to the preferred alternative. The exemption from tiering exceptions for specialty-tier Part D drugs, at § 423.578(a)(6)(iii), would apply only to tiering exceptions to non-specialty tiers (meaning, when the tiering exception request is for the specialty-tier Part D drug to be covered at a cost-sharing level that applies to a non-specialty tier). Under our proposal, we would require Part D sponsors to permit tiering exception requests for drugs on the higher cost-sharing, specialty tier to the lower cost-sharing, specialty tier.

To improve transparency, we proposed to codify current methodologies for cost sharing and calculations relative to the specialty tier, with some modifications. First, we proposed to codify a maximum allowable cost sharing permitted for the specialty tiers of between 25 percent and 33 percent, inclusive (that is, 25 percent ≤ maximum allowable cost sharing ≤ 33 percent), depending on whether the plan includes a deductible, as described further in section IV.E.4. of this final rule.

We also proposed to determine the specialty-tier cost threshold—meaning whether the drug has costs high enough to qualify for specialty-tier placement—based on a 30-day equivalent supply. Additionally, we proposed to base the determination of the specialty-tier cost threshold on the ingredient cost reported on the PDE. This would be a change from our current policy, which uses the negotiated price reflected on the PDE. Under our proposal, the specialty-tier cost threshold would apply to both specialty tiers.

To respond to comments on our Draft 2020 Call Letter requesting that the specialty-tier cost threshold be increased regularly, we also proposed to maintain a specialty-tier cost threshold that is set at a level that, in general, reflects Part D drugs with monthly ingredient costs that are in the top 1 percent of all monthly ingredient costs, as described further in section IV.E.6. of this final rule. We proposed to adjust the threshold, in an increment of not less than ten percent, rounded to the nearest $10, when an annual analysis of PDEs shows that recalibration of the specialty-tier cost threshold is necessary to continue to reflect only Part D drugs with the top 1 percent of monthly ingredient costs. We proposed to annually: (1) Determine whether the adjustment would be triggered, and (2) announce the specialty-tier cost threshold.

2. A Second, “Preferred,” Specialty Tier

Placement on the specialty tier can play an important role in maintaining lower cost sharing on non-specialty tiers. The non-specialty, non-preferred brand/drug tiers frequently have cost sharing equal to as much as 50 percent coinsurance. This means that Part D enrollees would pay considerably more after application of coinsurance for a high-cost drug if it appeared on a non-specialty, non-preferred brand/drug tier with, for instance, 50 percent cost sharing as opposed to placement on the specialty tier, which has been subject to lower cost-sharing requirements. For this reason, we reject the recommendation of some commenters on our Draft 2020 Call Letter that we eliminate the specialty tier altogether.

To the opposite effect, as discussed in section IV.E.1 of this final rule, other Start Printed Page 5933stakeholders, including MedPAC, have recommended that we permit Part D sponsors to maintain a second specialty tier. Stakeholders favoring this approach have posited that this change would: (1) Improve the ability of Part D sponsors and pharmacy benefit managers (PBMs) to negotiate better rebates [50] with manufacturers by enabling them to establish a preferred specialty tier that distinguishes between high-cost drugs and effectively encourages the use of preferred specialty-tier Part D drugs; (2) reduce costs for Part D enrollees, not only through direct cost-sharing savings associated with a lower cost-sharing, “preferred” specialty tier, but also indirectly, through the lowered premiums for all Part D enrollees that could result from better rebates on specialty-tier Part D drugs; and (3) reduce our costs directly through lower drug costs because lower cost sharing would delay a Part D enrollee's entry into the catastrophic phase of the benefit in which the government is responsible for 80 percent of the costs.

Consistent with our ongoing efforts to implement new strategies that can help lower drug prices and increase competition, we proposed to permit Part D sponsors to have up to two specialty tiers by permitting a new preferred specialty tier. However, driven by ongoing concerns over actuarial equivalence and discriminatory benefit designs, in order to strike the appropriate balance between plan flexibility and Part D enrollee access, we also needed to carefully weigh the following factors: (1) Tiering exceptions between the two specialty tiers or to other, non-specialty tiers; (2) the maximum allowable cost sharing for each specialty tier; and (3) tier composition (that is, the selection of Part D drugs for each specialty tier). The regulatory text to allow up to two specialty tiers (which reflects our consideration of these factors) and other related proposals are discussed in the following sections of this preamble.

We received 82 public comments concerning our proposal to permit Part D sponsors to maintain up to two specialty tiers. Although there was some overlap in stakeholder categories, 81 comments were from groups representing Part D sponsors, beneficiary advocates, manufacturers, providers, pharmacists and pharmacies, wholesale distributors, policy institutes, and non-partisan Congressional agencies. The remaining comment was from an individual beneficiary. A summary of the comments and our responses follow.

Comment: Many commenters supported CMS's proposal.

Response: We thank the commenters for their support.

Comment: Some commenters advocated that CMS should abolish specialty tiers altogether, finding them to be outdated and discriminatory to the Part D enrollees whose conditions require they take Part D drugs placed on the specialty tiers. Similarly, these commenters suggested that specialty tiers are unique to prescription drug benefits with no equivalent in the medical benefit and run counter to the purpose of insurance altogether by effectively serving as what the commenter termed “reverse insurance,” reasoning that the sickest patients who need specialty-tier eligible drugs subsidize the benefit to keep premiums and cost sharing on non-specialty tiers lower for the rest of the benefit.

Response: We thank the commenters for this perspective. However, the use of specialty tiers in the commercial market predates the Part D program by several years, and there is widespread use of two specialty tiers in employer-based plans, with some plans using two or more specialty tiers since at least 2014.[51 52 53 54 55 56 57] Additionally, Part D enrollee cost sharing for the specialty tier(s) in Part D, with a maximum allowable cost sharing of 25/33 percent coinsurance is equal to, or, in the case of the preferred, specialty tier that has cost sharing less than the 25/33 percent maximum, better than cost sharing under the Defined Standard benefit. Because cost sharing under the Defined Standard benefit is provided for by statute, neither cost sharing under the Defined Standard benefit nor specialty-tier cost sharing, which is better than the Defined Standard benefit, is discriminatory. Moreover, a hallmark of Medicare Part D is that it relies on market forces to provide prescription drug benefits to Part D enrollees, and, as a public benefit that is administered by the private insurance market, it is incumbent upon us to keep abreast of industry standards for the provision of this benefit while also balancing Part D enrollee access to prescription drugs. While the use of a specialty tier may be counterintuitive, it is a tool widely used in the industry to address a highly volatile market for high-cost Part D drugs. Although there are distinctions between commercial plans and the Medicare Part D program, we believe this particular option is worth pursuing, not only because of the possibility that benefits could ensue, but most centrally because we do not anticipate that permitting a second, preferred specialty tier would lead to additional harms for Part D enrollees given our proposed Part D enrollee protections, such as retention of the 25/33 percent maximum allowable cost sharing.

We also disagree with the assertion that the specialty tier(s) serve as a perverse, “reverse insurance” whereby the sickest patients who need specialty-tier eligible drugs subsidize the benefit to keep premiums and cost sharing on non-specialty tiers lower for the rest of the benefit. We believe this reasoning is flawed because the specialty tier is aligned with the Defined Standard benefit, and the Part D plan bid requirements also necessitate that the benefit structure below the specialty tier also be actuarially equivalent to the Defined Standard benefit. Therefore, the use of specialty-tier eligible drugs has no differential impact on lowering the premiums and cost sharing on non-specialty tiers for the rest of the benefit.

Lastly, we believe that providing Part D sponsors the ability to make business decisions regarding the distribution of insurance risk, as permitted by the statute and while retaining central Part D enrollee protections, reflects the goals of the Part D program, which aim to provide flexibilities, when possible, that could enable Part D sponsors to offer robust formularies with lower costs.

Comment: Some commenters expressed concern that, although CMS proposed to permit Part D sponsors to maintain up to two specialty tiers, CMS did not propose corresponding regulatory text to this effect. Some commenters urged CMS to clarify that a second specialty tier is voluntary, and other commenters urged CMS to clarify Start Printed Page 5934that a second specialty tier would be in addition to the total number of allowed drug tiers, rather than in place of an existing tier.

Response: We proposed to add a new paragraph at § 423.104(d)(2)(iv)(D) to specify that a Part D plan may maintain up to two specialty tiers; additionally, as discussed in section IV.E.3 of this final rule, we also proposed to amend § 423.578(a)(6)(iii) to reflect the possibility of a second specialty tier. Maintaining one or two specialty tier(s) is voluntary. Similarly, we also clarify that a second specialty tier would be in addition to, not in lieu of, the six existing tiers for actuarially equivalent benefit designs.

Comment: Some commenters suggested that this proposal would limit access to specialty-tier Part D drugs, complicate an already complicated benefit structure/process for Part D enrollees, and/or would involve additional, burdensome utilization management for prescribers. Some commenters urged CMS to do a demonstration or pilot before finalizing the proposals to permit a second specialty tier, while others urged CMS to monitor the uptake of the use of a second specialty tier.

Response: We do not anticipate adverse effects to Part D enrollees' access to specialty-tier Part D drugs by allowing Part D sponsors to structure their benefits with a second, “preferred” specialty tier, as we have proposed, either in terms of formulary access or Part D enrollee cost sharing. This is due in large part to the other Part D enrollee protections we proposed in conjunction with our proposal to permit Part D sponsors to maintain a second specialty tier (notably, tiering exceptions between the two specialty tiers and maximum allowable cost sharing, as discussed in sections IV.E.3., and IV.E.4., respectively, of this final rule). As we do not anticipate that permitting a second, preferred specialty tier would lead to harm for any Part D enrollees, it seems reasonable to provide the requested flexibility, as proposed, to Part D sponsors. We are mindful of the need to minimize complexity and make our rules as transparent as possible. However, we believe that the risk of confusion will be outweighed by the potential for Part D sponsors to provide their enrollees with improved access to specialty-tier Part D drugs because improved competition for preferred specialty tier formulary placement results in better negotiations for Part D sponsors, which could result in lower cost sharing for Part D enrollees.

Many specialty-tier Part D drugs already require utilization management, including prior authorization and/or step therapy to access the drug, and then monitoring the enrollee once therapy has been initiated. Utilization management requirements are subject to the requirements of our annual formulary review and approval process under § 423.120(b)(2). (We detailed the components of our annual formulary review and approval process in our May 2019 final rule (84 FR 23835).) As part of this review and approval process, we perform multiple reviews related to the clinical appropriateness of both tier composition and utilization management strategies. For additional information, please also see section 30.2.7 of Chapter 6 of the Medicare Prescription Drug Benefit Manual, available at https://www.cms.gov/​Medicare/​Prescription-Drug-Coverage/​PrescriptionDrugCovContra/​Downloads/​Part-D-Benefits-Manual-Chapter-6.pdf.) Additionally, the same specialty-tier cost threshold would apply to both specialty tiers. In other words, there is no difference in eligibility for specialty-tier placement between the two specialty tiers, and therefore, specialty-tier eligible Part D drugs would be divided between the two specialty tiers. Consequently, we do not anticipate that allowing a second specialty tier would introduce significant utilization management beyond what is already required or increase the number of drugs placed on a specialty tier.

In finalizing our proposals to permit Part D sponsors to maintain up to two specialty tiers, we intend to monitor the uptake of the use of a second specialty tier. We are unclear about, generally, what the commenters believe we would research in a demonstration or pilot, and do not believe one is necessary given the Part D enrollee protections we are finalizing as part of this final rule.

Comment: Some commenters suggested that CMS should not finalize the proposals regarding permitting Part D to maintain up to two specialty tiers for 2021 and that CMS should clarify that the bids for coverage year 2021 will be based on existing rules. Some commenters mentioned that CMS needs to issue new guidance regarding the Plan Bid Package (PBP) Beta Software, which currently does not provide the functionality to file a preferred specialty tier, and that to maintain compliance, CMS needs to provide the specific filing requirements for the second tier. Some commenters suggested that with these changes, CMS must continue to improve written and online materials to provide clear, unbiased, user-friendly language and graphics, and engage in public campaigns to inform and educate Part D enrollees and their caregivers about benefit designs and cost sharing obligations. Some commenters suggested that if CMS finalizes our proposals to permit Part D sponsors to maintain up to two specialty tiers, that CMS will need to “recodify” guidance in the “Coverage Determination Manual.” Some commenters suggested that CMS should institute a generic/biosimilar utilization Star ratings measure focused on specialty-tier drugs.

Response: The proposals regarding permitting Part D sponsors to maintain up to two specialty tiers that are being finalized in this rulemaking will be in effect for coverage year 2022. Additionally, we intend to issue program instructions regarding the filing of two specialty tiers in the Contract Year (CY) 2022 Part D Bidding Instructions. In the May 22, 2020 HPMS memo titled, “Updated Contract Year (CY) 2021 Final Part D Bidding Instructions,” we instructed that bids for coverage year 2021 will be based on existing rules for the specialty tier. We continue to regularly review our policies regarding marketing and other communication materials and expect Part D sponsors to follow the requirements that are being finalized elsewhere in this final rule. Although we assume the commenters referring to the “Coverage Determination Manual” meant our Parts C&D Enrollee Grievances, Organization/Coverage Determinations, and Appeals Guidance, available at https://www.cms.gov/​Medicare/​Appeals-and-Grievances/​MMCAG/​Downloads/​Parts-C-and-D-Enrollee-Grievances-Organization-Coverage-Determinations-and-Appeals-Guidance.pdf, we are not clear on what the commenters believe needs to be “re”-codified, and welcome further input on this matter. In our Announcement of Calendar Year (CY) 2021 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (available at https://www.cms.gov/​files/​document/​2021-announcement.pdf), we discussed the potential to develop measures to assess generic and biosimilar utilization in the Medicare Part D program, and we continue to review feedback for a potential future measure.

We are finalizing without modification our proposals to add a new paragraph at § 423.104(d)(2)(iv)(D) to specify that a Part D plan may maintain up to two specialty tiers. The proposals regarding permitting Part D sponsors to maintain up to two specialty tiers that are being finalized in this rulemaking will apply for coverage year 2022.

To retain the policies in effect before coverage year 2022, we are amending § 423.578(a)(6)(iii) by adding paragraph Start Printed Page 5935(A) to cross reference the definition of specialty tier which will be in effect before coverage year 2022, and paragraph (B) to cross reference placement of the definition of specialty tier at § 423.104(d)(2)(iv) which will apply beginning coverage year 2022. Additionally, paragraph (A) will remove the phrase “and biological products,” and paragraph (B) will (1) reflect the possibility of a second specialty tier, and (2) clarify that Part D sponsors may design their exception processes so that Part D drugs on the specialty tier(s) are not eligible for a tiering exception to non-specialty tiers.

3. Two Specialty Tiers and Tiering Exceptions

As discussed in section IV.E.1. of this final rule, section 1860D-4(g)(2) of the Act specifies that a beneficiary enrolled in a Part D plan offering a prescription drug benefit for Part D drugs through the use of a tiered formulary may request an exception to the Part D sponsor's tiered cost-sharing structure. Additionally, Part D sponsors are required under this section of the statute to create an exceptions process to handle such requests, consistent with guidelines we established (see section 40.5.1 of Parts C & D Enrollee Grievances, Organization/Coverage Determinations, and Appeals Guidance, available at https://www.cms.gov/​Medicare/​Appeals-and-Grievances/​MMCAG/​Downloads/​Parts-C-and-D-Enrollee-Grievances-Organization-Coverage-Determinations-and-Appeals-Guidance.pdf). However, section 1860D-4(g)(2) of the Act does not require tiering exceptions in every case, and rather, indicates that tiering exceptions might not be covered in every instance, by recognizing that non-preferred Part D drugs “could” be covered at the cost sharing applicable to preferred Part D drugs.

As discussed in section IV.E.1. of this final rule, the requirement that Part D plans be actuarially equivalent to the Defined Standard benefit means that if Part D sponsors were required to permit Part D enrollees to obtain Part D drugs on specialty tiers at non-specialty-tier cost sharing, Part D sponsors might need to increase premiums, cost sharing for non-specialty tiers, or both. To avoid such increased costs, in the Medicare Program; Medicare Prescription Drug Benefit Final Rule (hereinafter referred to as the January 2005 Part D final rule, 70 FR 4193), we finalized § 423.578(a)(7), which provided that Part D sponsors with a tier for very high cost and unique items, such as genomic and biotech products (in other words, a specialty tier), could exempt such drugs from its tiering exception process (70 FR 4353). In our April 2018 final rule, we revised and redesignated § 423.578(a)(7) as § 423.578(a)(6)(iii) to specify that if a Part D sponsor maintains a specialty tier, the Part D sponsor may design its exception process so that Part D drugs and biological products on the specialty tier are not eligible for tiering exceptions. While the current policy does not require that Part D sponsors use a specialty tier, or exempt the drugs on such tier from tiering exceptions, nearly all do use a specialty tier and also exempt the drugs on such tier from tiering exceptions.

Section 1860D-4(g)(2) of the Act stipulates that under a tiering exception, a non-preferred Part D drug could be covered under the terms applicable for preferred Part D drugs if the prescriber determines that the preferred Part D drug for treatment of the same condition would not be as effective for the Part D enrollee, would have adverse effects for the Part D enrollee, or both. Thus, the statutory basis for approval of tiering exceptions requests is the presence of (a) clinically appropriate, therapeutically alternative Part D drug(s) on a lower cost-sharing tier of the plan's formulary, and a statement from the prescriber indicating that the alternative drug(s) would not be as effective for that enrollee or would cause adverse effects for the enrollee, or both. Therefore, even if a Part D sponsor permitted tiering exceptions for Part D drugs on the specialty tier to non-specialty tiers, tiering exceptions requests would not be approvable if the plan's formulary did not include any clinically appropriate, therapeutically alternative Part D drugs on a lower cost-sharing tier. For example, suppose that a biological product, “Biologic A,” and another biological product that is indicated for the same condition, “Biologic B,” are both on the specialty tier with no clinically appropriate, therapeutically alternative Part D drugs on a lower cost-sharing tier. If the Part D enrollee's prescriber were to write a prescription for Biologic A, and the prescriber were to request a tiering exception, because Biologic B, the clinically appropriate therapeutic alternative, is on the same tier as Biologic A, and not a lower cost-sharing tier, the tiering exception request would be denied. For further explanation of tiering exceptions requirements, please see § 423.578(a)(6).

Permitting Part D sponsors to exempt Part D drugs on a higher cost-sharing, specialty tier from any tiering exceptions, even to a lower cost-sharing, preferred specialty tier, could improve Part D sponsors' ability to negotiate better rebates. Nevertheless, unlike our justification for allowing Part D plans to exempt a specialty tier from tiering exceptions to lower-cost, non-specialty tiers, granting tiering exceptions from the higher cost-sharing, specialty tier to the preferred specialty tier is less likely to lead to increased premiums or cost sharing to meet actuarial requirements (than granting tiering exceptions from a specialty tier to a non-specialty tier) because we would apply the same specialty-tier cost threshold to both specialty tiers. Our current belief is that improved negotiation alone is not sufficient to justify permitting Part D sponsors to exempt drugs on the higher cost-sharing, specialty tier from requests for tiering exceptions to the preferred, specialty-tier cost sharing. We note that we did not propose to require Part D sponsors to permit tiering exceptions from either specialty tier to lower, non-specialty tiers, and our policy would not change current regulations at § 423.578(c)(3)(ii) that require Part D sponsors to cover drugs for which a tiering exception was approved at the cost-sharing level that applies to the preferred alternative(s). This means that Part D sponsors would be required to grant tiering exceptions for Part D drugs from the higher cost-sharing, specialty tier to the preferred specialty tier if tiering exceptions requirements are met (for instance, when a Part D enrollee cannot take an applicable therapeutic alternative on the preferred specialty tier). Specifically, we proposed to amend § 423.578(a)(6)(iii) (1) to reflect the possibility of two specialty tiers and (2) by adding at the end the phrase “to non-specialty tiers” to clarify that a Part D sponsor may design its tiering exception process so that Part D drugs on the specialty tier(s) are not eligible for tiering exceptions to non-specialty tiers. Consequently, the existing policy at § 423.578(c)(3)(ii) would require Part D sponsors to permit tiering exceptions between their two specialty tiers to provide coverage for the approved Part D drug on the higher cost-sharing, specialty tier that applies to preferred alternative Part D drugs on the lower cost-sharing, preferred specialty tier. While we would not require Part D sponsors to permit tiering exceptions to non-specialty tiers for Part D drugs on a specialty tier, nothing precludes a Part D sponsor from doing so, insofar as their plan benefit design remains actuarially equivalent to the Defined Standard benefit.

Alternatively, we considered permitting Part D sponsors to exempt drugs on either specialty tier from all tiering exceptions, even between the two specialty tiers, as is provided under Start Printed Page 5936the existing regulations at § 423.578(a)(6)(iii). We do not believe maintaining the current exemption would be discriminatory in light of our proposal, discussed in section IV.E.4 of this final rule, to set the same maximum allowable cost sharing (that is, 25/33 percent) currently applied for a single specialty to-the higher cost-sharing, specialty tier and to also require the preferred specialty tier to have cost sharing below that of the higher cost-sharing, specialty tier. With the proposed maximum allowable cost sharing, Part D enrollees would pay no more for a drug on either specialty tier than is the case under our current policy. And, as noted previously, maintaining the current exemption from all tiering exceptions for specialty-tier Part D drugs could allow Part D sponsors to negotiate better rebates. On the other hand, our proposal to require Part D sponsors with two specialty tiers to permit tiering exceptions from the higher cost-sharing, specialty tier to the lower-cost sharing, preferred specialty tier would provide an important Part D enrollee protection when there is a therapeutic alternative on the lower cost-sharing, preferred specialty tier that the Part D enrollee is unable to take. Accordingly, we invited comment on the benefits or drawbacks of maintaining the current policy under § 423.578(a)(6)(iii) that, if we were to finalize our proposal to permit Part D sponsors to have up to two specialty tiers, would apply to permit Part D sponsors to exempt drugs on a specialty tier from the tiering exceptions process altogether.

We note that, as part of our proposed change at § 423.578(a)(6)(iii), we also proposed a technical change to remove the phrase “and biological products.” While the specialty tier usually includes biological products, in the context of the Part D program, biological products already are included in the definition of a Part D drug at § 423.100. Therefore, the phrase “Part D drugs and biological products” is redundant and potentially misleading. Consequently, we proposed to remove the phrase “and biological products.”

To summarize, we proposed to amend § 423.578(a)(6)(iii) to: (1) Reflect the possibility of a second specialty tier, (2) clarify that Part D sponsors may design their exception processes so that Part D drugs on the specialty tier(s) are not eligible for a tiering exception to non-specialty tiers, and (3) remove the phrase “and biological products.” Additionally, we proposed to maintain the existing policy at § 423.578(c)(3)(ii), thereby requiring Part D sponsors to permit tiering exceptions between their two specialty tiers to provide coverage for the approved Part D drug on the higher cost-sharing, specialty tier that applies to preferred alternative Part D drugs on the lower cost-sharing, preferred specialty tier. Additionally, although contingent on finalizing our proposal to permit Part D sponsors to maintain up to two specialty tiers, we solicited comment on maintaining the existing policy at § 423.578(a)(6)(iii), thereby permitting Part D sponsors to exempt drugs on either specialty tier from the tiering exceptions process altogether.

We received 35 public comments concerning our proposal to require Part D sponsors to permit tiering exceptions between their two specialty tiers to provide coverage (for the approved Part D drug on the higher cost-sharing, specialty tier) at the cost-sharing level that applies to the preferred alternative Part D drug on the lower cost-sharing, preferred specialty tier, and 32 public comments concerning our proposal that Part D sponsors can extend to both specialty tiers their current ability to design their exceptions processes to exempt Part D drugs on the specialty tier from tiering exceptions to non-specialty tiers (while requiring tiering exceptions between the two specialty tiers). We received 9 public comments concerning the alternative on which we solicited comment to permit Part D sponsors to design their exceptions processes to exempt drugs on either specialty tier from the tiering exceptions process altogether.

We received no comments on our proposal to amend § 423.578(a)(6)(iii) by removing the phrase “and biological products” and therefore are finalizing this provision without modification.

Although there was some overlap in stakeholder categories, all of the comments were from groups representing Part D sponsors, beneficiary advocates, manufacturers, providers, pharmacists and pharmacies, wholesale distributors, policy institutes, and non-partisan Congressional agencies. A summary of the comments and our responses follow.

Comment: Many commenters supported CMS's proposals. However, some commenters opposed CMS's proposal that Part D sponsors be permitted to design their exceptions processes to exempt Part D drugs on the specialty tiers(s) from tiering exceptions to non-specialty tiers (while requiring tiering exceptions between the two specialty tiers) and also opposed the alternative on which CMS solicited comment to permit Part D sponsors to design their exceptions processes to exempt drugs on either specialty tier from the tiering exceptions process altogether. Some of these commenters, in advocating that CMS require tiering exceptions from the specialty tiers to the non-specialty tiers, found any exemption of the specialty tiers from tiering exceptions to be both discriminatory and a violation of Part D enrollees' statutory rights. Some commenters believed that CMS's proposals and the alternative on which CMS solicited comment prohibited Part D sponsors from offering tiering exceptions.

Response: We thank the commenters who supported our proposals for their support. We disagree that permitting Part D sponsors to design their exceptions processes to exempt Part D drugs on the specialty tier(s) from tiering exceptions to the non-specialty tiers is discriminatory or a violation of Part D enrollees' statutory rights.

Since the beginning of the Part D program, as reflected in our January 2005 Part D final rule, it has been our policy to permit Part D plans to exempt drugs on the specialty tier from tiering exceptions. We did not propose to change this exemption, but rather to adapt it to the possibility of a plan's having two specialty tiers. Historically, the specialty tier has aligned with the Defined Standard benefit, which does not have tiers, and therefore no tiering exceptions. The alignment with the Defined Standard benefit meant that an enrollee's cost sharing for a specialty tier drug would not exceed what would otherwise apply under the Defined Standard benefit, and that tiering exceptions similarly would not be available. We disagree with commenters that exempting the specialty tier(s) from tiering exceptions to non-specialty tiers is discriminatory precisely because of its alignment with the Defined Standard benefit, which, as previously noted, has no tiers, and therefore no tiering exceptions. Moreover, by the same rationale, we do not believe that permitting Part D sponsors to design their exceptions processes to exempt Part D drugs on the specialty tier(s) from tiering exceptions to non-specialty tiers violates a Part D enrollee's rights. As noted earlier, we believe section 1860D-4(g)(2) of the Act does not require tiering exceptions in every case. The addition of a second, preferred specialty tier does not change this analysis, particularly in light of the parameters we are finalizing (described elsewhere in this rule) that cap specialty tier cost sharing at the level that remains aligned with the Defined Standard benefit.

In response to comments regarding whether Part D sponsors should be required to permit tiering exceptions Start Printed Page 5937request from the higher-cost specialty tier to the lower-cost specialty tier, we are finalizing our proposal, and not adopting the alternative we considered. We continue to believe that a Part D drug's placement on a specialty tier can play an important role in maintaining lower cost sharing on non-specialty tiers, and we must balance the ability to get lower cost sharing on specialty-tier Part D drugs through tiering exceptions with the requirement that plans be actuarially equivalent to the Defined Standard benefit. Consequently, while we are not changing our policy that permits Part D sponsors to exempt drugs from tiering exceptions between the specialty and non-specialty tiers, as was originally envisioned by § 423.578(a)(6)(iii), we believe that requiring Part D sponsors to design their tiering exceptions processes to permit tiering exceptions between the two specialty tiers, as provided at § 423.578(c)(3)(ii), strikes the appropriate balance.

Finally, we wish to clarify that Part D sponsors are not required to have a specialty tier at all, and under the provisions we are finalizing, can choose one, two, or no specialty tier(s). Similarly, Part D sponsors are not required to permit tiering exceptions from a specialty tier to a non-specialty tier. However, Part D sponsors also are permitted to design their tiering exceptions processes in such a way as to permit these tiering exceptions from a specialty tier to a non-specialty tier if they wish, so long as the plan's benefit design remains actuarially equivalent to the Defined Standard benefit.

We are finalizing without modification our proposals to amend § 423.578(a)(6)(iii) to: (1) Reflect the possibility of a second specialty tier, and (2) clarify that Part D sponsors may design their exception processes so that Part D drugs on the specialty tier(s) are not eligible for a tiering exception to non-specialty tiers. Additionally, the existing policy at § 423.578(c)(3)(ii) applies as to the two specialty tiers, meaning that Part D sponsors must permit tiering exceptions between their two specialty tiers to provide coverage for the approved Part D drug on the higher cost-sharing, specialty tier at the cost sharing that applies to preferred alternative Part D drugs on the lower cost-sharing, preferred specialty tier. Additionally, we intend to monitor the uptake of the use of a second specialty tier, and may revisit our decision to require plans to allow tiering exceptions between the two specialty tiers in future rulemaking.

Comment: Some commenters suggested that specialty tiers and tiering exceptions have no clinical basis. They reasoned that, because of this, CMS should define several terms (such as “specialty drug.” and “specialty pharmacy”) and provide additional clinical guidance for Part D sponsors when implementing a second specialty tier. Other commenters added that CMS should delay implementation of CMS's proposals to permit two specialty tiers in order to undertake further rulemaking to refine CMS's proposal with additional details regarding clinically based Part D enrollee protections.

Response: We acknowledge that we have based a Part D drug's eligibility for placement on the specialty tier on whether such Part D drug meets the dollar-per-month amount of the specialty-tier cost threshold. However, our application of the tiering exceptions policy has been, and remains, rooted in a clinical basis. To illustrate, while the specialty tier in Part D is limited to the highest-cost Part D drugs, these drugs are often relatively more structurally complicated, and apply to complex conditions, including, but not limited to, cancer, Hepatitis C, HIV/AIDS, Multiple Sclerosis, and Rheumatoid Arthritis. Section 1860D-4(g)(2) of the Act specifies that under a tiering exception, a non-preferred drug could be covered under the terms applicable for preferred drugs if the prescriber determines that the preferred drug (for treatment of the same condition) would not be as effective for the individual, would have adverse effects for the individual, or both. Therefore, tiering exceptions always have a clinical basis, and requiring tiering exceptions between the two specialty tiers reinforces the clinical deliberations Part D sponsors must undertake when considering formulary inclusion and tier composition with regard to specialty-tier Part D drugs. Because the pharmacy practice landscape is changing so rapidly, and because the considerations are so varied, we continue to believe that any attempt by us to define “specialty drug” or “specialty pharmacy” is not warranted at this time. Nonetheless, throughout this final rule, we have opted to use the term “specialty-tier drug” instead of “specialty drug” in order to clarify that our discussion is limited to drugs which meet specialty-tier cost threshold and are therefore eligible for inclusion on a specialty tier in Part D.

Comment: Some commenters stated that the tiering exceptions process is confusing for Part D enrollees, and suggested that CMS should eliminate tiering exceptions altogether. Other commenters provided that permitting tiering exceptions between the specialty tiers but not to non-specialty tiers would be confusing to Part D enrollees. Some of these commenters suggested that CMS should allow tiering exceptions from the specialty to the non-specialty tiers, while others suggested that CMS should require tiering exceptions from the specialty to the non-specialty tiers.

Response: We are mindful of the need to minimize complexity and make our rules as transparent as possible. We appreciate the commenters' perspectives and welcome further detail on both the difficulties that Part D enrollees encounter during the exceptions and appeals process as well as any changes to our marketing and communications materials that could better address these difficulties.

However, we believe that any additional complexity arising from permitting a second specialty tier will be outweighed by the potential to improve enrollee access to specialty-tier Part D drugs. We did not propose to change our policy that permits Part D sponsors to exempt a specialty tier from tier exceptions to a non-specialty tier. Section 1860D-4(g)(2) of the Act provides that Part D enrollees may request exceptions from tiered cost-sharing structures. For this reason, we decline to either eliminate tiering exceptions altogether or require Part D sponsors to permit tiering exceptions from the specialty tiers to the non-specialty tiers. Regarding the request that we should allow tiering exceptions from the specialty to the non-specialty tiers, we note that this is already permitted under § 423.578(a)(6)(iii), and Part D sponsors will continue to have this option under the finalized version of this regulation.

Comment: Some commenters suggested that Part D enrollees who have undergone step therapy, failed other therapies, won a coverage determination or appeal, or a combination of the above, should have non-specialty, preferred cost sharing.

Response: While we appreciate the commenters' perspectives, we did not propose, and decline to adopt, these changes. For further explanation of tiering exceptions requirements and the associated cost sharing, please see § 423.578(a)(6) and section 40.5.1 of the Parts C & D Enrollee Grievances, Organization/Coverage Determinations, and Appeals Guidance (available at https://www.cms.gov/​Medicare/​and-Grievances/​MMCAG/​Downloads/​Parts-C-and-D-Enrollee-Grievances-Organization-Coverage-Determinations-and-Appeals-Guidance.pdf).

Additionally, section 40.5.2 of the Parts C & D Enrollee Grievances, Start Printed Page 5938Organization/Coverage Determinations, and Appeals Guidance discusses the parameters for cost sharing under formulary exceptions. Unlike under the tiering exceptions regulations, the regulations do not specify what level of cost sharing applies when an exception is approved under the formulary exceptions process. Rather, the regulations at § 423.578(b)(2)(iii) require that the plan's formulary exceptions process must address the cost-sharing scheme that will be applied when coverage is provided for a non-formulary drug.

Comment: Some commenters suggested CMS could use CMS's annual formulary review and approval process to prevent discriminatory plan benefit designs, although some commenters asserted CMS has not been transparent about how it conducts the discrimination review. Some commenters suggested that CMS should exempt the specialty tiers from the discrimination review altogether, and some suggested that CMS's formulary review and approval process should evaluate both tiers as a whole instead of each tier independently. Finally, some commenters asserted that additional discrimination reviews on higher specialty tier will lead to more exception requests and thus additional administrative burden for plan sponsors.

Response: As we discussed in our final rule, titled “Modernizing Part D and Medicare Advantage To Lower Drug Prices and Reduce Out-of-Pocket Expenses,” published in the Federal Register on May 23, 2019 (hereinafter referred to as our May 2019 final rule, 84 FR 23835), our annual formulary review and approval process is designed to ensure that Part D formularies do not substantially discourage enrollment by certain beneficiaries and that the formularies include adequate representation of all necessary Part D drug categories or classes for the Medicare population. In other words, our annual formulary review and approval process is designed to prevent discriminatory plan benefit designs. As part of that review and approval process, we assess all tiers both individually and together for the formulary as a whole, and that approach will continue with respect to plans that choose to establish two specialty tiers. Please see our May 2019 rule for additional detail on the components of the annual formulary review and approval process (84 FR 23835). Finally, although we do not understand the commenters' assertion that additional discrimination reviews on the higher cost-sharing, specialty tier will lead to more exception requests and thus additional administrative burden, we welcome additional detail on this issue for consideration in future rulemaking.

Comment: Some commenters suggested that CMS should review all tiering exceptions requests after implementation. Some commenters requested that CMS enforce the existing exceptions and appeals processes.

Response: We monitor and enforce the requirements of our coverage determinations and appeals processes, including tiering exceptions, through the Complaints Tracking Module (CTM), regional CMS account managers, Part D reporting requirements, and program audits. (See https://www.cms.gov/​files/​document/​cy2020part-d-reporting-requirements.pdf for more detail about reporting requirements.) Additionally, in recent years, we have undertaken efforts to improve our exceptions and appeals processes, including improving clarity of the exceptions timeframes for Part D drugs. (See our final rule, titled “Medicare and Medicaid Programs; Policy and Technical Changes to the Medicare Advantage, Medicare Prescription Drug Benefit, Programs of All-Inclusive Care for the Elderly (PACE), Medicaid Fee-For-Service, and Medicaid Managed Care Programs for years 2020 and 2021,” published in the Federal Register on April 16, 2019, hereinafter referred to as our April 2019 rule, 84 FR 15777.) We appreciate the commenters' perspectives and welcome further detail on both the difficulties that Part D enrollees encounter during the exceptions and appeals processes as well as any changes to our marketing and communications materials that could better address these difficulties.

We are finalizing without modification our proposals to amend § 423.578(a)(6)(iii) to: (1) Reflect the possibility of a second specialty tier, (2) clarify that Part D sponsors may design their exception processes so that Part D drugs on the specialty tier(s) are not eligible for a tiering exception to non-specialty tiers, and (3) remove the phrase “and biological products.” Additionally, we will maintain the existing policy at § 423.578(c)(3)(ii), thereby requiring Part D sponsors to permit tiering exceptions between their two specialty tiers to provide coverage for the approved Part D drug on the higher cost-sharing, specialty tier that applies to preferred alternative Part D drugs on the lower cost-sharing, preferred specialty tier.

4. Two Specialty Tiers and Maximum Allowable Cost Sharing

At the start of the Part D program, although we provided Part D sponsors the option to exempt specialty tiers from the tiering exceptions process, we remained concerned that exempting the specialty tier from tiering exceptions could potentially be discriminatory for Part D enrollees with certain diseases only treated by specialty tier-eligible drugs, and thus in conflict with the statutory directive under section 1860D-11(e)(2)(D) of the Act that we disapprove any “design of the plan and its benefits (including any formulary and tiered-formulary structure) that are likely to substantially discourage enrollment by certain part D eligible individuals under the plan.” Using this authority, we aligned the cost-sharing limit for Part D drugs on the specialty tier with the Defined Standard benefit at section 1860D-2(b)(2)(A) of the Act. Consequently, we established a “25/33 percent” maximum allowable cost sharing for the specialty tier, meaning that we would approve cost sharing for the specialty tier of no more than 25 percent coinsurance after the standard deductible and before the initial coverage limit (ICL), or up to 33 percent coinsurance for plans with decreased or no deductible under alternative prescription drug coverage designs and before the ICL (that is, 25 percent ≤ maximum allowable cost sharing ≤ 33 percent). In other words, under actuarially equivalent alternative prescription drug coverage designs, we allow the maximum allowable cost sharing for the specialty tier to be between 25 and 33 percent coinsurance, inclusive, if the Part D plan has a decreased deductible, such that the maximum allowable cost sharing equates to 25 percent coinsurance plus the standard deductible. We derived the maximum allowable cost sharing of 33 percent coinsurance for plans with no deductible under alternative prescription drug coverage by adding the allowable deductible to the 25 percent maximum allowable cost sharing between the deductible and initial coverage limit (ICL) and dividing the resultant value by the ICL. The following calculations illustrate how we derived the maximum allowable cost sharing for the specialty tier.

a. Derivation of 33 percent maximum allowable cost sharing for plans with no deductible.

In 2006, under the Defined Standard benefit, the maximum deductible was $250, and the ICL was $2,250. The maximum allowable cost sharing between the deductible and the ICL was, as it is today, 25 percent coinsurance. (This example uses contract year 2006 numbers for simplicity, but the concepts presented still apply to current guidance.)Start Printed Page 5939

$2,250 ICL−$250 deductible = $2,000 difference × 0.25 = $500 maximum allowable cost sharing after the deductible and before the ICL for specialty-tier Part D drugs in plans with the standard deductible.

$500 maximum (previous calculation) + $250 deductible = $750 maximum for plans with no deductible.

Therefore, the maximum allowable coinsurance before the ICL for specialty-tier Part D drugs in plans with no deductible is $750 divided by the $2,250 ICL ≉ 0.33, or 33 percent coinsurance.

b. Derivation of maximum allowable cost sharing for plans with deductible between $0 and the maximum deductible.

Plans with deductibles between $0 and $250 are permitted to have maximum allowable cost sharing for specialty-tier Part D drugs between the deductible and the ICL of between $500 and $750 (that is, coinsurance between 25 and 33 percent, inclusive) provided that such cost sharing added to the deductible is $750.

For example, using contract year 2006 numbers, if the deductible was $100, the maximum coinsurance that the plan could charge for specialty-tier Part D drugs between the deductible and the ICL would have been approximately 30 percent:

$750−$100 deductible = $650 maximum allowable cost sharing (that is, $650 + $100 = $750).

$2,250 ICL−$100 deductible = $2,150 difference

$650 divided by $2,150 ≉ 0.30, or 30 percent

Therefore, the maximum allowable coinsurance between the $100 deductible and the $2,250 ICL ≉ 0.30, or 30 percent coinsurance. (This 30 percent represents mathematical rounding from the actual calculated value.)

Because section 1860D-2(b)(2) of the Act requires that plan benefit designs be actuarially equivalent to the Defined Standard benefit, the cost sharing for high-cost drugs would likely increase without the use of a specialty tier. This is because often the specialty tier has lower cost sharing than the non-specialty, non-preferred brand/drug tiers, which frequently have cost sharing as much as 50 percent coinsurance. Additionally, many specialty tier-eligible Part D drugs, particularly biological products, often do not have alternatives on lower-cost tiers. Our proposal to codify a maximum allowable cost sharing for the specialty tier equal to the cost sharing for the Defined Standard benefit plus the cost of any deductible would ensure Part D enrollees still pay no more than the Defined Standard cost sharing for high-cost drugs placed on a specialty tier.

Although we proposed to allow Part D sponsors to have up to two specialty tiers, we note that the currently available tier-model structures already allow Part D sponsors to negotiate rebates and distinguish their preferred, high-cost Part D drugs by placing them on the preferred brand tier as opposed to the specialty tier, and placing less preferred agents on the specialty tier. Such distinction could potentially drive the same rebates as two specialty tiers; however, Part D sponsors have told us they are reluctant to take such an approach because of the availability of tiering exceptions for the non-specialty tiers, which could increase costs in lower, non-specialty tiers in order to achieve actuarial equivalence. We believe this concern is addressed by our proposal (discussed in section IV.E.3. of this final rule) to permit Part D sponsors to exempt Part D drugs on either or both specialty tiers from tiering exceptions to non-specialty tiers.

Additionally, while we are sensitive to and trying to be responsive to the volatility of the specialty-tier drug market by proposing to allow Part D sponsors to have up to two specialty tiers, we remain concerned about whether our proposal will actually achieve the potential benefits to the Part D program and Part D enrollees asserted by stakeholders in support of two specialty tiers. As discussed in section IV.E.2 of this final rule, those stakeholders posit that permitting two specialty tiers will reduce Part D enrollee cost sharing for specialty Part D drugs. However, this would be true only for Part D drugs on the lower cost-sharing, preferred specialty tier, and only if the lower cost-sharing, preferred, specialty-tier cost sharing were set lower than 25/33 percent.

When requesting a second specialty tier, some Part D sponsors and PBMs have told us they would need to charge more than 25/33 percent for the higher cost-sharing, specialty tier. However, if we were to permit Part D sponsors to charge more than 25/33 percent for the higher cost-sharing, specialty tier, the cost sharing for drugs in the higher cost-sharing, specialty tier would likely be higher than if there were only one specialty tier. We appreciate that permitting Part D sponsors to increase cost sharing over current limits might lead to negotiations for better rebates, which could result in savings to Part D enrollees offered through, for instance, lower costs on some Part D drugs in the preferred specialty tier or lower premiums. However, in the absence of evidence to the contrary, it appears to us that if we were to permit Part D sponsors to charge higher percentages than is currently the case, Part D enrollees who need Part D drugs on the higher cost-sharing, specialty tier will pay more, and possibly significantly more, than they currently do for those drugs given that specialty tiers, by definition, consist of high-cost drugs. In other words, we remain concerned about Part D enrollee protections and do not want improved rebates on some Part D drugs to come at the expense of those Part D enrollees who could already be paying, as proposed, as much as a 33 percent coinsurance on the highest-costing drugs. Moreover, because Part D enrollees who use high-cost Part D drugs progress quickly through the benefit, some Part D enrollees' entry into the catastrophic phase of the benefit may be advanced faster if the higher cost-sharing, specialty tier were to have a maximum allowable cost sharing that is higher than 25/33 percent. Therefore, it is unclear to us, in the aggregate, how much a second specialty tier would save the government if the second specialty tier was allowed to have a higher cost sharing than the current 25/33 percent.

In addition, while a second specialty tier might improve Part D sponsors' ability to negotiate better rebates, we also have concerns regarding discriminatory plan designs with a second, higher cost-sharing, specialty tier with cost sharing higher than the 25/33 percent that is currently permitted. If we were to allow a maximum allowable cost sharing for the higher cost-sharing, specialty tier above the 25/33 percent that is currently permitted, some Part D enrollees whose Part D drugs are placed on the higher cost-sharing, specialty tier could see their out-of-pocket (OOP) costs increase above the Defined Standard cost-sharing amount. We are concerned that the disproportionate impact on Part D enrollees who take Part D drugs on the higher cost-sharing, specialty tier runs a greater risk of discriminatory plan design. Additionally, while it is generally allowable for plans to use tier placement to steer Part D enrollees toward preferred agents, we would have to develop additional formulary checks to prevent discrimination against those Part D enrollees who require Part D drugs on the higher cost-sharing, specialty tier, and those additional formulary checks would limit the ability of plans to negotiate for tier placement between the two specialty tiers.

We proposed to set a maximum allowable cost sharing for a single specialty tier or, in the case of a plan Start Printed Page 5940with two specialty tiers, the higher cost-sharing, specialty tier as follows: (1) For plans with the full deductible provided for in the Defined Standard benefit, 25 percent coinsurance; (2) for plans with no deductible, 33 percent coinsurance; and (3) for plans with a deductible that is greater than $0 and less than the deductible provided for in the Defined Standard benefit, a coinsurance percentage that is determined by subtracting the plan's deductible from 33 percent of the initial coverage limit (ICL) under section 1860D-2(b)(3) of the Act, dividing that difference by the difference between the ICL and the plan's deductible, and rounding to the nearest 1 percent. Shown mathematically, that is:

((ICL × 0.33)−deductible)/(ICL−deductible)

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

As mentioned in section IV.E.3 of this final rule, we have ongoing concerns that offering a lower cost-sharing, preferred specialty tier below the current 25/33 percent maximum could, in theory, lead to increased costs in lower, non-specialty tiers in order to achieve actuarial equivalence. However, because these increases in costs would be spread across the overall plan design, we believe the overall impact on Part D enrollees, would be less than the increase on individual Part D enrollee cost sharing were we to permit a maximum allowable cost sharing for the specialty tier above what is currently permitted (25/33 percent). Although we are concerned about offsetting increases to lower, non-specialty tiers, the 25/33 percent maximum allowable cost sharing is based upon the Defined Standard benefit cost sharing and therefore would provide an important Part D enrollee protection to prevent discriminatory benefit structures. Consequently, we believe this approach strikes the appropriate balance between Part D sponsor flexibility and Part D enrollee access.

In summary, we proposed to add a new paragraph at § 423.104(d)(2)(iv)(D) to specify that a Part D sponsor may maintain up to two specialty tiers. Further, we proposed to set a maximum allowable cost sharing for a single specialty tier, or, in the case of a plan with two specialty tiers, the higher cost-sharing, specialty tier by adding paragraphs (d)(2)(iv)(D)(1), (2), and (3) which provide: (1) 25 percent coinsurance for plans with the full deductible provided under the Defined Standard benefit; (2) 33 percent coinsurance for plans with no deductible; and (3) for plans with a deductible that is greater than $0 and less than the deductible provided under the Defined Standard benefit, a coinsurance percentage that is between 25 and 33 percent, determined by subtracting the plan's deductible from 33 percent of the initial coverage limit (ICL), dividing this difference by the difference between the ICL and the plan's deductible, then rounding to the nearest 1 percent.

We solicited comment on this approach. We were also interested in and solicited comments on plan benefit designs with two specialty tiers if we were to permit the higher cost-sharing, specialty tier to have a higher coinsurance than what we have proposed. Specifically, we were interested in comments that discuss whether permitting a coinsurance higher than 25/33 percent would be discriminatory.

Additionally, we note that the deductible applies to all tiers, and is not limited to, nor borne solely by, Part D enrollees taking Part D drugs on the specialty tier. Therefore, it is unclear that we should continue to differentiate the specialty tier from the other tiers on the basis of the deductible. Accordingly, we also considered adopting a maximum allowable cost sharing of 25 percent for any specialty tier, regardless of whether the plan has a deductible. We solicited comment on alternative approaches of using a maximum allowable cost sharing of 25 percent coinsurance regardless of whether there is a deductible.

To summarize, we proposed to add a new paragraph at § 423.104(d)(2)(iv)(D) to: (1) Specify that a Part D plan may maintain up to two specialty tiers; and (2) set a maximum allowable cost sharing of 25/33 percent for a single specialty tier, or, in the case of a plan with two specialty tiers, the higher cost-sharing, specialty tier. We also proposed to permit Part D sponsors to set the cost sharing for the preferred specialty tier at any amount lower than that of the higher cost-sharing, specialty tier. Additionally, we solicited comment on actuarial equivalence and the potential for discriminatory effects plan designs with two specialty tiers if we were to permit: (1) The higher cost-sharing, specialty tier to have a higher coinsurance than the 25/33 percent maximum allowable cost sharing we have proposed; or (2) a maximum allowable cost sharing of 25 percent without regard to deductible. Finally, we also solicited comment as to whether to set a numeric or other differential in cost sharing between a specialty tier and any preferred specialty tier.

We received 22 public comments concerning our proposal to set a maximum allowable cost sharing of 25/33 percent for a single specialty tier, or, in the case of a plan with two specialty tiers, the higher cost-sharing, specialty tier. We received 23 public comments Start Printed Page 5941concerning the alternative on which we solicited comment to permit the higher cost-sharing, specialty tier to have a higher coinsurance than the 25/33 percent maximum allowable cost sharing we have proposed. We received 10 public comments concerning the alternative on which we solicited comment to permit a maximum allowable cost sharing of 25 percent without regard to deductible. We received 18 public comments concerning our proposal to permit Part D sponsors to set the cost sharing for the preferred specialty tier at any amount lower than that of the higher cost-sharing, specialty tier; and 18 public comments concerning the alternative on which we solicited comment as to whether to set a numeric or other differential in cost sharing between a specialty tier and any preferred specialty tier.

Although there was some overlap in stakeholder categories, all of the comments were from groups representing Part D sponsors, beneficiary advocates, manufacturers, providers, pharmacists and pharmacies, wholesale distributors, policy institutes, and non-partisan Congressional agencies. A summary of the comments and our responses follow.

Comment: Most commenters supported CMS's proposals to set a maximum allowable cost sharing of 25/33 percent for a single specialty tier, or, in the case of a plan with two specialty tiers, the higher cost-sharing, specialty tier. A commenter asserted that under current policy, coinsurance for specialty tiers can be as high as 50 percent.

Response: We thank the commenters for their support. We are not clear on the commenters' assertion that coinsurance for the specialty tiers can be as high as 50 percent; it has been our longstanding policy—which we are codifying in this rule—that Part D sponsors may not charge more than 25/33 percent coinsurance, depending on the plan's deductible. We thank the commenter, and if the commenter has evidence to the contrary, we welcome further input on this matter.

Comment: Some commenters opposed CMS's proposal and supported the alternative on which CMS solicited comment to permit the higher cost-sharing, specialty tier to have a higher coinsurance than the 25/33 percent maximum allowable cost sharing CMS proposed. Some commenters suggested that CMS should keep the existing maximum allowable cost sharing for the lower cost-sharing, preferred specialty tier at 25/33 percent and establish the maximum allowable cost sharing for the higher cost-sharing, specialty tier with a range between 30 and 40 percent, inclusive, depending on the deductible. Other commenters suggested something of a hybrid approach between our proposal and the previous approach in which CMS would permit Part D sponsors to set the cost sharing for (1) the lower cost-sharing, preferred specialty tier at any amount lower than that of the other specialty tier and (2) the higher cost-sharing, specialty tier higher than the 25/33 percent maximum allowable cost sharing as long as the cost sharing between the two tiers averages, or is actuarially equivalent to, 25/33 percent. These latter commenters further suggested that CMS could set a maximum allowable cost sharing for the higher cost-sharing, specialty tier at 50 percent; however, they did not specify whether this 50 percent would be applied with regard to the deductible.

Response: We are not persuaded by commenters recommending that we permit Part D sponsors offering two specialty tiers to have coinsurance for the higher-cost sharing specialty tier that exceeds the 25/33 percent maximum we proposed. We continue to have significant concerns that allowing specialty-tier cost sharing to exceed 25/33 percent, especially when an enrollee may not be able to receive a tiering exception, could result in discriminatory plan designs, particularly for enrollees who take high-cost drugs that meet the specialty-tier cost threshold we are finalizing in this final rule. We remain concerned that, given the high cost of drugs that meet such specialty-tier cost threshold, increased cost-sharing could leave more Part D enrollees unable to afford what could be life-saving drugs. Moreover, as noted in section IV.E.2 of this final rule, our specialty-tier cost sharing maximum has historically been based on the Defined Standard benefit as a Part D enrollee protection, and the maximum allowable cost sharing of 25/33 percent that we proposed is dependent upon the plan's deductible. Commenters recommending higher cost sharing for the higher cost-sharing specialty tier offered no analysis or approach that would allow us to determine how the higher cost-sharing level would align with the Defined Standard benefit. For this reason, we similarly believe it is inappropriate to finalize a hybrid approach as some commenters suggested, as we would need more information and analysis before we could determine how such a hybrid approach would be structured. We can consider such a policy for future rulemaking, if warranted. We welcome further input from stakeholders, and we thank the commenters.

Comment: Most commenters preferred that the maximum allowable cost sharing for the specialty tiers continue to be expressed as a range, with a specific value for each plan that is dependent upon the plan's deductible. However, some commenters supported the alternative on which CMS solicited comment to permit a maximum allowable cost sharing of 25 percent without regard to deductible. A commenter agreed with this, in principle, but suggested that CMS should permit a maximum allowable cost sharing of 33 percent without regard to the deductible, and, some commenters suggested that plans should be permitted to establish the cost sharing for the specialty tier(s) at coinsurance greater than 25 percent if there is no deductible.

Response: Although we also solicited comment on alternative approaches of using a maximum allowable cost sharing of 25 percent coinsurance regardless of whether there is a deductible, we did not receive any examples of this. We thank the commenters who expressed support or opposition to this alternative, but we were not persuaded to adopt a maximum allowable cost sharing of 25 percent for any specialty tier, regardless of whether the plan has a deductible. None of the comments persuaded us that the current policy, which we proposed to codify and are now adopting, is insufficient.

We note that under the current and proposed policies, Part D plans are permitted to establish the cost sharing for the specialty tier greater than 25 percent, up to and including 33 percent, if there is no deductible. As detailed earlier in this section of this final rule, we are concerned that, unlike our current maximum allowable cost sharing of 25/33 percent, establishing a maximum allowable cost sharing of 33 percent without regard to the deductible could be discriminatory.

Comment: Some commenters suggested that CMS should contemplate other changes to the non-preferred brand/drug tiers to address high Part D enrollee cost sharing. For example, some commenters suggested that a preliminary analysis indicates that, for plan benefit designs with coinsurance for the non-preferred brand/drug tiers, 75 percent of Part D enrollees receiving drugs on this tier pay more than, and some significantly more than, the corresponding amount for such tier when the plan uses copayments (for example, $100 for contract year 2021). These commenters suggested that CMS Start Printed Page 5942should monitor this, particularly if enacting any changes to the specialty tiers.

Response: We thank the commenters for their comments, and welcome additional detail on this to consider it for future rulemaking.

Comment: Some commenters supported CMS's proposal to permit Part D sponsors to set the cost sharing for the preferred specialty tier at any amount lower than that of the higher cost-sharing, specialty tier, encouraging CMS to allow plans to innovate in this area. However, other commenters preferred the alternative on which CMS solicited comment to set a numeric or other differential in cost sharing between a specialty tier and any preferred specialty tier. Some commenters suggested that CMS establish a difference of 5 or 8 percent in cost sharing between the two specialty tiers; some commenters suggested that CMS establish the maximum allowable cost sharing for the lower cost-sharing, specialty tier at 15, 17, or 20 percent while maintaining the maximum allowable cost sharing of 25/33 percent for the higher cost-sharing, specialty tier. Some commenters encouraged CMS to give Part D sponsors the option set the cost sharing for their specialty tier(s) lower than the maximum allowable cost sharing CMS has specified.

Finally, a commenter suggested that CMS should provide by regulation that CMS will annually specify a minimum percentage differential that CMS determines will be likely to substantially incent utilization of the products on the preferred specialty tier over utilization of the products on the higher cost-sharing, specialty tier, and that minimum differential would be subtracted from the coinsurance for the plan's higher cost-sharing, specialty tier (in other words, between 25 and 33 percent, inclusive, depending on the plan's deductible) to result in the maximum allowable cost sharing for the lower cost-sharing, preferred specialty tier.

Response: While we appreciate the specific suggestions provided by commenters, we decline to adopt these suggestions. None of the commenters suggesting specific differentials provided any analysis to support those thresholds or reasonable extrapolation from the Defined Standard benefit (for example, the 25/33 percent).

Finally, while we are intrigued by the commenters' suggestion that we specify a minimum percentage differential that we determine will be likely to substantially incent utilization of the products on the preferred specialty tier versus those on the higher cost-sharing, specialty tier, we decline to adopt this approach. Because a Part D sponsor's decision to place a Part D drug on one tier versus another is multifactorial, it is unclear how we could determine a percentage that is “likely to substantially incent utilization” of the products on the preferred specialty tier versus those on the higher cost-sharing, specialty tier. However, we welcome additional information on this suggestion, and we thank the commenter.

After considering the comments, we are finalizing without modification our proposals to: (1) Add new paragraphs § 423.104(d)(2)(iv)(D)(1) through (3) to establish a maximum allowable cost sharing of 25/33 percent for a single specialty tier, or, for plans with two specialty tiers, the higher cost-sharing, specialty tier and (2) permit Part D sponsors to set the cost sharing for the preferred specialty tier at any amount lower than that of the other specialty tier.

5. Two Specialty Tiers and Tier Composition

A few commenters on the Draft 2020 Call Letter suggested that we should create a lower cost specialty tier for generic drugs and biosimilar biological products, and that such a tier should be limited to only such products. We declined to propose such a policy for this rule. First, we wish to provide maximum flexibility to Part D sponsors that might find, for instance, that a brand-name Part D drug costs less with a rebate than a generic equivalent or corresponding biosimilar biological product. Moreover, generic drugs and biosimilar biological products that meet the specialty-tier cost threshold may not always be the lowest-priced product. Second, nothing in our proposal would prohibit Part D sponsors from setting up such parameters should they choose (provided they meet all other requirements, including the proposed maximum allowable cost sharing). Therefore, in order to provide more flexibility for plans to generate potential savings through benefit design and manufacturer negotiations, we did not propose to prescribe which Part D drugs may go on either specialty tier. However, such placement will be subject to the requirements of our formulary review and approval process under § 423.120(b)(2). Additionally, consistent with our current policy, we will continue to evaluate formulary change requests involving biosimilar biological products on the specialty tiers on a case-by-case basis to ensure they continue to meet the requirements of our formulary review and approval process. (See § 423.120(b)(5).)

We solicited comment on whether Part D sponsors should restrict the lower cost-sharing, preferred specialty tier to only generic drugs and biosimilar biological products while also placing them along with any other Part D drugs meeting the specialty-tier cost threshold on the higher cost-sharing, specialty tier. In other words, either brand or generic drugs and biosimilar biological products would be placed on the higher cost-sharing, specialty tier, but only generic drugs and biosimilar biological products would be placed on the preferred specialty tier. We stated that we were particularly interested in comments that discuss what impact such a policy would have on non-specialty tiers.

We received 30 public comments concerning our proposal to give Part D sponsors the flexibility to determine which Part D drugs are placed on either specialty tier, subject to the thresholds we proposed and the requirements of the CMS formulary review and approval process under § 423.120(b)(2); and 30 public comments concerning the alternative on which we solicited comment to require Part D sponsors to restrict the preferred specialty tier to only generic drugs and biosimilar biological products, while permitting Part D sponsors to have generic drugs, biosimilar biological products, and reference/originator drugs and biological products on the higher cost-sharing, specialty tier.

Although there was some overlap in stakeholder categories, all of the comments were from groups representing Part D sponsors, beneficiary advocates, manufacturers, providers, pharmacists and pharmacies, wholesale distributors, think tanks, and non-partisan Congressional agencies. A summary of the comments and our responses follow.

Comment: Most commenters supported CMS's proposal to give Part D sponsors the flexibility to determine which Part D drugs are placed on either specialty tier, subject to the thresholds CMS proposed and the requirements of the CMS formulary review and approval process under § 423.120(b)(2) and opposed the alternative on which CMS solicited comment to require Part D sponsors to restrict the preferred specialty tier to only generic drugs and biosimilar biological products, while permitting Part D sponsors to have generic drugs, biosimilar biological products, and reference/originator drugs and biological products on the higher cost-sharing, specialty tier.Start Printed Page 5943

Response: We thank the commenters for their support.

Comment: Several commenters opposed CMS's proposal. Some commenters asserted that CMS should require Part D sponsors to use their second specialty tier to encourage greater use of less-expensive biosimilar biological products and greater price competition for specialty-tier drugs, but did not provide suggestions on how to do so. Some commenters suggested that current formulary and tiering practices discourage utilization of generic specialty-tier drugs. Some commenters asserted that CMS should only allow brand products on the higher cost-sharing, specialty tier, and some commenters asserted that generic drugs and biosimilar biological products should be exempt from specialty tier placement altogether. Some commenters suggested permitting generic drugs and biosimilar biological products on the higher cost-sharing, non-specialty tier and/or the same tier as brand specialty-tier drugs and biological products would discourage the use of generic drugs and biosimilar biological products and hamper the research and development pipeline of such products. Conversely, some commenters asserted that current market incentives for generic drugs and biosimilar biological products are sufficient.

Response: We continue to strive to encourage the use of generic drugs and biosimilar biological products. However, we believe that our proposal to give Part D sponsors the flexibility to determine which Part D drugs are placed on either specialty tier, subject to the thresholds we are proposing and the requirements of the CMS formulary review and approval process under § 423.120(b)(2) is appropriate because restricting which types of products may be included on a particular specialty tier may result in fewer generic and biosimilar products being included on the formulary. Part D plans can frequently negotiate lower net prices for brand drugs than generic drugs and biosimilar biological products, and if we were to require preferred placement of a product that has the potential to be more expensive, Part D sponsors may elect not to include the generic drug or biosimilar biological product on their formulary at all. (We note that there currently are no interchangeable biological products on the market.)

Comment: Some commenters asserted that tier placement should have a clinical basis. Additionally, some commenters asked CMS to ensure that utilization management and prior authorization are not inappropriately imposed to prefer brand products over generic drugs and biosimilar biological products.

Response: We detailed the components of our annual formulary review and approval process in our May 2019 final rule (84 FR 23835). As part of this review and approval process, we perform multiple reviews related to the clinical appropriateness of both tier composition and utilization management strategies. For additional information, please also see section 30.2.7 of Chapter 6 of the Medicare Prescription Drug Benefit Manual, available at https://www.cms.gov/​Medicare/​Prescription-Drug-Coverage/​PrescriptionDrugCovContra/​Downloads/​Part-D-Benefits-Manual-Chapter-6.pdf.

Comment: Some commenters, in expressing their opposition to CMS's proposal to permit Part D sponsors to maintain up to two specialty tiers: (1) Agreed with CMS's assertion that the currently available tier-model structures (which already allow Part D sponsors to negotiate rebates and distinguish their preferred, high-cost Part D drugs by placing them on the preferred brand tier as opposed to the specialty tier, and placing less preferred agents on the specialty tier) could potentially drive the same rebates as two specialty tiers; (2) suggested that Part D sponsors could place preferred, high-cost Part D drugs on the specialty tier and place less preferred agents on the non-preferred brand/drug tiers; and (3) suggested that, before implementing further changes to the specialty tiers, CMS needs to provide more detail on why the use of either of the aforementioned options (that is, (1) placing preferred, high-cost Part D drugs on the preferred brand tier while placing less preferred agents on the specialty tier, or, (2) placing preferred, high-cost Part D drugs on the specialty tier while placing less preferred agents on the non-preferred brand/drug tiers) is insufficient to achieve our stated policy goals for permitting Part D sponsors to maintain up two specialty tiers.

Response: While these options certainly are available, we do not foresee harm in finalizing our proposal to permit Part D sponsors to maintain up to two specialty tiers under the parameters we have established in this final rule while monitoring the uptake and outcomes associated with the use of a second specialty tier as Part D sponsors implement it. Conversely, as specialty-tier drugs play an increasingly important role in the prescription drug marketplace, limiting Part D sponsors to either of the aforementioned options could adversely impact the Medicare Part D marketplace. Currently, only 8 percent of Part D plans offer preferred brand tiers with coinsurance.

Limiting Part D sponsors to the option of placing preferred specialty-tier drugs on the preferred brand tier could lead to more plans adopting coinsurance for the preferred brand tier, which could significantly decrease competition among plans in the Part D marketplace as plan benefit designs become less varied and more like the Defined Standard benefit. Conversely, if Part D sponsors were limited to placing non-preferred, specialty-tier eligible drugs on the non-preferred brand/drug tiers, Part D enrollees whose specialty-tier eligible drugs are on this tier could face cost sharing of up to 50 percent coinsurance, which, given the high cost of specialty-tier eligible drugs, is substantially more than they would pay if the drug were on a specialty tier, with the maximum allowable cost sharing of 25/33 percent that we are finalizing in this final rule.

Comment: Some commenters believed that CMS's combined proposals (which would (1) permit Part D sponsors to maintain up to two specialty tiers and (2) give Part D sponsors the flexibility to determine which Part D drugs are placed on either specialty tier, subject to the thresholds CMS proposed and the requirements of the CMS formulary review and approval process under § 423.120(b)(2)) are inextricably linked to problems concerning the role rebates play within Part D and, due to the high cost of specialty-tier drugs, will exacerbate the effect these problems have on costs incurred by Part D enrollees and the government.

Response: Because we are setting a maximum cost sharing for the higher cost-sharing, specialty tier at 25/33 percent, we do not believe that any Part D enrollee or the government will be worse off than today. Nonetheless, we intend to monitor the uptake of and outcomes associated with the use of a second specialty tier. Finally, we decline to adopt the recommendation that we require the preferred tier to reflect clinically appropriate therapeutic alternatives with the lower list price. Section 1860D-11(i) of the Act, otherwise known as the non-interference clause, prohibits us from (1) interfering with the negotiations between drug manufacturers and pharmacies and Part D sponsors, and (2) requiring a particular formulary or instituting a price structure for the reimbursement of covered Part D drugs. For additional information regarding noninterference, please see our rule titled, “Medicare Program; Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and Start Printed Page 5944the Medicare Prescription Drug Benefit Programs” (79 FR 29843) at 79 FR 29844, and 79 FR 29874-5.

Comment: Some commenters asserted that transitioning between biosimilar biological products, reference biological products, or both can jeopardize patient safety due to immunogenicity.

Response: We would refer commenters to the FDA regarding the safety and efficacy of biological products, including biosimilar biological products.

After considering the comments, we are finalizing without modification our proposal to give Part D sponsors the flexibility to determine which Part D drugs are placed on either specialty tier, subject to the cost threshold we are finalizing and the requirements of the CMS formulary review and approval process under § 423.120(b)(2).

6. Establishing and Increasing the Specialty-Tier Cost Threshold

To effectuate the specialty tier, it was necessary to determine which Part D drugs could be placed on a specialty tier. Consequently, we developed a minimum dollar-per-month threshold amount to determine which Part D drugs are eligible, based on relative high cost, for inclusion on the specialty tier. We have sought comment on both this methodology used to establish the specialty-tier cost threshold and the resultant value of the specialty-tier cost threshold when publishing the annual Draft Call Letter. Most recently, commenters on the Draft 2020 Call Letter were largely supportive of having a methodology in place to annually evaluate and adjust the specialty-tier cost threshold, as appropriate. While some commenters wanted to maintain the current level (and others wanted to eliminate the specialty tier or reduce its cost sharing), there was broad support to regularly increase the specialty-tier cost threshold. Some comments requested annual increases, while others wanted us to tie increases to the specialty-tier cost threshold to drug inflation, or benefit parameters. As we detail later in this discussion, we proposed to codify, with some modifications, the same outlier PDE analysis we have historically used. Our proposed annual methodology would account for rising drug costs, as well as any potential changes in utilization. By identifying the top 1 percent of 30-day equivalent PDEs, our proposal aims to create a specialty-tier cost threshold that is representative of outlier claims for the highest-cost drugs. By using PDEs, the proposed analysis would also reflect the fact that the numbers of Part D enrollees filling prescriptions for high-cost drugs as a percentage of all drug claims may vary from year to year. Given the general support for regular increases in the specialty-tier cost threshold, we proposed to make adjustments to the specialty-tier cost threshold based on a specific methodology, as discussed later in this section.

Beginning in 2007, we established the specialty-tier cost threshold at $500 per month [59] based on identifying outlier claims (that is, the top 1 percent of claims having the highest negotiated prices as reported on the PDE, adjusted, as described in this section of this final rule, for 30-day equivalent supplies) and increased the threshold to $600 beginning in contract year 2008. The specialty-tier cost threshold remained at $600 per month from contract years 2008 through 2016.[60 61] In the 2016 analysis for contract year 2017 (using contract year 2015 PDE data), the number of claims for 30 day-equivalent supplies with negotiated prices meeting the existing $600 per-month cost threshold exceeded 1 percent. This, coupled with the significant increase in the cost of Part D drugs since the last adjustment (in 2008), supported an increase in the specialty-tier cost threshold for contract year 2017. To adjust the specialty-tier cost threshold, we applied the annual percentage increase used in the Part D benefit parameter updates (that is, 11.75 percent for contract year 2017) to the $600 threshold. This increase in the specialty-tier cost threshold (that is, $70.50), rounded to the nearest $10 increment (that is, $70), was sufficient to reestablish the 1 percent outlier threshold for PDEs having negotiated prices for 30-day equivalent supplies greater than the threshold. Since contract year 2017, the specialty-tier cost threshold has been $670 per month.

In our April 2018 final rule, we defined specialty tier in regulation at § 423.560 to mean a formulary cost-sharing tier dedicated to very high-cost Part D drugs and biological products that exceed a cost threshold established by the Secretary (83 FR 16509). To improve transparency, we proposed to codify current methodologies for calculations relative to the specialty tier, with some changes. As noted in sections IV.E.3 and IV.E.4. of this final rule, it was necessary to establish the composition of a specialty tier in order to effectuate specialty tier exceptions and anti-discrimination policies. Under § 423.560, only very high-cost drugs and biological products that meet or exceed a cost threshold established by the Secretary may be placed on a plan's specialty tier (for example, a negotiated price of or exceeding $670 per month for coverage year 2020). Current guidance at section 30.2.4 of Chapter 6 of the Medicare Prescription Drug Benefit Manual describes these high-cost drugs and biological products as those having Part D sponsor-negotiated prices that exceed a dollar-per-month amount we established in the annual Call Letter, which has noted the historical use of a threshold under which approximately 99 percent of monthly PDEs adjusted for 30-day equivalent supplies have been below the specialty-tier cost threshold.

In setting the specialty-tier cost threshold, we have historically analyzed PDE data for the plan year that ended 12 months before the applicable plan year (for example, we used contract year 2017 PDE data to determine the cost threshold for contract year 2019). First, we have calculated the number of 30-day equivalent supplies reported on each PDE. We have considered a 30-day equivalent supply to be any days' supply, as reported on each PDE, of less than or equal to 34 days. Thus, a PDE with a 34-days' supply has been considered one 30-day equivalent supply. (This reflects the fact that a full supply of medication for a Part D enrollee could equal less than a month's supply, or reflect manufacturer packaging. For instance, we did not want to triple the cost of a 10-day course of antibiotics to determine the 30-day equivalent supply because that would overstate the Part D enrollee's cost for the full prescription). If the days' supply on the PDE is greater than 34, the 30-day equivalent supply is equal to the PDE's days' supply divided by 30. Thus, for example, a PDE with a 90-day supply has been considered as three 30-day equivalent supplies. Similarly, a PDE with a drug that has been dispensed in a package containing a 45-days' supply has been considered as 1.5 30-day equivalent supplies. This includes long-acting drugs, including, but not limited to long-acting injections. For example, a single injection that is considered to be a 90-days' supply has been considered as three 30-day equivalent supplies.

After determining the number of 30-day equivalent supplies for each PDE, we have calculated the 30-day equivalent negotiated price for the PDE by dividing the PDE's negotiated price Start Printed Page 5945by the number of 30-day equivalent supplies reflected on the PDE. Thus, for example, if the PDE is for a 90-days' supply and has a negotiated price of $810, that PDE contains three 30-day equivalent supplies, and the 30-day equivalent negotiated price is $270.

Next, taking into consideration the 30-day equivalent negotiated prices for all Part D drugs for which PDE data are available, we have identified the PDEs with 30-day equivalent negotiated prices that reflect the top 1 percent of 30 day-equivalent negotiated prices, and have maintained the specialty-tier cost threshold at an amount that corresponds to the lowest 30-day equivalent negotiated price that is within the top 1 percent of all 30-day equivalent negotiated prices.

We note that this process may result in dose specificity of eligibility for placement on the specialty tier, such that one strength of a Part D drug may be eligible but another strength may not. For example, suppose that Part D drug X is available as tablets in strengths of 10mg, 20mg, and 30mg taken once daily with 30-day equivalent negotiated prices of $300, $600, and $900, respectively. The 30mg tablets, because their 30-day equivalent negotiated price exceeds the specialty-tier cost threshold, are eligible for placement on the specialty tier, but the 10mg and 20mg tablets are not, because their 30-day equivalent negotiated prices do not exceed the specialty-tier cost threshold.

We believe our existing policy to set the specialty-tier cost threshold such that only the top 1 percent of 30-day equivalent negotiated prices would exceed it is consistent with the purpose of the specialty tier—that is, that only the highest-cost Part D drugs are eligible for placement on the specialty tier. For this reason, we proposed to codify a similar process to adjust and rank PDE data as the basis for determining the specialty-tier cost threshold, as described in this section of this final rule. Specifically, instead of 30-day equivalent negotiated prices, we proposed to determine the 30-day equivalent ingredient cost to set the specialty tier-cost threshold in the same manner as we have historically done, as described previously in this section.

In addition, to maintain stability in the specialty-tier cost threshold, we proposed to set the specialty-tier cost threshold for contract year 2021 to reflect the top 1 percent of 30-day equivalent ingredient costs, at an amount that corresponds to the lowest 30-day equivalent ingredient cost that is within the top 1 percent of all 30-day equivalent ingredient costs. We also proposed to undertake an analysis of 30-day equivalent ingredient costs annually, and to increase the specialty-tier cost threshold for a plan year only if we determine that no less than a ten percent increase in the specialty-tier cost threshold, before rounding to the nearest $10 increment, is needed to reestablish the specialty-tier cost threshold that reflects the top 1 percent of 30-day equivalent ingredient costs.

As a hypothetical example, suppose that, in 2020, when analyzing contract year 2019 PDE data for contract year 2021, we find that more than 1 percent of PDEs have 30-day equivalent ingredient costs that exceed the contract year 2020 specialty-tier cost threshold of $670. Further, suppose that we find that 1 percent of the PDEs have 30-day equivalent ingredient costs that exceed $685. This $15 difference represents a 2.24 percent increase over the $670 specialty-tier cost threshold. Under our proposed methodology, we would not increase the specialty-tier cost threshold for contract year 2021.

However, if we suppose that, instead of $685, we find that 1 percent of the PDEs have 30-day equivalent ingredient costs that exceed $753, then in this scenario, the $83 change represents a 12.39 percent increase over the $670 specialty-tier cost threshold. Under our proposed methodology, because this would be a change of more than 10 percent, we would set the specialty-tier cost threshold for contract year 2021 at $750 which is the nearest $10 increment to $753.

We solicited comment on this proposal. Because rounding down, as in the previous example, would technically cause the new specialty-tier cost threshold to account for very slightly more than 1 percent of 30 day-equivalent ingredient costs, we also considered the alternative that we would always round up to the next $10 increment. Using the previous example, we would have set the threshold for contract year 2021 at $760 instead of $750. This alternative would: (a) Better ensure that the new specialty-tier cost threshold actually reflects the top 1 percent of claims adjusted for 30-day equivalent supplies, and (b) provide more stability to the specialty-tier cost threshold, that is to say, it will theoretically not need to be changed as frequently, because rounding down will always result in a specialty-tier cost threshold that would include more than the top 1 percent of 30-day equivalent ingredient costs. We do not expect that this alternative would significantly impact the number of Part D drugs that would meet our proposed specialty-tier cost threshold. We solicited comment on this alternative approach to rounding and stated that we could finalize an amended version of our proposed language at § 423.104(d)(2)(B) to reflect such alternative. We proposed to annually determine whether the adjustment would be triggered using the proposed methodology, and if it is, we would apply the proposed methodology to determine the new specialty-tier cost threshold, which we would announce via an HPMS memorandum or a comparable guidance document. Finally, we proposed for contract year 2021 that we would apply our proposed methodology to the contract year 2020 specialty-tier cost threshold of $670, and if a change to the methodology based on comments received on this final rule would result in a change to that threshold, we stated that we will announce the new specialty-tier cost threshold in this final rule.

We have concerns regarding the use of negotiated prices of drugs, as the term is currently defined in §  423.100, in the determination of the specialty-tier cost threshold, because the negotiated prices include all pharmacy payment adjustments except those contingent amounts that cannot reasonably be determined at the point of sale. For this reason, negotiated prices typically do not reflect any performance-based pharmacy price concessions that lower the price a Part D sponsor ultimately pays for a drug. Negotiated prices in the PDE record are composed of ingredient cost, administration fee (when applicable), dispensing fee, and sales tax (when applicable). Administration fees, dispensing fees, and sales tax are highly variable. Therefore, because the ingredient cost has fewer variables than the negotiated price, the ingredient cost represents the most transparent, least complex, and most predictable of all the components of negotiated price upon which to base the determination of the specialty-tier cost threshold. Consequently, as noted previously, we proposed to use the ingredient costs associated with 30-day equivalent supplies when we determine the specialty-tier cost threshold according to the methodology proposed earlier in this preamble. We do not expect that this change would significantly affect the number of Part D drugs meeting the specialty-tier cost threshold because the ingredient cost generally accounts for most of the negotiated price; however, this change to use the ingredient cost ensures that we are using the most predictable of all the components of the negotiated price upon which to base the specialty-tier cost threshold.

Using the methodology in this final rule and contract year 2019 PDE data that we have to date, the specialty-tier Start Printed Page 5946cost threshold for contract year 2021 would be $780 as a 30-day equivalent ingredient cost. To determine this threshold, we analyzed 2.2 billion PDEs, and determined the lowest 30-day equivalent ingredient cost that is within the top 1 percent of all 30-day equivalent ingredient costs to be $780, which did not require rounding. Therefore, we would increase the specialty-tier cost threshold to $780 (as a 30-day equivalent ingredient cost) for contract year 2021 from the previous $670 (as a 30-day equivalent negotiated price). While this change will impact the specific dollar-threshold amount for specialty-tier eligibility, the specialty-tier cost threshold still accounts for the top 1 percent of all claims, as adjusted for 30-day equivalent supplies. Due to the increased costs of prescription drugs since the previous $670 specialty-tier cost threshold was set several years ago, the top 1 percent of all claims, as adjusted for 30-day equivalent supplies, cost more, on average. Moreover, we estimate that the change from using negotiated price to using ingredient cost only will result in fewer than 20 drugs not meeting the $780 30-day equivalent ingredient cost specialty-tier cost threshold that would have if we continued to use the 30-day equivalent negotiated price.

Additionally, consistent with current guidance in section 30.2.4 in Chapter 6 of the Medicare Prescription Drug Benefit Manual, we consider claims history in reviewing the placement of Part D drugs on Part D sponsors' specialty tiers. Consequently, we proposed to codify current guidance that a Part D drug will be eligible for placement on a specialty tier if the majority of a Part D sponsor's claims for that Part D drug, when adjusted for 30-day equivalent supplies, exceed the specialty-tier cost threshold. However, for Part D drugs newly approved by the FDA for which Part D sponsors would have little or no claims data because such drugs have only recently become available on the market, we proposed to permit Part D sponsors to estimate the 30-day equivalent ingredient cost portion of their negotiated prices based on the maximum dose specified in the FDA-approved labeling and taking into account dose optimization, when applicable for products that are available in multiple strengths. If, based on their estimated 30-day equivalent ingredient cost, the newly FDA-approved Part D drug is anticipated to exceed the specialty-tier cost threshold most of the time (that is, more than 50 percent of the time), we would allow Part D sponsors to place such drug on a specialty tier. Finally, such placement would be subject to our review and approval as part of our annual formulary review and approval process.

We proposed to add paragraphs (d)(2)(iv)(A), (B), and (C) to § 423.104 and to cross reference this section in our revised definition of specialty tiers, which we proposed to move to § 423.104, as described later in this section. Specifically, we proposed in paragraph (d)(2)(iv)(A) to described in paragraphs (d)(2)(iv)(A)(1) through (4) the manner by which we set the specialty-tier cost threshold, and further, to describe in paragraph (d)(2)(iv)(A)(5) a Part D drug's eligibility for placement on the specialty tier. In paragraph (d)(2)(iv)(A)(1) we proposed to specify that we use PDE data, and further, use the ingredient cost reflected on the PDE to determine the ingredient costs in dollars for 30-day equivalent supplies of drugs. In paragraph (d)(2)(iv)(A)(2) we proposed to specify how we determine 30-day equivalent supplies from PDE data, such that if the days' supply reported on a PDE is less than or equal to 34, the number of 30-day equivalent supplies equals one, and if the days' supply reported on a PDE is greater than 34, the number of 30-day equivalent supplies is equal to the number of days' supply reported on the PDE divided by 30. We proposed that paragraph (d)(2)(iv)(A)(3) would specify that we then determine the amount that equals the lowest 30-day equivalent ingredient cost that is within the top 1 percent of all 30-day equivalent ingredient costs reflected in the PDE data. We proposed that paragraph (d)(2)(iv)(A)(4) would specify that, except as provided in paragraph (B), the amount determined in paragraph (d)(2)(iv)(A)(3) is the specialty-tier cost threshold for the plan year. Further, we proposed that paragraph (d)(2)(iv)(A)(5) would specify that, except for newly FDA-approved Part D drugs only recently available on the market for which Part D sponsors would have little or no claims data, we will approve the placement of a Part D drug on a specialty tiers when that Part D sponsor's claims data from the plan year that ended 12 months prior to the applicable plan year demonstrate that greater than 50 percent of the Part D sponsor's PDEs for a given Part D drug, when adjusted for 30-day equivalent supplies, have ingredient costs for 30-day equivalent supplies that exceed the specialty-tier cost threshold.

We proposed in paragraph (d)(2)(iv)(B) to describe the methodology we will use to increase the specialty-tier cost threshold. Specifically, we proposed to increase the specialty-tier cost threshold for a plan year only if the amount determined by paragraph (d)(2)(iv)(A)(3) for a plan year is at least ten percent above the specialty-tier cost threshold for the prior plan year. We proposed that if an increase is made, we would round the amount determined in proposed paragraph (d)(2)(iv)(A)(3) to the nearest $10. That amount would be the specialty-tier cost threshold for the applicable plan year.

Finally, we proposed paragraph (d)(2)(iv)(C) to specify that the determination of the specialty-tier cost threshold for a plan year is based on PDE data from the plan year that ended 12 months prior to the beginning of the applicable plan year.

As mentioned in this section of this final rule, to align the definition of specialty tier with our proposal to allow Part D sponsors to have up to two specialty tiers, we first proposed to move the definition of specialty tier from § 423.560 to appear in § 423.104(d)(2)(iv) as part of a proposed new section on specialty tiers that also includes the methodology for determining the specialty-tier cost thresholds and maximum allowable cost sharing. (We also proposed to revise § 423.560 and § 423.578(a)(6)(iii) to cross reference the placement of that definition in § 423.104(d)(2)(iv).) Additionally, we proposed to amend the definition of specialty tier to reflect our proposal to allow Part D sponsors to have up to two specialty tiers. With respect to the phrase “and biological products,” for the reasons discussed in the section IV.E.3 of this final rule, (specifically, that biological products are already are included in the definition of a Part D drug at § 423.100), we also proposed a technical change to the definition of specialty tier to remove the phrase “and biological products.” Therefore, we proposed to define specialty tier at § 423.104(d)(2)(iv) to mean a formulary cost-sharing tier dedicated to high-cost Part D drugs with ingredient costs for a 30-day equivalent supply (as described in § 423.104(d)(2)(iv)(A)(2)) that are greater than the specialty-tier cost threshold specified in § 423.104(d)(2)(iv)(A).

To summarize, we proposed to: (1) Amend the definition of specialty tier at § 423.560 and move it to § 423.104(d)(2)(iv); (2) amend § 423.578(a)(6)(iii) to cross reference placement of the definition of specialty tier at § 423.104(d)(2)(iv); (3) add new paragraph (d)(2)(iv)(A) which describes, in (d)(2)(iv)(A)(1) through (4), the methodology by which we set the specialty-tier cost threshold, and in (d)(2)(iv)(A)(5), a Part D drug's eligibility for placement on the specialty Start Printed Page 5947tier; (4) add new paragraph (d)(2)(iv)(B), which describes the methodology we will use to increase the specialty-tier cost threshold; and (5) add new paragraph (d)(2)(iv)(C), which specifies that the determination of the specialty-tier cost threshold for a plan year is based on PDE data from the plan year that ended 12 months prior to the beginning of the applicable plan year. We solicited comment on specifying at the new § 423.104(d)(2)(iv)(B) that we would round up to the nearest $10 increment.

We received 8 public comments concerning our proposal to amend the definition of specialty tier at § 423.560 and move it to § 423.104(d)(2)(iv); and 8 public comments concerning our proposal to amend § 423.578(a)(6)(iii) to cross reference placement of the definition of specialty tier at § 423.104(d)(2)(iv). We received 10 public comments concerning our proposal to add new paragraph (d)(2)(iv)(A) which describes, in (d)(2)(iv)(A)(1) through (4), the methodology by which we set the specialty-tier cost threshold, and in (d)(2)(iv)(A)(5), a Part D drug's eligibility for placement on the specialty tier. We received 12 public comments concerning our proposal to add new paragraph (d)(2)(iv)(B), which describes the methodology we will use to increase the specialty-tier cost threshold; and 6 public comments concerning our proposal to add new paragraph (d)(2)(iv)(C), which specifies that the determination of the specialty-tier cost threshold for a plan year is based on PDE data from the plan year that ended 12 months prior to the beginning of the applicable plan year. We received 7 public comments concerning our proposal to increase the specialty-tier cost threshold to $780 (as a 30-day equivalent ingredient cost) for contract year 2021 from the previous $670 (as a 30-day equivalent negotiated price).

Although there was some overlap in stakeholder categories, all of the comments were from groups representing Part D sponsors, beneficiary advocates, manufacturers, providers, pharmacists and pharmacies, wholesale distributors, think tanks, and non-partisan Congressional agencies.

A summary of the comments on amending, moving, and cross-referencing the definition of specialty tier and data used to determine the specialty-tier cost threshold and our responses follow.

Comment: Most commenters supported CMS's proposals. We did not receive any comments on the alternative on which we solicited comment to specify at the new § 423.104(d)(2)(iv)(B) that we would round up to the nearest $10 increment. We received unanimous support of our proposals to (1) amend the definition of specialty tier at § 423.560 and move it to § 423.104(d)(2)(iv); (2) amend § 423.578(a)(6)(iii) to cross reference placement of the definition of specialty tier at § 423.104(d)(2)(iv); and (3) add new paragraph (d)(2)(iv)(C), which specifies that the determination of the specialty-tier cost threshold for a plan year is based on PDE data from the plan year that ended 12 months prior to the beginning of the applicable plan year.

Response: We thank the commenters for their support. We will not finalize the alternative on which we solicited comment to specify that we would round up to the nearest $10 increment at this time, but may consider it for future rulemaking. We will finalize without modification our proposal to add new paragraph (d)(2)(iv)(C), which specifies that the determination of the specialty-tier cost threshold for a plan year is based on PDE data from the plan year that ended 12 months prior to the beginning of the applicable plan year. This provision will apply for coverage year 2022. We therefore are not finalizing our proposal to specify a specialty-tier cost threshold of $780 for 2021.

To retain the policies in effect before coverage year 2022, we are amending the definition of specialty tier at § 423.560 by adding paragraph (i) to clarify that the existing definition will apply before coverage year 2022, and paragraph (ii) to cross reference the definition which appears in § 423.104(d)(2)(iv), which will apply beginning coverage year 2022. Additionally, as discussed in section IV.E.2. of this final rule, we are amending § 423.578(a)(6)(iii) by adding paragraph (A) to cross reference the definition of specialty tier which will apply before coverage year 2022, and paragraph (B) to cross reference placement of the definition of specialty tier at § 423.104(d)(2)(iv) which will apply beginning coverage year 2022. Additionally, paragraph (A) will remove the phrase “and biological products.” Additionally, paragraph (B) will (1) reflect the possibility of a second specialty tier, and (2) clarify that Part D sponsors may design their exception processes so that Part D drugs on the specialty tier(s) are not eligible for a tiering exception to non-specialty tiers.

A summary of the comments on the methodology to determine the specialty-tier cost threshold and a Part D drug's eligibility for placement on the specialty tier and our responses follow.

Comment: Some commenters supported CMS's methodology to establish the specialty-tier cost threshold, but were opposed to the maximum dose being used to determine the specialty-tier eligibility for newly-FDA-approved drugs. Some commenters believed that: (1) The maximum dose should not be used to evaluate newly-approved drugs for specialty-tier eligibility; (2) for newly-FDA approved drugs, CMS should require Part D plans to estimate the 30-day equivalent ingredient cost for each drug product strength, package size, and formulation level, similar to how it is already done for already FDA-approved Part D drugs; and (3) CMS should also codify language at § 423.104 regarding dose specificity and dose optimization for all drugs.

Response: We thank the commenters for their perspective on the process for newly FDA-approved drugs. We agree that we need to provide more detail on what we meant in our preamble when we stated that we proposed to permit Part D sponsors to estimate the 30-day equivalent ingredient cost portion of newly-FDA-approved drugs “based on the maximum dose specified in the FDA-approved labeling and taking into account dose optimization, when applicable for products that are available in multiple strengths.”

We did not mean to suggest that only maximum doses would qualify for the specialty tier. Rather, we would expect Part D sponsors to estimate the 30-day equivalent ingredient cost of a drug, taking into account dose optimization—which, based on the maximum FDA-approved dose of a medication, consolidates the Part D enrollee's dose into the fewest number of dose units (for example, tablets)—and dose specificity—which is based on the price applied to the particular strength and dosage form of the drug.

To illustrate that the process for determining a Part D drug's specialty-tier eligibility should take into account dose optimization and dose specificity for both already-FDA approved drugs (for which Part D sponsors would have claims history) and newly-FDA approved drugs (for which Part D sponsors would have little to no claims history), we clarify the example earlier in this section (section IV.E.6) of this final rule. We gave the example of “Part D drug X” that is available as tablets in strengths of 10mg, 20mg, and 30mg taken once daily with 30-day equivalent negotiated prices of $300, $600, and $900, respectively. Regarding dose specificity, the 30mg tablets, because their 30-day equivalent negotiated price exceeds the specialty-tier cost threshold, Start Printed Page 5948are eligible for placement on the specialty tier, but the 10mg and 20mg tablets are not, because their 30-day equivalent negotiated prices do not exceed the specialty-tier cost threshold.

Regarding dose optimization, using the previous example, suppose “Part D drug X” is administered once daily, and the maximum dose is 30mg once daily. Suppose a Part D enrollee takes the maximum dose of 30mg once daily. The Part D enrollee could accomplish that by taking three 10mg tablets, one and a half 20mg tablets, or one 30mg tablet. However, because the 30mg tablets yield the fewest number of dose units for the Part D enrollee to achieve the required dose, dispensing 30, 30mg tablets for a 30-day supply is indicated to be “dose optimized” relative to the other options. Although prescriptions for 30 30mg tablets or 90 10mg tablets each cost $900, because the prescription for 90 10mg tablets is not dose optimized, it (still) does not qualify for the specialty-tier cost threshold.

Because our proposed language at (d)(2)(iv)(A)(6) applied to Part D drugs except those newly-approved by the FDA, in response to the comments, we wish to clarify the process for newly-FDA approved drugs. Therefore, we are also finalizing new paragraph (d)(2)(iv)(A)(6), which describes the eligibility for placement on the specialty tier of newly-FDA-approved Part D drug such that we will approve placement of a newly-FDA-approved Part D drug on a specialty tier when that Part D sponsor estimates that ingredient cost portion of their negotiated price for a 30-day equivalent supply is anticipated to exceed the specialty-tier cost threshold more than 50 percent of the time, subject to our review and approval as part of our annual formulary review and approval process.

While we appreciate the commenters' suggestion that we codify language at § 423.104 concerning dose specificity and dose optimization, we do not believe that we could effectively do so, given the myriad drugs, conditions, different doses for such conditions, dosage forms, package sizes, etc., that factor into these determinations, which can sometimes be quite complicated. We do not want to inadvertently exclude nuanced, but clinically relevant dose optimization strategies. Consequently, we will consider potential language for future notice and comment rulemaking.

Comment: Some commenters suggested that moving from negotiated price to ingredient cost may increase the number of drugs eligible for the specialty tier since negotiated prices may be lower than average wholesale price (AWP) and that CMS should ensure that the switch from negotiated price to ingredient cost tracks the medications captured by the current threshold. Some commenters suggested that if CMS finalizes this provision with 30-day equivalent negotiated price (instead of 30-day equivalent ingredient cost), CMS needs to clarify which definition of negotiated price.

Response: We estimate that the change from using negotiated price to using ingredient cost only would result in fewer than 20 drugs not meeting the $780 30-day equivalent ingredient cost specialty-tier cost threshold that would have met the threshold if we continued to use the 30-day equivalent negotiated price. In other words, in our preliminary analysis, moving from negotiated price to ingredient cost decreased the number of drugs eligible for the specialty tier. However, we will continue to monitor the uptake and outcomes associated with these proposals. We are finalizing the provision to establish a Part D drug's eligibility for placement on the specialty tier using the ingredient cost.

Comment: Some commenters requested clarity on why CMS is codifying the existing methodology while at the same time proposing a substantive change, and inquired why CMS does not simply propose the change. The commenters added that in proposing to move away from the negotiated price and use the ingredient cost that CMS has, in essence, removed the dispensing fee from the determination of a Part D drug's eligibility for specialty-tier placement, but that CMS has not specified if there is a specific issue with dispensing fees that would warrant removing them altogether from the calculation of the specialty tier cost threshold. These commenters then inquired if CMS had another definition for ingredient cost, and suggested that if so, CMS needs to spell this out.

Response: We proposed to codify our longstanding policy with certain changes to improve the transparency and consistency of the specialty tier cost threshold.

We have concerns regarding the use of negotiated prices of drugs, as the term is currently defined in §  423.100, in the determination of the specialty-tier cost threshold, because the negotiated prices include all pharmacy payment adjustments except those contingent amounts that cannot reasonably be determined at the point of sale. For this reason, negotiated prices typically do not reflect any performance-based pharmacy price concessions that lower the price a Part D sponsor ultimately pays for a drug. Negotiated prices in the PDE record are composed of ingredient cost, administration fee (when applicable), dispensing fee, and sales tax (when applicable). Administration fees, dispensing fees, and sales tax are highly variable. Therefore, because the ingredient cost has fewer variables than the negotiated price, the ingredient cost represents the most transparent, least complex, and most predictable of all the components of negotiated price upon which to base the determination of the specialty-tier cost threshold. We do not expect that this change would significantly affect the number of Part D drugs meeting the specialty-tier cost threshold because the ingredient cost generally accounts for most of the negotiated price.

Use of the ingredient cost in lieu of the negotiated price for purposes of determining the specialty-tier cost threshold does not remove the dispensing fee from the negotiated price. Rather, as previously noted, we are merely using the most stable portion of the negotiated price to determine the specialty tier cost threshold. Finally, by ingredient cost, we mean the ingredient cost that is reported on the PDE.

We are finalizing our proposal describing the methodology by which we set the specialty-tier cost threshold, and a Part D drug's eligibility for placement on the specialty tier with one modification. In response to comments, we are also finalizing new paragraph (d)(2)(iv)(A)(6), which describes the eligibility for placement on the specialty tier of newly-FDA-approved Part D drugs.

A summary of the comments on the methodology to increase the specialty-tier cost threshold and our responses follow.

Comment: Most commenters supported CMS's proposal describing the methodology CMS will use to increase the specialty-tier cost threshold.

Response: We thank the commenters for their support.

Comment: Some commenters opposed CMS's proposed 10 percent threshold for change for updating the specialty-tier cost threshold, and suggested that drugs that no longer meet the threshold should be removed from the specialty tier, regardless of the magnitude of the threshold's change. Some commenters were concerned about products not meeting the specialty-tier cost threshold from one year to the next, and consequently moving in and out of the specialty tier from one year to the next, which could cause Part D enrollee confusion. Some commenters noted a tension between tiering exceptions, use of the ingredient cost in lieu of the Start Printed Page 5949negotiated price for purposes of determining the specialty-tier cost threshold, and increases to the specialty-tier cost threshold, noting that, as drugs no longer qualify for the specialty tier and are moved to a non-specialty, non-preferred brand/drug tier, Part D enrollees could potentially pay more for a preferred specialty tier drug than a non-specialty, non-preferred drug, even though the non-specialty, non-preferred drug is the less expensive product. Additionally, some commenters suggested that CMS should clarify how our proposal to revise the specialty-tier cost threshold could impact the distribution of generic drugs and biosimilar biological products that are able to be placed on the specialty tier. Finally, some commenters suggested that CMS should address sudden increases, perhaps due to a sudden increase in the utilization of specialty-tier drugs.

Response: We agree that the specialty tier should consist of only the highest-cost drugs. However, as the commenters noted, to decrease Part D enrollee confusion arising from year-to-year changes in the specialty-tier cost threshold, we must balance the limitation of the specialty tier to the highest-drugs with the need for stability in the specialty-tier cost threshold. Nonetheless, we wish to clarify that, even absent any increase in the specialty-tier cost threshold, if the price of a drug changes, and it no longer meets the specialty-tier cost threshold, it must be removed from the specialty tier at the beginning of the next plan year.

While we acknowledge the commenters' concerns about the tension between tiering exceptions, the specialty-tier cost threshold, tier composition (that is, as Part D drugs no longer meet the specialty-tier cost threshold and are potentially placed on other, non-specialty tiers), and Part D enrollee cost sharing, this dynamic exists today and our policy would not change this. We also note that if Part D drugs, including generic drugs and biosimilar biological products, were no longer eligible for specialty-tier placement and subsequently placed on a non-specialty, non-preferred tier in the following plan year, an enrollee could then request a tiering exception for that drug.

We also appreciate that the commenters' suggestion of sudden increases comes at a time of unprecedented uncertainty regarding the specialty tiers in light of COVID-19. However, we decline to adopt any new policies to address sudden price changes. Consistent with our guidance at section 30.3.3 of Chapter 6 of the Medicare Prescription Drug Benefit Manual and subject to the requirements of § 423.120(b)(5), we permit Part D sponsors to add drugs to and remove drugs from the formulary during the plan year.

Comment: Some commenters suggested that CMS should increase the specialty-tier cost threshold by the Annual Percentage Increase (API) or medical inflation with a periodic rebalancing when the specialty-tier cost threshold represents less than one percent of claims.

Response: We thank the commenters, but we decline to adopt this recommendation because we proposed a methodology that would keep specialty tier drugs at the top 1 percent.

We are finalizing without modification our proposed methodology to increase the specialty-tier cost threshold.

A summary of the comments on increasing the specialty-tier cost threshold to $780 (as a 30-day equivalent ingredient cost) for contract year 2021 from the previous $670 (as a 30-day equivalent negotiated price) and our responses follow.

Comment: Most commenters supported CMS's proposal to increase the specialty-tier cost threshold to $780 (as a 30-day equivalent ingredient cost) for contract year 2021 from the previous $670 (as a 30-day equivalent negotiated price). A commenter asked what the cost threshold for higher cost-sharing, specialty tier would be, and if it will be set by the plan.

Response: We thank the commenters for their support. We are not finalizing this proposal. The specialty-tier cost threshold will apply to both specialty tiers, and while Part D sponsors would not set the threshold, Part D sponsors may choose which specialty-tier drugs go on which tier, subject to our annual formulary review and approval process. However, as we noted in our May 22, 2020 HPMS memorandum entitled, “Updated Contract Year (CY) 2021 Final Part D Bidding Instructions,” for coverage year 2021, we will maintain the specialty-tier cost threshold at $670, as a 30-day equivalent negotiated price. The methodology that is being finalized in this rulemaking will be in effect for coverage year 2022.

Comment: Some commenters asked whether CMS considered the effect of our proposal to increase the specialty-tier cost threshold in combination with our proposal to permit Part D sponsors to maintain up to two specialty tiers, overall, asserting that CMS may be reducing the benefits that a second specialty tier could bring to plans and Part D enrollees because a brand drug may continue to qualify for the specialty tier(s) while its generic equivalent may not.

Response: As discussed earlier in this section (section IV.E.6) of this final rule, we believe the specialty tier should consist of only the highest-cost drugs and therefore, that we should apply a methodology that takes into account rising drug costs and changes in utilization over time. There is a chance that a drug—including a generic drug—that no longer qualifies for placement on the specialty tier may be placed on a non-specialty, non-preferred brand/drug tier, which may have up to 50 percent coinsurance. We note however that this scenario exists today, where drugs are no longer eligible for specialty tier placement because they no longer meet the specialty-tier cost threshold, and Part D sponsors can choose to place them on formulary in a way that they deem best for their enrollees, provided they comply with the requirements of our formulary review and approval process under § 423.120(b). The dynamics around formulary placement of brand and generic drugs and the elements that drive those decisions are central to the core structure and function of the Part D benefit. We therefore do not believe this proposal exacerbates this issue. We also acknowledge in section IX.E.5. of this final rule that conflicting forces might limit the potential savings/benefits of this proposal. Moreover, it is important to note that drugs on a non-specialty, non-preferred brand/drug tier are subject to tiering exceptions.

Under the requirements of § 423.578(a)(6) and consistent with our guidance at section 40.5.1 of the Parts C & D Enrollee Grievances, Organization/Coverage Determinations, and Appeals Guidance, non-preferred generic drugs are eligible for tiering exceptions to the lowest applicable cost sharing associated with alternatives that are either brand or generic drugs when the medical necessity criteria are met. This represents an important protection for Part D enrollees, particularly when paired with our benefit parameters that we establish on an annual basis. Under § 423.104(d)(2)(iii), tiered cost sharing for non-defined standard benefit designs (meaning, actuarially equivalent standard, basic alternative, or enhanced alternative benefit designs) may not exceed levels (or cost sharing thresholds) that we annually determine to be discriminatory.

We are not finalizing our proposal to increase the specialty-tier cost threshold to $780 (as a 30-day equivalent ingredient cost) for contract year 2021 from the previous $670 (as a 30-day Start Printed Page 5950equivalent negotiated price). For CY 2021, we will maintain the specialty tier threshold at $670, as a 30-day equivalent negotiated price. However, as previously described, we are finalizing our proposed methodology to determine the specialty tier threshold each year, beginning with CY 2022.

In summary, we are finalizing without modification our proposals to:

  • Add a new paragraph at § 423.104(d)(2)(iv)(D) to specify that a Part D plan may maintain up to two specialty tiers;
  • Maintain the existing policy at § 423.578(c)(3)(ii), thereby requiring Part D sponsors to permit tiering exceptions between their two specialty tiers to provide coverage for the approved Part D drug on the higher cost-sharing, specialty tier that applies to preferred alternative Part D drugs on the lower cost-sharing, preferred specialty tier;
  • Add new paragraphs § 423.104(d)(2)(iv)(D)(1) through (3) to establish a maximum allowable cost sharing of 25/33 percent for a single specialty tier, or, for plans with two specialty tiers, the higher cost-sharing, specialty tier;
  • Permit Part D sponsors to set the cost sharing for the preferred specialty tier at any amount lower than that of the other specialty tier;
  • Give Part D sponsors the flexibility to determine which Part D drugs are placed on either specialty tier, subject to the thresholds we are proposing and the requirements of the CMS formulary review and approval process under § 423.120(b)(2);
  • Amend § 423.578(a)(6)(iii) to cross reference placement of the definition of specialty tier at § 423.104(d)(2)(iv);
  • Add new paragraph (d)(2)(iv)(C), which specifies that the determination of the specialty-tier cost threshold for a plan year is based on PDE data from the plan year that ended 12 months prior to the beginning of the applicable plan year;
  • Add new paragraph (d)(2)(iv)(A) which describes, in (d)(2)(iv)(A)(1) through (4), the methodology by which we set the specialty-tier cost threshold, and in (d)(2)(iv)(A)(5) a Part D drug's eligibility for placement on the specialty tier; and
  • Add new paragraph (d)(2)(iv)(B), which describes the methodology we will use to increase the specialty-tier cost threshold.

In response to comments, we are also finalizing new paragraph (d)(2)(iv)(A)(6), which describes the eligibility for placement on the specialty tier of newly-FDA-approved Part D drug.

These final policies will apply for coverage year 2022, and we will announce the specialty-tier cost threshold for coverage year 2022 prior to the contract year 2022 bidding deadline.

As discussed in section IV.E.2 and earlier in this section (section IV.E.6) of this final rule, to retain the policies in effect before coverage year 2022, we will:

  • Amend the definition of specialty tier at § 423.560 by adding paragraph (i) to clarify that the existing definition will apply before coverage year 2022, and paragraph (ii) to cross reference the definition which appears in § 423.104(d)(2)(iv), which will apply beginning coverage year 2022; and
  • Amend § 423.578(a)(6)(iii) by adding paragraph (A) to cross reference the definition of specialty tier which will apply before coverage year 2022, and paragraph (B) to cross reference placement of the definition of specialty tier at § 423.104(d)(2)(iv), which will apply beginning coverage year 2022. Additionally, paragraph (A) will remove the phrase “and biological products.” Additionally, paragraph (B) will (1) reflect the possibility of a second specialty tier, and (2) clarify that Part D sponsors may design their exception processes so that Part D drugs on the specialty tier(s) are not eligible for a tiering exception to non-specialty tiers.

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

1. Overview and Summary

Section 101 of the MMA requires the adoption of Part D e-prescribing (eRx) standards. Prescription Drug Plan (PDP) sponsors and Medicare Advantage (MA) organizations offering Medicare Advantage Prescription Drug Plans (MA-PD) are required to establish electronic prescription drug programs that comply with the e-prescribing standards that are adopted under this authority. Prescribers and dispensers who electronically transmit and receive prescription and certain other information for Part D-covered drugs prescribed for Medicare Part D-eligible individuals, directly or through an intermediary, are required to comply with any applicable standards that are in effect.

Section 119 of the Consolidated Appropriations Act requires that Part D plan sponsors implement a prescriber RTBT capable of integrating with clinicians' electronic prescribing and electronic health record systems for the real-time transmission of formulary, benefit, clinical alternative, cost sharing, and utilization management information specific to Part D plan enrollees. This requirement is to take effect once the Secretary names a prescriber RTBT standard, which has not yet occurred.

For a further discussion of the statutory basis for this final rule and the statutory requirements at section 1860D-4(e) of the Act, please refer to section I. of the February 4, 2005, Medicare Program; E-Prescribing and the Prescription Drug Program Proposed Rule (70 FR 6256).

In accordance with our regulations at § 423.160(b)(1), (2), and (5), CMS' Part D eRx program requires that Part D sponsors support the use of the adopted standards when electronically conveying prescription and formulary and benefit information regarding Part D-covered drugs prescribed to Part D-eligible individuals between plans, prescribers, and dispensers.

CMS utilized several rounds of rulemaking to update the Part D e-prescribing program. Most recently, in the May 2019 final rule Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out-of-Pocket Expenses Final Rule (84 FR 23832) (hereinafter referred to as the May 2019 final rule), we required that Part D plans support a prescriber electronic real-time benefit tool capable of integrating with at least one e-prescribing or electronic health record (EHR) system. The prescriber RTBT must provide its enrollees with complete, accurate, timely, and clinically appropriate patient-specific real-time formulary and benefit information (including enrollee cost sharing information formulary alternatives and utilization management requirements). This “prescriber RTBT” electronic transaction requirement will become effective January 1, 2021, and is expected to enhance medication adherence and lower overall drug costs by providing Part D prescribers information in real time when lower-cost alternative drugs are available.

The SCRIPT and the NCPDP Formulary and Benefits standards have already become critical components of the Part D program, and CMS believes that the recently finalized prescriber RTBT requirement at § 423.160(b)(7) will do the same by enhancing the electronic communication of prescription-related information between plans and prescribers under the Part D benefit program. In order to further enhance this communication, CMS has been monitoring the development of prescriber RTBT standards and will consider adoption of these standards in future rulemaking. While these requirements will empower prescribers, CMS also believes it is important to empower patients with Start Printed Page 5951information like that which will be included in the prescriber RTBT and give them the ability to access this information either at their computer or using a mobile device.

In the February 2020 proposed rule, CMS proposed to adopt at § 423.128(d)(1)(vi), (d)(4) and (d)(5) a requirement that Part D sponsors implement a beneficiary RTBT that would allow enrollees to view accurate, timely, and clinically appropriate patient-specific real-time formulary and benefit information, effective January 1, 2022, so as to allow both prescriber and patient to consider potential cost differences when choosing a medication that best meets the patient's medical and financial needs. CMS proposed to require that each system response value would need to present real-time values for the patient's cost-sharing information and clinically appropriate formulary alternatives, where appropriate. This requirement would include the formulary status of clinically appropriate formulary alternatives, including any utilization management requirements, such as step therapy, quantity limits, and prior authorization, applicable to each alternative medication. CMS also proposed to require that plans make this information available to enrollees via their customer service call center.

CMS received the following comments related to our proposal, in general. Our responses follow.

Comment: All commenters supported our proposal, citing the need to provide beneficiaries with actionable information about their prescription drug costs, so beneficiaries can make better informed decisions about treatment options.

Response: CMS thanks commenters for their support. CMS agrees that providing beneficiaries with information about prescription drug costs is important and that the beneficiary RTBT will help provide this information to Part D enrollees.

Comment: Some commenters requested that we delay the implementation date until January 1, 2023 to allow more time for testing the tool. Some of these commenters requested that we exercise enforcement discretion, should we choose not to delay the implementation date. Other commenters requested that we change the implementation date to January 1, 2021 so that beneficiaries can access the benefits of the tool more expeditiously.

Response: CMS understands both the desire to ensure that the tool functions properly and that Part D enrollees have access to information about prescription drug costs. However, in order to help ensure that Part D sponsors have adequate time to implement the tool properly so that beneficiaries can access accurate information as seamlessly as possible, we have decided to delay the implementation date until January 1, 2023.

Comment: A few commenters requested that CMS provide training tools on beneficiary RTBTs to help ensure that Part D enrollees are able to use the RTBTs properly. Other commenters requested that we provide the Part D sponsors with standard language to use on their beneficiary RTBTs to help ensure that Part D enrollees are able to understand the information.

Response: CMS believes that helping ensure that Part D enrollees can use the beneficiary RTBTs and understand the information within them is of utmost importance. However, CMS wants to help ensure that plans have sufficient flexibility when implementing this requirement, since most Part D sponsors have computer applications or portals in place and are more attuned to the needs of their enrollees. In addition, the RTBTs may differ slightly by plan, so we believe that Part D sponsors are better equipped to ensure that their enrollees understand how to use the tool and the language within it.

In order to help ensure that beneficiaries understand how to use this tool, CMS considered requiring that Part D sponsors provide training to their enrollees. However, we believe this would limit our strategy of maximal flexibility for Part D sponsors in implementing this new requirement. Part D sponsors are in the best position to gauge whether or not their enrollees would benefit from training about how to use beneficiary RTBTs. Furthermore, we expect these RTBTs to be similar to the computer applications or portals that most Part D sponsors already have in place, so we do not believe that Part D enrollees will require a training to use the new tool.

Comment: Commenters requested that we require Part D sponsors to include additional information unrelated to beneficiary drug costs in the beneficiary RTBT, such as beneficiary eligibility status, the notification that beneficiaries have the right to an appeal, an explanation of the difference between out of pocket costs and premiums, and a message letting beneficiaries know that assistance programs are available to beneficiaries to help them pay their out of pocket costs.

Response: Although CMS understands the importance of keeping beneficiaries informed about these important topics, we decline to adopt this suggestion. Beneficiaries can access this information from several sources, including upon enrollment in Medicare Part D, through the Medicare & You publication, and Medicare.gov. The purpose of the beneficiary RTBT is to better inform beneficiaries about alternative medications, rather than serve as a repository of information for Part D enrollees. As previously stated, CMS seeks to allow Part D sponsors flexibility in implementing this requirement. As a result, CMS is not requiring sponsors to include information that is not directly connected to the purpose of the RTBT. However, Part D sponsors can include additional information, if they deem it helpful to their enrollees.

2. Pricing Information for the Beneficiary RTBT

As previously noted, CMS proposed to require that Part D sponsors include beneficiary-specific cost information in their beneficiary RTBTs. We proposed this requirement since we believe that sharing this information would yield greater medication adherence. In our proposed rule, we cited evidence suggesting that reducing medication cost yields benefits in increased patient medication adherence. Evidence supports that increased medication out-of-pocket costs was associated with adverse non-medication related outcomes such as additional medical costs, office visits, hospitalizations, and other adverse events.[62] Given that patient cost is such a determinant of adherence, including the patient in such discussions should improve medication adherence. Further, research shows that when patients play an active role in their health care decisions the result is increased patient knowledge, satisfaction, adherence with treatment and improved outcomes.[63] Although not all patients will choose to actively participate in treatment decisions, interactive discussions between patients and physicians are correlated with improved patient satisfaction with their health care provider.[64]

We believe that bringing all of these benefits to Part D enrollees is especially important, in light of the fact that the Start Printed Page 5952Medicare population is becoming increasingly comfortable with technology. According to a 2017 Pew Research Center study, some groups of seniors report “owning and using various technologies at rates similar to adults under the age of 65” [65] and also characterized “82% of 65- to 69-year-olds as internet users,” and found that 40 percent of seniors now own smartphones, “more than double the share that did so in 2013.” As more seniors use computers and smart phones in their daily lives, it is likely that they will use electronic means to research information about their prescription medications. CMS believes that the Part D program must move to accommodate those enrollees by enhancing the way that digital technologies are currently used.

We also stated that we would consider it a best practice for beneficiary RTBTs to include cost-sharing amounts for medications if purchased at a pharmacy selected by the beneficiary, provided the pharmacy is in the plan's network. Sponsors would also be allowed to provide cost data for alternative pharmacies in the plan's network. However, due to concerns with enrollees being steered to different pharmacies, we did not propose to require that beneficiary RTBTs include pharmacy-specific cost sharing information.

In order to support maximum transparency, CMS also encouraged plans to show each drug's negotiated price (as defined in § 423.100) in the beneficiary RTBTs in addition to the requirement to reflect the beneficiary's out-of-pocket cost information at the beneficiary's currently chosen pharmacy. Alternatively, if the beneficiary RTBT does not show the negotiated price, we would encourage plans to provide additional cost data comparing the beneficiary and plan cost comparisons for each drug and its alternatives. For example, if Drug A has beneficiary cost sharing of $10 and the plan pays $100, and Drug B also has a beneficiary cost sharing of $10 but the plan only pays $90, the beneficiary RTBT would reflect a difference of $0 for cost sharing and −$10 in comparative plan cost for Drug B. Providing data such as negotiated price or comparative plan costs would provide beneficiaries with a better understanding of the price differences between alternative drugs and could help provide beneficiaries with information on potential clinically appropriate alternatives that could steer a discussion with their clinician and provide the biggest savings to the beneficiary and potentially lower Part D costs overall.

Although we encouraged the inclusion of the negotiated price and other comparative information in the beneficiary RTBT, we did not propose to require the inclusion of such information. We did not propose to require this because we do not have research that shows learning the payer's rate will affect beneficiary choice if there is no effect on their payment amount. However, we solicited comment on this issue.

CMS appreciates the feedback we received on our proposals. In the sections that follow, which are arranged by topic area, we summarize the comments we received on each proposal and provide our responses. In the following pages, we summarize the comments received about the pricing data to be included in the beneficiary RTBT.

Comment: Some commenters requested that CMS require the inclusion of the negotiated and net prices of medications, which is the cost of the medication after all rebates and fees are subtracted. Other commenters requested that we refrain from even encouraging the inclusion of the negotiated price, as we did in our proposed rule.

Response: CMS understands that it may be helpful for some beneficiaries to see additional pricing information, including the negotiated and net prices. However, as stated in our November 2020 Transparency in Coverage final rule (85 FR 72158), which implements requirements for group health plans and health insurance issuers in the individual and group market to share participant cost sharing information and the negotiated price with the participant in the form of machine readable files and paper (upon request by the participant), CMS should aim to strike a balance between illuminating some of the factors that drive drug costs and not overwhelming consumers with information that is not directly relevant to their cost-sharing liability. In the case of the beneficiary RTBT, we believe this balance is best struck through alignment with the information in the prescriber RTBT, which does not require inclusion of the negotiated or net prices. Having the same information in both tools will not only help facilitate conversations between enrollees and their providers about different medications for the enrollee, but will give the prescriber the opportunity to explain the information in the beneficiary RTBT to enrollees. Providing enrollees information about the negotiated drug prices could easily overwhelm consumers with information, since the pricing information is updated in real time using test claims transmitted to the pharmacy in order to adequately gauge what the drug price is at the time the request is made.

By contrast, in our November 2020 final rule, the requirement for group health plans and private issuers is to compile information for consumers in a file outside of the prescriber RTBT. As a result, group health plans and private issuers are only required to provide this information once—through a machine-readable file or via paper. However, if we were to require Part D sponsors to provide the negotiated and net prices in the beneficiary RTBT, Part D sponsors would be required to transmit two different claims in order to facilitate these tools—one for the prescriber RTBT and one for the beneficiary RTBT. We believe that the benefit these enrollees derive from seeing the net and negotiated prices is outweighed by the burden for plans to calculate this cost and program it into the beneficiary RTBT.

Further, since most plans have similar beneficiary RTBTs in place, we believe that plans are in the best position to gauge what information is useful to their enrollees. We intend for our regulatory requirements to be a starting point for the beneficiary RTBTs and that plans will have the ability to add in additional information, if they believe it will helpful for their enrollees. The sole purpose of our regulatory requirements is to provide the minimum amount of information that must be included in the beneficiary RTBT, and we do not believe that including the net or negotiated prices is absolutely necessary in the beneficiary RTBTs. This approach differs from the approach in our November 2020 final rule, since Part D plans already have similar tools in place, whereas the group health plans and issuers in the private and group market do not.

Comment: Some commenters requested that CMS require Part D plans to include pharmacy and provider-specific data, so that beneficiaries can find the lowest possible price for their medications.

Response: CMS understands the importance of ensuring that beneficiaries have the appropriate tools to find the lowest price medications. However, CMS seeks to balance this desire with the desire to ensure that beneficiaries are not improperly steered away from their pharmacies and providers of choice. Since plans have Start Printed Page 5953the most experience in working with enrollees, we seek to give plans flexibility in implementing the beneficiary RTBT. As a result, we will not prohibit plans from displaying pharmacy and provider-specific pricing. However, we will not require plans to show this information. Therefore, we decline to accept the suggestion that we mandate that plans include this information. Instead we are finalizing our proposal to require only that Part D sponsors include the enrollee cost sharing amount, rather than the negotiated or net price.

3. Beneficiary RTBT Formulary Data

In order to fully empower enrollees to select the most appropriate medications, we proposed to require Part D sponsors to review formulary medications to determine which alternatives exist and whether those alternatives may save their enrollees money through reduced cost sharing. The sponsors would then import that information into the beneficiary RTBT.

However, since we understand that most enrollees may not have the clinical background required to accurately discern the clinical appropriateness of all alternatives, we proposed a narrow exception to this requirement, to include for example certain antibiotics which are “drugs of last resort” that are typically reserved for instances in which the patient is found to have certain drug-resistant infections, or instances in which side-effects are such that a given prescription would not typically be selected in the absence of countervailing risks that would justify risking such side-effects, or instances in which there would be interactions with other drugs already used by the beneficiary that would contra-indicate prescribing a given drug. In these and other clinically appropriate instances, we stated that it may be appropriate to omit certain drugs from what is presented to the user of a beneficiary RTBT. Thus, in order to address these and other clinically appropriate scenarios, we proposed that Part D sponsors would be permitted to have their Pharmacy and Therapeutics (P & T) committees evaluate whether certain medications should be excluded from the beneficiary RTBT. In order to help ensure that this exception is narrowly construed, we proposed to allow P & T committees to exclude medications from the beneficiary RTBT only in the following situations or instances: (1) The only formulary alternatives would have significant negative side effects for most enrollees and the drug would not typically be a practitioner's first choice for treating a given condition due to those side effects, (2) for cases where medications are considered to be “drugs of last resort,” (3) instances in which there would be interactions with other drugs already used by the beneficiary that would contra-indicate prescribing a given drug, or (4) other clinically-appropriate instances.

We clarified that the data that we proposed to require be provided in the beneficiary RTBT must be patient-specific, clinically appropriate, timely, accurate, and devoid of commercial purposes that would adversely impact the intended functionality of promoting cost-effective beneficiary and prescriber selections of drugs. In the following pages, we summarize the comments and provide our responses and final decisions surrounding formulary data to be included in the beneficiary RTBT.

Comment: A number of commenters recommended that CMS remove the requirement for any formulary alternatives to be included on the beneficiary RTBT. These commenters expressed concern that listing these alternatives for Part D enrollees would lead to confusion among their enrollees, since beneficiaries would not be able to appropriately discern whether the medications are appropriate for them. Another commenter suggested that CMS require Part D sponsors to include alternatives that are not on plan formularies, in addition to the formulary alternatives, so that enrollees have a greater array of options.

Response: Part D sponsors are required to include medications on their formulary that provide beneficiaries with a broad range of medically appropriate drugs across an appropriate breadth of categories and classes that cover all disease states, and meet other classifications. CMS reviews these formularies annually to help ensure compliance. As a result, we believe that the medications listed on the Part D formularies should provide sufficient options for Part D enrollees without requiring alternative options for enrollees outside of the Part D formularies.

Although CMS shares commenters' concerns surrounding beneficiary confusion, we believe that limiting beneficiaries' choices to medications within their plan's formulary will help alleviate this concern. CMS believes that allowing beneficiaries the opportunity to choose from different medication alternatives within the plan's formulary strikes the right balance between ensuring that beneficiaries have adequate options for medications while not overwhelming beneficiaries with too many choices that may not be available to them. Although some enrollees may find these options overwhelming, we believe that the benefit of giving beneficiaries different medication options outweighs the risk that some beneficiaries may be overwhelmed by all the medication choices.

Comment: The majority of commenters disagreed with our proposal to allow plans to exclude formulary alternatives in clinically appropriate instances, citing the possibility that plans could use this exclusion as an opportunity to steer patients away from the most clinically appropriate medications, give rise to undue confusion in cases where the provider determines that an excluded drug is actually appropriate, or cause plans to erroneously omit certain medications from the RTBT. However, some commenters supported this exclusion, since they believed that Part D sponsors could benefit from the additional flexibility.

Response: After considering the information provided by the commenters, we are persuaded that the potential for misuse and confusion emanating from this exclusion outweighs the benefit of additional plan flexibility. CMS continues to believe that Part D sponsors should be granted flexibility when implementing the beneficiary RTBT. However, the harm that could be caused by the potential exclusion of appropriate medications outweighs the limited benefit of granting Part D sponsors this additional flexibility in this case. Therefore, we are removing this exclusion and finalizing our proposed requirement to include all formulary alternatives in the beneficiary RTBT.

4. Rewards and Incentives for Beneficiary RTBT

In order to encourage enrollees to use the beneficiary RTBT, we proposed to allow plans to offer rewards and incentives (RI) to their enrollees who use the tool. We proposed to define use, for purposes of permitted RI, to mean logging onto either the portal or application or calling the plan's call center to ask for this information, without regard to whether the enrollee engages in a discussion with his or her prescriber or obtains or switches to any medication in response to such use. In other words, we proposed that plans that choose to offer RI must offer it to all plan enrollees who use the tool or seek to access this information via phone and must not make RI contingent upon the medical diagnosis or the type of medication a beneficiary is taking, or upon the enrollee switching medications.Start Printed Page 5954

We proposed to prohibit any enrollee remuneration under the guise of RI, which includes waivers of copayments and deductible amounts and transfers of items or services for free. We also proposed to prohibit plans from offering any cash or monetary donations, under the guise of RI. However, we did propose to allow for the use of gift cards, as long as they are not cash equivalents and do not encourage enrollees to further patronize the plan or any of the plan's corporate affiliates. For purposes of this proposal, CMS proposed that gift cards that can be used like cash, for example, a VISA or Amazon gift card, to be a “cash equivalent.” Cash equivalents also may include, for example, instruments convertible to cash or widely accepted on the same basis as cash, such as checks and debit cards. This means that gas cards or restaurant gift cards would be permitted. However, a gift card that can be used for goods or services purchased from the plan would be prohibited, since that could incentivize enrollment in plans that could provide gift cards that enrollees could use at pharmacies or retail stores owned by their plan, rather than at a third-party establishment owned by a different company.

We also proposed that the RI be of nominal value, which Office of Inspector General (OIG) guidance specifies as no more than $15 per login or $75 in the aggregate annually, in accordance with OIG guidance.[66] We also proposed that the member can receive a RI for no more than one login per month. We also proposed that this expense would have to be included as an administrative expense in the bids of Part D sponsors, rather than it being considered a drug cost. We solicited comments on these limitations and on how we can ensure that these RIs will not be indirectly provided or funded by pharmaceutical manufacturers. We also solicited comments on safeguards to mitigate risks of fraud and abuse with respect to these incentives.

MA-PDs are already permitted to offer rewards and incentives for Part C benefits under our regulation at § 422.134, which permits plans to offer health-driven rewards and incentives that are designed to encourage enrollees to participate in activities that focus on promoting improved health, preventing injuries and illness, and promoting efficient use of health care resources. We propose to adopt Part C's ban at § 422.134(b) on discrimination for Part D RI that plans offer to encourage the use of the beneficiary RTBT. We therefore proposed to require that if a Part D plan sponsor offers RI, it must be available to all of the plan's enrollees that log into the plan's portal or call the plan's call center, without discrimination based on a prohibited basis; under applicable law, prohibited bases of discrimination include the enrollee's proficiency in English, race, color, national origin, sex, age, disability, chronic disease, health status, or other basis prohibited by law.

We proposed to add this provision to our regulations at § 423.128 by amending paragraph (d) to add paragraphs (4) and (5). Paragraph (4) would address the beneficiary RTBT and paragraph (5) would address the rewards and incentives for use of the beneficiary RTBT.

Because of the safeguards included in the aforementioned proposals, including requiring that the rewards and incentives be non-cash equivalents, we believe the RI presents a low risk of fraud and abuse and is unlikely to compromise the integrity of the program.

We received the following comments related to our proposal, and our responses follow:

Comment: The majority of commenters supported the use of rewards and incentives for this provision. However, some of these commenters requested that CMS allow use of Amazon gift cards for the beneficiary RTBT, since they are a popular incentive for beneficiaries. The commenters disagreed with our classification of Amazon gift cards as cash equivalents, since they can only be used when shopping on Amazon.com or in Whole Foods.

Response: CMS continues to believe that Amazon gift cards fall under the definition of cash equivalents. In their final rule entitled “Medicare and State Health Care Programs: Fraud and Abuse; Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements,” published on December 7, 2016, (81 FR 88393), the OIG states that items that can be used like cash (such as a general purpose debit card) constitute cash equivalents. In addition, we seek to help ensure consistency across CMS rulemaking, and CMS has previously defined cash equivalents to include Amazon gift cards. Please see final rule entitled “Medicare Program; Medicare Shared Savings Program; Accountable Care Organizations—Pathways to Success and Extreme and Uncontrollable Circumstances Policies for Performance Year 2017” published on December 31, 2019.

Although we understand the desire to use incentives that enrich the lives of beneficiaries, CMS must balance this desire against the increased fraud and abuse risk that exists when cash equivalents, such as a general purpose debit card or Amazon gift card are offered. As a result, we prohibit the use of Amazon gift cards as an RI under the beneficiary RTBT.

However, we seek to empower Part D sponsors to ensure that beneficiaries are motivated to use the RTBT, especially given the aforementioned potential benefits of the RTBT, including medication adherence and improved patient satisfaction. As a result, we are not finalizing our proposed requirement that the rewards and incentives be nominal in value and thus be limited to $15/login and $75/year. Rather, we defer to the judgment of Part D sponsors as to what they consider to be a reasonable amount to offer their enrollees. As previously mentioned, we seek to grant flexibility to Part D sponsors as they are in the best position to judge the needs of their enrollees.

CMS understands that this standard differs from what is considered appropriate under the Part C rewards and incentives program. The goal of the Part C rewards and incentives program is to promote healthy behaviors. By contrast, the goal of the rewards and incentives program for the beneficiary RTBT is to promote use of the tool, which are intended to lead to the aforementioned potential benefits of the RTBT, including medication adherence and decreasing overall drug costs. Because these goals differ and the value of use of the tool cannot be easily quantified, the Part C limit on rewards and incentives, which requires that the value of the reward and incentive not exceed the value of the activity itself, is not appropriate in this context of the Part D beneficiary RTBT. As a result, CMS is finalizing the limit for the rewards and incentives to be the amount Part D sponsors believe to be reasonable, rather than the Part C limit on rewards and incentives or a nominal amount. The other aspects of the RTBT rewards and incentives program are being finalized as proposed.

After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing our proposed provisions at §§ 423.128(d)(4) and (5) with several modifications. First, we are adding a January 1, 2023 applicability date to the regulation text at paragraph (d)(4) to reflect that this Start Printed Page 5955provision will not apply until that date. Second, because we are requiring that plans include all formulary medication alternatives, rather than only the alternatives that are clinically appropriate, we are modifying the language at § 423.128(d)(4)(ii) to require all formulary medication alternatives to be included. Since we will be allowing plans to determine what they believe to be reasonable in determining the dollar value of the rewards and incentives, we are modifying the language at 423.128(d)(5)(i) to replace the word “nominal” with “reasonable” to clarify that the new limit for the value of the rewards and incentives is what plans consider to be a reasonable value, rather than an amount that OIG has interpreted to be nominal. Because plans will be determining what they deem to be reasonable, rather than an amount that OIG has interpreted to be nominal, we are removing the limitation at § 423.128(d)(5)(ii) on offering rewards and incentives for only one login per month.

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

Section 1860D-12(b)(3)(D) of the Act provides broad authority for the Secretary to add terms to the contracts CMS enters into with Part D sponsors, including terms that require the sponsor to provide the Secretary with information as the Secretary may find necessary and appropriate. Pursuant to our statutory authority, we codified these information collection requirements for Part D sponsors in regulation at § 423.514. We proposed to amend the regulatory language at § 423.514(a) to establish a requirement for Part D sponsors to disclose to CMS the pharmacy performance measures they use to evaluate pharmacy performance, as established in their network pharmacy agreements.

Collecting pharmacy performance measures used to determine whether a financial reward or penalty is incurred by a pharmacy after the point-of-sale (POS) will enable CMS at a minimum to better understand how the measures are applied, whether uniformly or specific to pharmacy type. This effort may also explain if there is a pharmacy performance problem, as pharmacy price concessions (financial penalties incurred) after the POS have continued to grow annually. Knowledge of the industry's pharmacy performance measures would also provide transparency to the process and likely confirm or dispel the idea that many of the measures may not provide appropriate metrics across all types of pharmacies. Once collected, we stated that CMS would publish the list of pharmacy performance measures reported to increase public transparency.

We encouraged the industry to continue to work together on developing a set of pharmacy performance measures through a consensus process and Part D sponsors to adopt such measures to ensure standardization, transparency and fairness. We also solicited comment on the principles that Part D pharmacy performance measures should adhere to, including potential burden or hardship of performance measures on small, independent, and/or rural pharmacies, and recommendations for instituting potential Part D Star Ratings metrics related to these measures. Finally, we solicited comment on the data elements, timeline, and method of submission for the reporting of pharmacy performance measures.

We received the following comments and our response follows:

Comment: The vast majority of comments were supportive of the proposal for CMS to establish a reporting requirement to collect pharmacy performance measures used by Part D sponsors in their network pharmacy contracts. Virtually all of the supportive comments shared the opinion that the current pharmacy performance measures and processes were either flawed, opaque or both. They believed the collection of this information would spur transparency and reveal the need for standardized measures via an industry driven consensus process facilitated by an experienced and neutral third-party.

Response: We appreciate the support for the proposal to establish a requirement for Part D sponsors to disclose pharmacy performance measures to CMS. We agree that the information should provide transparency and help industry stakeholders come to a consensus on measures.

Comment: A number of commenters believed that if CMS made the pharmacy performance measures used by Part D sponsors public it would result in a loss of leverage and flexibility for sponsors in their negotiations with network pharmacies. Other concerns were that it would stifle innovation and be harmful to market competition. A commenter requested that the measures only be shared with the involved parties. Another added that, if universal performance thresholds are applied, Part D sponsors would lose their ability to effectively negotiate performance programs with network pharmacies when true differences in performance may exist. Another believed the publication of performance measures without context could mislead patients about the performance of their pharmacies. A couple of commenters stated that the information was sensitive and that making it public would be harmful to market competition; believing it inappropriate to make sponsors' performance measure thresholds public.

Response: We remind commenters that in the proposed rule we did not propose universal performance thresholds, but rather proposed to collect plans' pharmacy performance measures as an additional reporting section of our Part D reporting requirements. Given the growing magnitude of pharmacy price concessions based on performance measures in Part D, we believe it is important to provide transparency to the public regarding the measures in use. In addition, we believe that publishing a list of currently used pharmacy performance measures will promote the development of consensus-built standards by the industry that are transparent and equitable across various pharmacy types and patient populations, and support value-based care. Creating a “level playing field” to measure pharmacy network performance should not pose an obstacle to flexibility, innovation or competitiveness. Rather, a fair, more accurate and transparent system of measuring the strengths or weaknesses of a plan's network pharmacies should encourage both plans and the pharmacies within their respective networks to be innovative, flexible and competitive in how they use the data collected. Accurately identifying poorly performing pharmacies and well-performing pharmacies should encourage, when practical, a sharing of top pharmacy best practices' throughout a plan's network that would ideally enhance a plan's competitiveness in the marketplace.

Comment: The large majority of commenters agreed with the reporting requirement proposal, but noted concerns related to industry burden, need for more industry input, that any elements or criteria be subject to rulemaking, and that a reasonable timeline for implementation be given.

Response: As stated in the proposed rule, we are dedicated to the involvement of the industry in the development of this requirement. After publication of this final rule to establish the requirement that sponsors disclose pharmacy performance measure information to CMS, any new elements added to the Part D reporting Start Printed Page 5956requirements (OMB 0938-0992) to implement this requirement would result from industry feedback through 60- and 30-day public comment periods in the Federal Register and approval through the Office of Management and Budget (OMB) Paper Reduction Act (PRA) process. As with any new elements added to the Part D reporting requirements, we believe the opportunity to provide comment through the PRA process will allow adequate input from the public and the industry. We also agree that to implement this provision we need to ensure the timeline and burden are reasonable for all parties involved. We will take into consideration the feedback received in response to the proposed rule when putting forth a timeline for implementation and potential elements for public comment.

Comment: We received one comment that warned that implementing a standard set of performance measures held the potential of narrowing pharmacy networks, thereby impacting some pharmacies and the options available to beneficiaries. Other commenters, while expressing support for standardization of measures in principle, requested that sponsors not be locked into only specific measures.

Response: We did not propose to implement a standard set of performance measures nor did we make any proposals with respect to requiring the use of any particular measures. Rather, in the proposed rule, we encouraged industry to come to a consensus on a standard set of pharmacy performance measures.

Comment: A few commenters, while supportive of the industry standardizing pharmacy performance measures, cautioned against placing too many exacting limits on the performance measures, and stated that sponsors should retain the ability to use metrics beyond those decided by a third-party facilitator such as, but not limited to, the Pharmacy Quality Alliance (PQA), provided such measures are transparent to CMS and pharmacies.

Response: We thank the commenters for their comments. We reiterate that we did not propose to standardize pharmacy performance measures in the proposed rule. We would expect that if through an industry consensus a standard set of pharmacy performance measures is established, it would be through a similar transparent and consensus process that additional measures would be added. We note, however, that transparency is of little consequence if the measures or the corresponding thresholds for that measure are ill-suited for the type of pharmacy or patient population that is being evaluated.

Comment: We received a few comments regarding our request for feedback on recommendations on measures to consider for use in the Part D Star Ratings related to the uptake or evaluation of pharmacy performance measures. A commenter believed it premature to consider specific metrics for a Star Ratings program, and another opposed the idea, believing that the proposed use of Star Ratings for pharmacy performance would not be meaningful to Medicare beneficiaries who judge pharmacy performance on a highly personalized basis. Other commenters strongly supported our proposal with one asking the agency to follow its traditional approach when first introducing Star Ratings and report the results on the display page. We received a comment that requested that any future pharmacy performance measures be developed in a way that directly ties to the Part D Star Ratings program.

Response: We appreciate the comments received and will consider them for any potential future development of measures based on pharmacy performance measure information. We note that we believe it is not premature to discuss potential Star Ratings as there would be a natural outgrowth to the development of standardized pharmacy measures. While we agree with the commenter that the selection of a pharmacy by a Medicare beneficiary is often a highly personalized choice, we believe that creating a rating system that leverages this plan-reported data could offer the beneficiaries additional information about the performance of pharmacies in the sponsors' pharmacy network.

We agree with the commenter that requested we follow the regulatory process for the introduction of new Star Ratings measures. CMS codified the methodology for the Part C and D Star Ratings program in the CY 2019 Medicare Part C and D Final Rule (83 FR 16725 through 83 FR 16731), published in April 2018, for performance periods beginning with 2019; that final rule lays out the methodology for the 2021 Star Ratings and beyond. CMS will continue to solicit feedback on new measure concepts as well as updated measures through the process described for changes in, and adoption of, payment and risk adjustment policies in section 1853(b) of the Act. We will also continue to provide advance notice regarding measures considered for implementation as future Star Ratings measures. As specified at § 422.164(c)(2)-(4), § 423.184(c)(2)-(4), § 422.164(d)(2), and § 423.184(d)(2), new measures and measures with substantive specification changes must remain on the display page for at least 2 years prior to becoming a Star Ratings measure. We appreciate the comment that we develop any future pharmacy performance measures in a way that can be directly tied to the Part D Star Ratings program.

Comment: A few commenters responded to our solicitation for feedback regarding the principles that Part D pharmacy performance measures should adhere to, including potential burden or hardship of performance measures on small, independent and/or rural pharmacies. Most comments suggested that smaller pharmacies be exempt entirely from all performance measures or subject to a modified approach. A commenter indicated that a voluntary set of measures, or a custom measurement set that is more applicable and feasible for smaller pharmacies to report (for example, patient counseling, medication therapy management) be used.

Response: We thank the commenters for their recommendations and will take them into consideration.

Comment: A commenter stated that pharmacies should have the ability to appeal results of their performance measures.

Response: We appreciate the comment regarding appeal rights; however, we did not propose to adopt any performance measures, and therefore did not propose an appeals procedure.

Comment: In response to our solicitation for comments on the proposed list of potential data elements there were two primary objections made by commenters. Some commenters opposed the use of retrospective data that could include success/failure thresholds, and average scores or statistics that may reveal sensitive information regarding contractual arrangements. There were no comments supportive of the proposed rule specifically on the data elements.

Response: We appreciate the comments. In the proposed rule, we recommend and encourage industry to continue, through a neutral third-party facilitator, creating and testing potential pharmacy performance measures based on industry consensus. If an industry-wide consensus is reached on a set of standardized measures it follows that part of the process of reaching consensus will be determining what should and should not be reported retrospectively, and what would and would not be deemed sensitive Start Printed Page 5957contractual information between a sponsor and its pharmacy network.

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

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

We proposed regulations for withdrawing or dismissing Part C organization determination and reconsideration requests and Part D coverage determination and redetermination requests. We also proposed regulations for withdrawing or dismissing Part C and Part D independent review entity (IRE) reconsiderations. We also proposed to apply these provisions to requests for integrated organization determinations and reconsiderations at §§ 422.631 and 422.633. The proposals specifically addressed under what circumstances it would be appropriate to dismiss a coverage request or appeal at the plan or IRE level. We also proposed rules for how a party may request to withdraw their coverage request or appeal at the plan or IRE level. A withdrawal of a request is when the party that initiated the request voluntarily decides that a decision on their request is no longer needed, and the party communicates that desire to the plan to stop consideration of the request for determination (or reconsideration). A dismissal of a request is when a plan decides to stop consideration of a request before issuing a decision. The effect of both a withdrawal and a dismissal is that the plan does not proceed with making a substantive decision on the merits of the coverage request.

Specifically, we proposed that:

  • In new §§ 422.568(g), 422.631(e), and 423.568(i), we proposed to permit a plan to dismiss a request for the initial plan level decision (that is, organization determination, integrated organization determination or coverage determination) when any of the following apply—

++ The individual or entity making the request is not permitted to request an organization determination or coverage determination.

++ The plan determines that the individual or entity making the request failed to make a valid request for an organization determination or coverage determination.

++ The enrollee dies while the request is pending and the enrollee's spouse or estate has no remaining financial interest in the case and no other individual or entity with a financial interest in the case wishes to pursue the organization determination or coverage determination; we explained in the proposed rule that we interpret having a financial interest in the case as having financial liability for the item(s) or service(s) underlying the coverage request.

++ The individual or entity who requested the review submits a timely written request for withdrawal of their request for an organization determination or coverage determination with the plan.

  • In §§ 422.570(g) and 423.570(f), we proposed to permit a plan to dismiss an expedited organization determination or coverage determination, consistent with the proposed requirements at §§ 422.568 and 423.568, respectively. Applicability of these procedures to expedited integrated coverage determinations was proposed at § 422.631(e).
  • In §§ 422.582(f), 422.633(h), and 423.582(e), we proposed to permit a plan to dismiss (either entirely or as to any stated issue) a request for the second plan level decision (that is, reconsideration, integrated reconsideration or redetermination) when any of the following apply —

++ The individual or entity making the request is not a proper party to the reconsideration, integrated reconsideration, or redetermination under the applicable regulation; we explained that this proposal would authorize dismissal when the individual or entity making the request is not permitted to request a reconsideration, integrated reconsideration, or redetermination.

++ When the plan determines the party failed to make a valid request for a reconsideration, an integrated reconsideration, or a redetermination that substantially complies with the applicable regulation for making a valid request for reconsideration or redetermination.

++ When the party fails to file the reconsideration, integrated reconsideration or redetermination request within the proper filing time frame in accordance with the applicable regulation.

++ When the enrollee dies while the reconsideration or redetermination is pending and the enrollee's spouse or estate has no remaining financial interest in the case and no other individual or entity with a financial interest in the case wishes to pursue the reconsideration or redetermination. We explained in the proposed rule that we interpret having a financial interest in the case as having financial liability for the item(s) or service(s) underlying the coverage request.

++ When the individual or entity submits a timely written request to withdraw their request for a reconsideration or redetermination.

  • At new § 422.584(g), we proposed to permit a plan to dismiss an expedited reconsideration using virtually identical language as for the proposed requirements at § 422.582. At new § 423.584(f), we proposed to permit a plan to dismiss an expedited redetermination by cross referencing § 423.582. Applicability of these procedures to expedited integrated coverage determinations was described in proposed § 422.633(h).
  • At new §§ 422.592(d) and 423.600(g), we proposed to permit the Part C and Part D IRE to dismiss a request when any of the following apply—

++ The individual or entity is not a proper party under § 422.578 in the case of a Part C reconsideration or is not permitted to request a reconsideration by the IRE under § 423.600(a) in the case of a Part D reconsideration.

++ The independent entity determines the party failed to make out a valid request for a reconsideration that substantially complies with the applicable regulation.

++ When the enrollee dies while the reconsideration request is pending and the enrollee's spouse or estate has no remaining financial interest in the case and no other individual or entity with a financial interest in the case wishes to pursue the reconsideration. We explained in the proposed rule that we interpret having a financial interest in the case as having financial liability for the item(s) or service(s) underlying the coverage.

++ When the individual or entity submits with the independent review entity a timely written request for a withdrawal of the reconsideration.

  • In §§ 422.568(h), 422.582(g), 422.592(e), 422.631(f), 422.633(i), 423.568(j), 423.582(f), and 423.600(h) we proposed that a written notice of the dismissal must be delivered to the parties (either mailed or otherwise transmitted) to inform them of the action; this would include the Start Printed Page 5958individual or entity who made the request. The notice must include certain information, as appropriate, including applicable appeal rights (that is, request to vacate dismissal, review of the dismissal).
  • In §§ 422.568(i), 422.582(h), 422.592(f), 422.631(g), 422.633(j), 423.568(k), 423.582(g), and 423.600(i), we proposed that a dismissal may be vacated by the entity that issued the dismissal (that is, MA organizations, applicable integrated plans, Part D plan sponsors, and the IRE) if good cause for doing so is established within 6 months of the date of the dismissal.
  • In §§ 422.568(j), 422.631(h), and 423.568(l), we proposed that the dismissal of the organization determination or coverage determination is binding unless it is modified or reversed by the MA organization, applicable integrated plan, or Part D plan sponsor, as applicable, upon reconsideration or vacated under the provisions we proposed for vacating dismissals.
  • At new §§ 422.582(i), 422.633(k), and 423.582(h), we proposed that the dismissal of the reconsideration or redetermination is binding unless the enrollee or other valid party requests review by the IRE or the dismissal is vacated under the applicable regulation.
  • At new §§ 422.592(g) and 423.600(j), we proposed that a dismissal by the IRE is binding and not subject to further review unless a party meets the amount in controversy threshold requirements necessary for the right to a review by an administrative law judge or attorney adjudicator and the party files a proper request for review with the Office of Medicare Hearings and Appeals as outlined in §§ 422.600, 422.602, and 423.600(j), as applicable.
  • At new §§ 422.568(k), 422.592(h), 422.631(i), 422.633(g), 423.568(m), and 423.600(f), we proposed that a party that makes a request may withdraw its request at any time before the decision is issued by filing a written request for withdrawal. Each proposed regulation paragraph identifies the entity (that is, the MA organization, the applicable integrated plan, or the Part D plan) with which the request for withdrawal must be filed.

We also proposed a change that applies to Part C only, given that the current rules do not include a process for an enrollee or other party to request IRE review of an MA organization's reconsideration (because review by the IRE of an adverse reconsidered determination is automatic). Specifically, we proposed to add a new paragraph (i) (mistakenly identified as a new paragraph (h) in the preamble of the February 2020 proposed rule) to § 422.590 that would give the enrollee or another party to the reconsideration the right to request review by the independent entity of an MA organization's dismissal of a request for a reconsideration in accordance with §§ 422.582(f) and 422.584(g). In new paragraph (i) of § 422.590 we proposed that a request for review of such a dismissal must be filed in writing with the independent entity within 60 calendar days from the date of the MA organization's dismissal notice. Under existing rules at § 422.590(a)(2), (b)(2), (c)(2), (d), (e)(5), and (g),[67] if the MA organization makes a reconsidered determination that affirms, in whole or in part, its adverse organization determination or fails to meet the timeframe for making a reconsidered determination, it must prepare a written explanation and send the case file to the independent entity contracted by CMS as expeditiously as the enrollee's health condition requires, but no later than 30 calendar days from the date it receives the request for a reconsideration (or no later than the expiration of an applicable extension). These regulations that require a case to be automatically sent to the independent entity do not apply in the case of a dismissal of a request for a reconsideration because the MA organization is not making a substantive decision on the merits of the request.

As a corollary to this proposal, we also proposed to revise paragraph (a) of § 422.592 to add that, consistent with proposed § 422.590(i), the independent entity is responsible for reviewing MA organization dismissals of reconsideration requests. As noted earlier in this section of the preamble, this new paragraph (i) to § 422.590 was mistakenly identified as new paragraph (h) in the preamble of the February 2020 proposed rule; this incorrect citation at § 422.592(a) has been corrected in this final rule to correctly refer to § 422.590(i). Further, we proposed to add a new paragraph (i) at § 422.592 to state that the independent entity's decision regarding an MA organization's dismissal, including a decision to deny a request for review of a dismissal, is binding and not subject to further review. In this final rule, we add a reference to § 422.590 at § 422.592(i) to state if the independent entity determines that the MA organization's dismissal was in error, the independent entity vacates the dismissal and remands the case to the plan for reconsideration consistent with § 422.590.

We also proposed a change applying to Part D only, given that the current rules do not include a process for enrollees to request IRE review of plan sponsor dismissals of redetermination requests. We proposed to add a new paragraph (f) at § 423.582 to establish in regulation the right of enrollees and other parties to request review by the independent entity of the Part D plan sponsor's dismissal of a request for a redetermination. As a corollary to this proposal, we also proposed to add paragraph (j) at § 423.590 to state that, consistent with proposed § 423.584(f), an enrollee can request review of a Part D plan sponsor's dismissal of a redetermination request by the independent entity. Finally, we proposed to add a new paragraph (k) at § 423.600 to state that if the independent entity determines that the Part D plan sponsor's dismissal was in error, the independent entity would reverse the dismissal and remand the case to the plan for a redetermination on the merits of the case.

We received the following comments on the proposals related to dismissal and withdrawal of Medicare Part C organization determination and reconsideration and Part D coverage determination and redetermination requests.

Comment: Numerous commenters opposed the proposed language that required a party to submit a written request in order to withdraw requests for organization determinations, coverage determinations, reconsiderations, and redeterminations. Commenters noted that this language indicated that verbal withdrawal requests would not be accepted. Commenters referenced CMS guidance that states, in the “Parts C & D Enrollee Grievances, Organization/Coverage Determinations, and Appeals Guidance” (Effective January 2020), at section 40.14, that a plan may accept verbal requests to withdraw a request for an organization or coverage determination. Additionally, commenters noted the same guidance states, in section 50.4, that a plan may also accept verbal requests to withdraw a request for a reconsideration, provided that the plan mails a written confirmation of the withdrawal to the party within 3 calendar days from the date of the verbal request. Commenters recommended removing the requirement for a written request to withdraw appeal requests in order to maintain consistency with the sub-regulatory guidance and current industry practice, and to reduce burden Start Printed Page 5959on enrollees and plans. Commenters supported the current practice of requiring a written confirmation be mailed to the party within three calendar days from the date of the verbal request.

Response: CMS thanks the commenters for their perspective and feedback. The proposed provisions were intended to generally model the current provisions regarding dismissal and withdrawal of requests for appeal codified in 42 CFR part 405, subpart I (see §§ 405.952 and 405.972) because under § 422.562(d)(1), unless subpart M provides otherwise, and subject to specific exclusions set forth in paragraph (d)(2), the regulations in part 405 (concerning the administrative review and hearing processes and representation of parties under titles II and XVIII of the Act) apply to MA cases to the extent they are appropriate. Part 405, subpart I states that a party may withdraw a request by filing a written and signed request for withdrawal (see, §§ 405.952 and 405.972). Accordingly, we proposed that a request for withdrawal be made in writing.

However, the primary goal of codifying dismissal and withdrawal processes in regulation is to codify what we believe to be the current practices related to dismissal and withdrawal of Part C organization determination and reconsideration requests and Part D coverage determination and reconsideration requests, including those applicable to the Part C and Part D IRE. As commenters pointed out, current guidance permits plans to accept a request for withdrawal that has been made verbally. Accordingly, in response to these comments, we are finalizing the regulation changes with revisions to permit verbal requests to withdraw requests for organization determinations, coverage determinations, reconsiderations, and redeterminations are permitted under this final rule.

In response to the comments asking that verbal dismissal and withdrawal requests not be prohibited by regulation, we are finalizing the proposed changes, with modifications, to permit withdrawal requests to be made verbally. Specifically, the word “written” is not being finalized in the following provisions in this final rule: §§ 422.568(g)(4), 422.568(k), 422.582(f)(5), 422.592(d)(4), 422.592(h), 422.631(e)(4), 422.631(i), 422.633(g), 422.633(h)(5), 423.568(i)(4), 423.568(m), 423.582(e)(5), 423.600(f), and 423.600(g)(5). Additionally, in this final rule we are finalizing revisions to §§ 422.582(e) and 423.582(d) to remove the word “written” from the current regulation text describing a withdrawal of a request for a reconsideration. While this is a variance from the fee-for-service rules at 42 CFR part 405, subpart I (see §§ 405.952 and 405.972) upon which these final rules are generally modeled, this approach is consistent with existing Parts C and D guidance on these processes which allow for verbal withdrawal requests for organization determinations, coverage determinations, reconsiderations, and redeterminations.

Comment: We received a number of comments on the proposals to require a plan to dismiss a request for organization determinations, coverage determinations, reconsiderations, and redeterminations when the individual or entity who requested the review submits a timely written request for withdrawal. Specifically, commenters were concerned about the requirements in §§ 422.568(h), 422.582(g), 422.592(e), 422.631(f), 422.633(i), 423.568(j), 423.582(f), and 423.600(h) that would require plans to provide written notice to the parties of a dismissal, including instances where a party asks to withdraw their request for an organization determination, coverage determination or appeal. Commenters also noted that by considering a timely request for withdrawal as a circumstance under which a plan may dismiss a request, CMS is causing confusion between and conflation of withdrawals and dismissals. Commenters noted that the withdrawal process is different from the dismissal process and recommended that CMS exclude references to withdrawals in the list of circumstances under which a plan or IRE may dismiss a request for an organization determination, coverage determination or appeal under proposed §§ 422.568(g), 422.582(f), 422.592(d), 423.568(i), 423.582(e) and 423.600(g).

Response: CMS thanks the commenters for their perspective and feedback. The proposed provisions were intended to generally model the current provisions regarding dismissal and withdrawal of requests for appeal codified in part 405, subpart I (see §§ 405.952 and 405.972) because under § 422.562(d)(1), unless subpart M provides otherwise and subject to specific exclusions set forth in paragraph (d)(2), the regulations in part 405 (concerning the administrative review and hearing processes and representation of parties under titles II and XVIII of the Act) apply to MA cases to the extent they are appropriate.

The reasoning behind adopting the proposed provisions at §§ 422.568(h), 422.582(g), 422.592(e), 422.631(f), 422.633(i), 423.568(j), 423.582(f), and 423.600(h) related to providing written notice to the parties of a dismissal, which are generally modeled on §§ 405.952 and 405.972, is to preserve the rights of other proper parties to the decision if one party submits a withdrawal request; other parties may wish to pursue the appeal. For example, a physician may file an organization determination request on behalf of the enrollee and then later decide to withdraw the request because the physician better understands the reason for denial after further research. The plan would then dismiss the physician's request and issue a dismissal notice to the physician and enrollee. The enrollee is still a party to the request for an organization determination and may have an interest in having that organization determination process continue so that the plan issues a complete decision in accordance with §§ 422.566 and 422.568 despite the physician's withdrawal of the physician's request. Under our proposed provisions, the enrollee could then file a request to review the dismissal at the next level and explain that he or she wants a decision to be reached and issued. CMS regulations do not require all parties to file a request for a determination or reconsideration in order for them to remain parties to the appeal; issuing a notice of dismissal to all parties when the dismissal is based on the withdrawal request from the party that initially filed a request acknowledges that involvement.

Commenters also stated that they believe the requirement to issue a notice of dismissal when a party requests a withdrawal may cause confusion from both a reporting standpoint and a notification standpoint. CMS does not believe this proposal will cause confusion. For reporting, purposes, withdrawals and dismissals will remain distinct categories. Further, a notice of dismissal must contain the reason for dismissal; accordingly, the reason for dismissal in such cases would be the withdrawal of the request for the organization determination, coverage determination, reconsideration, or redetermination by a proper party to the request. Further operational guidance will be issued by CMS, as necessary.

Comment: Several commenters noted that the circumstances for dismissal of a request for an organization determination, coverage determination, reconsideration, or redetermination listed in §§ 422.568(g), 422.570(g), 422.582(f), 422.584(g), 422.592(d), 422.631(e), 422.633(h), 423.568(i), 423.570(f), 423.582(e), 423.548(f), and 423.600(g) are permissive rather than mandatory, in that the word “may” is Start Printed Page 5960used. The commenters noted that all of the circumstances listed in the regulation imply the party requesting the reconsideration is either not a proper party or no longer has a financial interest in pursuing the reconsideration. The commenters recommend that CMS make the dismissal due to these circumstances mandatory and not permissive.

Response: It was not CMS' intent that the proposed regulatory language related to dismissals for these reasons be permissive. In this final rule, we are finalizing the provisions at §§ 422.568(g), 422.570(g), 422.582(f), 422.584(g), 422.592(d), 422.631(e), 422.633(h), 423.568(i), 423.570(f), 423.582(e), 423.584(f), and 423.600(g) without the word “may” to be clear on this point and to better align these provisions with §§ 405.952(b) and 405.972(b).

Comment: Several commenters noted that, under the proposed provision, written notice of a dismissal must be delivered to the parties (either mailed or otherwise transmitted) to inform them of the action. The commenters requested further guidance from CMS regarding applicable timeframes that would apply to this notice as well as the template or information that must be included.

Response: With respect to the commenter's request for guidance regarding the timeframes applicable to a notice of dismissal, the existing regulatory timeframes for issuing a decision notice when a substantive decision is made on a request will also apply if a request is dismissed under these final rules. In other words, a decision to dismiss a request is a determination, albeit a procedural one, on the type of request that was made and is subject to the decision notice timeframes at §§ 422.568(b) and (c), 422.572(a), 422.590(a), (b), (c), and (e), 422.631(d)(2), 422.633(f), 423.568(b) and (c), 423.590(a), (b), and (d) and 423.600(d). As an example, if an enrollee requests a standard reconsideration for a medical item or service pursuant to § 422.582 and the plan dismisses the request under the provisions at § 422.582(f) set forth in this final rule, the enrollee must be notified of the dismissal no later than 30 calendar days from the date the plan receives the request for a standard reconsideration under the provisions at § 422.590(a). A model Notice of Dismissal of Appeal Request can be found in section 50.9 of the Parts C & D Enrollee Grievances, Organization/Coverage Determinations, and Appeals Guidance (effective January 1, 2020). As necessary, additional operational guidance related to dismissal procedures will be issued by CMS. We note that the regulatory provisions we are finalizing regarding dismissals include specific provisions addressing the content of the notice of the dismissal (for example, §§ 422.568(h), 422.582(g), 422.592(e), 422.631(f), 422.633(i), 423.568(j), 423.582(f), and 423.600(h)); therefore, the current regulations governing the content of notices of substantive decisions on organization determinations, reconsiderations, integrated organization determinations, integrated reconsiderations, coverage determinations, and redeterminations and reconsiderations do not apply to dismissal notices. We also note that the proposed provisions addressing the content of the notice of dismissal for integrated organization determinations at § 422.631(f) were inadvertently incomplete. In the final rule we have revised the proposed text of § 422.631(f) to align with the analogous provisions for non-integrated organization determinations at § 422.568(h).

Comment: A commenter noted that CMS proposed that an MA plan may properly dismiss an organization determination if “the individual or entity making the request is not permitted to request an organization determination under §  422.566(c).” The commenter believes the referenced regulation, §  422.566(c), is too vague and this authority to dismiss a request on this basis will lead to beneficiaries being denied fair organization determinations. Specifically, the commenter noted that hospitals are often told by MA plans that a rehabilitation physician seeking to admit a patient to an inpatient rehabilitation hospital/unit cannot participate in organization determinations with MA plans. The commenter believes that the rehabilitation physicians that are precluded from participating are the same rehabilitation physicians required to perform the de facto prior authorization process required by Medicare. The commenter asked CMS to consider clarifying §  422.566(c) to allow any physician familiar with the patient's care needs, like a rehabilitation physician, to request an organization determination.

Response: CMS believes that the existing provisions at §  422.566(c) are sufficiently clear regarding who may request an organization determination, which include any provider that furnishes, or intends to furnish, services to the enrollee. As such, under the commenter's example, if a rehabilitation physician furnished or intended to furnish a service to an enrollee, the physician is permitted to request an organization determination pursuant to this regulation under §§ 422.568 and 422.570. Further, § 422.578 provides that a physician who is providing treatment to an enrollee may, upon providing notice to the enrollee, request a standard reconsideration of a pre-service request for reconsideration on the enrollee's behalf as described in § 422.582; a physician acting on behalf of an enrollee may also request an expedited reconsideration as described in § 422.584.

Comment: Several commenters requested that CMS structure the Part C and Part D regulatory text the same way where possible, for clarity. A commenter noted by example that in § 422.584 (Expediting certain reconsiderations) CMS repeats the rules from a different section while § 423.584 (Expediting certain redeterminations) cross refers to them.

Response: CMS strives for clarity in the structure of the Part C and Part D regulatory text. We are finalizing the amendment to § 422.584 using a cross reference to rules in § 422.582 as opposed to repeating regulation text related to dismissals that is also applicable to the dismissal of expedited requests. With this change, the structure of the Part C and Part D regulation text will be in parity.

Comment: Several commenters expressed concern that the proposed regulations allow dismissal or withdrawal of requests that are never valid in the first place. The commenters believe that requests that are invalid to begin with cannot be dismissed or withdrawn. The commenters believe CMS should not continue with the plan allowances to dismiss a case that should not have been started in the first place.

Response: CMS recognizes that there may be invalid requests. However, whether a request is initially valid or not is a determination a plan makes upon receiving and reviewing a request for an organization determination. When a plan receives a request for an organization determination that it believes to be invalid, the plan refuses to approve, provide or pay for the requested services. Such refusal is an action that is considered an organization determination under § 422.566(b). Parties to an organization determination may request that the determination be reviewed under § 422.578 and § 422.592. The scope of the 42 CFR part 422, subpart M regulations is, in part, to set forth the appeal process for MA enrollees with respect to organization determinations. Removing appeal rights from enrollees who receive an organization determination is antithetical to the purpose and scope of Start Printed Page 5961these regulations. The very purpose of these provisions is to provide a process and procedure (that is, dismissal) for the plan to dispense with invalid cases by issuing a procedural decision while also preserving an enrollee's right of review to a plan decision.

Comment: Two commenters responded to our request for comments regarding whether the proposed rules would create inconsistencies with any state-specific Medicaid procedures pertaining to dismissals or withdrawals. The commenter noted that Medicare determination and coverage processes may be different than Medicaid, and therefore, if medical care or services are not covered by Medicare, but are covered by Medicaid, withdrawing the appeal is an effective way to minimize the administrative burden of appeals in Medicare.

Response: CMS thanks the commenters for their feedback. We agree that for non-integrated plans that operate separate Medicare and Medicaid appeals processes, if an appeal concerns an item or service that is only coverable by Medicaid, withdrawing a Medicare appeal can reduce administrative burden. However, for applicable integrated plans that will follow the unified process established in §§ 422.629-422.634, one single coverage determination and appeals process applies to all requests for Medicare and Medicaid items and services covered by the plan, making withdrawal or dismissal of an appeal of a coverage denial inappropriate when there may be Medicaid coverage available from the applicable integrated plan. Applicable integrated plans must take into account both Medicare and Medicaid coverage available under the plan when making an integrated organization determination or integrated reconsideration.

Comment: Several commenters noted that proposed § 422.590(i) states “the enrollee or other party has the right to request review of the dismissal by the independent entity.” The commenters suggested the language be clarified to reflect it is the enrollee or other “proper party under § 422.578” so as to be consistent with § 422.592, which allows dismissals of requests for reconsideration if the individual requesting the reconsideration is not a proper party.

Response: We are finalizing the amendment to § 422.590(i) and § 423.590(j) with revised text to clarify that only proper parties under § 422.578 and § 423.580, respectively, have the right to request review of the dismissal by the independent entity.

Comment: Several commenters noted that CMS proposed to permit a plan to dismiss a request for a coverage determination in four specifically listed situations (that is, when any of the following apply: The individual or entity making the request is not permitted to request an organization determination or coverage determination, the plan determines that the individual or entity making the request failed to make a valid request for an organization determination or coverage determination, the enrollee dies while the request is pending and the enrollee's spouse or estate has no remaining financial interest in the case and no other individual or entity with a financial interest in the case wishes to pursue the organization determination or c