Medicare Program; Proposed Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs for Contract Year 2012 and Other Proposed Changes
Federal RegisterNov 22, 2010
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 417, 422, and 423
[CMS-4144-P]
RIN 0938-AQ00
Medicare Program; Proposed Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs for Contract Year 2012 and Other Proposed Changes
AGENCY:
Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION:
Proposed rule.
SUMMARY:
We are proposing revisions to the Medicare Advantage (MA) program (Part C) and Prescription Drug Benefit Program (Part D) to implement provisions specified in the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively referred to as the Affordable Care Act) (ACA) and make other changes to the regulations based on our continued experience in the administration of the Part C and D programs. These latter proposed revisions would clarify various program participation requirements; make changes to strengthen beneficiary protections; strengthen our ability to identify strong applicants for Parts C and D program participation and remove consistently poor performers; and make other clarifications and technical changes.
DATES:
To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. Eastern Standard Time (EST) on January 21, 2011.
ADDRESSES:
In commenting, please refer to file code CMS-4144-P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission. You may submit comments in one of four ways (no duplicates, please):
1.
Electronically.
You may submit electronic comments on specific issues in this regulation to
http://www.cms.hhs.gov/eRulemaking.
Click on the link “Submit electronic comments on CMS regulations with an open comment period.” (Attachments should be in Microsoft Word, WordPerfect, or Excel; however, we prefer Microsoft Word.)
2.
By regular mail.
You may mail written comments (one original and two copies) to the following address only: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-4144-P, P.O. Box 8013, Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received before the close of the comment period.
3.
By express or overnight mail.
You may send written comments (one original and two copies) to the following address only: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-4144-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4.
By hand or courier.
If you prefer, you may deliver (by hand or courier) your written comments (one original and two copies) before the close of the comment period to one of the following addresses. If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786-7195 in advance to schedule your arrival with one of our staff members. Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201; or 7500 Security Boulevard, Baltimore, MD 21244-1850.
(Because access to the interior of the HHH Building is not readily available to persons without Federal Government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period.
Submission of comments on paperwork requirements.
You may submit comments on this document's paperwork requirements by mailing your comments to the addresses provided at the end of the “Collection of Information Requirements” section in this document.
For information on viewing public comments, see the beginning of the
SUPPLEMENTARY INFORMATION
section.
FOR FURTHER INFORMATION CONTACT:
Vanessa Duran, (410) 786-8697 and Sabrina Ahmed, (410) 786-7499, General information.
Christopher McClintick, (410) 786-4682, Part C issues.
Deborah Larwood, (410) 786-9500, Part D issues.
Kristy Nishimoto, (410) 786-8517, Part C and D enrollment and appeals issues.
Deondra Moseley, (410) 786-4577, Part C payment issues.
SUPPLEMENTARY INFORMATION:
Submitting Comments:
We welcome comments from the public on all issues set forth in this rule to assist us in fully considering issues and developing policies. You can assist us by referencing the file code CMS-4144-P.
Inspection of Public Comments:
All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received at
http://www.cms.hhs.gov/eRulemaking.
Click on the link “Electronic Comments on CMS Regulations” on that Web site to view public comments.
Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1-800-743-3951.
Table of Contents
I. Background
A. Overview of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003
B. History and Overview
II. Provisions of the Proposed Regulation
A. Overview of the Proposed Changes
B. Changes To Implement the Provisions of the Affordable Care Act of 2010
1. Cost Sharing for Specified Services at Original Medicare Levels (§ 417.101 and § 422.100)
2. Simplification of Beneficiary Election Periods (§ 422.62, § 422.68, § 423.38, and § 423.40)
3. Special Needs Plan (SNP) Provisions (§ 422.2, § 422.4, § 422.101, § 422.107, and § 422.152)
a. Adding a Definition of Fully Integrated Dual Eligible SNP (§ 422.2)
b. Extending SNP Authority
c. Dual-Eligible SNP Contracts With State Medicaid Agencies (§ 422.107)
d. Approval of Special Needs Plans by the National Committee for Quality Assurance (§ 422.4, § 422.101, and § 422.152)
4. Section 1876 Cost Contractor Competition Requirements (§ 417.402)
5. Making Senior Housing Facility Demonstration Plans Permanent (§ 422.2 and § 422.53)
6. Authority To Deny Bids (§ 422.254, § 422.256, § 423.265, and § 423.272)
7. Determination of Part D Low-Income Benchmark Premium (§ 423.780)
8. Voluntary De Minimis Policy for Subsidy Eligible Individuals (§ 423.34 and § 423.780)
a. Reassigning LIS Individuals (§ 423.34)
b. Enrollment of LIS-Eligible Individuals (§ 423.34)
c. Premium Subsidy (§ 423.780)
9. Increase in Part D Premiums Due to the Income Related Monthly Adjustment Amount (D—IRMAA) (§ 423.44, § 423.286, and § 423.293)
a. Rules Regarding Premiums (§ 423.286)
b. Collection of Monthly Beneficiary Premium (§ 423.293)
c. Involuntary Disenrollment by CMS (§ 423.44)
10. Elimination of Medicare Part D Cost-Sharing for Individuals Receiving Home and Community-Based Services (§ 423.772 and § 423.782)
11. Appropriate Dispensing of Prescription Drugs in Long-Term Care Facilities Under PDPs and MA-PD Plans (§ 423.154)
12. Complaint System for Medicare Advantage Organizations and PDPs (§ 422.504 and § 423.505)
13. Uniform Exceptions and Appeals Process for Prescription Drug Plans and MA-PD Plans (§ 423.128 and § 423.562)
14. Including Costs Incurred by AIDS Drug Assistance Programs and the Indian Health Service Toward the Annual Part D Out-of-Pocket Threshold (§ 423.100 and § 423.464)
15. Cost Sharing for Medicare-Covered Preventive Services (§ 417.101 and § 422.100)
16. Elimination of the Stabilization Fund (§ 422.458)
17. Improvements to Medication Therapy Management Programs (§ 423.153)
18. Changes To Close the Part D Coverage Gap (§ 423.104 and § 423.884)
19. Payments to Medicare Advantage Organizations (§ 422.308)
a. Authority To Apply Frailty Adjustment Under PACE Payment Rules for Certain Specialized MA Plans for Special Needs Individuals (§ 422.308)
b. Application of Coding Adjustment (§ 422.308)
c. Improvements to Risk Adjustment for Special Needs Individuals With Chronic Health Conditions (§ 422.308)
20. Medicare Advantage Benchmark, Quality Bonus Payments, and Rebate (§ 422.252, § 422.258, and § 422.266)
a. Terminology (§ 422.252)
b. Calculation of Benchmarks (§ 422.258)
c. Increases to the Applicable Percentage for Quality (§ 422.258(d))
d. Beneficiary Rebates (§ 422.266)
21. Quality Bonus Payment and Rebate Retention Appeals (§ 422.260)
C. Clarify Various Program Participation Requirements
1. Clarify Payment Rules for Non-Contract Providers (§ 422.214)
2. Pharmacist Definition (§ 423.4)
3. Prohibition on Part C and D Program Participation by Organizations Whose Owners, Directors, or Management Employees Served in a Similar Capacity With Another Organization That Terminated Its Medicare Contract Within the Previous 2 Years (§ 422.506, § 422.508, § 422.512, § 423.508, § 423.507, and § 423.510)
4. Timely Transfer of Data and Files When CMS Terminates a Contract With a Part D Sponsor (§ 423.509)
5. Review of Medical Necessity Decisions by a Physician or Other Health Care Professional and the Employment of a Medical Director (§ 422.562, § 422.566, § 423.562, and § 423.566)
6. Compliance Officer Training (§ 422.503 and § 423.504)
7. Removing Quality Improvement Projects and Chronic Care Improvement Programs From CMS Deeming Process (§ 422.156)
8. Definitions of Employment-Based Retiree Health Coverage and Group Health Plan for MA Employer/Union-Only Group Waiver Plans (§ 422.106)
D. Strengthening Beneficiary Protections
1. Agent and Broker Training Requirements (§ 422.2274 and § 423.2274)
a. CMS-Approved or Endorsed Agent and Broker Training and Testing (§ 422.2274 and § 423.2274)
b. Extending Annual Training Requirements to All Agents and Brokers (§ 422.2274 and § 423.2274)
2. Call Center and Internet Web Site Requirements (§ 422.111 and § 423.128)
a. Extension of Customer Call Center and Internet Web site Requirements to MA Organizations (§ 422.111)
b. Call Center Interpreter Requirements (§ 422.111 and § 423.128)
3. Require Plan Sponsors To Contact Beneficiaries To Explain Enrollment by an Unqualified Agent/Broker (§ 422.2272 and § 423.2272)
4. Customized Enrollee Data (§ 422.111 and § 423.128)
5. Extending the Mandatory Maximum Out-of-Pocket (MOOP) Amount Requirements to Regional PPOs (§ 422.100 and § 422.101)
6. Prohibition on Use of Tiered Cost Sharing by MA Organizations (§ 422.262)
7. Delivery of Adverse Coverage Determinations (§ 423.568)
8. Extension of Grace Period for Good Cause and Reinstatement (§ 422.74 and § 423.44)
9. Translated Marketing Materials (§ 422.2264 and § 423.2264)
E. Strengthening Our Ability To Distinguish for Approval Stronger Applicants for Part C and Part D Program Participation and To Remove Consistently Poor Performers
1. Expand Network Adequacy Requirements to Additional MA Plan Types (§ 422.112)
2. Maintaining a Fiscally Sound Operation (§ 422.2, § 422.504, § 423.4, and § 423.505)
3. Release of Part C and Part D Payment Data
4. Required Use of Electronic Transaction Standards for Multi-Ingredient Drug Compounds; Payment for Multi-Ingredient Drug Compounds (§ 423.120)
5. Denial of Applications Submitted by Part C and D Sponsors With Less Than 14 Months Experience Operating Their Medicare Contracts (§ 422.502 and § 423.503)
F. Other Clarifications and Technical Changes
1. Clarification of the Expiration of the Authority To Waive the State Licensure Requirement for Provider-Sponsored Organizations (§ 422.4)
2. Cost Plan Enrollment Mechanisms (§ 417.430)
3. Fast-Track Appeals of Service Terminations to Independent Review Entities (IREs) (§ 422.626)
4. Part D Transition Requirements (§ 423.120)
5. Revision to Limitation on Charges to Enrollees for Emergency Department Services (§ 422.113)
6. Clarify Language Related to Submission of a Valid Application (§ 422.502 and § 423.503)
7. Modifying the Definition of Dispensing Fees (§ 423.100)
III. Collection of Information Requirements
A. ICRs Regarding Cost Sharing for Specified Services at Original Medicare Levels (§ 417.101 and § 422.100)
B. ICRs Regarding SNP Provisions (§ 422.101, § 422.107, and § 422.152)
1. Dual-Eligible SNP Contracts With State Medicaid Agencies (§ 422.107)
2. ICRs Regarding NCQA Approval of SNPs (§ 422.101 and § 422.152)
C. ICRs Regarding Voluntary De Minimis Policy for Subsidy Eligible Individuals (§ 423.34 and § 423.780)
D. ICRs Regarding Increase in Part D Premiums Due to the Income Related Monthly Adjustment Amount (D—IRMAA) (§ 423.44)
E. ICRs Regarding Elimination of Medicare Part D Cost Sharing for Individuals Receiving Home and Community-Based Services (§ 423.772 and § 423.782)
F. ICRs Regarding Appropriate Dispensing of Prescription Drugs in Long-Term Care Facilities Under PDPs and MA-PD plans (§ 423.154) and Dispensing Fees (§ 423.100)
G. ICRs Regarding Complaint System for Medicare Advantage Organizations and PDPs (§ 422.504 and § 423.505)
H. ICRs Regarding Uniform Exceptions and Appeals Process for Prescription Drug Plans and MA-PD Plans (§ 423.128(b)(7)(i), § 423.128(d), and § 423.562(a)(3))
I. ICRs Regarding Including Costs Incurred by AIDS Drug Assistance Programs and the Indian Health Service Toward the Annual Part D Out-of-Pocket Threshold (§ 423.100 and § 423.464)
J. ICRs Regarding Improvements to Medication Therapy Management Programs (§ 423.153(vii))
K. ICRs Regarding Changes To Close the Part D Coverage Gap (§ 423.104 and § 423.884)
L. ICRs Regarding Medicare Advantage Benchmark, Quality Bonus Payments, and Rebate (§ 422.252, § 422.258 and § 422.266)
M. ICRs Regarding Quality Bonus Appeals (§ 422.260)
N. ICRs Regarding Timely Transfer of Data and Files When CMS Terminates a
Contract With a Part D Sponsor (§ 423.509)
O. ICRs Regarding Compliance Officer Training (§ 422.503 and § 423.504)
P. ICRs Regarding Agent and Broker Training Requirements (§ 422.2274 and § 423.2274)
Q. ICRs Regarding Call Center and Internet Web Site Requirements (§ 422.111 and § 423.128)
R. ICRs Regarding Requiring Plan Sponsors To Contact Beneficiaries To Explain Enrollment by an Unqualified Agent/Broker (§ 422.2272 and § 423.2272)
S. ICRs Regarding Customized Enrollee Data (§ 422.111 and § 423.128)
T. ICRs Regarding Extending the Mandatory Maximum Out-of-Pocket (MOOP) Amount Requirements to Regional PPOs (§ 422.100(f) and § 422.101(d))
U. ICRs Regarding Prohibition on Use of Tiered Cost Sharing by MA Organizations (§ 422.100 and § 422.262)
V. ICRs Regarding Translated Marketing Materials (§ 422.2264 and § 423.2264)
W. ICRs Regarding Expanding Network Adequacy Requirements to Additional MA Plan Types (§ 422.112)
X. ICRs Regarding Maintaining a Fiscally Sound Operation (§ 422.2, § 422.504, § 423.4, and § 423.505)
Y. ICRs Regarding Release of Part C and Part D Payment Data
Z. ICRs Regarding Revision to Limitation on Charges to Enrollees for Emergency Department Services (§ 422.113)
IV. Response to Comments
V. Regulatory Impact Analysis
A. Overall Impact
B. Costs, Savings, and Anticipated Effects Associated With This Proposed Rule
1. Cost Sharing for Specified Services at Original Medicare Levels (§ 417.101 and § 422.100)
2. Approval of Special Needs Plans (SNPs) by National Committee for Quality Assurance (NCQA) (§ 422.4, § 422.101, and § 422.152)
3. Determination of Part D Low-Income Benchmark Premium (§ 423.780)
4. Voluntary De Minimis Policy for Subsidy Eligible Individuals (§ 423.34 and § 423.780)
5. Increase in Part D Premiums Due to the Income-Related Monthly Adjustment Amount (D—IRMAA) (§ 423.44)
6. Elimination of Medicare Part D Cost Sharing for Individuals Receiving Home and Community-Based Services (§ 423.772 and § 423.782)
7. Appropriate Dispensing of Prescription Drugs in Long-Term Care Facilities Under PDPs and MA-PD Plans (§ 423.154) and Dispensing Fees (§ 423.100)
8. Complaint System for Medicare Advantage Organizations and PDPs (§ 422.504 and § 423.505)
9. Uniform Exceptions and Appeals Process for Prescription Drug Plans and MA-PD Plans (§ 423.128 and § 423.562)
10. Including Costs Incurred by the AIDS Drug Assistance Program (ADAP) and the Indian Health Service (IHS) Toward the Annual Part D Out-of-Pocket Threshold (§ 423.100 and § 423.464)
11. Cost Sharing for Medicare Covered Preventive Services (§ 417.101 and § 422.100)
12. Elimination of the Stabilization Fund (§ 422.458)
13. Improvements to Medication Therapy Management Programs (§ 423.153)
14. Changes To Close the Part D Coverage Gap (§ 423.104 and § 423.884)
15. Medicare Advantage Benchmark, Quality Bonus Payments, and Rebate and Application of Coding Adjustment (§ 422.252, § 422.258, § 422.266, and § 422.308)
16. Quality Bonus Appeals (§ 422.260)
17. Timely Transfer of Data and Files When CMS Terminates a Contract With a Part D Sponsor (§ 423.509)
18. Review of Medical Necessity Decisions by a Physician or Other Health Care Professional and the Employment of a Medical Director (§ 422.562, § 422.566, § 423.562, and § 423.566)
19. Compliance Officer Training (§ 422.503 and § 423.504)
20. Agent and Broker Training Requirements (§ 422.2274 and § 423.2274)
21. Call Center Interpreter Requirements (§ 422.111 and § 423.128)
22. Customized Enrollee Data (§ 422.111 and § 423.128)
23. Extending the Mandatory Maximum Out-of-Pocket (MOOP) Amount Requirements to Regional PPOs (§ 422.100 and § 422.101)
24. Translated Marketing Materials (§ 422.2264 and § 423.2264)
C. Expected Benefits
1. Cost Sharing for Specified Services at Original Medicare Levels (§ 417.101 and 422.100)
2. Determination of Part D Low-Income Benchmark Premium (§ 423.780)
3. Voluntary De Minimis Policy for Subsidy Eligible Individuals (§ 423.34 and § 423.780)
4. Increase in Part D Premiums Due to the Income Related Monthly Adjustment Amount (D—IRMAA) (§ 423.44)
5. Elimination of Medicare Part D Cost Sharing for Individuals Receiving Home and Community-Based Services (§ 423.772 and § 423.782)
6. Appropriate Dispensing of Prescription Drugs in Long-Term Care Facilities Under PDPs and MA-PD Plans (§ 423.154) and Dispensing Fees (§ 423.100)
7. Complaint System for Medicare Advantage Organizations and PDPs (§ 422.504 and § 423.505)
8. Uniform Exceptions and Appeals Process for Prescription Drug Plans and MA-PD Plans (§ 423.128 and § 423.562)
9. Including Costs Incurred by the AIDS Drug Assistance Program (ADAP) and the Indian Health Services (IHS) Toward the Annual Part D Out-of-Pocket Threshold (§ 423.100 and § 423.464)
10. Cost Sharing for Medicare Covered Preventive Service (§ 417.101 and § 422.100)
11. Elimination of the Stabilization Fund (§ 422.458)
12. Improvements to Medication Therapy Management Programs (§ 423.153)
13. Changes to Close the Part D Coverage Gap (§ 423.104 and § 423.884)
14. Medicare Advantage Benchmark, Quality Bonus Payments, and Rebate and Application of Coding Adjustment (§ 422.252, § 422.258 and § 422.266, and § 422.308)
15. Quality Bonus Appeals (§ 422.260)
16. Timely Transfer of Data and Files When CMS Terminates a Contract With a Part D Sponsor (§ 423.509)
17. Review of Medical Necessity Decisions by a Physician or Other Health Care Professional and the Employment of a Medical Director (§ 422.562, § 422.566, § 423.562, and § 423.566)
18. Compliance Officer Training (§ 422.503 and § 423.503)
19. Agent and Broker Training Requirements (§ 422.2274 and § 423.2274)
20. Call Center Interpreter Requirements (§ 422.111 and § 423.128)
21. Customized Enrollee Data (§ 422.111 and § 423.128)
22. Extending the Mandatory Maximum Out-of-Pocket (MOOP) Amount Requirements to Regional PPOs (§ 422.100 and § 422.101)
23. Translated Marketing Materials (§ 422.2264 and § 423.2264)
D. Alternatives Considered
1. Cost Sharing for Specified Services at Original Medicare Levels (§ 417.101 and § 422.100)
2. Cost Sharing for Medicare Covered Preventive Services (§ 417.101 and § 422.100)
3. Quality Bonus Appeals (§ 422.260)
4. Timely Transfer of Data and Files When CMS Terminates a Contract With a Part D Sponsor (§ 423.509)
5. Review of Medical Necessity Decisions by a Physician or Other Health Care Professional and the Employment of a Medical Director (§ 422.562, § 422.566, § 423.562, and § 423.566)
6. Compliance Officer Training (§ 422.503 and § 423.504)
7. Agent and Broker Training Requirements (§ 422.2274 and § 423.2274)
8. Call Center Interpreter Requirements (§ 422.111 and § 423.128)
9. Customized Enrollee Data (§ 422.111 and § 423.128)
10. Extending the Mandatory Maximum Out-of-Pocket (MOOP) Amount Requirements to Regional PPOs (§ 422.100 and § 422.101)
11. Translated Marketing Materials (§ 422.2264 and § 423.2264)
12. Increases to the Applicable Percentage for Quality (§ 422.258(d))
E. Accounting Statement
Regulations Text
Acronyms
ACA The Affordable Care Act of 2010 (which is the collective term for the Patient Protection and Affordable Care Act (Pub. L. 111-148) and the Health Care and Education Reconciliation Act (Pub. L. 111-152))
AO Accrediting Organization
ADS Automatic Dispensing System
AEP Annual Enrollment Period
AHFS American Hospital Formulary Service
AHFS-DI American Hospital Formulary Service-Drug Information
AHRQ Agency for Health Care Research and Quality
ALJ Administrative Law Judge
ANOC Annual Notice of Change
BBA Balanced Budget Act of 1997 (Pub. L. 105-33)
BBRA [Medicare, Medicaid and State Child Health Insurance Program] Balanced Budget Refinement Act of 1999 (Pub. L. 106-113)
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement Protection Act of 2000 (Pub. L. 106-554)
CAHPS Consumer Assessment Health Providers Survey
CAP Corrective Action Plan
CCIP Chronic Care Improvement Program
CCS Certified Coding Specialist
CHIP Children's Health Insurance Programs
CMP Civil Money Penalties
CMR Comprehensive Medical Review
CMS Centers for Medicare & Medicaid Services
CMS-HCC CMS Hierarchal Condition Category
CTM Complaints Tracking Module
COB Coordination of Benefits
CORF Comprehensive Outpatient Rehabilitation Facility
CPC Certified Professional Coder
CY Calendar Year
DOL U.S. Department of Labor
DRA Deficit Reduction Act of 2005 (Pub. L. 109-171)
DUM Drug Utilization Management
EGWP Employer Group/Union-Sponsored Waiver Plan
EOB Explanation of Benefits
EOC Evidence of Coverage
ESRD End-Stage Renal Disease
FACA Federal Advisory Committee Act
FDA Food and Drug Administration (HHS)
FEHBP Federal Employees Health Benefits Plan
FFS Fee-for-Service
FY Fiscal Year
GAO Government Accountability Office
HCPP Health Care Prepayment Plans
HEDIS HealthCare Effectiveness Data and Information Set
HHS [U.S. Department of] Health and Human Services
HIPAA Health Insurance Portability and Accountability Act of 1996 (Pub. L. 104-191)
HMO Health Maintenance Organization
HOS Health Outcome Survey
HPMS Health Plan Management System
ICD-9-CM Internal Classification of Disease, 9th, Clinical Modification Guidelines
ICEP Initial Coverage Enrollment Period
ICL Initial Coverage Limit
ICR Information Collection Requirement
IRMAA Income-Related Monthly Adjustment Amount
IVC Initial Validation Contractor
LEP Late Enrollment Penalty
LIS Low Income Subsidy
LTC Long Term Care
MA Medicare Advantage
MAAA Member of the American Academy of Actuaries
MA-PD Medicare Advantage-Prescription Drug Plans
M+C Medicare +Choice Program
MOC Medicare Options Compare
MPDPF Medicare Prescription Drug Plan Finder
MIPPA Medicare Improvements for Patients and Providers Act of 2008
MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173)
MSA Metropolitan Statistical Area
MSAs Medical Savings Accounts
MSP Medicare Secondary Payer
MTM Medication Therapy Management
MTMP Medication Therapy Management Programs
NAIC National Association Insurance Commissioners
NCPDP National Council for Prescription Drug Programs
NCQA National Committee for Quality Assurance
NGC National Guideline Clearinghouse
NIH National Institutes of Health
NOMNC Notice of Medicare Non-Coverage
OEP Open Enrollment Period
OIG Office of Inspector General
OMB Office of Management and Budget
OPM Office of Personnel Management
OTC Over the Counter
PART C Medicare Advantage
PART D Medicare Prescription Drug Benefit Programs
PBM Pharmacy Benefit Manager
PDE Prescription Drug Event
PDP Prescription Drug Plan
PFFS Private Fee For Service Plan
POS Point of Service
PPO Preferred Provider Organization
PPS Prospective Payment System
P&T Pharmacy & Therapeutics
QIO Quality Improvement Organization
QRS Quality Review Study
PACE Programs of All Inclusive Care for the Elderly
RADV Risk Adjustment Data Validation
RAPS Risk Adjustment Payment System
RHIA Registered Health Information Administrator
RHIT Registered Health Information Technician
SEP Special Enrollment Periods
SHIP State Health Insurance Assistance Programs
SNF Skilled Nursing Facility
SNP Special Needs Plan
SPAP State Pharmaceutical Assistance Programs
SSA Social Security Administration
SSI Supplemental Security Income
TrOOP True Out-Of-Pocket
U&C Usual and Customary
USP U.S. Pharmacopoeia
SUPPLEMENTARY INFORMATION:
I. Background
A. Overview of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) established the Part D program and made significant revisions to Part C provisions governing the Medicare Advantage (MA) program. The MMA directed that important aspects of the Part D program be similar to, and coordinated with, regulations for the MA program. Generally, the provisions enacted in the MMA took effect January 1, 2006. The final rules implementing the MMA for the MA and Part D prescription drug programs appeared in the
Federal Register
on January 28, 2005 (70 FR 4588 through 4741 and 70 FR 4194 through 4585, respectively).
As we have gained experience with the MA program and the prescription drug benefit program, we periodically have revised the Part C and D regulations to continue to improve or clarify existing policies and/or codify current guidance for both programs. For example, in December 2007, we published a final rule with comment on contract determinations involving Medicare Advantage (MA) organizations and Medicare Part D prescription drug plan sponsors (72 FR 68700). In April 2008, we published a final rule to address policy and technical changes to the Part D program (73 FR 20486). In September 2008 and January 2009, we finalized revisions to both the Medicare Advantage and Medicare prescription drug benefit programs (73 FR 54226 and 74 FR 1494, respectively) to implement provisions in the Medicare Improvement for Patients and Providers Act (MIPPA) (Pub. L. 110-275), which contained provisions affecting both the Medicare Part C and D programs, and to make other policy changes and clarifications based on experience with both programs (73 FR 54208, 73 FR 54226, and 74 FR 2881). In April 2010, we finalized new policies for both the MA and Part D prescription drug programs as part of our continuing efforts to protect beneficiaries from excessive out-of-pocket costs, ensure transparency in plan costs and benefits, and strengthen plan compliance with our requirements (75 FR 19678 through 19826).
B. History and Overview
The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) established a new “Part C” in the Medicare statute (sections 1851 through 1859 of the Social Security Act (the Act)) which established the current MA program. As discussed above, the MMA, enacted on December 8, 2003, added a new “Part D” to the Medicare statute (sections 1860D-1 through 42 of the Act) creating the Medicare Prescription Drug Benefit Program, and made significant changes to the M+C program.
Also as noted previously, MIPPA, enacted on July 15, 2008, further amended provisions in Part C and D, including adding extensive new provisions governing marketing under both programs, which were implemented in a final rule that paralleled provisions in MIPPA that was published in the
Federal Register
on September 18, 2008 (73 FR 54208), and in the same issue of the
Federal Register
(73 FR 54226) we published a separate interim final rule that addressed the other provisions of MIPPA affecting the MA and Part D programs. We also clarified the MIPPA marketing provisions in a November 2008 interim final rule (73 FR 67407) and issued a separate interim final rule in January 2009 to address MIPPA provisions related to Part D plan formularies (74 FR 2881).
The proposed and final rules addressing additional policy clarifications under the Part C and D programs appeared in the October 22, 2009 (74 FR 54634) and April 15, 2010
Federal Register
(75 FR 19678 through 19826), respectively. (These rules are hereinafter referred to as the October 2009 proposed rule and the April 2010 final rule, respectively.) As noted when issuing these rules, we believed that additional programmatic and operational changes were needed in order to further improve our oversight and management of the Part C and D programs, and to further improve a beneficiary's experience under MA or Part D plans.
Indeed, one of the primary reasons set forth in support of issuing our April 2010 final rule was to address beneficiary concerns associated with the annual task of selecting a Part C or Part D plan from so many options. We noted that while it was clear that the Medicare Part C and D programs have been successful in providing additional health care options for beneficiaries, a significant number of beneficiaries have been confused by the array of choices provided and have found it difficult to make enrollment decisions that are best for them. Moreover, experience had shown that organizations submitting multiple bids under Part C and D had not consistently submitted benefit designs significantly different from each other, which we believed added to beneficiary confusion. For this reason, the April 2010 rule required that multiple plan submissions in the same area have significant differences from each other. Other changes set forth in the April 2010 final rule were aimed at strengthening existing beneficiary protections, improving payment rules and processes, enhancing our ability to pursue data collection for oversight and quality assessment, strengthening formulary policy, and finalizing a number of clarifications and technical corrections to existing policy.
In this new proposed rule, we are continuing our process of implementing improvements in policy consistent with those included in the April 2010 final rule, while also implementing changes to the Part C and Part D programs made by recent legislative changes. The Patient Protection and Affordable Care Act (Pub. L. 111-148) was enacted on March 23, 2010, as passed by the Senate on December 24, 2009, and the House on March 21, 2010. The Health Care and Education Reconciliation Act (Pub. L. 111-152), which was enacted on March 30, 2010, modified a number of Medicare provisions in Pub. L. 111-148 and added several new provisions. The Patient Protection and Affordable Care Act (Pub. L. 111-148) and the Health Care and Education Reconciliation Act (Pub. L. 111-152) are collectively referred to as the Affordable Care Act (ACA). The ACA includes significant reforms to both the private health insurance industry and the Medicare and Medicaid programs. Provisions in the ACA concerning the Part C and D programs largely focus on beneficiary protections, MA payments, and simplification of MA and Part D program processes. These provisions affect the way we implement our policies concerning beneficiary cost-sharing, assessing bids for meaningful differences, and ensuring that cost-sharing structures in a plan are transparent to beneficiaries and not excessive. Some of the other provisions for which we are proposing revisions to the MA and Part D programs, based on the ACA and our experiences in administering the MA and Part D programs, concern MA and Part D marketing, including agent/broker training; payments to MA organizations based on quality ratings; standards for determining if organizations are fiscally sound; low income subsidy policy under the Part D program; payment rules for non-contract health care providers; extending current network adequacy standards to Medicare medical savings account (MSA) plans that employ a network of providers; establishing limits on out-of-pocket expenses for MA enrollees; and several revisions to the special needs plan requirements, including changes concerning SNP approvals and deeming. In general, our proposals are intended to strengthen the way we administer the Part C and D programs, and help beneficiaries make the best plan choices for their health care needs.
II. Provisions of the Proposed Regulations
A. Overview of Proposed Changes
In the sections that follow, we discuss the proposed changes to the regulations in 42 CFR parts 417, 422, and 423 governing the MA and prescription drug benefit programs. To better frame the discussion of the specific regulatory provisions we are proposing, we have structured the preamble narrative by topic area rather than in subpart order. Accordingly, our proposals address the following five specific goals:
• Implementing the provisions of the ACA.
• Clarifying various program participation requirements.
• Strengthening beneficiary protections.
• Strengthening our ability to distinguish for approval stronger applicants for Parts C and D program participation and to remove consistently poor performers.
• Implementing other clarifications and technical changes.
A number of the proposed revisions and clarifications affect both the MA and prescription drug programs, while some affect section 1876 cost contracts. Within each section, we have provided a chart listing all subject areas containing provisions affecting the Part C, Part D, and section 1876 cost contract programs, and the associated regulatory citations that would be revised.
We note that these regulations would be effective 60 days after the publication of the final rule that will finalize the proposed changes discussed in this proposed rule, except where otherwise noted in the preamble. Table 1 lists the proposed changes that have an effective date other than 60 days after the publication of the final rule. The proposed effective dates are discussed in the preamble for each of these items.
We are proposing several changes to the regulations to reflect provisions in the ACA which either are already in effect, or have an effective date that will likely be earlier than 60 days after the publication of the final rule. Table 2 lists these proposed changes. While these ACA provisions are effective on the statutory effective date, we propose that the regulations implementing these provisions be effective 60 days after the publication of the final rule.
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B. Changes to Implement the Provisions of the Affordable Care Act
The ACA includes significant reforms of both the private health insurance industry and the Medicare and Medicaid programs. Provisions in the Act concern the Part C and D programs and largely focus on beneficiary protections, MA payments, and simplification of MA and Part D program processes. The changes based on provisions in the ACA are detailed in Table 3.
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1. Cost Sharing for Specified Services at Original Medicare Levels (§ 417.101 and § 422.100)
Section 3202 of the ACA amended section 1852 of the Act to establish new standards for MA plans' cost sharing. Specifically, section 1852(a)(1)(B) of the Act was amended by the addition of a new clause (iii) that limits cost sharing under MA plans so that it cannot exceed the cost sharing imposed under Original Medicare for specific services identified in a new clause (iv). New section 1852(a)(1)(B)(iv) of the Act lists the three services for which cost sharing in MA plans may not exceed that required in Original Medicare (chemotherapy administration services, renal dialysis services, skilled nursing care) and at section 1852(a)(1)(B)(iv)(IV) of the Act specifies that this limit on cost sharing also applies to such other services that the Secretary determines appropriate, including services that the Secretary determines require a high level of predictability and transparency for beneficiaries. The limits on cost sharing in clause (iii) are “subject to” an exception in clause (v) which provides that, “[i]n the case of services described in clause (iv) for which there is no cost sharing required under Parts A and B, cost sharing may be required for those services” under the clause (i) standard in place prior to the amendments made by section 3202 of the ACA. This section requires that overall cost sharing for Medicare Part A and B services be actuarially equivalent to that imposed under Original Medicare. As noted in the final rule that appeared in the April 15, 2010
Federal Register
(75 FR 19712) and clarified in our April 16, 2010 policy guidance, the provisions of section 3202 of the ACA apply to MA plans offered in CY 2011. To codify these provisions, we are proposing to amend § 422.100 by adding a new paragraph (g). In addition, under our authority in section 1876(i)(3)(D) of the Act to impose “other terms and conditions” deemed “necessary and appropriate,” we are proposing in a proposed new paragraph (g) in § 417.100 that the requirements in section 3202 of the ACA be extended by regulation to section 1876 cost contracts. We believe that this extension is necessary in order to ensure that all Medicare beneficiaries have the benefit of the cost sharing protections enacted in the ACA, regardless of whether they receive their Part A and B benefits through Original Medicare, an MA plan, or under a section 1876 cost contract.
We believe that the measures to protect beneficiaries from high out-of-pocket costs in section 3202 of the ACA complement the steps we already have taken in our April 2010 final rule to protect beneficiaries from health plans with high out-of-pocket costs, discriminatory cost sharing and benefit designs that interfere with beneficiaries' access to affordable high quality health care, and create confusion that is attributable to having too many MA plan choices in an area that are not “meaningfully different.” In fact, for CY 2011, MA organizations already were expected to comply with new standards for cost sharing and to submit meaningfully different plans in order to reduce beneficiary confusion, and were strongly encouraged to provide Medicare-covered preventive services without cost sharing. Organizations also were expected to limit the number of plans offered in a service area by identifying for non-renewal plans with sustained low enrollment.
In our April 16, 2010 guidance issued via the Health Plan Management System (HPMS) (“Benefits Policy and Operations Guidance Regarding Bid Submissions; Duplicative and Low Enrollment Plans; Cost Sharing Standards; General Benefits Policy Issues; and Plan Benefits Package (PBP) Reminders for Contract Year (CY) 2011”), we included clarifying information related to implementation of the required cost sharing for chemotherapy administration services, renal dialysis services, and skilled nursing care for CY 2011 and we defined chemotherapy administration services to include chemotherapy drugs, radiation therapy services and other related chemotherapeutic agents, as well as administration, and skilled nursing care to mean skilled nursing facility services. We also clarified that, since there is no cost sharing under Original Medicare for the first 20 days of skilled nursing services, under section 1852(a)(1)(B)(v) of the Act, the new restrictions in section 3202 of the ACA
do not apply to such services during this period.
In our proposed addition to § 422.100 and § 417.101, we would incorporate these definitions for the two service categories. We welcome comments on these proposed cost sharing standards.
We also are proposing to limit cost sharing for home health services under MA plans to that charged under Original Medicare. We note that, although we can generally rely on our authority at 1852(a)(1)(B)(iv)(IV) of the Act to apply Original Medicare cost sharing limits to other services that the Secretary determines appropriate, because there is no cost sharing under Original Medicare for home health services, as in the case of the first 20 days of skilled nursing facility services, the exception in clause (v) of section 1852(a)(1)(B) of the Act would apply, and the limit on cost sharing under section 1852(a)(1)(B)(iii) of the Act would not apply. Thus, in proposing to apply Original Medicare cost sharing amounts to home health services or any other service with zero cost sharing, we would rely instead on our authority in section 1856(b)(1) of the Act to establish MA standards by regulation, and in section 1857(e)(1) of the Act to impose additional “terms and conditions” found “necessary and appropriate” to require that cost sharing for these services under MA plans conform to that under Original Medicare, meaning that no cost sharing could be imposed for these services.
We believe that even with the additional restriction on cost sharing for home health services, MA organizations will continue to have adequate flexibility to design plan benefits that are responsive to beneficiary needs and preferences while providing access to high quality and affordable health care. We are soliciting public comment on our proposal to limit cost sharing for home health services to that charged for those services under Original Medicare.
2. Simplification of Beneficiary Election Periods (§ 422.62, § 422.68, § 423.38, and § 423.40)
Section 3204 of the ACA modified section 1851(e)(3)(B) of the Act such that, beginning with plan year 2012, the annual coordinated election period (AEP) under Parts C and D will be held from October 15 to December 7. We propose to amend § 422.62(a)(2) and § 423.38(b) to codify this change, which will be effective October 15, 2011 for elections effective January 1, 2012.
Section 3204 of the ACA also revised section 1851(e)(2)(C) of the Act to establish, beginning in 2011, a 45-day period at the beginning of the year (January 1 through February 14) that allows beneficiaries enrolled in MA plans the opportunity to disenroll and join Original Medicare, with the option to enroll in a Medicare prescription drug plan. This 45-day period replaces the MA open enrollment period that previously occurred annually from January 1 to March 31, and eliminates the requirements in section 1851(e)(2)(c)(iii) of the previous open enrollment provision that required that Part D status be maintained when an election is made (under the previous rule, an individual disenrolling from an MA-PD plan to Original Medicare was required to enroll in a Part D plan, where it is optional under the new provision). We propose to amend § 422.62(a) to provide for this new disenrollment opportunity, and modify § 423.38(d) to allow for enrollment into a standalone PDP.
We also would amend § 422.62(a) to clarify that the open enrollment opportunities for those beneficiaries who are newly eligible for MA would continue only through the end of 2010. Additionally, we would modify § 422.68(f) to specify the effective date for disenrollment requests submitted during the new 45-day disenrollment period. Finally, in § 423.40(d), we would specify the enrollment effective dates for individuals who enroll in a standalone Medicare prescription drug plan after disenrolling from MA during the 45-day period. These changes would be effective January 1, 2011.
As indicated in section II.A. of this proposed rule, we propose that the regulations implementing these provisions be effective 60 days after the publication of the final rule.
3. Special Needs Plan (SNP) Provisions (§ 422.2, § 422.4, § 422.101, § 422.107, and § 422.152)
This section proposes a definition of a fully integrated dual-eligible special needs plan (SNP) for purposes of section 3205(b)(iv)(II) of the ACA, and regulations implementing changes made by the ACA which extend the SNP program, extend provisions permitting existing DE-SNPs that were not seeking to expand their service areas to continue operating through 2012, and establish a required NCQA approval process for SNPs.
a. Adding a Definition of Fully Integrated Dual Eligible SNP (§ 422.2)
Section 3205 of the ACA revised section 1853(a)(1)(B) of the Act provides authority to apply a frailty payment under PACE payment rules for certain individuals under fully integrated dual-eligible special needs plans described in section 3205(b)(iv)(II) of the ACA. We are adding a definition of fully integrated dual-eligible SNPs to § 422.2 that would apply for these purposes. Under this definition, a plan—
• Is a SNP enrolling special needs individuals entitled to medical assistance under a State plan under Medicaid, as defined under section 1859(b)(6)(B)(ii) of the Act and § 422.2;
• Provides dually-eligible beneficiaries access to Medicare and Medicaid benefits under a single managed care organization (MCO);
• Has a capitated contract with a state Medicaid agency that includes coverage of specified primary, acute and, long-term care benefits and services, consistent with State policy;
• Coordinates the delivery of covered Medicare and Medicaid health and long-term care services, using aligned care management and specialty care network methods for high-risk beneficiaries; and
• Employs policies and procedures approved by CMS and the State to coordinate or integrate member materials, including enrollment, communications, grievance and appeals, and quality assurance.
b. Extending SNP Authority
Section 3205 of the ACA revised section 1859(f)(1) of the Act to extend the authority for SNPs to restrict enrollment to special needs individuals, thereby permitting SNPs to continue to limit enrollment to special needs individuals through the 2013 contract year. This extension applies to all SNP categories, with the exception of dual eligible SNPs that do not have a contract with the State in which they operate as described in section II.B.1.c. of this proposed rule. This provision is effective upon enactment of the ACA. However, as indicated in section II.A. of this proposed rule, we propose that the regulations implementing this provision be effective 60 days after the publication of the final rule.
c. Dual-Eligible SNP Contracts With State Medicaid Agencies (§ 422.107)
Section 164 of MIPPA provided that all new dual-eligible SNPs (DE SNPs) must have contracts with the State Medicaid Agencies in the States in which the SNP plans operate. The provision also allowed existing DE SNPs that were not seeking to expand their service areas to continue to operate without a State contract through the 2010 contract year as long as all other MIPPA established requirements were met. This authority was codified at § 422.107. Section 3205 of the ACA extended this provision for existing DE SNPs through December 31, 2012 such
that all new DE SNPs must have contracts with State Medicaid agencies, while all renewing DE SNPs that do not have contracts with State Medicaid agencies and are not seeking to expand their service areas may continue to offer DE SNPs through the 2012 contract. For contract year 2013, all DE SNPs—new and renewing—must have contracts with State Medicaid agencies. Accordingly, we propose revising § 422.107(d)(ii) to codify this provision. This provision is effective upon enactment of the ACA. However, as indicated in section II.A. of this proposed rule, we propose that the regulations implementing this provision be effective 60 days after the publication of the final rule.
d. Approval of Special Needs Plans by the National Committee for Quality Assurance (§ 422.4, § 422.101, and § 422.152)
The ACA amended section 1859(f) of the Act to require that SNPs be approved by the National Committee for Quality Assurance (NCQA) effective January 1, 2012 and subsequent years. Under this section, the NCQA approval process shall be based on the standards established by the Secretary.
The NCQA SNP approval process should provide a foundation for selecting Medicare Advantage organizations that comprehend the unique requirements of the SNP program and are capable of implementing these requirements. Both the overall quality improvement (QI) program description and the model of care (MOC) are critical clinical elements that represent the potential for the SNP to provide integrated care for Medicare enrollees.
New SNPs or SNPs that are expanding their service areas are already required to submit a QI Program Plan and a MOC as part of the application process. For 2012, we will also require existing SNPs to submit their QI Program and MOC during the same application timeframe. NCQA will review the QI program and the MOC elements during the application process using the standards that are currently being developed by CMS. NCQA would assume responsibility for the review and scoring of the overall QI program plan and the MOC based on the standards developed by CMS. While we will coordinate with NCQA in developing these standards, CMS will not participate in the scoring and review of the MOC and QI program plans.
Shortly, we will release specific instructions and guidance to organizations about how to submit their QI program and MOCs. This guidance will include the specific criteria that NCQA will use to evaluate the QI program and the MOC. Also included in the guidance will be information about technical assistance that will be available to the SNPs as they prepare their QI Program and MOC submissions as well as details on the frequency of the SNP approval process. We are concerned that an annual approval process could be burdensome for plans. Therefore, we are considering an approval cycle that would occur between 1 to 5 years. This approval cycle would be designed so that the plans that have a higher score on the initial approval of their QI program and MOC would be granted a longer period before being required to be re-approved. While plans that scored at the lower end of the acceptable spectrum would be granted a shorter period before the next approval was required. We are also considering using other quality improvement measures to help determine the length of time a plan may have before reapproval. For example, plans that score well during their annual quality improvement audits may be eligible for extensions to the time period for the approval process. We would like to use the public comment period to help to determine the appropriate frequency for the SNP approval process.
We are conducting a review of the MOCs from a sample of the SNPs. Data are not yet available from these audits. However, it is anticipated that the audits will be completed by the end of the calendar year. Information received from the audits will be used to assist CMS in revising and improving the MOC. In addition, we intend to use this information to modify and refine the required evaluation criteria over time to improve the QI program and the MOC.
Accordingly, we propose adding a new paragraph (iv) to § 422.4(a) to require MA plans wishing to offer a SNP, whether new or current, to be approved by NCQA, effective January 1, 2012, by submitting their overall quality QI program and MOC to CMS for NCQA evaluation and approval, per CMS guidance. We also propose codifying the new requirement at § 422.101(f), which specifies MOC requirements, by adding a new paragraph (vi). Finally we propose codifying the new requirement by revising § 422.152(g), which specifies QI program requirements.
4. Section 1876 Cost Contractor Competition Requirements (§ 417.402)
Section 3206 of the ACA revised section 1876(h)(5)(C) of the Act to extend implementation of the section 1876 cost contract competition provisions until January 1, 2013. Previously, MIPPA had specified that section 1876 cost contractors operating in service areas or portions of service areas with two or more local or two or more regional Medicare coordinated care plans meeting minimum enrollment requirements (5,000 enrollees for urban areas and 1,500 enrollees for non urban areas) be non-renewed beginning in 2010. In addition, MIPPA specified that MA plan enrollment be assessed over a full contract year.
As a result of the ACA revision, we will evaluate enrollment of competing MA coordinated care plans beginning 2012, and affected section 1876 cost contractors will receive non-renewal notices beginning 2013. Beginning in 2014, section 1876 cost contractors will no longer be able to offer health care services in affected service areas. We propose to revise § 417.402(c) to specify the statutory change in the implementation date of the section 1876 cost plan competition requirements from 2010 to 2013.
This provision is effective upon enactment of the ACA. However, as indicated in section II.A. of this proposed rule, we propose that the regulations implementing this provision be effective 60 days after the publication of the final rule.
5. Making Senior Housing Facility Demonstration Plans Permanent (§ 422.2 and § 422.53)
Section 3208 of the ACA establishes (at section 1859(g) of the Act) that as of January 1, 2010, senior housing facility plans participating as of December 31, 2009 “in a demonstration project established by the Secretary under which such a plan was offered for not less than 1 year” may continue participation as Medicare Advantage senior housing facility plans. MA senior housing facility plans must:
• Limit enrollment to residents of continuing care retirement communities as defined in section 1852(l)(4)(B) and codified at § 422.133(b)(2)—that is, an arrangement under which housing and health-related services are provided (or arranged) through an organization for the enrollee under an agreement that is effective for the life of the enrollee or for a specified period;
• Provide primary care services onsite and have a ratio of accessible physicians to beneficiaries that the Secretary determines is adequate; and
• Provide transportation services for beneficiaries to specialty providers outside of the facility.
We propose to amend the definitions section at § 422.2 to include “senior
housing facility plan” as a new coordinated care plan type. Our proposed definition of the term senior housing facility plan would be consistent with the statutory requirements for such plans at section 1859(g) of the Act—that is, that such plan restrict enrollment to individuals who reside in a continuing care retirement community as defined in § 422.133(b)(2); provide primary care services onsite and have a ratio of accessible physicians to beneficiaries that we determine is adequate consistent with prevailing patterns of community health care as provided under § 422.112(a)(10); provide transportation services for beneficiaries to specialty providers outside of the facility; and was participating as of December 31, 2009 in a demonstration established by us for not less than 1 year. We note that a senior housing facility plan must otherwise meet all requirements applicable to MA organizations under this part.
In addition, we propose to add a new § 422.53 to subpart B of Part 422 to address the eligibility and enrollment policies applicable to senior housing facility plans. We propose specifying at § 422.53 that MA senior housing facility plans must restrict enrollment in these plans to residents of continuing care retirement communities, and that individuals enrolled in such plans must meet all other MA eligibility requirements in order to be eligible to enroll. In addition, we propose specifying at § 422.53(c) that an MA senior housing facility plan must verify the eligibility of each individual enrolling in its plan using a CMS approved process. As indicated in section II.A. of this proposed rule, we propose that the regulations implementing this provision be effective 60 days after the publication of the final rule.
6. Authority To Deny Bids (§ 422.254, § 422.256, § 423.265, and § 423.272)
Section 3209 of the ACA amends section 1854(a)(5) of the Act by adding subsections (C)(i) and (ii) to provide that nothing in section 1854 of the Act shall be construed as requiring the Secretary to accept any or every bid submitted by an MA organization, and expressly provides that the Secretary may deny a bid submitted by an MA organization for an MA plan if it proposes significant increases in cost sharing or decreases in benefits offered under the plan. Section 3209 also extends these provisions to apply to the review of bids from Part D sponsors by amending section 1860D-11(d) of the Act to add a new paragraph (3). This statutory authority applies to bids submitted for contract years beginning on or after January 1, 2011. However, as indicated in section II.A. of this proposed rule, we propose that the regulations implementing this provision be effective 60 days after the publication of the final rule.
We believe that these amendments clarify the Secretary's authority to deny bids submitted by MA organizations and PDP sponsors and provide support for our current policies intended to encourage plans that are high quality, meaningfully different from each other, and nondiscriminatory with respect to cost sharing. In our final rule entitled “Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs” (75 FR 19678), we established authority to impose limits on cost sharing and to deny bids submitted by plans with sustained low enrollment, and for plans not meaningfully different from other plans offered by the same MA organization or PDP sponsor in a service area. We provided further guidance related to these policies via the Health Plan Management System (HPMS) on April 16, 2010 (“Benefits Policy and Operations Guidance Regarding Bid Submissions; Duplicative and Low Enrollment Plans; Cost Sharing Standards; General Benefits Policy Issues; and Plan Benefits Package (PBP) Reminders for Contract Year (CY) 2011”and “2011 Part D Plan Benefit Package (PBP) Submission and Review Instructions”).
Using our authority under sections 1857(c)(2)(B) and 1860D-12(b)(3)(D) of the Act, we codified requirements in § 422.506(b)(1)(iv) and § 423.507(b)(1)(iii) for Part C and Part D, respectively, to non-renew a health plan or prescription drug plan (at the benefit-package level) if the plan does not have sufficient number of enrollees to establish that it is a viable independent plan option. Consistent with that authority, we scrutinized low-enrollment plans during the bid review period this year and encouraged sponsors to withdraw or consolidate low-enrollment plans prior to submitting bids for CY 2011. We revised § 422.256(b)(4)(i) and § 423.272(b)(3)(i) to stipulate that we would only approve a bid submitted by a MA organization or Part D sponsor if its benefit package or plan cost structure is substantially different from those of other plan offerings by the organization or sponsor in the service area with respect to key characteristics such as premiums, cost-sharing, formulary structure, or benefits offered. Related changes to § 422.254(a)(4) and § 423.265(b)(2) provide that MA organizations and Part D sponsors may submit multiple bids in the same area only if the offerings are substantially different from each other. In the above-mentioned April 16, 2010 guidance for PDP sponsors, for the CY 2011 plan year, we defined meaningful differences between health plans as a $20 per member per month difference (PMPM) in cost sharing and for PDPs as a $22 PMPM difference in cost sharing (not including premiums) as reflected in the out-of-pocket cost (OOPC) data.
We further indicated that we do not believe sponsors can demonstrate meaningful differences based on expected out-of-pocket costs between two stand-alone basic Part D benefit designs and maintain both statutory actuarial equivalence requirements and fulfill the requirement (in § 423.153(b)) to maintain cost-effective drug utilization review programs. Therefore, we indicated that PDP sponsors should submit only one basic offering (where basic offering includes defined standard, actuarial equivalent or basic alternative drug benefit types) for a stand-alone prescription drug plan in a service area. We also are increasing our scrutiny of the expected cost sharing amounts incurred by beneficiaries under coinsurance tiers, in order to more consistently compare copay and coinsurance cost sharing impacts. If a sponsor submitted coinsurance values (instead of copayment values) for its formulary tiers, we requested documentation from the sponsor on the average expected price for medications on the coinsurance tier(s) in order to better translate the coinsurance value into an average cost sharing amount for the purpose of our anti-discrimination review. These additional benefit and formulary evaluations are in addition to our formulary review and analysis of tier placement of drugs to ensure that the coverage is balanced and that the associated cost sharing does not discriminate against beneficiaries with a certain disease or diagnosis category. Therefore, we have already established, in effect, a bid review policy that evaluates the limits plans place on member benefits and cost sharing.
Under authority clarified in section 3209 of the ACA to decline to accept bids, we believe that we can choose to limit the number and/or type of plans offered in service areas to enhance our ability to achieve our goals, which are to protect beneficiaries from confusion, discriminatory cost sharing, and any but the highest performing plans. For instance, for CY 2011, we are requiring that MA organizations and PDP sponsors meet new cost sharing standards, ensure that meaningful differences exist between plan offerings,
and consolidate or terminate plans with sustained low enrollment. Although we are not now proposing to establish additional restrictive criteria for CY 2012, we considered proposing additional regulatory restrictions and assessed the expected effects of such additional restrictions on MA organizations, PDP sponsors, and beneficiaries. For example, we believe the Secretary has authority under section 3209 by regulation to set specific thresholds limiting premium increases that can be imposed without a bid being denied, limit which MA organizations and PDP sponsors may offer plans based on quality ratings, and specify caps on the number or the types of plans that may be offered in a service area.
We concluded that we would not propose such additional restrictions limiting MA organizations' or PDP sponsors' plan bids until we were able to evaluate the effectiveness of the limits in place for CY 2011. We also are aware of the many changes we required plans to make for CY 2011 and believe that allowing plans time to adjust to the most recent policies prior to implementing further restrictions may be the most advantageous and reasonable approach for CMS, Medicare beneficiaries, and the organizations and sponsors. Thus, although we believe the new authority strengthens our ability to take corrective action in the event that MA organizations and PDP sponsors do not meet the criteria in our current regulation and subsequent guidance, we realize that setting further limits before we have enough information to evaluate the effectiveness of our recent policy changes or their effects on the market may be premature.
Furthermore, with respect to Part C, we believe that the implementation of specific non-acceptance and denial policies based on comparisons of premium and cost sharing increases and benefit decreases from year to year would be especially challenging considering the number of plan types and services offered by MA organizations. There would be serious difficulties with an effective quantitative premium and cost sharing evaluation process. Such a process would need to measure and adjust for annual changes in maximum out-of-pocket limits, Original Medicare cost-sharing and premiums, medical cost inflation, MA payment policy, benefit designs, and plan service expansions and reductions. Such a process might well turn out to be too rigid to adapt to rapidly changing circumstances and market conditions.
To avoid such rigidity, and to promote the statutory goals (including protection of beneficiaries from confusion and discriminatory cost sharing), we do not propose to specify additional criteria such as thresholds (either absolute or relative to the distribution of bids received) limiting acceptable premium increases. But we do seek comment on our proposed approach and on possible alternatives, designed to balance the need to avoid rigidity while promoting clarity and predictability. We are specifically soliciting public comments from the industry and advocacy communities regarding the criteria outlined in our April 16, 2010 guidance issued via HPMS and whether we should establish additional requirements to limit plan offerings in a service area. We also invite comment as to whether there are other measures we should consider as part of future rulemaking that may help us in our efforts to protect beneficiaries and promote provision of high quality, affordable health plans. We also solicit comments on whether we should adopt other substantive criteria for exercising our authority under section 3209 of the ACA by implementing caps, or limits, on the number of plans offered in a region, or on the number of sponsors participating in the program. For example, for contract year 2011, we identified plan outliers based on changes in premiums and cost-sharing and required some changes to plan bids in order for them to be approved. We solicit comment on this and other, similar approaches of using outlier analyses based on previous and/or current contract year bids to exercise our authority under section 3209 of the ACA. We ask the industry and advocacy communities what we should consider when limiting the acceptance of plan bids or denying plan bids (for example, comparability and access to services in certain service areas, plan performance, outlier plans with the highest bids), were we to choose to move in that direction. Finally, we solicit comment on the best way to ensure fair notice and equal treatment for all plan bids in the absence of specific non-acceptance and denial policies. Our decision not to propose additional specific criteria for CY 2012 should not be interpreted as an indication that we will not adopt specific policies in future rulemaking or that we will not perform robust and thorough reviews of bid submissions. We will continue to use our statutory and regulatory authority to ensure that only high value, non-discriminatory, and actuarially sound bid submissions are approved as we evaluate the effects of our current cost sharing, meaningful differences and low-enrollment policies and consider the timely suggestions and comments we receive from the public on this proposed rule to guide our future policy. Additionally, we note that our discretion to make determinations that MA plan bids propose significant increases in cost sharing or decreases in benefits offered on a case-by-case basis, in accordance with statutory goals, is limited to consideration of the criteria for acceptance or denial of plan bids that have been established via rulemaking and guidance.
We propose to codify the amendments made to sections 1854(a)(5) and 1860D-11(d) of the Act by adding paragraph (a)(5) to § 422.254, revising § 422.256(a), adding paragraph (b)(3) to § 423.265 and by adding paragraph (b)(4) to § 423.272.
7. Determination of Part D Low-Income Benchmark Premium (§ 423.780)
The ACA amends the statute governing the calculation of the LIS benchmark premium amount. Section 1860D-14(b)(3)(B)(iii) of the Act, as amended by the ACA, requires us to calculate the LIS benchmarks using MA-PD basic Part D premiums before the application of Part C rebates each year, beginning with 2011. This proposed rule updates the regulations at § 423.780(b)(2)(ii)(C) to incorporate this change. As indicated in section II.A. of this proposed rule, we propose that the regulations implementing this provision be effective 60 days after the publication of the final rule.
We note that the ACA also requires us to calculate the low-income premium benchmarks before the application of the quality bonuses under section 1853(o) of the Act. The ACA section 1102(d) ties the level of rebate to a plan's star rating for quality of performance. Since the quality bonus is part of the rebate, we do not refer to this requirement in the regulation text. The quality bonus is described in more detail in the Medicare Advantage Benchmark, Quality Bonus Payments, and Rebate section (
see
section II.B.20. of this proposed rule).
8. Voluntary De Minimis Policy for Subsidy Eligible Individuals (§ 423.34 and § 423.780)
Section 3303(a) of the ACA modifies section 1860D-14(a) of the Act by creating a new subsection (5) that permits PDPs and MA-PD plans to waive a
de minimis
monthly beneficiary premium for low income subsidy (LIS) eligible individuals who are enrolled in the plan. The provision also prohibits the Secretary from reassigning LIS individuals the plan's premium was greater than the LIS benchmark premium amount, so long as amount of
the premium is
de minimis
and the plan waives it.
Section 3303(b) of the ACA modifies section 1860D-1(b)(1) of the Act that permits the Secretary to include PDPs and MA-PD plans that waive the
de minimis
amount in the auto-enrollment process that we use to enroll those LIS eligible individuals who fail to enroll in a Part D plan. If these plans are included in the process, and there is more than one plan, the statute requires that enrollees be randomly assigned among all such plans in the PDP region. We propose to amend regulations in § 423.34 and § 423.780(f) to codify the new statutory requirements. The statutory provision is effective January 1, 2011. However, as indicated in section II.A. of this proposed rule, we propose that the regulations implementing these provisions be effective 60 days after the publication of the final rule.
a. Reassigning LIS Individuals (§ 423.34)
Currently, § 423.34(c) specifies that CMS may reassign certain low income subsidy eligible individuals if CMS determines that further enrollment is warranted. We have used this authority to reassign LIS eligible individuals annually when a PDP's monthly beneficiary premium amount is going to exceed the low income benchmark as calculated in § 423.780(b)(2). As noted above, the ACA prohibits the Secretary from reassigning a plan's LIS eligible enrollees based on the fact that the plan's monthly beneficiary premium exceeds the LIS benchmark premium amount, so long as the amount of premium is
de minimis
and the plan volunteers to waive the amount by which their monthly premium exceeds the LIS benchmark. Thus, plans that would otherwise have lost enrollees because of a
de minimis
monthly beneficiary premium can retain their membership. We are proposing to amend § 423.34(c) regarding reassignment of LIS beneficiaries to reflect section 1860D-1(a)(5) of the Act.
b. Enrollment of LIS-Eligible Individuals (§ 423.34)
Currently, § 423.34(d) specifies that CMS enroll LIS eligible individuals who fail to enroll in a PDP. The PDP into which we auto-enroll these individuals are those plans with monthly beneficiary premiums for LIS eligible individuals that do not exceed the low income benchmark as calculated in § 423.780(b)(2).
We are proposing to amend § 423.34(d) regarding auto-enrollment of LIS eligible individuals to be consistent with section 1860D-1(b)(1) of the Act, as modified by the ACA. We will provide details on when we will use this discretion in forthcoming guidance, specifically operational guidance memorandums as well as in Chapter 3 on Eligibility, Enrollment, and Disenrollment of the Medicare Prescription Drug Benefit Manual. We expect that we will not auto-enroll or reassign beneficiaries into plans that volunteer to waive the
de minimis
amount. The only exception would be in cases where the reassignments would allow beneficiaries to remain within the same parent organization. Plans within the same organization usually have the same formulary, so keeping a person within the same organizations minimizes disruption. This mimics the policy in place during the
de minimis
demonstration from 2007 and 2008. The goal of that policy was to minimize reassignments, while maintaining downward pressure on Part D bids by not rewarding
de minimis
plans with new enrollees. Beneficiaries with 100 percent premium subsidy who are already enrolled in, or voluntarily elect, a PDP or MA-PD plan that waives the
de minimis
amount will not be liable for premiums. Although we do not intend to exercise this discretion by including Part D plans that waive the
de minimis
amount in the pool of Part D plans qualified to receive auto-enrollees or reassignees, we do believe that the D regulations should be modified so that the flexibility to do so can be maintained.
c. Premium Subsidy (§ 423.780)
We are also proposing to amend § 423.780(f) to reflect section 1860D-14(a)(5) of the Act. In addition, because section 1860D-14(a)(5) of the Act refers to waivers of
de minimis
premium that exceeds the low-income benchmark, which accounts only for the basic benefit, we propose to limit the waiver of the
de minimis
amount to the premium applicable to the basic benefit. We will determine the
de minimis
amount taking into consideration the goal of minimizing reassignments without undue cost to the program. We will announce the
de minimis
amount each August, in conjunction with our announcement of the LIS benchmarks. Plans will volunteer as part of the bid finalization process. Additional details will be provided in forthcoming guidance.
9. Increase In Part D Premiums Due to the Income Related Monthly Adjustment Amount (D—IRMAA) (§ 423.44, § 423.286, and § 423.293)
Section 3308 of the ACA amended section 1860D-13(a) of the Act by establishing an income related monthly adjustment amount (hereafter referred to as Part D—IRMAA) that is added to the monthly Part D premium for individuals whose modified adjusted gross income exceeds the same income threshold amounts established under section 1839(i) of the Act with respect to the Medicare Part B income-related monthly adjustment amount (Part B—IRMAA).
In calendar year (CY) 2007, the income ranges set forth in section 1839(i) of the Act required that individual and joint tax filers enrolled in Part B whose modified adjusted gross income exceeded $80,000 and $160,000, respectively, would be assessed the Part B—IRMAA on a sliding scale. As specified in section 1839(i)(5) of the Act, since the implementation of the Part B—IRMAA, each dollar amount within the income threshold tiers has been adjusted annually based on the Consumer Price Index. As a result of the annual adjustment, for calendar year 2010, the income threshold amounts were increased to reflect the four income threshold amount tiers shown below:
Individual tax filers with income:
Joint tax filers with income:
Premium
percentage
Equal to or less than $85,000
Equal to or less than $170,000
0—No IRMAA.
Greater than $85,000 and less than or equal to 107,000
Greater than $170,000 and less than or equal to $214,000
35.
Greater than $107,000 and less than or equal to $160,000
Greater than $214,000 and less than or equal to $320,000
50.
Greater than $160,000 and less than or equal to $214,000
Greater than $320,000 and less than or equal to $428,000
65.
Greater than $214,000
Greater than $428,000
80.
We note that section 3402 of the ACA freezes the income thresholds at the above 2010 levels through 2019.
In accordance with section 3308 of the ACA, effective January 1, 2011, any individual enrolled in the Medicare prescription drug program whose modified adjusted gross income exceeds the same income threshold amount tiers established under Part B will have an income related increase to his/her Part D monthly premium. Section 3308 of the ACA provides that the income related monthly amount for Part D will be calculated using the Part D national base beneficiary premium and the premium percentages in the above chart as follows: BBP x [(P percent −25.5 percent)/25.5 percent]. The BBP is the base beneficiary premium and P percent is the applicable premium percentage (35 percent, 50 percent, 65 percent, or 80 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 ACA requires us 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 every year, beginning in 2010. We must also provide SSA, no later than October 15 of each year, beginning 2010, with: (1) The modified adjusted gross income threshold ranges; (2) the applicable percentages established for Part D—IRMAA in accordance with section 1839(i) of the Act; (3) the corresponding monthly adjustment amounts; and (4) any other information SSA deems necessary to carry out the Part D—IRMAA. With respect to the final item, we will provide SSA with an initial list of all individuals enrolled in the Part D program. In accordance with section 3308 of the ACA, SSA will use this initial list of Part D enrollees to request beneficiary-specific tax payer information from the Internal Revenue Service in order to determine: (1) Which Part D enrollees exceed the income threshold amounts established under section 1839(i) of the Act; and (2) the income related monthly adjustment amount that these enrollees must pay. This exchange of information between CMS and SSA will occur in 2010 so that individuals identified will be billed the correct Part D—IRMAA beginning January 1, 2011. Following this initial data exchange with SSA, CMS will routinely provide SSA with the names of all individuals newly enrolling in the Part D program so that SSA can repeat the process of identifying individuals who must pay the Part D—IRMAA and the specific income related amount. We will also routinely provide the names of individuals who have disenrolled from the Part D program so that such individuals will no longer be assessed the Part D—IRMAA. In cases where an individual disagrees with a determination that he/she is subject to the Part D—IRMAA, such individual may appeal to SSA in the same manner that has been established for the Part B—IRMAA under 20 CFR Part 418.
Section 3308 of the ACA also stipulates that the Part D—IRMAA must be withheld from benefit payments in accordance with section 1840 of the Act. Therefore, in cases where an individual is receiving benefit payments from SSA, the Railroad Retirement Board (RRB), or the Office of Personnel Management (OPM), the Part D—IRMAA must be withheld from such benefit payments. However, if the benefit payment is insufficient to allow the Part D—IRMAA withholding, or an individual is not receiving benefit payments as described in section 1840 of the Act, section 3308 of the ACA requires SSA to enter into agreements with CMS, RRB, and OPM, as necessary, in order to allow the Part D—IRMAA to be collected directly from these beneficiaries.
To implement section 3308 of the ACA, we are proposing to revise § 423.286 (rules regarding premiums), § 423.293 (collection of monthly beneficiary premium), and § 423.44 (involuntary disenrollment by PDP).
a. Rules Regarding Premiums (§ 423.286)
Currently, § 423.286(a) provides that the monthly beneficiary premium for a Part D plan in a PDP region is the same for all Part D-eligible individuals enrolled in the plan with the exception of employer group waivers, the assessment of the Part D late enrollment penalty, or an enrollee receiving low-income assistance. We propose to revise § 423.286(a) to include the assessment of the income related monthly adjustment amount as another exception to the requirement for a uniform monthly beneficiary premium for a Part D plan in a PDP region.
We also propose to add a new § 423.286(d)(4) to define the increase for the income related monthly adjustment amount for Part D. This provision would specify that, beginning, January 1, 2011, the monthly beneficiary premium amount would be increased for any individual whose modified adjusted gross income amount exceeds the minimum income threshold amounts established at 20 CFR 418.1115 for the Part B—IRMAA. Additionally, proposed § 423.286(d)(4)(i) would specify that SSA would determine the individuals that are subject to the Part D—IRMAA and the amount of the adjustment. Proposed § 423.286(d)(4)(ii) would provide the formula used to calculate the monthly adjustment amount. Finally, proposed § 423.286(d)(4)(iii)-(iv) would provide appeals rights to individual who disagree with SSA's determination that they are subject to Part D—IRMAA or the threshold amount.
b. Collection of Monthly Beneficiary Premium (§ 423.293)
We are proposing to establish a new § 423.293(d)(1) that describes how the Part D—IRMAA would be collected. First, we would address the process for collecting the Part D—IRMAA from SSA, RRB or OPM benefit payments. In cases where SSA had determined that a Part D enrollee must pay an income related monthly adjustment amount, such amount must be paid through withholding from the enrollee's Social Security benefit payments, or benefit payments by the RRB or OPM in the manner that the Part B premium is withheld. Additionally, we would establish at § 423.293(d)(2) that in cases where premium withholding is not possible because the monthly benefit check is insufficient to allow the withholding, or the enrollee is not receiving any monthly benefit payment, the individual must be directly billed for the Part D—IRMAA through an electronic funds transfer mechanism (such as automatic charges of an account at a financial institution or a credit or debit card account) or according to other means that we may specify.
Section 3308 of the ACA provides that the Part D—IRMAA is an increase to the monthly beneficiary premium for certain individuals. Section 1851(g)(B)(i) of the Act, as incorporated by section 1860D-1(b)(5) of the Act, establishes that a beneficiary may be terminated for failing to pay his/her Part D premiums. Although the Part D—IRMAA is paid to CMS (via benefit payment withholdings or direct billing as described above), and not to the PDP, we believe the same consequences should apply for failure to pay the Part D—IRMAA as for failure to pay plan premiums. Therefore, we are proposing, at § 423.293(d)(3), that CMS would terminate Part D coverage for any individual who fails to pay the income related monthly adjustment amount in accordance with proposed § 423.44.
c. Involuntary Disenrollment by CMS (§ 423.44)
Section 3308 of the ACA provides that the Part D—IRMAA increases the
monthly beneficiary premium for individuals who are subject to the assessment. Therefore, we propose to apply provisions similar to the existing Part D premium rules to terminate Part D coverage for any individual who fails to pay the Part D—IRMAA. However, prior to terminating coverage, we propose to provide the beneficiary with a grace period to pay the Part D—IRMAA. We propose to add § 423.44(e), to specify the involuntary disenrollment process by CMS when an individual fails to pay the Part D—IRMAA.
Section 1860D-13(c) of the Act provides that enrollees' Part D coverage can be terminated if they fail to pay their Part D premiums to the PDP after a grace period and adequate notice has been provided. In cases where enrollees' Part D coverage is terminated due to their failure to pay premiums, Medicare rules do not now provide reinstatement if the enrollee later pays the premium arrearages after the termination date. We note that section C.8 of this preamble addresses our proposal to amend § 423.44(d)(1) to reinstate a beneficiary's enrollment into Part D if the beneficiary demonstrates good cause for failing to pay the Part D premium. Additionally, terminated enrollees cannot re-enroll in a stand-alone Part D or MA-PD plan unless they have a valid enrollment period. Consequently, waiting for a valid enrollment period may create a period in which an individual is without coverage and, depending on the duration, the enrollee may incur a Part D late enrollment penalty. Therefore, we propose to create a grace period and an extension of the grace period for good cause and reinstatement at § 423.44(e)(2) and (3) for individuals subject to the Part D—IRMAA. Although CMS recently extended the grace period that PDPs must provide enrollees before disenrolling them for failure to pay their premium (75 FR 19816) from a minimum of 1 month to 2 months, we propose to apply a longer grace period with respect to the Part D—IRMAA. The extended grace period under this proposed provision would be similar to the grace period (and extension of the initial grace period) afforded individuals under section 1838(b) of the Act with respect to the Part B premium (including the Part B—IRMAA).
We believe that it is appropriate to provide additional beneficiary flexibility in terms of a longer grace period for the Part D—IRMAA because section 3308 of the ACA does not impact the direct subsidy amount that CMS is required to pay Part D plan sponsors. Specifically, the Part D—IRMAA is not a reduction in the direct subsidy that CMS pays to PDPs; instead, it is an income-based amount paid to CMS in addition to the premium that is paid by the enrollee to his/her Part D plan. Thus, an extended grace period would not impact PDPs negatively. Furthermore, the extended grace period would allow the beneficiary more time to pay the Part D—IRMAA arrearages and avoid an immediate disenrollment that would leave the beneficiary without Part D coverage sooner. Therefore, we are proposing to allow all enrollees a minimum grace period of 3 months following the billing month to pay any Part D—IRMAA arrearages before they are disenrolled from their Part D plan. In addition, we propose that an enrollee's Part D coverage may be reinstated without interruption if the enrollee, within 3 calendar months after the termination date, demonstrates “good cause” (as defined under § 423.44(d)(1)(iv)of this proposed rule) for failure to pay Part D—IRMAA during the initial grace period, pays all Part D—IRMAA arrearages, and does not owe any plan premiums to the PDP. CMS (or an entity acting on behalf of CMS) will determine whether the beneficiary has demonstrated “good cause.”
We are also proposing at § 423.44(e)(4) to require PDPs, after notification by CMS, to notify enrollees of the termination of their enrollment in the Part D plan in a form and manner determined by CMS. We are also proposing to add a provision at § 423.44(e)(5) that would stipulate that in cases where an enrollee has been directly billed for the Part D—IRMAA and provided with the appropriate grace period as described above, the enrollee's termination will be effective the first day following the last day of the initial grace period. That is, the enrollee's last day of Part D coverage would be the last day of the grace period.
Finally, we propose to modify the title of § 423.44 from “Involuntary disenrollment by the PDP” to “Involuntary Disenrollment from Part D Coverage.” The new title would encompass disenrollments at the behest of both PDPs and CMS. In addition to disenrollments for failure to pay the Part D—IRMAA, examples of disenrollments that may be initiated by CMS include disenrollment due to death or loss of entitlement to Medicare Parts A or B.
10. Elimination of Medicare Part D Cost-Sharing for Individuals Receiving Home and Community-Based Services (§ 423.772 and § 423.782)
The MMA, as reflected in § 423.782, established that full-benefit dual eligible institutionalized individuals have no cost-sharing for covered Part D drugs under their PDP or MA-PD plan. Section 3309 of the ACA also eliminates cost-sharing for full-benefit dual eligible individuals who are receiving home and community-based services (HCBS) under a home and community-based waiver authorized for a State under section 1115 or subsection (c) or (d) of section 1915 of the Act, or under a State Plan Amendment under section 1915(i) of the Act, or if such services are provided through enrollment in a Medicaid managed care organization with a contract under section 1903(m) or 1932 of the Act. These services are targeted to frail, elderly individuals who, without the delivery in their home of services such as personal care services, would be at risk of institutionalization. We propose to amend § 423.772 to establish the definition of “individual receiving home and community-based services” and § 423.782(a)(2)(ii) to reflect that these individuals will have no cost-sharing. The Best Available Evidence policy in 42 CFR 423.800—which requires plans to charge a lower copayment if certain evidence is provided—is written broadly enough that it will apply to this new copayment category without any further regulatory changes. We will update our guidance to plans to provide additional detail on how the Best Available Evidence regulation applies to this population.
Section 3309 of the ACA provides the Secretary the discretion regarding the effective date of this provision, with the stipulation that it shall be effective no earlier than January 1, 2012. We rely on data from State Medicaid agencies, submitted to us no less frequently than monthly, to identify the individuals in the State who are full-benefit dual eligibles and are institutionalized. These data allow us to set these individuals' Part D cost-sharing to zero. To expand the population entitled to zero cost-sharing to include individuals receiving home and community-based services, states would be required to identify these additional individuals in their data to CMS.
We are proposing that this provision take effect on January 1, 2012. We believe it is important to provide this benefit at the earliest possible date, since it will provide assistance to an estimated 600,000 beneficiaries a year. In proposing an effective date, we considered the administrative impact on States, and we believe that even the earliest possible effective date will provide States with adequate time for implementation.
11. Appropriate Dispensing of Prescription Drugs in Long-Term Care Facilities Under PDPs and MA-PD Plans (§ 423.154)
Section 3310 of the ACA provides that the Secretary shall require Part D sponsors to utilize specific, uniform dispensing techniques, as determined by the Secretary in consultation with relevant stakeholders, such as weekly, daily, or automated dose dispensing when dispensing covered Part D drugs to enrollees who reside in long-term care (LTC) facilities in order to reduce waste associated with 30-day fills. We propose to implement this requirement by adding a new regulation at § 423.154 to govern how plan sponsors handle dispensing of covered Part D drugs in LTC facilities. The provisions of this regulation will apply to all organizations and sponsors offering Part D including stand alone Part D plans, MA organizations, EGWP contracts, and PACE plans.
Consistent with section 3310 of the ACA, we consulted with a number of stakeholders about dispensing in the LTC arena and their recommendations for implementing section 3310 of the ACA. On March 19, 2010, we participated in the “Short Cycle Dispensing Focus Group for Long Term Care” program hosted by the National Council for Prescription Drug Programs (NCPDP). The well attended focus group brought together pharmacies servicing LTC facilities, LTC facilities, vendors, prescription drug plans, and pharmacy benefit managers (PBMs). The objective of the conference was to discuss the implementation of 7-day-or-less dispensing from various points of view. We announced our open-door policy in several industry forums and have also actively reached out to all industry groups we could identify. We have consulted with a wide spectrum of industry stakeholders including professional organizations and trade groups; providers of LTC pharmacy services; vendors for automated dispensing technologies, pre-pack filling equipment and software; Part D sponsors; group purchasing organizations; LTC pharmacy networks; and pharmacy benefit managers. On June 29, 2010, we hosted a meeting on long-term care waste and the implementation of section 3310 of the ACA. The meeting brought together leaders in the LTC industry including nursing and pharmacy professional organizations, LTC facilities, and LTC pharmacies. The industry has been helpful in providing recommendations for implementing Section 3310 of the ACA to reduce waste associated with 30-day dispensing.
We consider “waste” to occur when a Part D drug is dispensed to a Part D enrollee residing in a LTC facility and billed to a Part D sponsor, but is not consumed by the Part D enrollee. Waste may occur, for example, when treatment with the Part D drug has been discontinued, the Part D enrollee has been discharged to the community, the Part D enrollee has been hospitalized, or the Part D enrollee has died, leaving unused dispensed drugs.
Under § 423.154 (a)(1)(i), we propose to require all pharmacies servicing long-term care facilities, as defined in § 423.100, to dispense brand-name medications, as defined in § 423.4, to enrollees in such facilities in no greater than 7-day increments at a time. During our discussions with the industry, multiple parties reported that 75 percent to 80 percent of the cost of drug wastage arises from only 20 percent of the drugs. That 20 percent is made up exclusively of brand-name medications. In an effort to target the drugs resulting in the most financial waste and to lessen the burden for facilities transitioning from 30-day supplies to 7-day supplies, we propose initially limiting the requirement for 7-day-or-less dispensing to brand-name drugs as defined in § 423.4. However, nothing precludes LTC pharmacies and facilities from expanding 7-day-or-less dispensing to more than brand-name drugs, and we encourage Part D sponsors to facilitate that practice. While we considered imposing the 7-day dispensing requirement for all drugs at once, in consultation with industry representatives, we have concluded that a transitional approach would ease the initial burden on nursing facility nursing staff time and LTC pharmacy pharmacist staff time, in particular by reducing the number of products for which a pharmacy would have to transition from dispensing one 30-day supply per month to dispensing at least four 7-day supplies per month. Many industry participants in our consultative phone interviews and face-to-face meetings indicated that they believed it would be feasible to change quickly to 7-days-or-less dispensing for the 20 percent of total scripts (that is, those for brand-name drugs). Although other industry representatives opined that a transitional approach was not necessary and that the additional labor associated with four times as many dispensing events per month on all applicable medications was being overestimated. Nonetheless, we are not aware of any objective data which demonstrate the cost effectiveness of full versus partial implementation, and thus we believe the more prudent course is to proceed with a transitional approach. If such data does exist, we welcome comments from the public presenting such data. Therefore, our proposal would apply the 7-day-or-less supply requirement initially only to brand-name drugs and would postpone applying the requirement to generic drugs until a later date which we will determine through future rulemaking. In the meantime, we solicit comments on how soon the industry can transition to include generic drugs in the 7-day-or-less requirement.
We also propose excluding from the requirements of § 423.154(a) those drugs that are difficult to dispense in a 7-day or less supply and drugs that are dispensed for acute illnesses. We believe that requiring these types of drugs to be dispensed in 7-day-or-less increments could result in safety or efficacy concerns or could have the counterproductive effect of increasing drug waste. We propose to codify these exclusions at § 423.154(b). In proposing these exclusions, we recognize that there are some medications that, for the reasons described above, do not lend themselves well to a 7-day or less supply. These include eye drops, ear drops, inhalers and inhalation drugs, nasal sprays, reconstituted antibiotics and other drugs with parenteral route of administration, drugs that must remain in their original container, and topical medications. However, in keeping with the statute's intent—that is, the reduction of drug waste in the LTC setting—our proposal aims to be limited to instances where a 7-day-or-less dispensing requirement is truly not feasible. For example, some in the industry have suggested that we exclude liquids from the requirements; however, we believe most liquids can be transferred to smaller amber prescription bottles or oral syringes to accommodate 7-day-or-less dispensing, so we decline to propose the exclusion of all liquids. In contrast, we believe antibiotics reconstituted from powder need to remain in their original container and, thus, our proposal would exclude them from the 7-day-or-less dispensing requirement. For other medications that we proposed excluding from the requirement, we encourage use of smaller size containers, when available, to reduce the potential for waste. We solicit comments on the types of dosage forms and drugs that should be excluded from the requirements under § 423.154(a).
Another solution we considered to reduce waste in LTC facilities is in the area of return for credit and reuse. Under this scenario, Part D sponsors
would have policies in place, consistent with state law, to require unused Part D drugs to be returned to the pharmacy for reuse to fill another patient's prescription. Although return for credit and reuse is not prohibited by CMS, we recognize limitations to this approach since return for credit and reuse is not permitted in all states, often excludes lower cost generic drugs, and is frequently limited to a subset of drugs in unused or specially approved packaging. Moreover, return and reuse of controlled substances is limited by the Drug Enforcement Agency (DEA). In order to reduce pharmaceutical and financial waste, pharmacies must reclaim the unused medications from the LTC facility, reverse, and re-bill the claim to reflect the unused portion of drug, and restock the drug. We understand from discussions with the industry that this places a significant burden on the pharmacies. In addition, there are safety and quality control issues regarding storage of the unused medications in the LTC facility and chain of custody of the drugs to be returned. Finally, return for credit and reuse does not address issues regarding drug diversion because unused drugs that may be returned to the pharmacy for reuse are still available for diversion prior to restocking. Upon consideration of these facts, we decided that return for credit and reuse would not be the optimal solution to address drug waste generated by LTC facilities under Part D. However, we believe that Part D sponsor contracts should not be silent on the disposition of unused drugs. Only when data has been systematically collected will the extent of waste of Part D drugs be quantifiable on other than an anecdotal basis. Therefore, we propose to add a provision at § 423.154(f) to require that Part D sponsors include terms in their LTC pharmacy contracts that require any unused drugs originally dispensed to the Part D sponsor's enrollees to be returned to the pharmacy (not necessarily for reuse) and reported to the sponsor. Such contracts will also address contractual obligations for disposal in accordance with Federal and State regulations, as well as whether return for credit and reuse is authorized where permitted under State law. Beyond these proposed requirements, we urge the industry to improve practices with respect to the tracking and inventory control of returned unused drugs, as well as electronic transactions for adjustments to previously submitted claims and other reporting on the disposition of unused drugs. We solicit comments on whether there are DEA or state technical issues that may be barriers to the implementation of this provision.
Although we are not proposing to recognize return for credit and reuse as an alternative to 7-day-or-less dispensing, we understand that return for credit and reuse may be a supplement to reduce the minimal pharmaceutical waste associated with 7-day-or-less dispensing. Through conversations with the industry, we learned that there are circumstances where a Part D drug can be safely returned to stock for reuse. For example, a LTC facility may have an onsite pharmacy that services only that facility using unit dose packaging. Under those conditions, assuming state law allows return for credit and reuse, it would be a reasonable way to reduce the minimal waste that may be generated with 7-day-or-less dispensing. We will allow return for credit and reuse in LTC pharmacies, when return for credit and reuse is permitted under the state law and is allowed under the contract between the Part D sponsor and the pharmacy. We expect that if Part D drugs are returned for credit, the Part D drugs will be reused only if the environments to which the drugs have been exposed and chain of custody of the drugs do not compromise the safety or efficacy of the medication. In addition, when permitted or required contractually, we believe pharmacy dispensing fees paid to pharmacies may take into account restocking fees consistent with the proposed modification to dispensing fees under § 423.100, “Dispensing Fees” discussed in section II.F. of this proposed rule (Other Clarifications and Technical Changes).
While we believe return for credit and reuse, where permitted, can help to reduce some drug waste after it occurs, we believe it is better to prevent the waste from occurring in the first place through the use of 7-day-or-less dispensing. It stands to reason that if fewer drugs are available to be wasted, fewer drugs will be wasted. That proposition is supported in smaller studies and analyses projecting waste based on retrospective reviews of drugs dispensed using less than 30-day dispensing methodologies.
1
Those studies not only show a reduction in pharmaceutical waste, but also show savings associated with reduction of the waste.
1
James W. Moncrief, Advanced Pharmacy, data from a seven month study of 36 LTC facilities presented at the NCPDP Short Cycle Dispensing Meeting. Sheraton Hotel BWI, March 19, 2010.
Lepinski PW, Am J Hosp Pharm 1986 Nov; 43 (11):2771-9 Cost comparison of unit dose and traditional drug distribution in a long-term-care facility.
Brown CH, Am J Hosp Pharm. 1984 Apr; 41(4):698-702 Cost of discarded medication in Indiana LTC facilities.
Parrott KA Am J Hosp Pharm 1980 Nov; 37(11);1531-4 Drug waste in LTC facilities: impact of drug distribution system.
Farmer RG Am J Hosp Pharm 1985 Nov; 42(11):2488-91 Cost of drugs wasted in the multiple-dose drug distribution system in long-term-care facilities.
Seven-day-or-less dispensing has advantages besides reducing financial waste. For example, 7-day-or-less dispensing is consistent with the DEA's requirement to guard against diversion of controlled substances by limiting the quantity of drugs dispensed. (See for example 21 CFR 1301.71). We are also convinced that 7-day-or-less dispensing would be more beneficial for the environment. We note that the Environmental Protection Agency (EPA) recommends that LTC facilities reduce the amount of pharmaceutical waste generated by limiting the amount of pharmaceuticals dispensed at one time.
2
2
Environmental Protection Agency, Unused Pharmaceuticals the health care industry: Interim report, August 2008 (available at
http://epa.gov/waterscience/ppcp/hcioutreach.pdf
)
Based on our research and discussions with stakeholders, we therefore propose to require that for the purposes of dispensing Part D drugs to Part D enrollees in LTC facilities, Part D sponsors require that their contracted pharmacies dispense no more than a 7-day supply of brand-name drugs as defined in § 423.4, except when a brand-name drug is excluded from the requirement. We understand from the industry that 7-day-or-less dispensing has been used for decades by some pharmacies servicing small facilities with as few as ten beds, as well as by some pharmacies that service large facilities with hundreds of beds. Many pharmacies are currently using 14-day or 7-day-or-less dispensing methodologies for their Medicare Part A population since the nursing facilities are responsible for Part A stay-related costs and recognize the cost-saving value of lesser amounts dispensed at a time. As a result, many pharmacies providing drugs to LTC facilities have experience with 7-day-or-less dispensing.
The requirement would generally apply to “all pharmacies,” including not only closed-door exclusively LTC pharmacies, but also retail pharmacies and mail order pharmacies that dispense to LTC facilities. Under section § 423.100, a LTC facility 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. We note that this provision does not encompass settings such as group homes or assisted living facilities that may also be serviced by these same pharmacies.
We also note that 7-day-or-less dispensing does not correspond to a change in the quantity of a prescription a prescriber writes, or the number of prescriptions. Unlike the typical 30 or 90-day prescriptions written for individuals in the community, prescribing in the LTC setting is generally done by physicians inserting standing orders for medications into the residents' medical record. Pharmacies may dispense a partial days supply in a manner consistent with the proposed requirements of § 423.154(a)(1). Partial filling of prescriptions is not inconsistent with DEA regulations and is permissible under 21 CFR 1306.23 for Schedule III, IV, and V drugs and under 21 CFR 1306.13(b) for Schedule II drugs.
Under § 423.154(a)(1)(ii), we propose to permit the use of uniform dispensing techniques defined by each of the LTC facilities being serviced. By uniform techniques, we mean that dispensing methodologies will be uniform with respect to the type of packaging used to dispense Part D drugs within a LTC facility, but may vary by the quantity of medication (days' supply) dispensed at a time. The industry currently employs a variety of single and multi-dose packaging systems such as punch cards (also known as blister packs or bingo cards), strip packaging, cassettes, pouches, and envelopes. Consistent with section 3310 of the ACA, we consulted with the LTC industry and based on industry input, we have determined that it is not possible or practical for CMS or Part D sponsors to identify the uniform dispensing techniques that must be used by all pharmacies. Rather, it is the LTC facilities that are in the best position to identify uniform dispensing techniques to be used throughout their LTC facility. We understand from the industry that there are various constraints and considerations that limit the type of dispensing systems used in a particular LTC facility. For example, we understand that there are older LTC facilities that cannot easily support automated dose dispensing technology because of the computer networking and ventilation considerations for that type of equipment. Therefore, we are proposing that Part D sponsors must permit their contracted pharmacies to implement the uniform dispensing techniques selected by each LTC facility, and may not require the use of a different packaging system or technology than that selected by the facility through its contracted LTC pharmacy. Based on our conversations with industry, we understand that one of the greatest potential problems in implementing a 7-day-or-less dispensing approach would be any inconsistency in the dispensing methodology and/or packaging technique utilized in the same LTC facility. We believe our proposal to require that Part D sponsors must ensure that their contracted pharmacies dispense Part D drugs using techniques that are uniform throughout the facility would address this concern. We believe this proposal is consistent with the purpose of section 3310 of the ACA because it is intended to minimize waste through the use of uniform dispensing techniques that are specific to the LTCs being served.
We understand from the industry that depending on the 7-day-or-less dispensing methodology used, there may be an increase in nursing time devoted to ordering and receiving medication. We encourage LTC facilities to work with the pharmacies serving them to determine the 7-day-or-less dispensing methodology that will work best for the LTC facility, taking into account not only physical plant and labor considerations, but also overall cost effectiveness and waste reduction potential . We believe our proposed requirement will accommodate various 7-day-or-less on-demand or cycle filling methodologies in use by the LTC industry today, including (1) 7-day-supply dispensing; (2) dispensing of a drug for 2 days, followed by the dispensing of the drug for another 2 days, followed by dispensing of the drug for 3 days, referred to as “2-2-3” day dispensing; (3) dispensing of a drug for 4 days followed by the dispensing of the drug for 3 days, referred to as “4-3” day dispensing; (5) daily dispensing; and (6) automated shift or dose dispensing.
In making this proposal, we recognize that automated dose dispensing, which generally refers to medication dispensing through automated technology located at the facility on a demand basis, is likely the most efficient dispensing methodology and the most effective in reducing waste. However, we recognize there are significant limitations to the rapid adoption of automated dose dispensing systems, including capital acquisition costs, state pharmacy board restrictions, the lack of final automated medical record and interface standards, and inventory considerations. Additionally, automated dose dispensing may not be considered practical by some LTC facilities and the pharmacies servicing them due to size or physical plant limitations. Thus, we expect Part D sponsors to encourage pharmacies and LTC facilities to work together to determine the most appropriate dispensing methodology or methodologies to be used for a particular facility.
We recognize that the majority of pharmacies not already using 7-day-or-less dispensing methodologies are using 30-day dispensing for their Part D population. We understand that the most common 30-day dispensing system is the 30-day punch card. As a result, these pharmacies will have to make changes in the number of medications packed in a 30-day card or switch to 7-day card stock in order to continue dispensing brand-name drugs to Part D enrollees residing in LTC facilities. Our conversations with manufacturers of the 30-day punch card systems have indicated that there is minimal conversion involved in the transition from 30-day dispensing to 7-day dispensing.
We also do not expect a pharmacy's delivery schedule to be greatly affected since deliveries are generally made at least daily to long-term care facilities to accommodate first dose and new admission needs. However, we recognize that for some pharmacies there will be changes in the way deliveries are made. Some pharmacies may not service the number of beds to justify hiring additional delivery drivers and purchasing additional delivery vehicles. These arrangements need to be considered by the pharmacy and LTC facilities. As specified under 50.5.2 of Chapter 5 of the Medicare Prescription Drug Benefit Manual (See
http://www.cms.gov/PrescriptionDrugCovContra/Downloads/Chapter5.pdf
), which outlines the Long-Term Care Performance and Service Criteria, specific delivery arrangements are to be determined through an agreement between the pharmacy and the LTC facility. Accordingly and subject to any state law restrictions, pharmacies and LTC facilities may agree to use a common carrier for some deliveries of drugs to LTC facilities. We would not consider a contractual agreement to deliver a portion of Part D drugs to Part D enrollees residing in LTC facilities via a common carrier to constitute a mail order benefit, or the pharmacy making some but not all deliveries by common carrier being considered a mail order pharmacy. We solicit comments on this interpretation.
We note that options for billing to accommodate 7-day-or-less dispensing are being discussed in a National Council for Prescription Drug Programs (NCPDP) workgroup. Unless the
industry voluntarily adopts a single billing standard, we believe that Part D sponsors should generally allow pharmacies to use currently accepted transactions to minimize burden in transitioning to more frequent dispensing of smaller amounts. However, pursuant to our authority under section 1860D-12(b)(3)(D) of the Act, which incorporates by reference section 1857(e)(1) of the Act, we also propose establishing a new requirement under § 423.154(a)(2) in which Part D sponsors must collect and report to CMS the dispensing methodology used for each dispensing event described by proposed § 423.154(a)(1)(i) and (ii). We expect that our data collection efforts will help us to estimate the relative efficiencies of dispensing methodologies and determine the residual waste to estimate additional savings. We cannot establish the impact of increased dispensing fees prior to the dispensing fees being renegotiated. We believe that it is critical for Part D sponsors and CMS to obtain data to identify changes in the industry and to evaluate the effect of different dispensing methodologies on the reduction of waste. We note that the NCPDP workgroup is considering the adoption and transmission of specific codes on billing transactions that would facilitate the collection of this information by Part D sponsors in an automated and cost-effective manner.
We note that if adopted, this proposal would likely lead to a change in copayment methodology. We anticipate the implementation of particular co-payment methodologies will be dependent on the billing and dispensing methodologies used, and as a result, we acknowledge that co-payment methodologies within the same plan may vary depending on the LTC facility where the beneficiary resides. We believe implementation of co-payment methodologies in this way is consistent with the uniform benefit requirement at § 423.104(b)(2) so long as the copayment methodology throughout the plan's service area is consistent for beneficiaries who receive their Part D medications using the same dispensing methodology. Copayment may be collected at the first dispensing event in a month, the last dispensing event in a month, or prorated based on the number of days a Part D drug was dispensed in a month. However, due to the relatively small copayments for low-income subsidy (LIS) beneficiaries, copayments for LIS beneficiaries should be billed with the first or last dispensing event of the month.
Despite the changes in dispensing events, billing, and co-payments, we are considering limiting the LTC claims prescription drug events (PDEs) to 1 per month for each standing order or prescription. We solicit comments on this proposal.
We realize our proposed requirements are likely to result in renegotiations of dispensing fees to reflect the costs associated with additional dispensing events in a single billing cycle for a single prescription and the costs undertaken to acquire technology aimed at reducing waste. Currently, Part D plans have the flexibility to vary the actual dispensing fees paid to pharmacies. As provided in section 1860D-11(i) of the Act, we are prohibited from intervening in negotiations between pharmacies and Part D plans; however, we do believe that it reasonable to expect that dispensing fees be adjusted based on the proposed requirements under this provision. Accordingly, we propose to modify the definition of “dispensing fee” under § 423.100 to include costs associated with the acquisition and maintenance of technology to maintain reasonable pharmacy costs. Although it is not our intent to include all activities that are “reasonable costs” in the definition of “dispensing fees,” in light of statutory requirements regarding LTC pharmacy dispensing, we believe it is particularly important to highlight potential pharmacy costs aimed at reducing waste and efficiency of dispensing. We also believe dispensing fees are likely to differentiate among the costs associated with different dispensing methodologies and appropriately address costs that are incurred to offset waste. Appropriate dispensing fees that differentiate among the various dispensing methodologies could incentivize more rapid adoption of the most cost-effective technologies and align facility, plan sponsor, and public interests in minimizing costs and pharmaceutical waste.
We also solicit comments on whether the requirements should be waived for particular types of LTC pharmacies. We propose to waive the requirements under paragraph (a) for pharmacies when they dispense brand-name Part D drugs to Part D enrollees residing in an intermediate care facilities for the mentally retarded and developmentally disabled (ICFMRDD) and institutes for mental disease (IMDs) under § 423.154(c). We believe that due to specific problems with medication delivery and dispensing to closed (and often locked) facilities, it would be difficult for these pharmacies to adhere to 7-day-or-less dispensing. Waving the requirements in this instance would be consistent with the statute when done on a uniform basis (that is, all similarly situated LTCs) and when there is a demonstration that applying the dispensing requirements to that type of LTC would not serve to reduce waste. For the ICFMRDD and IMDs, there is a good rationale for not requiring 7-day dispensing, because requiring 7-day-or-less dispensing is not feasible and could increase costs rather than decrease waste associated with 30-day dispensing. We solicit comments on whether other types of similarly situated facilities (such as LTC facilities utilizing Indian Health Service (IHS) facilities to provide pharmaceuticals or utilizing Tribal facilities providing pharmacy services for the IHS under Pub. L. 93-638 compacts or contracts) should also be waived from the requirement and specific reasons as to why those facilities should be waived from the requirement.
We note that we originally considered waiving the requirements for pharmacies dispensing to small LTC facilities. However, we do not believe that such a waiver is supported based on conversations with the industry which, as stated above, demonstrate that pharmacies servicing LTC facilities as small as 10 beds are using 7-day-or-less dispensing methodologies. We also considered waiving the requirements for pharmacies that dispense to LTC facilities in rural areas. Similarly, we do not believe such a waiver is supported since many of these pharmacies deliver to LTC facilities daily to accommodate first fill and new admissions. We solicit specific comments on the waiver criteria for LTC pharmacies.
Pursuant to section 3310 of the ACA, the requirements of this section go into effect January 1, 2012. However, as a result of discussions with the LTC industry, we propose a limited extension to a Part D sponsor when an independent community pharmacy (such as, not a closed door pharmacy dedicated to servicing LTC facilities only) with which the Part D sponsor has contracted is the primary provider to a small LTC facility (less than 80 beds) in rural communities, as defined by the Bureau of the Census, and the pharmacy is not already dispensing a 7-day supply to any patient population in the LTC facility. Since independent community pharmacies are frequently the only pharmacy provider to rural LTC facilities, we understand that there could be significant challenges in getting Part D drugs to beneficiaries residing in LTC facilities in rural areas. We have heard from the industry that small pharmacies dispensing to small LTC facilities in rural areas frequently only dispense in 30-day supplies. We understand that those facilities may
need extra time because of a lack of dedicated staff to adequately train and make the necessary changes to convert to 7-day-or-less dispensing by January 1, 2012. Under § 423.154(e), we propose allowing an independent community pharmacy that is the primary provider of the Part D drugs to a LTC facility located in a rural to dispense no more than a 14-day supply through December 31, 2012. We expect that these pharmacies contracted with Part D sponsors will find solutions to their significant challenges and work towards full compliance with § 423.154(a) during this extension. We propose that Part D sponsors contracted with these independent community pharmacies must come into full compliance with § 423.154(a) by January 1, 2013. We solicit comments on this proposal.
Based on the preceding, we propose to revise § 423.150 by renumbering paragraphs (b) through (g) as paragraphs (c) through (h) and adding a new paragraph (b) that would address appropriate dispensing of covered Part D drugs in LTC facilities. We also propose to add new requirements, as discussed previously, at § 423.154 to require Part D sponsors to ensure that all pharmacies servicing LTC facilities dispense no more than a 7-day supply of brand-name medications and use uniform dispensing methodologies as defined by each of the LTC facilities being serviced. In addition, we propose § 423.154 (a)(2) which requires Part D sponsors to collect and report, as CMS requires, the dispensing methodology used for each dispensing event described by paragraphs (a)(1)(i) and (ii) of § 423.154. We propose exceptions to this requirement at § 423.154(b)(1) and (2) relative to specific drugs and waivers of this requirements for specific pharmacies under § 423.154(c). Pursuant to section 3310 of the ACA, we propose the effective date of January 1, 2012 for § 423.154 under § 423.154(d) with a limited extension through December 31, 2012 to pharmacies meeting the requirements under § 423.154(e). We also propose to add the requirement that Part D sponsors require any unused Part D drugs originally dispensed to its enrollees to be returned to the pharmacy and reported to the sponsor and address whether return for credit and reuse is permitted under their contracts with pharmacies servicing LTC facilities in § 423.154(f).
12. Complaint System for Medicare Advantage Organizations and PDPs (§ 422.504 and § 423.505)
The Secretary has the authority under the Act to include any terms or conditions the Secretary deems necessary and appropriate in MA organization and Part D sponsor contracts, including requiring the organization to provide the Secretary with such information as the Secretary may find necessary and appropriate. (
See
section 1857(e)(1) of the Act as incorporated into Part D through section 1860D-12(b)(3)(D) of the Act.) Under this authority, we have proposed a number of contract provisions that require MA organizations and Part D sponsors to report specific information to CMS for a variety of purposes, with the overall goal of improving the Part C and D programs. For example, we relied on this authority to establish a requirement related to the reporting of prescription drug event data under Part D for purposes other than payment. One of the purposes for requiring submission of these data for nonpayment-related purposes was to enable us to conduct evaluations of the data in order to make recommendations for improving the Medicare program.
Up until now, we have not implemented specific regulatory requirements related to the tracking and resolution of complaints that we capture from the Part C and D enrollees in the CMS-established Health Plan Management System (HPMS) Complaints Tracking Module (CTM). This system was established at the start of the Part D program in order to record and track complaints received by CMS from beneficiaries, providers, and other constituents about prescription drug plans. After the start of the Part D program, the system was expanded in July 2008 to collect and capture complaints related to the Part C program.
With the establishment of the CTM system, we have routinely provided complaint-related information to Part C and D sponsoring organizations to assist sponsors in the identification of operational and plan performance issues. In addition, we have issued oversight and compliance direction to Part C and D sponsors with respect to CTM complaints, including CMS' expectations of MA organization and Part D sponsors with regard to complaint resolution. These expectations are largely contained in recommended standard operation procedures (SOPs) that CMS issued to MA organization and Part D sponsors (
see https://www.cms.gov/PrescriptionDrugCovContra/Downloads/CTMSOP_10.06.09.pdf
). As part of these procedures, CMS directed MA organizations and Part D sponsors to document when they resolve a complaint in their case notes, and to enter a resolution date and a resolution summary note in the CTM complaint tracking system, to which they have access. Since we developed the CTM system, we have focused on complaint resolution monitoring for oversight purposes but have not gone so far as requiring in regulation that MA organizations and Part D sponsors respond to complaints received by us and document the details of the complaint resolution in the CMS CTM system.
With the enactment of the Affordable Care Act, we now believe additional requirements in the area of complaint resolutions are necessary. Under section 3311 of the Affordable Care Act, we (under our delegation of authority by the Secretary of HHS) are directed to develop a complaint system that will allow for the collection and maintenance of complaints against PDPs and MA-PD plans. We are also directed to develop a model electronic complaint form that is to be maintained on
http://www.medicare.gov
and the Office of Medicare Ombudsman's Web site. Finally, we are required to report to Congress annually on the number and types of complaints reported in the system, geographic variations in such complaints, the timeliness of agency or plan responses to such complaints, and the resolution of such complaints.
We believe that the current CTM system largely fulfills the requirement by Congress that we establish a complaint system to capture complaints against Part D plans. As explained previously, the CTM system was established to record and track complaints received by us from beneficiaries, providers, and other constituents about health and drug plans. However, to ensure that the data collected and warehoused in the system provide us with sufficient information to report to Congress, we believe that enhancements to the current system are necessary, particularly with respect to the data relating to the closure of complaints. While our SOP instructs MA organizations and Part D sponsors to indicate in the system a clear and concise complaint resolution summary note when the complaint is resolved, we have determined that many sponsors do not do so and merely write the words “complaint closed” in the CTM. Absent more detailed information on how a complaint is resolved by the plan, we do not believe we will be able to meet the objectives of Congress to report on the timeliness and resolution of complaints. Therefore, to ensure that we have the appropriate information to report to Congress, and to further improve our monitoring efforts with respect to complaint closure, we are proposing a
new requirement on MA organizations and Part D sponsors, under the authority of section 3311 of the ACA and section 1857(e)(1) and 1860D-12(b)(3)(D) of the Act, to require sponsors to respond to complaints received by us. We believe it is necessary and appropriate to apply these requirements to both MA organizations and Part D sponsors to maintain a balanced and fair program for beneficiaries receiving medications under the Part D program or an enhanced benefit under the MA program. At this time, with respect to the proposed requirement to document how a complaint was resolved, we are contemplating adding a drop down checklist to CTM that MA organization and Part D sponsors would use to document closure of complaints, as opposed to requiring free text descriptions of complaint closure. We invite comments on this approach.
With respect to the model electronic complaint form to be used for reporting plan complaints, Congress has directed us to prominently display the form on the front page of the Medicare.gov Internet Web site and on the Internet Web site of the Medicare Beneficiary Ombudsman. We are in the process of developing the model electronic complaint form and plan to make this form available on the internet websites as required. Considering the importance that Congress has given to the issue of reporting complaints and the development of a standardized form for taking complaints against plans, we are also proposing to require MA organizations and Part D plans to link to the CMS-developed electronic complaint form on the Medicare.gov Internet Web site from their main Web page. We believe the importance Congress has given to the issue of complaint reporting makes it necessary and appropriate to propose to apply this requirement to both MA organizations and Part D plans.
Accordingly, based on the preceding, we propose to add a new requirement to § 422.504(a) and § 423.505(b) to require MA organization and Part D sponsors to address and resolve all complaints in the CMS complaint tracking system and to require a link to the electronic complaint form at the Medicare.gov Internet Web site on each Part C and Part D sponsor main Web page. If adopted, this requirement would be effective January 1, 2012. Following the issuance of a final rule, we will develop guidance to instruct MA organizations and Part D sponsors on how to comply with this new requirement.
13. Uniform Exceptions and Appeals Process for Prescription Drug Plans and MA-PD Plans (§ 423.128 and § 423.562)
Section 3312 of the ACA amends section 1860D-4(b)(3) of the Act by adding a new section (H) that will require, effective January 1, 2012, each PDP sponsor of a prescription drug plan to use a single, uniform exceptions and appeals process (including, to the extent the Secretary determines feasible, a single uniform model form for use under such process) with respect to the determination of prescription drug coverage for an enrollee under the plan; and to provide instant access to such processes by enrollees through a toll-free telephone number and an Internet Web site.
Since the inception of the Part D program, we have received numerous comments, especially from beneficiary advocacy groups, suggesting the coverage determination and appeals processes are too complex and difficult for enrollees to navigate. The commenters recommended streamlining the existing coverage determination and appeals processes in order to simplify the plan appeals procedures for both enrollees and providers. The most significant concerns noted by commenters involve access to the Part D coverage determination and redetermination processes. For a variety of reasons, enrollees often have difficulty making initial requests for coverage. Over time, plan sponsors have developed plan-specific forms for requesting coverage, and often have multiple request forms that are drug-specific. As a result, enrollees often have difficulty locating or obtaining these plan-specific request forms and determining which form should be used for their particular request. Even when enrollees are able to locate and complete the appropriate request forms, they may have trouble determining where the forms should be submitted, because plan sponsors often have multiple addresses, telephone numbers, and fax numbers, and it is not clear which address or phone number should be used to submit a particular request. Commenters indicate these elements create a process that is quite overwhelming and frustrating for enrollees, and for those who try to assist them.
In accordance with the new section 1860D-4(b)(3)(H) of the Act, we propose to revise the regulation at § 423.562(a) to require Part D plans to use a single, uniform exceptions and appeals process that includes procedures for accepting oral and written requests for coverage determinations and redeterminations. In addition, we also propose to revise the regulation at § 423.128 paragraphs (b)(7) and (d) to provide specific mechanisms that plan sponsors must have in place in order to meet the uniform appeals requirements of section 1860D-4(b)(3)(H) of the Act. We believe the proposed requirements will address many of the long-standing concerns about the Part D coverage determination and appeals processes being too complex and difficult for enrollees to navigate.
At § 423.128(b)(7), we propose adding paragraph (i) to require that plan sponsors make available a standard form to request a coverage determination and a standard form to request a redetermination, to the extent such standard request forms have been approved for use by CMS. We plan to evaluate the feasibility of developing and requiring the use of standard request forms and will determine whether a single form can reduce confusion and address the needs of beneficiaries, providers, and PDP sponsors. If it is determined that standardized forms are appropriate, the forms will be developed by us and will be used to request any type of coverage determination under Part D (including exception requests and requests for drugs that may be subject to a utilization management requirement) and redeterminations. We will evaluate existing plan and CMS forms used for requesting coverage determinations and redeterminations to determine what elements should be included in the forms. We welcome comments and suggestions regarding: (1) The specific elements that should be included in these forms; (2) whether a single request form is feasible; and (3) any other issues that should be considered and/or resolved before this requirement is operationalized.
Section 3312 of the ACA also requires plan sponsors to provide instant access to the coverage determination and appeals processes through an internet Web site. Therefore, we propose to add paragraph (ii) to
§
423.128(b)(7), which would require sponsors to develop a Web-based electronic interface that allows an enrollee (or an enrollee's prescriber or representative) to immediately request a coverage determination or redetermination via a plan's secure Web site. We believe that allowing requests for coverage determinations and redeterminations to be made through plan websites will further increase beneficiary access to the coverage determination and redetermination processes. We propose that the interface would be the “electronic equivalent” of the paper
coverage determination and appeals forms proposed at § 423.128(b)(7)(i). In establishing this interface, Part D sponsors must ensure that any such interface complies with the Health Insurance Portability and Accountability Act (HIPAA) of 1996, the Privacy Act, and CMS's information security requirements where appropriate. Some Part D sponsors may already have an electronic means for requesting coverage determinations and redeterminations available to their enrollees. We request comments and ideas regarding how such an electronic interface should work and any issues that need to be addressed before operationalizing this requirement.
Plan sponsors must also establish a toll-free telephone line that provides instant access to the coverage determination and appeals process pursuant to section 3312 of the ACA. Therefore, we propose to revise § 423.128(d)(1) to include a requirement that sponsors provide a toll-free telephone line for requesting coverage determinations and appeals. We currently require sponsors to offer a toll-free customer call center as part of the provision of specific information requirements at § 423.128(d), and propose requiring plan sponsors to provide enrollees with access to the coverage determination and redetermination processes through the toll-free customer call center if sponsors are not doing so already. In other words, we envision the customer service representative (CSR) accessing the on-line coverage determination and redetermination process via the plan's web-based application discussed previously, and entering the information supplied by the enrollee via telephone. We will develop model scripts for the CSRs to use for this purpose.
Consistent with the proposals to require the use of standardized forms for requesting coverage determinations and redeterminations (should this be determined feasible and to the extent that standard request forms have been approved for use by CMS), and the establishment of a toll-free telephone number and Web site for accepting requests for coverage determinations and redeterminations, we propose to amend § 423.562 by adding a new paragraph (a)(1)(ii) which cross-references the proposed requirements in § 423.128 paragraphs (b)(7) and (d)(1)(iii), and redesignating paragraphs (a)(1)(ii) and (a)(1)(iii) as paragraphs (a)(1)(iii) and (a)(1)(iv) respectively.
Finally, we are proposing to require Part D sponsors to modify their electronic response transactions to pharmacies so that they can transmit codes instructing the pharmacy to provide a point-of-sale (POS) notice to enrollees when a prescription cannot be filled. Currently, when an enrollee attempts to fill a prescription at a pharmacy, the pharmacist receives certain information electronically related to the prescription from the Part D sponsor, which may include whether it is on the plan's formulary, and whether there are any conditions associated with filling the prescription. In cases where a prescription cannot be filled as written, Part D sponsors are required under § 423.562(a)(3) to arrange with their network pharmacies to either post or distribute a pharmacy notice advising the enrollee of his or her right to contact the plan to request a coverage determination. The pharmacy notice is generic and does not include plan-specific information for requesting coverage determinations. While the current pharmacy notice provides enrollees with some information about requesting coverage determinations, beneficiary advocacy groups have argued the notice is too generic to provide enrollees with all of the information they need to easily access the coverage determination process. Advocates have also expressed concern about enrollees not receiving, or not being directed to the notice. Although we have been concerned about these complaints, under the existing pharmacy billing standard agreed upon by the National Council of Prescription Drug Programs (NCPDP version 5.1), it has not been feasible for plan sponsors to systematically transmit situation-specific messaging to pharmacists because transaction coding could not easily or quickly be changed. Furthermore, the pharmacies do not have the capability to populate, print, and distribute plan-specific notices to each enrollee who is not able to obtain a prescription as written.
With the adoption of the new HIPAA pharmacy billing standard (NCPDP version D.0), we now have the opportunity to work with the NCPDP to develop and standardize use of codes that will prompt a Part D network pharmacist to print or provide a POS notice to give to enrollees when a prescription cannot be filled. Accordingly, we are proposing at § 423.128(b)(7)(iii) that Part D sponsors modify their systems so that the plan sponsors are capable of transmitting codes to their contracted pharmacies and that the pharmacy will be notified to populate or provide a notice that can be printed by the pharmacist at the point of sale. We believe such notices should be printed and provided in the same manner as other instructions (for example, instructions for taking prescriptions). We will develop a model notice to ensure that messaging at the pharmacy is consistent with and in accordance with CMS rules. Consistent with this proposal, we are also proposing to revise § 423.562(a)(3) by deleting the reference to posting the pharmacy notice and requiring the sponsor to arrange with its network pharmacies to distribute notices instructing enrollees how to contact their plans to obtain a coverage determination or request an exception if they disagree with the information provided by the pharmacist. We propose that the pharmacy notice be provided in writing, consistent with the standards established in § 423.128(b)(7)(iii), and will include instructions explaining how enrollees can request coverage determinations by calling their plan sponsor's toll free customer service line or accessing their plan sponsor's Web site.
14. Including Costs Incurred by AIDS Drug Assistance Programs and the Indian Health Service Toward the Annual Part D Out-of-Pocket Threshold (§ 423.100 and § 423.464)
Section 1860D-2(b)(4)(C) of the Act provides protection against high out-of-pocket expenditures for Part D eligible individuals. Under the standard Part D benefit, a beneficiary is entitled to reductions in cost sharing under the catastrophic phase of the benefit once his or her true out-of-pocket (TrOOP) expenditures reach the annual Part D out-of-pocket threshold. TrOOP expenditures represent costs actually paid by the beneficiary, another person on behalf of the beneficiary, or a qualified State Pharmaceutical Assistance Program (SPAP). Most third party assistance, such as that from employers and unions, does not count toward the TrOOP threshold.
Prior to the passage of the ACA, our policy as specified in the definition of “incurred cost” at § 423.100 and as clarified in section 30.4 of Chapter 5 of the Prescription Drug Benefit Manual was that to the extent that a party paying for cost-sharing on behalf of a Part D enrollee was a group health plan, insurance program or otherwise (such as a government-funded health program), or third party payment arrangement with an obligation to pay for covered Part D drugs, that party's payment would not count toward TrOOP. Under this policy, supplemental drug coverage provided by the Indian Health Service (IHS), as defined in section 4 of the Indian Health Care Improvement Act, Indian tribes and organizations, and
urban Indian organization facilities were not considered to be TrOOP eligible because these entities fell under our definition of “government-funded health program,” under § 423.100.
Similarly, Aids Drug Assistance Programs (ADAPs) co-payments, which are funded under the Ryan White CARE Act, were not counted toward TrOOP for the purpose of meeting the out-of-pocket threshold at which catastrophic coverage under the Part D benefit begins. As explained in the preamble in the January 2005 final rule (see 70 FR 4240 and 4241) implementing the Part D program, ADAPs were not considered SPAPs because these programs receive Federal funding. Moreover, because the law specified that costs for covered Part D drugs paid by insurance or otherwise on behalf of a Part D enrollee do not count as incurred costs, any coverage that supplements the benefits available under Part D coverage that are provided to beneficiaries by Medicaid, Medicaid Section 1115 waiver programs, the VA health care program, the IHS, ADAP programs, and local or State indigent drug programs would not count as an incurred cost for purposes of TrOOP (see 70 FR 4240 and 4241).
With the passage of the ACA, CMS requirements as they relate to IHS and ADAPs have been superseded effective January 1, 2011. Section 3314 of the ACA amends section 1860D-2(b)(4)(C) of the Act to specify that costs borne or paid for by IHS, an Indian tribe or tribal organization, or an urban Indian organization, and costs borne or paid for by an ADAP would be treated as incurred costs for the purpose of meeting the annual out-of-pocket threshold. Based on these amendments, we propose to revise the definition of incurred cost at § 423.100(2)(ii) to include cost paid for by the IHS (as defined in section 4 of the Indian Health Care Improvement Act), an Indian tribe or tribal organization, or an urban Indian organization (referred to as I/T/U pharmacy in § 423.100) or under an AIDS Drug Assistance Program (as defined in part B of title XXVI of the Public Health Service). We also propose to amend § 423.464(f)(2) to specifically exclude expenditures made by IHS, an Indian tribe or tribal organization, or an urban Indian organization (referred to as I/T/U pharmacy in § 423.100) or under an AIDS Drug Assistance Program (as defined in part B of title XXVI of the Public Health Service) from the requirement to exclude such expenditures for the purpose of determining whether a Part D enrollee has satisfied the out-of-pocket threshold.
As indicated in section II.A. of this proposed rule, we propose that the regulations implementing this provision be effective 60 days after the publication of the final rule.
15. Cost Sharing for Medicare-Covered Preventive Services (§ 417.101 and § 422.100)
Effective January 1, 2011, sections 4103 and 4104 of the ACA revise sections 1833 and 1861 of the Act to create new coverage of Personalized Prevention Plan Services (PPPS) or “annual wellness visits” and establish a requirement that no cost sharing may be charged to beneficiaries under Original Medicare for the annual wellness visit, the initial preventive physical exam (IPPE) and Medicare-covered preventive services graded as an A or B by the U.S. Preventive Services Task Force (USPSTF).
In light of the new legislative requirements for Original Medicare, and the importance of preventive services in managed and coordinated care, we included information related to coverage and cost sharing for preventive services in guidance issued via the Health Plan Management System (HPMS) on April 16, 2010 (“Benefits Policy and Operations Guidance Regarding Bid Submissions; Duplicative and Low Enrollment Plans; Cost Sharing Standards; General Benefits Policy Issues; and Plan Benefits Package (PBP) Reminders for Contract Year (CY) 2011”) and May 20, 2010 (“Supplemental 2011 Benefits Policy and Operations Guidance on Application of the Mandatory Maximum Out-of-Pocket (MOOP) for Dual Eligible SNPs, and Cost Sharing for Preventive Services”). In this guidance, we strongly encouraged MA organizations to provide all in-network Medicare-covered preventive services without cost sharing charges under their MA plans in contract year 2011, indicated our intention to consider rulemaking to require that such preventive services be provided with no cost sharing, and provided instructions on how to reflect the zero cost sharing in their plan benefit package (PBP) submissions for contract year 2011.
As required at section 1852(a)(1)(A) of the Act (except as provided in section 1859(b)(3) of the Act for MSA plans and in section 1852(a)(6) of the Act for MA regional plans), each MA plan must provide to its members all Parts A and B benefits included under the Original Medicare fee-for-service program as defined at section 1852(a)(1)(B) of the Act. Because we agree with Congress that the utilization of preventive services should be encouraged by providing them without cost sharing, we believe it is necessary, and appropriate, to provide this same incentive to all Medicare beneficiaries, whether they receive their benefits through Original Medicare, under an MA plan, or under a section 1876 cost contract.
Therefore, under our authority in section 1856(b)(1) of the Act to establish MA standards by regulation, and our authority in section 1857(e)(1) of the Act to establish requirements we find “necessary and appropriate,” we propose to add a new paragraph (h) to § 422.100 to require MA organizations to provide in-network Medicare-covered preventive benefits at zero cost sharing, consistent with the new regulations for Original Medicare-covered preventive benefits. More specifically, we propose requiring that all MA organizations provide Medicare-covered preventive services, as specified by CMS, without enrollee cost sharing charges. Under our authority in section 1876(i)(3)(D) of the Act to impose requirements we find “necessary and appropriate,” we also propose to add a new paragraph (f) to § 417.101 to extend this proposed requirement to section 1876 cost plans.
For specific information about the list of preventive services covered under Original Medicare without cost sharing and information about what is included in the annual wellness visit, we propose to direct plans to go to the following Medicare Web sites:
https://www.cms.HospitalOPPS/
and
http://www.cms.gov/PhysicianFeeSched/.
16. Elimination of the Stabilization Fund (§ 422.458)
Section 221(c) of the MMA added section 1858 of the Act to establish rules for MA Regional Plans. Section 1858(e) established an MA Regional Plan Stabilization Fund (the Fund) for the purpose of providing financial incentives to MA organizations that offered new MA Regional Plans nationally, or in each MA region without one. The Fund was also established to retain MA regional plans in regions with relatively low MA market penetration. Specifically, the MMA authorized us to make a 1-year “national bonus payment” to an organization or organizations that offered an MA Regional Plan in each MA region in a given year (if there was no such plan offered in one or more regions in the previous year). If no national bonus payment was made in a given year, we could have used the fund to increase payments to MA regional plans offered in regions that did not have any MA regional plans offered in the prior year. Finally, to encourage plans to remain in regions with
relatively low MA market penetration, we could have used the Fund to make retention payments to MA regional plans that notified us of their intent to exit a region prior to the bidding deadline. Payments from the Fund, which was initially established at $10 billion, were first available beginning January 1, 2007.
Section 301 of Division B, Title III, of the Tax Relief and Health Care Act of 2006—enacted December 20, 2006—delayed Stabilization Fund payments until January 1, 2012, and limited initial funding to $3.5 billion. Subsequent legislation, including the Medicare, Medicaid and SCHIP Extension Act of 2007, and the Medicare Improvements for Patients and Providers Act of 2008, further delayed the timeframe during which initial funding was available until 2014 and limited the amount to $1.
Section 10327(c) of the ACA repealed section 1858(e) of the Act, eliminating the Stabilization Fund. Therefore, we are proposing to delete paragraph (f) from § 422.458, since the statutory basis for the Fund no longer exists.
17. Improvements to Medication Therapy Management Programs (§ 423.153)
Section 1860D-4(c)(1)(C) of the Act requires Part D sponsors to establish Medication Therapy Management programs (MTMPs). Section 1860D-4(c)(2) of the Act requires MTMPs to be designed to ensure that, with respect to targeted beneficiaries described in section 1860D-4(c)(2)(A)(ii) of the Act, covered Part D drugs are appropriately used to optimize therapeutic outcomes through improved medication use and to reduce the risk of adverse events. These requirements are codified in § 423.153(d) of the Part D regulations.
The federal regulations at § 423.153(d)(1) require each Part D sponsor to establish a MTMP that is designed to ensure that covered Part D drugs (as defined in § 423.100) prescribed to targeted beneficiaries are appropriately used to optimize therapeutic outcomes through improved medication use; designed to reduce the risk of adverse events for targeted beneficiaries; furnished by a pharmacist or other qualified provider; and allowed to distinguish between services provided in ambulatory and institutional settings. Beginning in 2011, § 423.153(d)(2) defines targeted beneficiaries as enrollees who have multiple chronic diseases, are taking multiple Part D drugs, and are likely to incur annual costs for covered Part D drugs that are greater than or equal to $3,000 as adjusted by the annual percentage increase under § 423.153(d)(5)(iv) for subsequent years.
With the recent passage of the Affordable Care Act, Congress provided for specific MTMP improvements by law. Effective January 1, 2013, section 10328 of the ACA amends section 1860D-4(c)(2) of the Act to require prescription drug plan sponsors to perform a quarterly assessment of all “at risk” individuals who are not already enrolled in an MTMP, establish opt-out enrollment for MTM, and offer medication therapy management services to targeted beneficiaries that include, at a minimum, an annual comprehensive medication review (CMR) that may be furnished person-to-person or via telehealth technologies and a review of the individual's medications, which may result in the creation of a recommended medication action plan, with a written or printed summary of the results of the review provided to the targeted individual. The law also requires that the action plan and summary resulting from the CMR be written in a standardized format.
Prior to the passage of the new legislation, we had already made several improvements to the MTM program via the 2010 Call Letter to Part D sponsors on the CMS Web site at
http://www.cms.gov/PrescriptionDrugCovContra/,
as well as via the 2011 final rule containing policy and technical changes under the Part C and D programs (
see
75 FR 19772 through 19776 and 19818 and 19819). In this final rule, in accordance with our authority under sections 1860D-4(c)(1)(C) and 1860D-4(c)(2) of the Act, we revised our regulations at § 423.153(d)(1)(v) to require Part D sponsors to enroll beneficiaries in their MTMPs using only an opt-out method of enrollment; § 423.153(d)(1)(vi) to require Part D sponsors to target beneficiaries for enrollment in the MTMP at least quarterly during each plan year; and § 423.153(d)(1)(vii) to require Part D sponsors to offer a minimum level of MTM services for each beneficiary enrolled in the MTMP that includes interventions for both beneficiaries and prescribers including, an annual comprehensive medication review with a written summary, and quarterly targeted medication reviews with follow up when necessary. We also revised § 423.153(d)(2) to clarify which beneficiaries should be targeted for MTMP services.
In comparing the requirements codified in the final rule to those required by section 10328 of the ACA, we found that a number of the provisions are consistent. The final rule requires opt-out enrollment of targeted beneficiaries, quarterly targeting of beneficiaries for enrollment into the MTMP, and quarterly targeted medication reviews for individuals enrolled in the MTMP with follow up interventions when necessary.
Based on this review and to ensure that our policies are fully consistent with the new requirements added by section 10328 of the ACA, we have determined that it is necessary to amend the current regulations to clarify the Part D MTMP requirements relating to the required use of a standardized format for the written summary and action plan that may result from the CMR. Thus, in accordance with sections 1860D-4(c)(1)(C) and 1860D-4(c)(2) of the Act as amended by section 10328 of the ACA, we propose to amend § 423.153(d)(1)(vii) to add the requirement that Part D sponsors use a standardized format for the action plan and summary resulting from a review of the targeted beneficiary's individual medications, and to provide the individual with a written or printed copy of the summary. We plan to award a contract to an outside entity to work in consultation with stakeholders in order to develop a standardized format for the action plan and summary which may result from annual or quarterly targeted medication reviews.
We also propose to amend the MTMP requirements at § 423.153(d)(1)(vii) to explicitly permit the use of telehealth technologies to conduct the required annual CMR as referenced under the ACA, to allow the sponsors to attempt innovative techniques that provide care at a distance in order to better serve the beneficiary, especially beneficiaries that cannot travel to the provider's location, or who reside in a remote location or in different time zone. Recent advancements in digitized health care and telecommunication now permit some direct provider care to be delivered to beneficiaries remotely. As promoted in the American Recovery and Reinvestment Act of 2009 (ARRA), the adoption and use of health information technology (HIT) and electronic health records (EHR) to provide patient care is encouraged by the federal government. We emphasize that when using telehealth technologies, personal health information privacy and security must be ensured.
In addition to the regulatory changes required to implement the ACA provisions, we are proposing a further revision to the MTMP requirements related specifically to MTM services furnished in LTC facilities. Under sections 1819(b)(4) and 1919(b)(4) of the Act, LTC facilities must provide, either directly or under arrangements with
others, for the provision of pharmaceutical services to meet the needs of each resident. This requirement is codified in regulations at § 483.60 which require LTC facilities to employ or obtain the services of a licensed pharmacist to provide consultation on all aspects of the provision of pharmacy services in the facility, including a drug regimen review at least once a month for each facility resident. Although Part D sponsors are required to provide MTM services to all beneficiaries meeting the target criteria, it is not clear that these services are being made available to nursing home residents meeting these criteria. Further, we are concerned that if MTM is provided, in the absence o
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