# Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A2023-07115

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** April 12, 2023
- **Citation:** 88 FR 22120

## Text

DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
Office of the Secretary
42 CFR Parts 417, 422, 423, 455, and 460
[CMS-4201-F]
RIN 0938-AU96
Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly

AGENCY:

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

ACTION:

Final rule.

SUMMARY:

This final rule will revise the Medicare Advantage (Part C), Medicare Prescription Drug Benefit (Part D), Medicare cost plan, and Programs of All-Inclusive Care for the Elderly (PACE) regulations to implement changes related to Star Ratings, marketing and communications, health equity, provider directories, coverage criteria, prior authorization, passive enrollment, network adequacy, and other programmatic areas. This final rule will also codify regulations implementing section 118 of Division CC of the Consolidated Appropriations Act, 2021, section 11404 of the Inflation Reduction Act, and includes provisions that will codify existing sub-regulatory guidance in the Part C, Part D, and PACE programs.

DATES:

Effective date:
These regulations are effective on June 5, 2023.

Applicability dates:
The provisions in this rule are applicable to coverage beginning January 1, 2024, except as otherwise noted. The revisions to §§ 422.166(a)(2)(i) and 423.186(a)(2)(i) regarding Tukey outlier deletion are applicable on June 5, 2023. The marketing and communications provisions at §§ 422.2262 through 422.2274 and 423.2262 through 423.2274 are applicable for all contract year 2024 marketing and communications beginning September 30, 2023. The revisions to the definition of “gross covered prescription drug costs” in § 423.308 are applicable on June 5, 2023. The removal of the Part C Diabetes Care—Kidney Disease Monitoring measure as described in sections V.D.1. of the final rule is applicable on June 5, 2023. The risk adjustment to the three Part D adherence measures based on sociodemographic status characteristics as described in section V.D.2. of this final rule is applicable for 2028 Star Rates beginning January 1, 2026. The PACE provision on the contract year definition at § 460.6 and the PACE provision on service determination requests at § 460.121 are applicable on June 5, 2023.

FOR FURTHER INFORMATION CONTACT:

Lucia Patrone, (410) 786-8621—General Questions.

Carly Medosch, (410) 786-8633—Part C and Cost Plan Issues.

Catherine Gardiner, (410) 786-7638—Part D Issues.

Sonia Eaddy, (410) 786-5459—Part D Issues.

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

Kelley Ordonio, (410) 786-3453—Parts C and D Payment Issues.

Hunter Coohill, (720) 853-2804—Enforcement Issues.

Lauren Brandow, (410) 786-9765—PACE Issues.

Sara Klotz, 410-786-0507—D-SNP Issues.

PartCandDStarRatings@cms.hhs.gov
—Parts C and D Star Ratings Issues.

SUPPLEMENTARY INFORMATION:

CMS intends to address all of the remaining proposals from the December 2022 proposed rule in subsequent rulemaking. Therefore, CMS plans to make provisions adopted in the subsequent, second final rule applicable to coverage beginning no earlier than January 1, 2025. Notwithstanding the foregoing, for proposals from the December 2022 proposed rule that would codify statutory requirements that are already in effect, CMS reminds organizations, plan sponsors, and other readers that the statutory provisions apply and will continue to be enforced. CMS intends to implement the statutory requirements in section 118 of Division CC of the Consolidated Appropriations Act, 2021 (CAA) and section 11404 of the Inflation Reduction Act (IRA) consistent with their effective provisions.

We received nearly one thousand timely pieces of correspondence containing multiple comments on the CY 2024 proposed rule. We note that some of the public comments were outside of the scope of the proposed rule. These out-of-scope public comments are not addressed in this final rule. Summaries of the public comments that are within the scope of the proposed rule and our responses to those public comments are set forth in the various sections of this final rule under the appropriate heading. However, we note that in this final rule, we are not addressing comments received on the provisions of the proposed rule that we are not addressing or finalizing at this time. Rather, we will address them at a later time, in a subsequent rulemaking document, as appropriate.

I. Executive Summary

A. Purpose

The primary purpose of this final rule is to amend the regulations for the Medicare Advantage (Part C), Medicare Cost Plan, and Medicare Prescription Drug Benefit (Part D) programs, and Programs of All-Inclusive Care for the Elderly (PACE). This final rule includes a number of new policies that would improve these programs as well as codify existing Part C and Part D sub-regulatory guidance.

Additionally, this rule implements certain sections of the following Federal laws related to the Parts C and D programs:

• The Inflation Reduction Act (IRA) of 2022.

• The Consolidated Appropriations Act (CAA), 2021.

B. Summary of the Major Provisions

1. Medicare Advantage/Part C and Part D Prescription Drug Plan Quality Rating System (§§ 422.162, 422.164, 422.166, 423.182, 423.184, and 423.186)

We are finalizing a health equity index (HEI) reward for the 2027 Star Ratings to further incentivize Parts C and D plans to focus on improving care for enrollees with social risk factors (SRFs); as part of this change, we also are finalizing the removal of the current reward factor (a reward for consistently high performance). This policy supports CMS efforts to ensure attainment of the highest level of health for all people. We are finalizing the reduction in the weight of patient experience/complaints and access measures to further align efforts with other CMS quality programs and the current CMS Quality Strategy, as well as to better balance the contribution of the different types of measures in the Star Ratings program. We also are finalizing the removal of the Part C Diabetes Care—Kidney Disease Monitoring measure; addition of the Part C Kidney Health Evaluation for Patients with Diabetes measure; and substantive updates to the Part D Medication Adherence for Diabetes Medications, Medication Adherence for

Hypertension (RAS Antagonists), and Medication Adherence for Cholesterol (Statins) measures. We are also finalizing a rule for the removal of certain types of Star Ratings measures in the future; removal of the 60 percent rule that is part of the adjustment for extreme and uncontrollable circumstances (also called the disaster adjustment); and technical clarifications and changes related to the disaster adjustment, treatment of ratings for contracts after consolidation, and the correction of an error related to codification of the use of Tukey outlier deletion. Generally, these changes will apply (that is, data will be collected and performance measured) for the 2024 measurement period and the 2026 Star Ratings, except for the removal of the Part C Diabetes Care—Kidney Disease Monitoring measure, which will apply beginning with the 2024 Star Ratings; the HEI reward, which will apply beginning with the 2024 and 2025 measurement periods and the 2027 Star Ratings; the risk adjustment based on sociodemographic status characteristics to the three adherence measures, which will be implemented beginning with the 2026 measurement period and the 2028 Star Ratings; and addressing the codification error related to the use of Tukey outlier deletion which will be applicable upon the effective date of this final rule and apply beginning with the 2024 Star Ratings.

The remaining Star Ratings provisions of the proposed rule are not being finalized in this rule and instead will be addressed in a later final rule. Those provisions include removing the stand-alone Medication Reconciliation Post-Discharge measure; adding the updated Colorectal Cancer Screening and Care for Older Adults—Functional Status Assessment measures; adding the Part D Concurrent Use of Opioids and Benzodiazepines, Polypharmacy Use of Multiple Anticholinergic Medications in Older Adults, and Polypharmacy Use of Multiple Central Nervous System Active Medications in Older Adults measures; removing guardrails (that is, bi-directional caps that restrict upward and downward movement of a measure's cut points for the current year's measure-level Star Ratings compared to the prior year's measure-threshold specific cut points) when determining measure-specific-thresholds for non-Consumer Assessment of Healthcare Providers and Systems (CAHPS) measures; modifying the Improvement Measure hold harmless policy; and adding technical clarifications related to Quality Bonus Payment (QBP) appeals and weighting of measures after a substantive specification change.

2. Health Equity in Medicare Advantage (MA) (§§ 422.111 and 422.112)

CMS is working to achieve policy goals that advance health equity across its programs and pursue a comprehensive approach to advancing health equity for all, including those who have been historically underserved, marginalized, and adversely affected by persistent poverty and inequality.
1

To that end, in addition to the health equity index, we are finalizing the following regulatory updates.

1

https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government/.

First, current regulations require MA organizations to ensure that services are provided in a culturally competent manner. The regulation provides examples of populations that may require consideration specific to their needs. In this final rule, we further clarify the broad application of our policy. Specifically, we are amending the list of populations to include people: (1) with limited English proficiency or reading skills; (2) of ethnic, cultural, racial, or religious minorities; (3) with disabilities; (4) who identify as lesbian, gay, bisexual, or other diverse sexual orientations; (5) who identify as transgender, nonbinary, and other diverse gender identities, or people who were born intersex; (6) who live in rural areas and other areas with high levels of deprivation; and (7) otherwise adversely affected by persistent poverty or inequality.

Next, CMS currently provides best practices for organizations to use in developing their provider directories, including incorporating non-English languages spoken by each provider and provider/location accessibility for people with physical disabilities. In this rule, we are codifying these best practices by requiring organizations to include providers' cultural and linguistic capabilities (including American Sign Language, ASL) in their provider directories. This change will improve the quality and usability of provider directories, particularly for non-English speakers, limited English proficient individuals, and enrollees who use ASL.

In addition, as the use of telehealth becomes more prevalent, there is evidence of disparities in telehealth access due in part to low digital health literacy, especially among populations who already experience health disparities. Low digital health literacy is one of the most significant obstacles in achieving telehealth equity, and many older adults with low digital health literacy experience gaps in access to the health care they need. This is concerning for the MA program because its enrollee population includes older adults who are age 65 or older, which is why we are finalizing policies to address the issue by requiring MA organizations to develop and maintain procedures to identify and offer digital health education to enrollees with low digital health literacy to assist with accessing any medically necessary covered telehealth benefits. We solicited comments from stakeholders on various aspects of our proposal, which informed the types of MA plans we are subjecting to the finalized regulatory requirements, and how we will collect information related to compliance with these requirements.

Finally, MA organizations' existing quality improvement (QI) programs are an optimal vehicle to develop and implement strategies and policies designed to reduce disparities in health and health care, and advance equity in the health and health care of MA enrollee populations, especially those that are underserved. To support these efforts, we will require MA organizations to incorporate one or more activities into their overall QI program that reduce disparities in health and health care among their enrollees. MA organizations may implement activities such as improving communication, developing and using linguistically and culturally appropriate materials (to distribute to enrollees or use in communicating with enrollees), hiring bilingual staff, community outreach, or similar activities. We believe adopting this proposed requirement for MA organizations as part of their required QI programs will align with health equity efforts across CMS policies and programs.

3. Utilization Management Requirements: Clarifications of Coverage Criteria for Basic Benefits and Use of Prior Authorization, Additional Continuity of Care Requirements, and Annual Review of Utilization Management Tools (§§ 422.101, 422.112, 422.137, 422.138, and 422.202)

In recent years, CMS has received numerous inquiries regarding MA organizations' use of prior authorization and its effect on beneficiary access to care. We are finalizing several regulatory changes to address these concerns regarding prior authorization. First, we are finalizing that prior authorization policies for coordinated care plans may only be used to confirm

the presence of diagnoses or other medical criteria and/or ensure that an item or service is medically necessary based on standards specified in this rule. Second, we are finalizing that an approval granted through prior authorization processes must be valid for as long as medically necessary to avoid disruptions in care in accordance with applicable coverage criteria, the patient's medical history, and the treating provider's recommendation, and that plans provide a minimum 90-day transition period when an enrollee who is currently undergoing an active course of treatment switches to a new MA plan. Third, we are finalizing that MA plans must comply with national coverage determinations (NCD), local coverage determinations (LCD), and general coverage and benefit conditions included in Traditional Medicare laws. This includes criteria for determining whether an item or service is a benefit available under Traditional Medicare. We are finalizing that when coverage criteria are not fully established in Medicare statute, regulation, NCD, or LCD, MA organizations may create publicly accessible internal coverage criteria that are based on current evidence in widely used treatment guidelines or clinical literature. We are also clarifying that coverage criteria are not fully established when additional, unspecified criteria are needed to interpret or supplement general provisions in order to determine medical necessity consistently; NCDs or LCDs include flexibility that explicitly allows for coverage in circumstances beyond the specific indications that are listed in an NCD or LCD, or there is an absence of any applicable Medicare statutes, regulations, NCDs or LCDs setting forth coverage criteria. When additional, unspecified criteria are needed to interpret or supplement general provisions, the MA organization must demonstrate that the additional criteria provide clinical benefits that are highly likely to outweigh any clinical harms, including from delayed or decreased access to items or services.

Finally, to ensure prior authorization and other utilization managed policies are consistent with the rules we are adopting on coverage criteria and coverage policies and relevant current clinical guidelines, we are finalizing that all MA plans establish a Utilization Management Committee to review all utilization management, including prior authorization, policies annually and ensure they are consistent with the coverage requirements, including current, traditional Medicare's national and local coverage decisions and guidelines. These changes will help ensure MA enrollees have consistent access to medically necessary care, without unreasonable barriers or interruptions.

4. Medicare Advantage (MA) and Part D Communications and Marketing (Subpart V of Parts 422 and 423)

In accordance with our statutory authority to review marketing materials and application forms and to develop marketing standards under sections 1851(h), 1851(j), 1860D-1(b)(1)(vi), and 1860D-4(l) of the Act, as well as the statutory requirements in sections 1852(c) and 1860D-4(a) of the Act requiring MA organizations and Part D sponsors disclose specific types of information to enrollees, we proposed several changes to 42 CFR parts 422 and 423, subpart V, to strengthen beneficiary protections and improve MA and Part D marketing. We are finalizing the following changes: notifying enrollees annually, in writing, of the ability to opt out of phone calls regarding MA and Part D plan business; requiring agents to explain the effect of an enrollee's enrollment choice on their current coverage whenever the enrollee makes an enrollment decision; simplifying plan comparisons by requiring medical benefits be in a specific order and listed at the top of a plan's Summary of Benefits; limiting the time that a sales agent can call a potential enrollee to no more than 12 months following the date that the enrollee first asked for information; limiting the requirement to record calls between third-party marketing organizations (TPMOs) and beneficiaries to marketing (sales) and enrollment calls; prohibiting a marketing event from occurring within 12 hours of an educational event at the same location; clarifying that the prohibition on door-to-door contact without a prior appointment still applies after collection of a business reply card (BRC) or scope of appointment (SOA); prohibiting marketing of benefits in a service area where those benefits are not available, unless unavoidable because of use of local or regional media that covers the service area(s); prohibiting the marketing of information about savings available that are based on a comparison of typical expenses borne by uninsured individuals, unpaid costs of dually eligible beneficiaries, or other unrealized costs of a Medicare beneficiary; requiring TPMOs to list or mention all of the MA organization or Part D sponsors that they represent on marketing materials; requiring MA organizations and Part D sponsors to have an oversight plan that monitors agent/broker activities and reports agent/broker non-compliance to CMS; modifying the TPMO disclaimer to add SHIPs as an option for beneficiaries to obtain additional help; modifying the TPMO disclaimer to state the number of organizations represented by the TPMO as well as the number of plans; prohibiting the collection of Scope of Appointment cards at educational events; placing discrete limits around the use of the Medicare name, logo, and Medicare card; prohibiting the use of superlatives (for example, words like “best” or “most”) in marketing unless the material provides documentation to support the statement, and the documentation is based on data from the current or prior year; clarifying the requirement to record calls between TPMOs and beneficiaries, such that it is clear that the requirement includes virtual connections such as video conferencing and other virtual telepresence methods; and requiring 48 hours between a Scope of Appointment and an agent meeting with a beneficiary, with exceptions for beneficiary-initiated walk-ins and the end of a valid enrollment period. We are not addressing our proposal to prohibit TPMOs from distributing beneficiary contact information in this final rule and may address it in a future final rule.

We are finalizing and implementing the changes, as previously discussed, to Subpart V in this rule for CY 2024. As such, they will become effective on September 30, 2023 for all activity related to CY 2024.

5. Strengthening Translation and Accessible Format Requirements for Medicare Advantage, Part D, and D-SNP Enrollee Marketing and Communication Materials (§§ 422.2267 and 423.2267)

Sections 422.2267(a)(2) and 423.2267(a)(2) require MA organizations, cost plans, and Part D sponsors to translate required materials into any non-English language that is the primary language of at least 5 percent of individuals in a plan benefit package service area. In addition, 45 CFR part 92 requires plans to provide appropriate auxiliary aids and services, including interpreters and information in alternate formats, to individuals with impaired sensory, manual, or speaking skills, where necessary to afford such persons an equal opportunity to benefit from the service in question. However, CMS has learned from oversight activities, enrollee complaints, and stakeholder feedback that enrollees often must make a separate request each time they would like a material in a non-English language or accessible format.

In addition, an increasing number of dually eligible individuals are enrolled in managed care plans where the same plan covers both Medicare and Medicaid services. In some cases, Medicaid standards for Medicaid managed care plans require translation of plan materials into a non-English language not captured by the Medicare Advantage requirements.

We are finalizing a requirement that MA organizations, cost plans, and Part D sponsors must provide materials to enrollees on a
standing basis
in any non-English language that is the primary language of at least 5 percent of the individuals in a plan benefit package service area or accessible format upon receiving a request for the materials or otherwise learning of the enrollee's primary language and/or need for an accessible format. We are also finalizing the application of this requirement to individualized plans of care for special needs plans. In addition, we are finalizing a requirement that fully integrated dual eligible special needs plans (FIDE SNPs), highly integrated dual eligible special needs plans (HIDE SNPs), and applicable integrated plans (AIPs) as defined at § 422.561, translate required materials into any languages required by the Medicare translation standard at § 422.2267(a) plus any additional languages required by the Medicaid translation standard as specified through their Medicaid capitated contracts.

In this rule, we are finalizing and implementing the changes as proposed for materials produced for CY 2024.

6. Behavioral Health in Medicare Advantage (MA) (§§ 422.112 and 422.116)

As part of the January 2022 proposed rule, we solicited comments from stakeholders regarding challenges in building MA behavioral health networks and opportunities for improving access to services. Stakeholders commented on the importance of ensuring adequate access to behavioral health services for enrollees and suggested expanding network adequacy requirements to include additional behavioral health specialty types.

To strengthen our network adequacy requirements and reaffirm MA organizations' responsibilities to provide behavioral health services, we are finalizing to: (1) add Clinical Psychology and Licensed Clinical Social Work as specialty types that will be evaluated as part of the network adequacy reviews under § 422.116, and make these new specialty types eligible for the 10-percentage point telehealth credit as allowed under § 422.116(d)(5); (2) amend our general access to services standards in § 422.112 to include explicitly behavioral health services; (3) codify, from existing guidance on reasonable wait times for primary care visits, standards for wait times that apply to both primary care and behavioral health services; (4) clarify that some behavioral health services may qualify as emergency services and, therefore, must not be subject to prior authorization; and (5) extend current requirements for MA organizations to establish programs to coordinate covered services with community and social services to behavioral health services programs to close equity gaps in treatment between physical health and behavioral health.

7. Enrollee Notification Requirements for Medicare Advantage (MA) Provider Contract Terminations (§§ 422.111 and 422.2267)

CMS requires notification to MA enrollees when a provider network participation contract terminates. Continuity of care is essential, especially for primary care and behavioral health, and consequently, adequate communication to enrollees is vital when network changes occur so that patients of any terminating primary care or behavioral health providers can decide how to proceed with their course of treatment. CMS is finalizing amendments to § 422.111(e) that establish specific enrollee notification requirements for no-cause and for-cause provider contract terminations and add specific and more stringent enrollee notification requirements when primary care and behavioral health provider contract terminations occur. CMS is also amending § 422.2267(e)(12) to specify the content and additional procedural requirements for the notification to enrollees about a provider contract termination. These requirements will generally increase enrollee protections when MA network changes occur and will raise the standards for the stability of enrollees' primary care and behavioral health treatment.

8. Transitional Coverage and Retroactive Medicare Part D Coverage for Certain Low-Income Beneficiaries Through the Limited Income Newly Eligible Transition (LI NET) Program (§§ 423.2500-423.2536)

CMS has operated the LI NET demonstration since 2010. The LI NET demonstration provides transitional, point-of-sale coverage for low-income beneficiaries who demonstrate an immediate need for prescriptions, but who have not yet enrolled in a Part D plan, or whose enrollment is not yet effective. LI NET also provides retroactive and/or temporary prospective coverage for beneficiaries determined to be eligible for the Part D low-income subsidy (LIS) by the Social Security Administration (SSA) or a State. In this final rule, we are making the LI NET program a permanent part of Medicare Part D, as required by the Consolidated Appropriations Act, 2021 (CAA). We are finalizing the regulation largely as proposed, with a few minor clarifying modifications.

9. Expanding Eligibility for Low-Income Subsidies (LIS) Under Part D of the Medicare Program (§§ 423.773 and 423.780)

Section 11404 of the IRA amended section 1860D-14 of the Act to expand eligibility for the full LIS to individuals with incomes up to 150 percent of the Federal poverty level (FPL) beginning on or after January 1, 2024. In addition, the IRA allows for individuals to qualify for the full subsidy based on the higher resource requirements currently applicable to the partial LIS group. This change will provide the full LIS subsidy for those who currently qualify for the partial subsidy. In this rule, we are finalizing implementing regulations at §§ 423.773 and 423.780 as proposed.

C. Summary of Costs and Benefits

BILLING CODE 4120-01-P

ER12AP23.000

ER12AP23.001

ER12AP23.002

ER12AP23.003

ER12AP23.004

ER12AP23.005

BILLING CODE 4120-01-C
D. General Comments on the Proposed Rule

Comment:
A commenter suggested that CMS had not allowed for a 60-day comment period for the proposed rule because the beginning of the comment period was calculated from the date the proposed rule was made available for public inspection on the
Federal Register
website rather than the date that it appeared in an issue of the
Federal Register
. The commenter recommended that CMS provide an additional 60-day comment period on the proposed rule.

Response:
Section 1871(b) of the Act requires that we provide for notice of the proposed regulation in the
Federal Register
and a period of not less than 60 days for public comment thereon. The proposed rule was available for public inspection on
federalregister.gov
(the website for the Office of Federal Register) on December 14, 2022. We believe that beginning the comment period for the proposed rule on the date it became available for public inspection at the Office of the Federal Register fully complied with the statute and provided the required notice to the public and a meaningful opportunity for interested parties to provide input on the provisions of the proposed rule.

II. Implementation of Certain Provisions of the Bipartisan Budget Act of 2018, the Consolidated Appropriations Act, 2021, and the Inflation Reduction Act of 2022

A. Applying D-SNP Look-Alike Requirements To Plan Benefit Package Segments (§§ 422.503(e), 422.504, 422.510 and 422.514)

In the final rule titled “Medicare Program; Contract Year 2021 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, and Medicare Cost Plan Program” which appeared in the
Federal Register
on June 2, 2020 (85 FR 33796) (hereinafter referred to as the June 2020 final rule), CMS finalized the contracting limitations for D-SNP look-alikes at § 422.514(d) and the associated authority and procedures for transitioning enrollees from a D-SNP look-alike at § 422.514(e). For plan year 2022 and subsequent years, as provided in § 422.514(d)(1), CMS will not enter into a contract for a new non-SNP MA plan that projects, in its bid submitted under § 422.254, that 80 percent or more of the plan's total enrollment are enrollees entitled to medical assistance under a State plan under Title XIX. For plan year 2023 and subsequent years, as provided in § 422.514(d)(2), CMS will not renew a contract with a non-SNP MA plan that has actual enrollment, as determined by CMS using the January enrollment of the current year, consisting of 80 percent or more of enrollees who are entitled to medical assistance under a State plan under Title XIX, unless the MA plan has been active for less than 1 year and has enrollment of 200 or fewer individuals at the time of such determination.

We established these contract limitations to address the proliferation and growth of D-SNP look-alikes, which raised concerns related to effective implementation of requirements for D-SNPs established by section 1859 of the Act (including amendments made by the Medicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110-275) and the Bipartisan Budget Act of 2018 (Pub. L. 115-123)). We adopted the regulation to ensure full implementation of requirements for D-SNPs, such as contracts with State Medicaid agencies; a minimum integration of Medicare and Medicaid benefits; care coordination through health risk assessments (HRAs); and evidence-based models of care. In addition, we noted how limiting these D-SNP look-alikes would address beneficiary confusion stemming from misleading marketing practices by brokers and agents that misrepresent to dually eligible individuals the characteristics of D-SNP look-alikes. For a more detailed discussion of D-SNP look-alikes and their impact on the implementation of D-SNP Medicare and Medicaid integration, we direct readers to the June 2020 final rule (85 FR 33805

through 33820) and the Medicare and Medicaid Programs; Contract Year 2021 and 2022 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly (85 FR 9018 through 9021) (also known as the February 2020 proposed rule). We proposed amendments to close unforeseen loopholes in the scope of the regulation adopted to prohibit D-SNP look-alikes.

1. Applying Contracting Limitations for D-SNP Look-Alikes to MA Plan Segments

As written at § 422.514(d) and (e), the contracting limitations for D-SNP look-alikes are based on analysis at the MA
plan
level. Section 1854(h) of the Act authorizes MA organizations to segment an MA plan and apply the uniformity requirements for MA plans at the
segment
level, provided that the segments are comprised of one or more MA payment areas. As implemented in §§ 422.2 (defining “MA plan”), 422.100(d), 422.254, and 422.262, MA plans may include multiple segments in an MA plan in which different benefit designs, cost-sharing, and premiums are available; bids are submitted at the segment level if an MA plan is segmented, and evaluation of compliance with MA requirements is done at the segment level where appropriate. For more information on MA plan segments, see 87 FR 79465 of the proposed rule. Since adopting § 422.514(d), we have seen MA plans where a specific segment looks like a D-SNP look-alike and would be subject to the contracting prohibitions in § 422.514(d) if the segment were treated as an MA plan. Currently, § 422.514(d) does not clearly apply to a segment within an MA plan. However, we believe that by applying the D-SNP look-alike contracting limitations only at the MA plan level without applying it to segments of plans, our existing regulation has an unintended and unforeseen loophole through which D-SNP look-alikes could persist, contrary to the stated objectives in our prior rulemaking.

In the proposed rule (87 FR 79465), we described examples of non-SNP MA plan segments that would be identified as D-SNP look-alikes if we were to apply the § 422.514(d)(2) criteria at the MA plan segment level. The segments in those three plans collectively have approximately 3,000 enrollees. While the number of non-SNP MA plans at the segment level is currently small, this number could grow in the future and provide an opportunity for MA organizations to circumvent the D-SNP look-alike contracting limitations at § 422.514(d).

We proposed adding a new paragraph at 42 CFR 422.514(g) to provide that § 422.514(d) through (f) apply to segments of the MA plan in the same way that those provisions apply to MA plans. Under the proposal, CMS would not contract with or renew a contract with a plan segment where the MA plan or segment is not a D-SNP and the enrollment thresholds in paragraph (d)(1) or (d)(2) are met. This proposal, to treat a segment of an MA plan as an MA plan, is consistent with CMS' annual review of MA plan bids and Medicare cost-sharing, in which each MA plan segment submits a separate bid pricing tool and plan benefit package (PBP) like an unsegmented MA plan and CMS separately evaluates these submissions for compliance with MA requirements.

As discussed in the June 2020 final rule, CMS implements the contracting prohibition in § 422.514 at the plan level. Where an MA plan is one of several offered under a single MA contract and the MA organization does not voluntarily non-renew the D-SNP look-alike, CMS will sever the D-SNP look-alike from the overall contract using its authority under § 422.503(e) to sever a specific MA plan from a contract and terminate the deemed contract for the look-alike plan (85 FR 33812). However, CMS does not currently have clear regulatory authority to sever a
segment
from an MA plan to terminate a contract that has only a segment of an MA plan. CMS adopted the severability regulation at § 422.503(e) in the Medicare Program; Establishment of the Medicare+Choice Program interim final rule (63 FR 35103, hereafter known as the June 1998 interim final rule) as part of implementing the statutory authority for MA contracts to cover more than one MA plan. Without amending § 422.503(e), CMS would need to sever the entire MA plan that has the D-SNP look-alike segment. As a result, the other segments in that MA plan would be subject to the contracting prohibition and not renewed under § 422.514(d) as proposed to be amended. Instead, we proposed to amend § 422.503(e) to allow for CMS to sever a segment from an MA plan and allow the remaining segments of that MA plan to continue along with any other MA plans offered under the same contract. We proposed to rely on our authority to adopt MA standards under section 1856(b)(1) of the Act and our authority to adopt additional contract terms when necessary and appropriate, and not inconsistent with the MA statute, under section 1857(e)(1) of the Act. Our primary impetus for this proposal relates to D-SNP look-alikes, but our proposal at § 422.503(e) is not specific to D-SNP look-alikes; because each segment of an MA plan is like a plan itself, we believe severability should apply similarly at the plan and segment level. We also proposed to amend § 422.504(a)(19) to adopt a new contract term that MA organizations agree not to segment an MA plan in a way that results in a D-SNP look-alike. In conjunction with the proposed amendments to § 422.514(g) to apply the prohibitions on contracting with D-SNP look-alikes to segments of an MA plan, the amendments to § 422.503(e) would allow CMS to eliminate existing D-SNP look-alike segments and the amendments to § 422.504(a)(19) would allow CMS to prevent new D-SNP look-alikes.

2. Applying Contracting Limitations for D-SNP Look-Alikes to Existing MA Plans

We identified a second loophole during our analysis of contract year 2023 MA plan bids to identify any new MA plans that meet the contract limitation at § 422.514(d)(1). An existing (that is, renewing) MA plan that did not meet the criteria in § 422.514(d)(2) (using January 2022 MMR data as provided in paragraph (e)(3)) projected in its contract year 2023 bid that the MA plan would have 80 percent or higher enrollment of dually eligible individuals in 2023. Because this MA plan is not a new MA plan for contract year 2023, the contract prohibition in § 422.514(d)(1) did not apply. To prevent similar situations in the future, we proposed to amend § 422.514(d)(1) to apply it to both new and existing (that is, renewing) MA plans that are not D-SNPs and submit bids with projected enrollment of 80 percent or more enrollees of the plan's total enrollment that are dually eligible for Medicare and Medicaid. We proposed to revise paragraph (d)(1) to provide that CMS does not enter into or renew an MA contract for plan year 2024 and subsequent years when the criteria in paragraphs (d)(1)(i) and (ii) are met. We proposed to begin this prohibition with 2024 because we expect that 2024 will be the first plan year after the final rule adopting this proposal. Pending finalization of this proposal, § 422.514(d)(1) will continue to prohibit contracts with new MA plans that meet the criteria. We noted in the proposed rule at 87 FR 79466 that the earliest our proposed revision to expand the scope of § 422.514(d)(1) could apply is 2024.

3. Contract Limitations for D-SNP Look-Alikes as a Basis for MA Contract Termination (§ 422.510(a)(4))

Finally, we proposed an amendment to § 422.510(a)(4), which outlined the bases for termination of an MA contract. Specifically, we proposed to add language at § 422.510(a)(4) to add a new paragraph (a)(4)(xvi) that permits CMS to terminate an MA contract when the MA organization meets the criteria in § 422.514(d)(1) or (d)(2). This proposed amendment is consistent with how § 422.514(d) provides that CMS will not enter into or renew an MA contract in certain circumstances. In our view, § 422.514(d) is sufficient authority for the non-renewal, that is termination, of MA contracts when § 422.514(d) applies. However, we believe that adopting a specific provision in § 422.510(a)(4) will avoid any inadvertent ambiguity on this topic and make it clear that the procedures outlined in § 422.510, including notices, timeframes, and appeal rights, apply when CMS does not renew an MA contract based on application of § 422.514(d).

We received the following comments, and our responses follow.

Comment:
Numerous commenters, including MACPAC and MedPAC, supported the CMS proposals overall to apply contracting limitations for D-SNP look-alikes to existing MA plans and MA plan segments. A few commenters specifically noted support for applying the contracting limitations to MA plan segments. A commenter stated that, despite concerns the commenter had raised in the past, the CMS proposal was a logical extension of existing policy and would allow remaining segments of the plan and other plans under the same contract to continue. Another commenter emphasized that MA plan segments are treated comparably to separate plans in a number of ways (for example, segments can have different benefit designs and cost-sharing; bids are submitted at the segment level; and where appropriate, compliance with MA requirements is determined at the segment level). Another commenter specifically emphasized its support to apply the D-SNP contract limitations to existing MA plans and to clarify CMS' authority to terminate an MA contract based on the application of D-SNP look-alike requirements.

Some of these commenters emphasized their overall support for CMS' proposals and general approach to limiting D-SNP look-alikes, noting that D-SNP look-alikes detract from plans that integrate Medicare and Medicaid benefits. MACPAC stated that it views D-SNP look-alikes as acting at cross purposes to State and Federal efforts to integrate care by drawing dually eligible individuals away from integrated products and avoiding the additional requirements for D-SNPs. MedPAC indicated that D-SNP look-alikes undermine efforts to develop integrated plans for dually eligible individuals by encouraging them to enroll instead in plans that provide many of the same extra benefits as D-SNPs but do nothing to integrate Medicaid coverage. A commenter stated that dually eligible individuals are better served in integrated plans, and thus, in areas with highly integrated dual eligible special needs plans (HIDE SNPs) or fully integrated dual eligible special needs plans (FIDE SNPs), they should have a choice among these available integrated modalities rather than D-SNP look-alikes. A commenter supported CMS' proposals as an important step to advance Medicare-Medicaid integration. A few commenters supported the proposals noting that D-SNP look-alikes create unnecessary competition for integrated products without meeting any requirements to work with States to integrate or coordinate Medicaid services, have specific models of care approved by the National Committee on Quality Assurance, or incorporate additional SNP quality measures designed for complex needs populations.

Several commenters supported CMS efforts to close unforeseen loopholes that have allowed D-SNP look-alikes to persist. A commenter appreciated CMS' efforts, citing the integrity of D-SNPs is critical since their membership consists of people with disabilities of all ages.

Response:
We appreciate the widespread support we received for the proposed amendments and agree with the commenters' concerns about D-SNP look-alikes. Many of these concerns mirror the discussion in the 2020 Final Call Letter,
2

February 2020 proposed rule (85 FR 9018 through 9021), and June 2020 final rule (85 FR 33805 through 33808). We believe the amendments that we are finalizing in this rule will enable us to more effectively implement Medicare-Medicaid integration requirements under the BBA of 2018 along with other State and Federal requirements.

2
Available at
https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.

Comment:
Some commenters recommended that CMS take action beyond implementing the proposals to lower the threshold used to identify D-SNP look-alikes. A few of these commenters suggested CMS reduce the threshold at § 422.514(d) for declining to contract or renew contracts with D-SNP look-alikes from 80 percent dually eligible enrollment to 50 percent, helping to mitigate the targeting of dually eligible individuals by non-integrated models. A commenter suggested lowering the threshold to at least 50 percent. Another commenter noted, while the 80 percent threshold is addressing the most obvious targeting of dually eligible individuals by non-SNP plans, it has allowed some non-SNP plans with enrollment of dually eligible individuals above 50 percent to continue to operate in markets where D-SNPs are not offered. This commenter supported lowering the enrollment threshold over the coming years as long as it can be done in a way that minimizes disruption to the enrollees and based its support for a lower threshold on the success of implementing the 80 percent threshold. A commenter indicated the current 80 percent threshold can itself serve as a loophole, allowing plans to enroll high proportions of dually eligible individuals without being subject to D-SNP look-alike requirements. This commenter encouraged CMS to consider a lower threshold to further promote integrated care and minimize enrollee confusion. MACPAC did not opine on whether or not CMS should change the enrollment threshold for identifying D-SNP look-alikes but expressed concern that there could still be a real risk of growth in plans of this type falling below the 80 percent threshold and thus continuing to detract from Federal and State efforts to integrate care.

Response:
We appreciate these comments. The recommendations to reduce the enrollment threshold at § 422.514(d) are outside of the scope of our proposed amendments. We continue to monitor the level of dually eligible enrollment among non-SNP MA plans and will consider these comments for future rulemaking. We note that the D-SNP look-alike contracting limitations at § 422.514(d) only apply in a State where there is a D-SNP or any other plan authorized by CMS to exclusively enroll individuals entitled to Medicaid, which includes Medicare-Medicaid Plans.

Comment:
Some commenters suggested that CMS exclude or reconsider excluding partial-benefit dually eligible individuals when calculating the 80 percent threshold at § 422.514(d). Several commenters recommended that we exclude partial-benefit dually eligible individuals from the 80 percent threshold calculation in States that limit D-SNP enrollment to

full-benefit dually eligible individuals. A few of these commenters noted that including partial-benefit dually eligible individuals in the 80 percent threshold calculation may limit managed care options for dually eligible individuals in these States. These commenters stated that the lack of access to medical benefits through some Medicaid programs and differences in the level of premium support and cost-sharing protections available to partial-benefit dually eligible individuals warrants separate plan benefit design from plans that are offered to full-benefit dually eligible individuals in order to optimize benefits to support functional and social needs and limit cost-sharing for partial-benefit dually eligible individuals. These commenters listed States like Massachusetts and New Jersey that limit D-SNP enrollment to full-benefit dually eligible individuals and explained that non-SNP MA plans in these States may be incentivized not to enroll partial-benefit dually eligible individuals due to the 80 percent threshold for determining D-SNP look-alikes. Another commenter noted that, in 2025, this concern would apply to all States with FIDE SNPs. Additionally, a commenter emphasized the importance of balancing the challenge many D-SNPs have with State procurements, which can result in increased numbers of dually eligible individuals enrolling in general MA plans.

A commenter expressed concern that CMS' current policy for calculating the 80 percent threshold may fail to maximize advances in health equity, as partial-benefit dually eligible individuals who are harmed are more likely than the overall Medicare population to be Black or Hispanic/Latino, under age 65, experience isolation and food insecurity, have a mental illness, and have a multiple chronic condition diagnosis. This commenter further stated that MA plans have the ability to offer unique, targeted benefits that are tailored to low-income populations (for example, groceries, health meals, transportation, and over-the-counter benefits) that directly address social determinants of health and drive higher quality and believed that, where plans are forced to offer less targeted benefits to avoid triggering the 80 percent threshold, partial-benefit dually eligible individuals are harmed. This commenter noted that at least eight States currently prohibit partial-benefit dually eligible individuals from enrolling in D-SNPs. Without a solution, according to the commenter, plans in these States will need to take benefits and resources away from this complex low-income population to instead use them to reduce Part D cost-sharing to attract enough non-dually eligible enrollees to avoid the 80 percent threshold.

A few commenters emphasized the value of allowing partial-benefit dually eligible individuals to enroll into D-SNPs. These commenters stated that D-SNPs provide supplemental benefits and care coordination provided through individualized care plans. A commenter noted that although partial-benefit dually eligible individuals are ineligible for most Medicaid services, these individuals have similar clinical, functional, and social needs as full-benefit dually eligible individuals and can benefit from access to stronger care management models available in D-SNPs. Recognizing that States decide whether or not to allow D-SNPs to enroll partial-benefit dually eligible individuals, a commenter recommended that CMS exclude these individuals from the calculation of the 80 percent threshold.

A commenter suggested that CMS consider alternative approaches, such as working with Congress to require States that limit D-SNP enrollment to full-benefit dually eligible individuals to, in turn, require their D-SNPs to have a separate PBP for partial-benefit dually eligible individuals, as Pennsylvania and Virginia have already done.

A commenter stated that excluding partial-benefit dually eligible individuals from the 80 percent threshold calculation would allow CMS to enforce D-SNP look-alike contracting restrictions in States where dually eligible individuals have D-SNPs they can move to, while not penalizing States that have not yet adopted the D-SNP model for all partial- and full-benefit dually eligible individuals.

Response:
We thank the commenters for their perspectives. The recommendations to revise the definition of the enrollment threshold at § 422.514(d) are outside of the scope of our proposed amendments; we believe that policy making on this issue would benefit from further study and engagement with interested parties. We will consider these comments for future rulemaking. For contract year 2023, D-SNPs limited to partial-benefit dually eligible individuals exist in 11 States (that is, Connecticut, Delaware, Florida, Idaho, Michigan, Mississippi, New York, Ohio, Virginia, Washington, and Wisconsin) and the District of Columbia. We continue to believe that allowing non-SNP MA plans to enroll partial-benefit dually eligible individuals with no limit would discourage States from taking this approach.

We believe the commenter noting that limitations on D-SNPs enrolling only full-benefit dually eligible individuals would apply to all States with FIDE SNPs in 2025 is referencing an amendment we made to the FIDE SNP definition in the Medicare Program; Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Programs; Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency; Additional Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency, which appeared in the
Federal Register
on May 9, 2022 (85 CFR 22704). Per the amendment to the FIDE SNP definition at 422.2 paragraph (5), for plan years 2025 and subsequent years, FIDE SNPs must have exclusively aligned enrollment. Starting for plan year 2025, FIDE SNPs will no longer be permitted to enroll any partial-benefit dually eligible individuals, because the definition of aligned enrollment is limited to full-benefit dually eligible individuals. However, the new requirement for exclusively aligned enrollment does not directly affect partial-benefit dually eligible individuals because no FIDE SNPs currently enroll partial-benefit dually eligible individuals. With respect to the comment regarding the ability of MA plans to offer benefits tailored to low-income populations such as groceries, transportation, and over-the-counter benefits, we note that these benefits may be offered when consistent with §§ 422.100(c)(2) and 422.102.

Comment:
A commenter suggested that CMS impose D-SNP look-alike restrictions only on MA plans and plan segments that have a minimum number of enrollees. The commenter indicated that creating an enrollment floor would prevent a small number of dually eligible enrollees from having an outsized impact on the plan's percentage of dually eligible enrollment due to low enrollment and recommended establishing this floor at 200 enrollees per plan for both new and existing plans to create a statistically significant sample size.

Response:
We thank the commenter for this perspective but disagree with the recommendation. The recommendations to revise the enrollment threshold at § 422.514(d) are outside of the scope of our proposed amendments. We will consider these comments for future rulemaking. Currently, § 422.514(d)(2)(ii) already exempts from the D-SNP look-alike contracting limitations non-SNP MA

plans that have been active for less than one year and have enrollment of 200 or fewer individuals based on January enrollment of the current year. The commenter is recommending that we adopt a minimum enrollment floor alone, without the requirement that the non-SNP MA plan be a new plan. As discussed in the June 2020 final rule at 85 FR 33813, we adopted the exemption at § 422.514(d)(2)(ii) to allow for some additional flexibility for initial enrollment patterns that may not be representative of the longer term enrollment pattern for the plan. Once the initial enrollment period has passed or the number of enrollees during that first year of operation exceeds 200 enrollees, we believe the enrollment profile accurately reflects whether or not the plan was designed to exclusively enroll dually eligible individuals.

Comment:
A commenter suggested that CMS couple the proposed amendments to the D-SNP look-alike policy with additional efforts to mitigate targeting of dually eligible individuals by non-integrated models, such as by considering the application of the D-SNP look-alike policy to other types of SNPs including chronic condition SNPs (C-SNPs). Another commenter noted that the proposed rule did not specify whether the proposed standards would apply to C-SNPs and requested that CMS provide more detail and transparency regarding the application of the proposal.

Response:
We welcome the commenters' perspectives but clarify that the proposed amendments would not apply the D-SNP look alike contract limitations to other types of SNPs. For plan year 2022 and subsequent years, as provided in § 422.514(d)(1), CMS will not enter into a contract for a new non-SNP MA plan that projects, in its bid submitted under § 422.254, that 80 percent or more of the plan's total enrollment are enrollees who are dually eligible. For plan year 2023 and subsequent years, as provided in § 422.514(d)(2), CMS will not renew a contract with a non-SNP MA plan that has actual enrollment, as determined by CMS using the January enrollment of the current year, consisting of 80 percent or more of enrollees are dually eligible, unless the MA plan has been active for less than 1 year and has enrollment of 200 or fewer individuals at the time of such determination. We proposed adding a new paragraph at § 422.514(g) to provide that § 422.514(d) through (f) apply to segments of the MA plan in the same way that those provisions apply to MA plans.

The recommendation to extend the contracting limitations at 422.514(d) to C-SNPs and I-SNPs is outside of the scope of our proposed amendments. We stated in the February 2020 proposed rule (85 FR 9021) and June 2020 final rule (85 FR 33813) that we proposed applying the requirement at § 422.514(d) only to non-SNP plans to allow for the predominant dually eligible enrollment that characterizes D-SNPs, I-SNPs, and some C-SNPs by virtue of the populations that the statute expressly permits each type of SNP to exclusively enroll. At this time, we are not aware of any non-SNP MA plans with features similar to C-SNPs and I-SNPs that do not meet the C-SNP or I-SNP requirements. Nonetheless, we will monitor evolution in enrollment patterns.

Comment:
Several commenters raised concerns or requested greater clarity about CMS' authority to terminate an MA contract. A commenter opposed CMS terminating an entire H contract number if CMS determined that a PBP of a health plan is a D-SNP look-alike due to having dually eligible enrollment greater than 80 percent of total enrollment and requested more detail regarding CMS' application of the proposal. Another commenter expressed concerns about CMS terminating a full MA contract when a plan segment rises above the D-SNP look-alike enrollment threshold since it would likely lead to significant disruptions in coverage and care coordination for impacted enrollees. This commenter suggested that CMS permit plans to crosswalk enrollees from MA plans that are at the 80 percent threshold or at risk of reaching the 80 percent threshold for dually eligible enrollment in a non-SNP plan, as well as add a corrective action period before the termination of an MA plan if the threshold is crossed. The commenter explained that providing such plans with the ability to crosswalk enrollees and a six-month window for corrective action may prevent CMS from needing to terminate the full MA contract and would prevent negative impacts for enrollees. Another commenter recommended that CMS provide details regarding the circumstances under which it would use the proposed authority to terminate an MA contract instead of taking more incremental measures to achieve compliance with the proposal.

Response:
We appreciate these comments and the requests for clarification. As stated in the June 2020 final rule at 85 FR 33812 and reiterated in the preamble to the proposed rule at 87 CFR 79466, we implement the contracting prohibition in § 422.514 at the
plan
level. We will similarly implement the contracting prohibition at the segment level if enrollment in the segment exceeds the D-SNP look-alike threshold.

Where an MA plan is one of several offered under a single MA contract and the MA organization does not voluntarily non-renew the D-SNP look-alike, CMS will sever the D-SNP look-alike from the overall contract using its authority under § 422.503(e) to sever a specific MA plan from a contract, and then terminate the deemed contract for the D-SNP look-alike. The other, non-D-SNP look-alike plans offered under the original contract would not be terminated. This action, in effect, allows CMS to renew only the portion of the contract that does not include the D-SNP look-alike. In this final rule, we are finalizing an amendment to § 422.503(e) to allow for CMS to sever a segment from an MA plan and allow the remaining non-D-SNP look-alike segments of that MA plan to continue along with any other non-D-SNP look-alike plans offered under the same contract.

Further, MA plans and MA plan segments that meet the criteria at § 422.514(d)(2) will have the opportunity to transition enrollees from a D-SNP look-alike per § 422.514(e). The transition authority at § 422.514(e) only permits transitioning the enrollment from the D-SNP look-alike plan or segment, that is, MA plans or segments that meet contracting limitation requirements at § 422.514(d)(2). The transition authority at § 422.514(e) does not apply to non-SNP MA plans with less than 80 percent dually eligible enrollees; a permissible crosswalk may be available depending on the circumstances. The comments about permitting transition of enrollees from plans at risk of reaching the 80 percent threshold and allowing a correction action period before termination of the MA plan meeting § 422.514(d) are out of scope for this rulemaking; we believe that policymaking on this issue would benefit from further study and engagement with interested parties. We will consider these comments for future rulemaking.

Comment:
A few commenters supported our proposal but noted that confusion can arise when crosswalk transactions are processed between segmented and non-segmented plans due to the variety of permissible scenarios. These commenters explained that in some cases CMS approved crosswalk transition plans for 2023 but MA plans later experienced incorrect denials during the plan crosswalk process despite the prior approval. These commenters believed the

proposal would clarify some of this confusion but recommended that CMS work with plan sponsors to ensure approvals are clearly indicated within the Health Plan Management System (HPMS) and appropriately communicated to all parties involved in executing crosswalk transactions.

Response:
We thank the commenters for their perspectives. We acknowledge that confusion can arise related to D-SNP look-alike transitions permitted under § 422.514(e) and crosswalk exceptions under § 422.530(c). We are planning enhancements to HPMS that will improve the clarity of approved and denied transactions.

Comment:
A commenter requested that CMS confirm whether it is permissible to consolidate two or more existing plans into a single plan and then segment the resulting consolidated plan.

Response:
We appreciate the comment. While an MA organization could consolidate two or more existing plans into one MA plan per § 422.530(b)(1)(ii) and segment the resulting consolidated plan, the resulting consolidated plan would be subject to the requirement we are finalizing at § 422.514(g).

Comment:
A commenter suggested that CMS delay implementation of the contracting limitations until January 1, 2025 to align with the transition of Medicare-Medicaid Plans (MMP). The commenter added that this delay would give dually eligible individuals who are currently enrolled in MMPs the ability to move to a D-SNP at the end of the demonstration and would give States that are currently participating in MMPs the ability to transition to D-SNPs as well.

Response:
We appreciate the commenter's suggestion but do not agree. The existing D-SNP look-alike contract limitation and transition authority at § 422.514(d) through (f), and amendments finalized at § 422.514(d) and § 422.514(g) in this rule, are not necessary to facilitate MMP to D-SNP transitions. Rather, CMS will work with States participating in the Financial Alignment Initiative to transition as described in the final rule titled Medicare Program; Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs; Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency; Additional Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency which appeared in the
Federal Register
on May 9, 2023 (CMS-4192-F) at 87 CFR 27796 through 27798. This process is consistent with the transition of California MMPs to D-SNPs effective January 1, 2023.
3

The transition of enrollees from MMPs to D-SNPs does not address our need to stem the proliferation and growth of D-SNP look-alikes now, as summarized earlier in this section and discussed in more detail in the February 2020 proposed rule (85 FR 9018 through 9021).

3
The California three-way contract is available at:
https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/FinancialAlignmentInitiative/Downloads/CAContract.pdf.

Comment:
A commenter encouraged CMS to continue efforts to reduce incentives for non-SNP plans to focus enrollments efforts on dually eligible individuals. A commenter suggested that CMS continue to monitor and evaluate any non D-SNP plan where dually eligible individuals make up the majority of the covered lives to ensure the plan is not engaged in deceptive marketing practices. Another commenter recommended that CMS contemplate requiring Medicare to inform beneficiaries when they are enrolling in a non-integrated model where an integrated model exists.

Response:
We appreciate the comments and agree with concerns about the potential proliferation of D-SNP look-alikes that are not required to comply with the requirements for D-SNPs and that may undermine our goals of encouraging and furthering integrated coverage options for dually eligible individuals. As described in the June 2020 final rule at 85 FR 9020, we stated that the prevalence of D-SNP look-alikes has led to instances of misleading marketing by brokers and agents that misrepresent to dually eligible individuals the characteristics of such look-alike plans, especially where the plans have marketed themselves as being special Medicaid-focused plans. We sought to reduce that prevalence through finalizing the D-SNP look-alike contracting limitations at § 422.514(d). Also in the June 2020 final rule, we codified at § 422.2262(a)(1)(xvi) a prohibition on MA organizations, with respect to their non-D-SNP plans, from marketing their plan as if it were a D-SNP, implying that their plan is designed for dually eligible individuals, targeting their marketing efforts exclusively to dually eligible individuals, or claiming a relationship with the State Medicaid agency, unless a contract to coordinate Medicaid services for that plan is in place. We will continue to monitor the level of dually eligible enrollment among non-SNP MA plans. This comment is out of scope for this rulemaking, but we will consider ways to monitor non-D-SNP plans for deceptive marketing practices and contemplate for future rulemaking a requirement to inform beneficiaries upon enrolling into a non-integrated model where an integrated model exists.

Comment:
A commenter noted that the unforeseen loopholes reinforced their concerns about the overly complex nature of MA contracting and the opportunities that complexity brings for abuse, which led to the need for D-SNP look-alike regulations. This commenter emphasized that complexity hampers transparency as shown by the MA plan segment issues and recommended that CMS take a hard look at its contracting and oversight of MA plans to ensure the system is more straightforward, accountable, and transparent.

Response:
We welcome this perspective. While this comment is out of scope for this rulemaking, we will consider it for future rulemaking and oversight opportunities.

After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing revisions to §§ 422.503(e), 422.504(a)(19), 422.510(a)(4), and 422.514(g) as proposed.

B. Part D Special Enrollment Period Change Based on CAA Medicare Enrollment Changes (§ 423.38)

Section 101 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) established a Part D—Voluntary Prescription Drug Benefit program for Medicare-eligible individuals. The MMA added section 1860D-1(b)(3)(C) of the Act, which authorized the Secretary to establish Part D special enrollment periods (SEP) for Medicare-eligible individuals to enroll in a Part D plan based on exceptional conditions—that is, an individual may elect a plan or change his or her current plan election when the individual meets an exceptional condition as determined by the Secretary.

In 2020, we codified a number of exceptional condition SEPs, including the SEP for Individuals Who Enroll in Part B During the Part B General Enrollment Period (GEP) (85 FR 33909). This SEP, as codified at § 423.38(c)(16), allowed individuals who are not entitled to premium-free Part A and who enroll in Part B during the GEP for Part B (January-March) to enroll in a Part D plan. This SEP begins April 1st and ends June 30th, with a Part D plan enrollment effective date of July 1st. This SEP effective date aligns with the

entitlement date for Part B for individuals who enroll in Part B during the GEP.

Prior to January 1, 2023, when an individual enrolled in Part B during the GEP, their Part B enrollment entitlement date was July 1st, regardless of when during the GEP they enrolled. Division CC, title I, subtitle B, section 120 of the Consolidated Appropriations Act, 2021 (CAA) Public Law 116-260 modified section 1838(a)(2) of the Act, to address the beginning of the entitlement for individuals enrolling during their GEP pursuant to section 1837(e) of the Act. As added by the CAA, section 1838(a)(2)(D)(ii) of the Act requires that, for an individual who enrolls in Part B during the GEP on or after January 1, 2023, entitlement begins the first day of the month following the month in which the individual enrolled. For example, if an individual enrolls in Part B in February 2023 (during the GEP), their Part B coverage will begin on March 1st.

Based on Medicare enrollment statutory changes made by the CAA described previously, we proposed to modify § 423.38(c)(16) to provide that on or after January 1, 2023, an individual who is not entitled to premium-free Part A and who enrolls in Part B during the GEP is eligible to use the SEP for Individuals Who Enroll in Part B During the Part B GEP to request enrollment in a Part D plan, and that this SEP will begin when the individual submits the application for Part B, and will continue for the first 2 months of enrollment in Part B. Further, we proposed to modify § 438.38(c)(16) to provide that where an individual uses this Part D SEP to request enrollment in a Part D plan, the Part D plan enrollment would be effective the first of the month following the month the Part D plan sponsor receives the enrollment request.

These proposed revisions are needed to align the timeframe for use of this Part D SEP based on new Part B GEP enrollment effective date parameters.

Because an individual may elect a Part D plan only during an election period, Medicare Part D sponsors already have procedures in place to determine the election period(s) for which an applicant is eligible. Finalizing this SEP will not add to existing enrollment processes, so we believe any burden associated with this aspect of enrollment processing would remain unchanged from the current practice and will not impose any new requirements or burden.

All information impacts of this provision have already been accounted for under OMB control number 0938-1378 (CMS-10718). We do not believe finalizing this SEP will adversely affect individuals requesting enrollment in Medicare plans, the plans themselves, or their current enrollees. Similarly, we do not believe finalizing this SEP will have any impact to the Medicare Trust Funds.

We received a number of comments on this proposal—those comments and our responses follow.

Comment:
All commenters supported our proposal to align the timeframe for use of this SEP based on the revised GEP effective date parameters established by the CAA. One commenter stated that they support beneficiaries' access to affordable, quality health coverage, and that this change would reduce potential coverage gaps. Another commenter agreed that this change would help alleviate potential coverage gaps, and added that it would simplify the process for beneficiaries and their caregivers, as it will align the effective date of Part D coverage with the effective date for other Part D SEPs. Another commenter stated that they support policies that support enrollment alignment across Medicare Parts A, B, C and D.

Response:
We thank the commenters for their support of this proposed revision to align the timeframe for use of this SEP with the new parameter for GEP effective dates established under the CAA.

Comment:
One commenter supported the proposal, but stated that current eligibility criteria do not require checking Part A status of payment, and requested clarification on whether CMS intends to require plans to validate Part A Entitlement Status Code in the Medicare Advantage Prescription Drug (MARx) system as part of eligibility verification for use of this SEP.

Response:
CMS did not propose any change to the criteria for use of this SEP, only the timeframe for its use, and the effective date of the coverage. Therefore, the actual enrollment process will not change. Per current procedures outlined in the CMS Plan Communications User Guide, Part D sponsors must verify Part D eligibility/Medicare entitlement by either the Batch Eligibility Query (BEQ) process or the MARx online query (M232 screen) or its equivalent for all enrollment requests except enrollment requests from a current enrollee of a PDP who is requesting enrollment into another PDP offered by the same parent organization with no break in coverage (that is, “switching plans”). CMS systems are updated within two business days of SSA processing new or changed Part A or Part B entitlement for a Medicare beneficiary. If the plan needs to validate the individual's Part A entitlement status, that code/information can be found in the Part A Entitlement Status column on the M257 screen in MARx.

Comment:
One commenter stated that the individual's premium-Part A entitlement is a necessary component if one were to use the SEP to apply for Part D. They further stated that, the window for applying for premium-Part A in the 14 group-payer states is limited to the GEP, so, group-payer states can delay the individual's ability to take advantage of the proposed Part D SEP.

Response:
We thank the commenter, but the parameters for applying for premium—Part A in group-payer states are outside of the scope of this rule.

After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the SEP for Individuals Who Enroll in Part B During the Part B GEP to request enrollment in a Part D plan at §  423.38(c)(16) without modification.

C. Alignment of Part C and Part D Special Enrollment Periods With Medicare Exceptional Condition Enrollment (§§ 422.62 and 423.38)

Section 1851(e)(4)(D) of the Act authorizes the Secretary to create special enrollment periods (SEPs) for an individual to disenroll from an MA plan or elect another MA plan if the individual meets an exceptional condition provided by the Secretary. This authority was originally codified at § 422.62(b)(4) in the June 1998 interim final rule as a general SEP for CMS to apply on an ad hoc basis. (63 FR 35073)

As noted previously, section 1860D-1(b)(3)(C) of the Act authorizes the Secretary to establish Part D SEPs for Medicare-eligible individuals to enroll in a Part D plan if they meet certain exceptional conditions. This authority was originally codified at § 423.38(c)(8)(ii) (70 FR 4529). The MMA also added section 1860D-1(b)(1)(B) of the Act which provides that in adopting the Part D enrollment process, the Secretary “shall use rules similar to (and coordinated with) the rules for enrollment, disenrollment, termination, and change of enrollment with an MA-PD plan under the following provisions of section 1851.”

As required by section 1851(a)(3) of the Act (for the MA program) and section 1860D-1(a)(3)(A) of the Act (for the Part D program) and described in §§ 422.50(a)(1) and 423.30(a)(1)(i), eligibility for MA or Part D plan enrollment requires that an individual first have Medicare Parts A and B for MA eligibility and either Part A or B for

Part D eligibility. Division CC, title I, subtitle B, Section 120 of the CAA established section 1837(m) of the Act to authorize the Secretary to establish Part B SEPs for individuals who are eligible to enroll in Medicare and meet such exceptional conditions as the Secretary provides. Per section 1818(c) of the Act, the provisions of section 1837 of the Act, excluding subsection (f) thereof, applies to the premium Part A program. This authority to adopt exceptional conditions SEPs for premium Part A and Part B was effective January 1, 2023. CMS finalized new exceptional condition SEPs under section 1837(m) of the Act in 42 CFR 406.27 and 407.23 for Medicare parts A and B, respectively, in a final rule that was published in the
Federal Register
on November 3, 2022, titled “Medicare Program; Implementing Certain Provisions of the Consolidated Appropriations Act, 2021 and Other Revisions to Medicare Enrollment and Eligibility Rules” (87 FR 66454). These SEPs are available to individuals who have missed an enrollment period due to an exceptional condition that is specified in the final rule. Specifically, individuals who miss an IEP, GEP, or another SEP, such as the Group Health Plan SEP, due to an exceptional condition, would be eligible to enroll in Medicare premium Part A or Part B using the new SEPs.

Based on Medicare enrollment changes made by the CAA described previously, we proposed to add corresponding exceptional condition SEPs for MA and Part D enrollment, as authorized under sections 1851(e)(4)(D) and 1860D-1(b)(3)(C) of the Act, to align with the new Medicare premium—Part A and B exceptional condition SEPs that CMS has finalized in 42 CFR 406.27 and 407.23.

We proposed at § 422.62(b) to redesignate current paragraphs (26) as (27) and add a new paragraph (26) to provide an SEP for individuals to enroll in a MA plan or MA plan that includes Part D benefits (MA-PD plan), when they use a Medicare exceptional condition SEP to enroll in premium Part A and/or Part B. We also proposed at § 423.38(c) to redesignate current paragraph (34) as (35) and add new paragraph (34) to provide an SEP for individuals to enroll in a stand-alone Part D prescription drug plan (PDP) when they use a Medicare exceptional condition SEP to enroll in premium Part A or Part B.

The proposed new MA SEP would begin when the individual submits the application for premium Part A and Part B, or only Part B, and would continue for the first 2 months of enrollment in Part A (premium or premium-free) and Part B. Similarly, the proposed new Part D SEP would begin when the individual submits their premium-Part A or Part B application and would continue for the first 2 months of enrollment in premium Part A or Part B. The MA or Part D plan enrollment would be effective the first of the month following the month the MA or Part D plan receives the enrollment request.

Because an individual may elect an MA or Part D plan only during an election period and when eligible, MA organizations and Part D sponsors already have procedures in place to determine the election period(s) for which an applicant is eligible. Finalizing these coordinating SEPs will not add to existing enrollment processes, so we believe any burden associated with this aspect of enrollment processing will remain unchanged from the current practice, and will not impose any new requirements or burden.

Consequently, finalizing these SEPs will not have added impact. All burden impacts of these provisions have already been accounted for under OMB control number 0938-1378 (CMS-10718). We do not believe finalizing these SEPs will adversely impact individuals requesting enrollment in Medicare plans, the plans themselves, or their current enrollees. Similarly, we do not believe the finalized SEPs will have any impact to the Medicare Trust Funds.

We received a number of comments on this proposal—those comments and our responses follow.

Comment:
All commenters supported our proposal to add corresponding exceptional condition SEPs for MA and Part D enrollment to align with the new Medicare premium Part A and B exceptional condition SEPs that CMS has finalized in 42 CFR 406.27 and 407.23. A few commenters expressed that the availability of these SEPs would reduce potential coverage gaps and help prevent late enrollment penalties. Another commenter stated that they support the timely access to prescription drugs, and these new SEPs would allow vulnerable beneficiaries access to prescription drug coverage to become effective the first of the month following the month the plan sponsor receives the enrollment request. One commenter stated that they support policies that promote enrollment alignment across Medicare Parts A, B, C and D. Another commenter stated that their priority is to improve beneficiary experience by reducing confusion and to align program dates within Medicare or between Medicare and Medicaid. They further stated that this will provide Medicare beneficiaries with the opportunity to learn about and enroll in MA special needs plans (SNPs). The commenter added that an ongoing issue for beneficiaries and stakeholders is the lack of understanding of the availability of SNPs, and that this will provide another opportunity for CMS to provide beneficiaries with the very important choice of fee-for-service vs. MA, and MA vs. SNPs.

Response:
We thank the commenters for their support of our proposal to add corresponding exceptional condition SEPs for MA and Part D enrollment to align with the new Medicare premium Part A and B exceptional condition SEPs.

Comment:
One commenter expressed that, under the new requirements, a Part D plan would not know the date the applicant submitted their application to the SSA. Accordingly, they requested CMS to clarify how the start of the SEP factors into a plan processing an enrollment request using the SEP.

Response:
Per current practice, the MA or Part D plan would need to confirm that the individual had enrolled in premium Part A and/or Part B, as applicable, prior to the individual's MA or Part D enrollment effective date. The SSA will have to first process the individual's premium Part A and/or Part B application and submit that information into SSA systems, which, in turn, would be populated in the CMS enrollment systems, for an MA or Part D plan to have access to that enrollment information.

• For MA enrollment, the SEP begins when the individual, using an exceptional condition SEP, submits their application for—

++ Premium—Part A and Part B; or

++ Part B only, if the individual is already entitled to Part A, (or enrolls in premium-free Part A within the timeframe for use of this SEP).

• For Part D enrollment, the SEP begins when the individual, using an exceptional condition SEP, submits their premium—Part A or Part B application.

We note that the timeframe for use of both of these SEPs extends two months beyond the premium—Part A and/or Part B entitlement date, which will be visible to plans.

Comment:
A commenter stated that, although they support CMS' policy intent with this proposal, with increased prescription coverage for beneficiaries, this will likely exacerbate current reimbursement challenges at the pharmacy counter—where pharmacies are being paid below costs for many of the prescriptions they purchase and dispense. Another commenter suggested

that CMS consider creating an SEP that would allow cancer patients to switch back to Original Medicare, in the case where a patient in an MA plan receives a cancer diagnosis and is unable to access needed treatment in a timely manner. The commenter also recommended that CMS create an ongoing open enrollment window for patients diagnosed with cancer, which would automatically provide the benefits of having comprehensive in-network care.

Response:
We thank the commenters for their feedback; however, we proposed to add corresponding exceptional condition SEPs for MA and Part D enrollment to align with the new Medicare premium-Part A and B exceptional condition SEPs that CMS has finalized, and these comments are outside of the scope of this rulemaking.

After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing, the MA SEP at §§ 422.62(b)(26) with a minor edit to the regulation text to clarify that this SEP applies to an individual submitting an application for Part B only if they are already entitled to Part A, or are enrolling in premium-free Part A within the timeframe of this SEP. We are finalizing the Part D enrollment SEP at 423.38(c)(34) as proposed without modification.

D. Transitional Coverage and Retroactive Medicare Part D Coverage for Certain Low-Income Beneficiaries Through the Limited Income Newly Eligible Transition (LI NET) Program (§§ 423.2500 Through 423.2536)

1. Background on the LI NET Demonstration and Introduction to the Proposals

a. Background on the LI NET Demonstration

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) established the Medicare Part D prescription drug benefit, which became effective on January 1, 2006. Prior to 2006, beneficiaries who were eligible for both Medicaid and Medicare (dually eligible) received prescription drug benefits through Medicaid. When the MMA went into effect, dually eligible beneficiaries began receiving their prescription drug benefits through Medicare Part D.

From the beginning of Part D, CMS recognized the need to provide both immediate and retroactive coverage for full-benefit dually eligible (FBDE) beneficiaries who were newly identified by either CMS or a State. Prior to 2010, CMS automatically enrolled newly identified beneficiaries eligible for the Part D low-income subsidy (LIS) into a Part D plan with a premium at or below the low-income benchmark (“benchmark” plans), which have no or reduced premiums for LIS-eligible beneficiaries. Each benchmark plan receiving these beneficiaries was required to grant retroactive coverage to the beginning of a beneficiary's LIS-eligible status or their last uncovered month, whichever date was later. At the time, there were around 300 Part D benchmark plans, and each needed to develop the capacity to provide transitional and retroactive coverage for these beneficiaries. Conducting retroactive claims adjudication and providing point-of-sale coverage was not efficient for Part D sponsors and accordingly, in 2010, CMS established the Medicare Part D Demonstration for Retroactive and Point of Sale Coverage for Certain Low-Income Beneficiaries, also known as Medicare's Limited Income Newly Eligible Transition (LI NET) demonstration. The LI NET demonstration consolidates administration of transitional and retroactive Part D coverage for eligible beneficiaries to a single Part D sponsor.

Part D coverage under the LI NET demonstration differs from coverage under traditional Part D plans in that the LI NET demonstration provides point-of-sale coverage for beneficiaries who demonstrate an immediate need for prescriptions, and also provides retroactive and/or temporary coverage for beneficiaries determined to be eligible, or likely to be eligible, for the Part D LIS by the Social Security Administration (SSA) or a State. The LI NET demonstration provides temporary, transitional Part D prescription drug coverage for LIS-eligible beneficiaries, including beneficiaries who are eligible for the Part D LIS but who are not yet enrolled in a Part D drug plan, or are enrolled in a plan but for whom coverage has not yet taken effect.

The purposes of the demonstration are to provide the following:

• More efficient prescription drug coverage and claims reimbursement for newly eligible low-income beneficiaries, including periods of retroactive eligibility;

• More efficient prescription drug coverage and claims reimbursement for individuals who are not enrolled in a PDP and whose LIS status is not yet established in CMS' systems, but who arrive at a pharmacy with an immediate need for their prescription. This may occur, for instance, when a State has determined that a beneficiary is eligible for Medicaid but that information does not yet appear in CMS' systems;

• A seamless transition for LIS-eligible beneficiaries from LI NET into a qualifying PDP with basic prescription drug coverage absent a beneficiary's choice otherwise; and

• More efficient prescription drug coverage and claims reimbursement for LIS-eligible beneficiaries who are losing existing coverage in a PDP. For example, a beneficiary could be terminated for moving out of the service area of their current PDP. The beneficiary would be automatically enrolled into LI NET for that month and the following month, with enrollment into a qualifying PDP with basic prescription drug coverage that would become effective at the end of the LI NET enrollment absent the beneficiary's choice otherwise.

b. Introduction to the Proposals To Implement LI NET as a Permanent Program

Division CC, title I, subtitle B, section 118 of the Consolidated Appropriations Act, 2021 (CAA) (Pub. L. 116-260) modified section 1860D-14 of the Act by redesignating subsection (e) of section 1860D-14 as subsection (f) and by establishing a new subsection (e) Limited Income Newly Eligible Transition Program. New subsection (e)(1) requires the Secretary to “carry out a program to provide transitional coverage for covered Part D drugs for LI NET eligible individuals . . .” no later than January 1, 2024. This directive in section 118 of the CAA makes LI NET a permanent program within Part D, beginning in 2024.

The proposed rulemaking to establish the LI NET program is consistent with President Biden's Executive Order 13985 on Advancing Racial Equity and Support for Underserved Communities Through the Federal Government (January 20, 2021) and Executive Order 14085 on Transforming Federal Customer Experience and Service Delivery to Rebuild Trust in Government (December 13, 2021). LI NET ensures that low-income beneficiaries transitioning from Medicaid to Medicare do not experience a gap in coverage for their prescription medications. Executive Order 14085 calls for the Federal Government to design and deliver services with “a focus on the actual experience of the people whom it is meant to serve” and “deliver services more equitably and effectively, especially for those who have been historically underserved.” We have designed the LI NET program with beneficiary needs foremost in mind, ensuring continuous drug coverage and access for eligible low-income individuals.

LI NET policies, infrastructure, and operations have evolved over the past 13 years to balance providing needed coverage with responsible stewardship of taxpayer dollars and efficiency in administering the program. The LI NET demonstration has proven successful in providing low-income individuals transitional Part D coverage. Approximately 8 million low-income individuals received the benefits of the LI NET program under the demonstration, with over 100,000 beneficiaries enrolled in LI NET in any given month. It has become a program that beneficiary advocacy groups rely on when supporting low-income individuals and connecting them with services. LI NET works directly with over a dozen advocacy groups and 51 State Health Insurance Assistance Programs (SHIPs), which collectively work with LIS beneficiaries to remove access barriers and provide health insurance counseling.

We believe the LI NET demonstration is a reliable, stable program that has been successful in providing transitional and retroactive Part D coverage to millions of beneficiaries. In developing our proposals for implementing the permanent LI NET program, we took into consideration our experience under the LI NET demonstration. Where appropriate, we discuss the policies and practices under the LI NET demonstration that informed our proposals for how to implement aspects of the LI NET program that are not directly specified by the statute.

We rely on the premise that Part D regulations apply to the LI NET program and to the LI NET sponsor as part of the Part D program and as a type of Part D sponsor, except for when the statute requires us to deviate or when existing regulations would not apply. For example, as discussed further in this final rule, because the LI NET sponsor is required to have an open formulary, existing Part D requirements on formulary development would not be applicable.

Our proposals to make LI NET a permanent program started with § 423.2500. In § 423.2500(a), we proposed the LI NET program would be based on section 1860D-14 of the Act. We proposed in § 423.2500(b) the scope of the LI NET program, which would begin no later than January 1, 2024. Under this program, eligible individuals would be provided transitional coverage for Part D drugs. Section § 423.2504 sets forth the LI NET eligibility and enrollment proposals and § 423.2508 proposed LI NET benefits and beneficiary protections. Next, we proposed in § 423.2512 the requirements to be an LI NET sponsor and § 423.2516 proposed how the Part D sponsor administering LI NET in partnership with CMS would be selected and the requirements set forth in the LI NET contract to provide services and coverage. In § 423.2518, we included a proposal for intermediate sanctions in the event of contract violations. In § 423.2520, we proposed how an LI NET contract would be non-renewed or terminated. In § 423.2524, we included our proposals for bidding and determining the LI NET payment rate. Finally, § 423.2536 enumerated the Part D requirements we proposed waiving for LI NET.

We proposed to align sunsetting the demonstration seamlessly with the start of the LI NET program under this section. Specifically, the LI NET demonstration will continue to operate until December 31, 2023, and the LI NET program would start to operate on January 1, 2024 according to the regulations that we finalize.

2. Eligibility and Enrollment

a. Eligibility

Section 1860D-14(e)(2) of the Act provides that an individual is eligible for LI NET coverage if they: (A) meet the requirements of section 1860D-14(a)(3)(A)(ii) and (iii) of the Act; and (B) have not yet enrolled in a prescription drug plan or an MA-PD plan, or, who have so enrolled, but with respect to whom coverage under such plan has not yet taken effect. This means that to be eligible, the individual would need to be a full-benefit dual-eligible individual or low-income subsidy (LIS) eligible individual as defined at § 423.773 and—

• Not yet be enrolled in a prescription drug plan or an MA-PD plan; or

• Be enrolled but their coverage has not yet taken effect.

Under these requirements, LI NET would be available to all categories of individuals who are LIS-eligible, including—

• Full Subsidy-Full Benefit Dually Eligible (FBDE) individuals, including institutionalized beneficiaries and beneficiaries receiving home and community-based services;

• Full Subsidy-Non-FBDE Individuals, including those who have applied or are eligible for QMB/SLMB/QI or SSI, with income and resource thresholds at or below the amounts set by CMS each year; and

• Partial Subsidy Individuals, including those who have applied and have income and resource amounts below the thresholds set by CMS each year.

We proposed to codify at Subpart Y the LI NET eligibility requirements set forth in section 1860D-14(e)(2) of the Act. We proposed to establish in paragraph (a) of new § 423.2504 two categories of individuals eligible to enroll in LI NET that encompass the previously noted categories of low-income individuals recognized by Part D. The first category, which we term “LIS-eligible” in proposed paragraph (a)(1), would be composed of individuals whose low-income status has been confirmed either through CMS's data in our system of record or because the individual can demonstrate their current or future low-income status. The second category, which we term “immediate need” in proposed paragraph (a)(2), would consist of individuals whose low-income status has not been confirmed, because CMS's data do not yet reflect the individual's low-income status, but the individual has indicated that they are eligible for the LIS.

We refer to the individuals in the category established in proposed paragraph (a)(2) as “immediate need” because they present at a pharmacy or to the LI NET sponsor in immediate need of a prescription and have no Part D coverage. Ideally, these beneficiaries would be able to show documentation of their pending LIS status, such as a letter received from the State showing the beneficiary's LIS status. However, we do not believe an absence of documentation in hand at the point-of-sale should be a barrier to entry to LI NET for immediate need individuals. This is because our experience in the demonstration is that 80 percent of immediate need individuals do have their eligibility confirmed,
4

and we would not want to turn away these individuals who imminently require access to their prescription drugs. Under the LI NET demonstration, individuals can indicate the likelihood of their low-income status by providing the evidence they have, which can include verbal explanations of why they consider themselves eligible.

4
Of the 80 percent of immediate need LI NET beneficiaries whose LIS status is ultimately confirmed, for 89 percent confirmation was within 10 days, and for 97 percent confirmation was within 21 days. In the demonstration, beneficiaries whose LIS status is not able to be confirmed within 21 days continue to be enrolled in LI NET for two months, but they can no longer fill prescriptions after 21 days.

We proposed in § 423.2504(a)(2) to grant immediate access to covered Part D drugs at the point-of-sale for individuals whose eligibility as defined at § 423.773 cannot be confirmed at the point-of-sale. We proposed to permit

immediate need individuals to provide documentation to the LI NET sponsor to confirm LIS eligibility. Documentation could include, but would not be limited to—

• A copy of the beneficiary's Medicaid card that includes their name and eligibility date;

• A copy of a letter from the State or SSA showing LIS status;

• The date that a verification call was made to the State Medicaid agency, the name and telephone number of the State staff person who verified the Medicaid period, and the Medicaid eligibility dates confirmed on the call;

• A copy of a State document that confirms active Medicaid status;

• A screen-print from the State's Medicaid systems showing Medicaid status; or

• Evidence at point-of-sale of recent Medicaid billing and payment in the pharmacy's patient profile.

Under our proposal, if an immediate need individual's LIS status cannot be confirmed within a period of 2 months, that individual would not be automatically enrolled into a Part D plan. This is the same as current practice under the LI NET demonstration. We solicited comment on the proposal to align the 2 months of enrollment with the ability to fill prescriptions for these immediate need beneficiaries.

We proposed to permit immediate need beneficiaries whose eligibility cannot be confirmed to continue to fill prescriptions throughout their 2-month enrollment in LI NET. We believe this ensures access to LI NET benefits and is an administratively simple approach as compared with alternative ideas, such as the approach under the demonstration of keeping immediate need beneficiaries with uncertain eligibility enrolled in LI NET but unable to fill prescriptions. We proposed that if, by the end of an immediate need individual's enrollment in LI NET, neither CMS's systems nor the beneficiary's provision of documentation confirms low-income status, then that individual would not be auto-enrolled into a qualifying standalone Part D plan following their LI NET coverage.

b. Enrollment

Section 1860D-14(e) of the Act does not specify a process for enrollment into the LI NET program. Therefore, in forming our proposed enrollment process, we looked to the process used in the demonstration. Under the LI NET demonstration, there are four ways for eligible individuals to be enrolled into the demonstration. They are as follows:

• Automatic enrollment. Individuals who are LIS-eligible but do not yet have Part D coverage, and those individuals who have selected a Part D plan but whose enrollment has not taken effect, are enrolled by CMS into the LI NET demonstration unless the beneficiary has affirmatively declined enrollment in Part D.

• Point of sale enrollment. Immediate need individuals whose claims are submitted by the pharmacy at the point-of-sale and billed to LI NET are enrolled into the LI NET demonstration by the LI NET sponsor.

• Direct reimbursement request. Individuals who are LIS-eligible and who submit receipts for reimbursement for claims paid out of pocket are retroactively enrolled into the LI NET demonstration by the LI NET sponsor, with 36-month retroactive coverage for full dually eligible individuals and those who receive supplemental security income (SSI) benefits.

• LI NET application form. Beneficiaries who are not enrolled into LI NET through auto-enrollment, point-of-sale enrollment or via an approved direct reimbursement request may submit an application form to the LI NET sponsor with supporting documentation demonstrating their LIS status. The LI NET sponsor will periodically check for eligibility and enroll applicants once eligibility is confirmed.

The majority of LI NET beneficiaries are enrolled into the LI NET demonstration automatically by CMS; about 90 to 95 percent of LI NET beneficiaries are those we identify in our systems and enroll into the demonstration. To do this, CMS “sweeps” our data monthly to identify all beneficiaries who are—

• Eligible for LIS;

• Eligible for Part D;

• Not enrolled in a Part D plan or receiving the Retiree Drug Subsidy (RDS) or coverage through Veterans Affairs;

• Have not opted-out of Part D enrollment for any reason (for example, because they declined it);

• Not incarcerated, are lawfully present in the US, and do not live in another country; and

• Are not enrolled in a Part C plan that disallows concurrent enrollment in a Part D plan.

Beneficiaries identified in the monthly sweep are automatically enrolled into the LI NET demonstration for that month and the following month. CMS then prospectively enrolls the beneficiary into a traditional Part D plan, with coverage under that plan taking effect immediately after the LI NET coverage ends. This population of beneficiaries includes those who may be gaining Part D eligibility or LIS status but have not made an election into a Part D plan.

A smaller number of beneficiaries, about five to ten percent of LI NET beneficiaries, enroll in the LI NET demonstration outside of the sweeps process. Some enroll at the point-of-sale, as described previously. An even smaller number of beneficiaries contact the LI NET sponsor directly to enroll in the LI NET demonstration. Individuals can submit a request for reimbursement to the LI NET sponsor. If the person is LIS-eligible, the LI NET sponsor enrolls them into the LI NET demonstration and reimburses them for eligible out-of-pocket costs for the duration of their retroactive enrollment. As with an individual who is enrolled at the point-of-sale, the start date of LI NET enrollment would be the first of the month the request is received. There may be individuals who do not have an immediate need for medication and believe they are eligible for LI NET. These individuals can either bring documentation of LIS status to a pharmacy or fill out an application form, which allows the LI NET sponsor to periodically check their eligibility and enroll them into LI NET if they become eligible.

Consistent with the enrollment processes under the demonstration, we proposed in § 423.2504(b) to codify the ways in which individuals can be enrolled into LI NET: auto-enrollment, point-of-sale for immediate need individuals, direct reimbursement, and LI NET enrollment form.

In § 423.2504(b)(1), we proposed that individuals who are LIS-eligible and whose auto-enrollment into a Part D plan (as outlined in § 423.34(d)(1)) has not taken effect will be automatically enrolled by CMS into the LI NET program unless they have affirmatively declined enrollment in Part D per § 423.34(e). LIS-eligible beneficiaries who have made the decision to opt out of enrollment in Part D must take a proactive step to contact CMS for us to record that decision in our systems by placing a flag on the beneficiary's record. Beneficiaries may opt out of Part D enrollment if they have other insurance or do not want to participate as a matter of principle. We assume that a beneficiary who opts out of Part D enrollment would also want to opt out of transitional coverage under the LI NET program. Therefore, proposed § 423.2504(b)(1) provided that when a beneficiary affirmatively declines enrollment in Part D per § 423.34(e),

that would also entail opting out of LI NET enrollment.

In defining “transitional coverage” for LI NET, the statute sets forth requirements for the duration of LI NET coverage under section 1860D-14(e)(3) of the Act. Section 1860D-14(e)(3)(A) establishes that “immediate access to covered part D drugs at the point of sale during the period that begins on the first day of the month such individual is determined to meet the requirements of clauses (ii) and (iii) of subsection (a)(3)(A) and ends on the date that coverage under a prescription drug plan or MA-PD plan takes effect with respect to such individual.” The starting point of enrollment into LI NET for these types of LIS-eligible beneficiaries, whether they are automatically enrolled or immediate need individuals, is required by statute but the duration of time they prospectively remain enrolled in LI NET is not specified. Under the demonstration, we typically cap non-retroactive coverage in LI NET to 2 months. Consistent with the statute and with our operations under the demonstration, in § 423.2504(c), we proposed that LI NET enrollment begins on the first day of the month an individual is identified as eligible under § 423.2504 and ends after 2 months.

Section 1860D-14(e)(3)(B) of the Act sets a limit on how far back retroactive LI NET coverage can extend. Full-benefit dually eligible individuals (as defined in section 1935(c)(6)) and recipients of supplemental security income (SSI) benefits under title XVI are eligible for up to 36 months of retroactive coverage. In proposed § 423.2504(c)(2), retroactive LI NET coverage would begin on the date an individual is identified as full-benefit dual or an SSI benefit recipient, or 36 months prior to the date such individual enrolls in (or opts out of) Part D coverage, whichever is later. This duration of time is similar to retroactive coverage under the demonstration, which provides for a maximum retroactive period of 36 months for Full Subsidy LIS eligible individuals.
5

As with LI NET beneficiaries without retroactive coverage, we proposed that LI NET coverage would end with enrollment into a Part D plan or opting out of Part D coverage.

5
The LI NET demonstration provides an exception to the 36-month maximum period of retroactive enrollment if there is a Medicaid determination within the last 90 days that confers Medicaid eligibility going back further than 36 months. In these situations, LI NET enrollment under the demonstration goes back to the start of Medicaid eligibility. We did not propose an exception to the 36-month limit on retroactive coverage in this rulemaking as the statute does not provide for such an exception.

We proposed in § 423.2504(d) that enrollment in LI NET would end on the date that coverage under Part D takes effect, consistent with section 1860D-14(e)(3) of the Act. In the case of immediate need beneficiaries for whom LIS-eligibility is not confirmed and who are not enrolled into a PDP, enrollment would end 2 months after the immediate need enrollment begins. No matter the method of enrollment, we proposed that the minimum duration of LI NET enrollment is 2 months unless the beneficiary elects to disenroll from LI NET or to enroll in a Part D plan. For example, an individual whom we auto-assign into LI NET starting April 1, 2024 would remain in LI NET for April and May 2024 before being enrolled into an appropriate Part D plan starting June 1, 2024.

We provided the following two examples to further explain how LI NET enrollment and disenrollment would work under our proposals:

Example 1:
Beneficiary Kristy is a full-benefit dually eligible individual and arrives at a pharmacy on May 5, 2024, with documentation showing that her LIS application is pending. She would have immediate coverage in LI NET for May and June 2024. If, in the course of adjudicating her LIS application, it is discovered that she was actually LIS-eligible dating back to January 2016, Kristy would be retroactively enrolled in LI NET as of July 1, 2021, which is the later of 36 months prior to the date she is enrolled in a Part D plan or the date she was first LIS eligible (since January 2016 is more than 36 months prior to her Part D plan enrollment, her retroactive coverage under LI NET is capped at 36 months prior to such enrollment). Kristy's LI NET coverage would end June 30, 2024, upon her enrollment into a benchmark PDP starting July 1, 2024, unless she makes the choice to opt-out.

Example 2:
The Social Security Administration notifies CMS in February 2024 that Beneficiary Ilan was eligible for both Medicare and SSI starting in November 2022. CMS provides Ilan retroactive Medicare drug coverage from November 2022, which is the later of 36 months prior to enrollment in a Part D plan or the date Ilan was first LIS eligible, through March 2024. After March 2024, if Ilan does not actively enroll in a plan of their choosing, CMS would randomly enroll them into a benchmark PDP with an April 1, 2024 effective date.

As noted previously, our goal in the proposals is to match current eligibility and enrollment policy in effect in the demonstration and the Part D program, to the extent the statute permits. We requested comment on whether revised or additional regulations were needed to achieve accurate, streamlined, and beneficiary-friendly eligibility determinations and enrollment in the LI NET program.

3. Benefits and Beneficiary Protections

Section 1860D-14(e)(4)(B)(i) of the Act requires the LI NET program to provide eligible beneficiaries with access to all Part D drugs under an open formulary. The statute, at clauses (ii) and (iii) of section 1860D-14(e)(4)(B) of the Act, also requires the LI NET program to permit all pharmacies that are determined by the Secretary to be in good standing to process claims under the program, and to be consistent with such requirements as the Secretary considers necessary to improve patient safety and ensure appropriate dispensing of medication. These requirements are consistent with how the LI NET demonstration has operated, and we proposed to codify the requirement that the LI NET program provide access to all Part D drugs under an open formulary in § 423.2508(a). We proposed in § 423.2508(b) to require the LI NET sponsor to permit all pharmacies that CMS determines to be in good standing to process claims under the program, whether or not the pharmacy is a network or out-of-network (OON) pharmacy for the LI NET sponsor. Under the demonstration, we consider a pharmacy, including retail, mail-order, and institutional pharmacies, to be “in good standing” when it is licensed and does not have a fraud, waste, or abuse determination against it. For the permanent LI NET program, we proposed that a pharmacy would be in good standing if it is licensed, has not been revoked from Medicare under § 424.535, does not appear on the Office of Inspector General's list of entities excluded from Federally funded health care programs pursuant to section 1128 of the Act and from Medicare under section 1156 of the Act (unless the OIG waives the exclusion, which the OIG has authority to do in certain specified circumstances), and does not appear on the preclusion list as defined in § 423.100. A pharmacy will appear on the preclusion list if it:

• Is currently revoked from Medicare, is under an active reenrollment bar, and CMS has determined that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program, including LI NET;

• Has engaged in behavior for which CMS could have revoked the entity to

the extent applicable if it had been enrolled in Medicare, and CMS determines that the underlying conduct that would have led to the revocation is detrimental to the best interests of the Medicare program, including LI NET; or

• Has been convicted of a felony under Federal or State law within the previous 10 years that CMS deems detrimental to the best interests of the Medicare program, including LI NET.

In § 423.2508(c), we proposed requirements we consider necessary to improve patient safety and ensure appropriate dispensing of medication consistent with subpart D of the Part D regulations. Existing Part D requirements related to appropriate dispensing, patient safety, electronic dispensing, quality improvement organization (QIO) activities, compliance, and accreditation would improve patient safety and appropriate dispensing. Specifically, we proposed to apply the following provisions to the LI NET program and LI NET sponsor, as appropriate:

• § 423.153(b) and (c) for dispensing and point-of-sale safety edits.

• § 423.154 for appropriate dispensing of prescription drugs in long-term care facilities.

• § 423.159, requiring an electronic prescription drug program.

• § 423.160, excepting the requirements pertaining to formulary standards in § 423.160(b)(5), setting forth standards for electronic prescribing.

• § 423.162, for quality improvement organization (QIO) activities.

• § 423.165, regarding compliance deemed on the basis of accreditation.

We solicited comment on whether any of these provisions would not be compatible with the LI NET program as proposed.

Section 1860D-14(e)(4)(B)(iv) of the Act provides the Secretary the authority to establish requirements for the LI NET coverage provided to LI NET eligible individuals. As noted in the proposed rule, we drew upon our experience under the demonstration to develop our proposed cost sharing and appeals policies for LI NET, which we proposed to codify in § 423.2508(d) and (e), respectively.

We proposed in § 423.2508(d)(1) that LI NET beneficiaries under § 423.2504(a)(1) (that is, beneficiaries whose LIS-eligibility is established and who have not yet enrolled in a prescription drug plan or MA-PD plan, or who have enrolled in a prescription drug or MA-PD plan but coverage under such plan has not yet taken effect) would pay the applicable cost sharing for their low-income category as established in the yearly Announcement of Calendar Year Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (the Rate Announcement publication specified in § 422.312). Under the demonstration, LI NET beneficiaries pay the reduced cost-sharing aligned with the LIS categories defined in the Part D program. Because there is already the existing statutory requirement for CMS to update the parameters for the LIS benefit each year using statutory indexing methods, and because CMS and pharmacy systems are already set up to reflect the appropriate cost-sharing based on the LIS category of the individual, we believe it is reasonable to calculate and charge cost-sharing in alignment with the Part D LIS categories. For immediate need beneficiaries, we proposed in § 423.2508(d)(2) these individuals would by default pay the cost-sharing associated with the category of non-institutionalized FBDE individuals with incomes above 100 percent of the Federal poverty level and full-subsidy-non-FBDE individuals (that is, Category Code 1).
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Of the four LIS eligibility categories, this category has the highest level of cost-sharing. Proposed § 423.2508(d)(2) would further provide that if the beneficiary is later confirmed to belong to a different LIS category, the beneficiary would be refunded by the LI NET sponsor for the difference between the cost sharing they paid versus what they would have paid in their confirmed LIS category. This approach allows for the least government liability for individuals whose LIS eligibility is unable to be confirmed while still allowing prescription drug access for immediate need individuals.

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Cost-sharing amounts in Part D are established each year in the Rate Announcement. Final Part D benefit parameters can be found for a plan year at
https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.

We proposed in § 423.2508(e) that LI NET enrollees have rights with respect to Part D grievances, coverage determinations, and appeals processes set out in subpart M of the Part D regulations. The established processes would adequately adjudicate LI NET beneficiary concerns. This approach of using existing processes avoids needing to devote resources to establishing separate processes for grievances, coverage determinations, and appeals processes. Furthermore, consistency with other Part D contracts with respect to grievances, coverage determinations, and appeals would be simplest for the LI NET sponsor.

4. LI NET Sponsor Requirements

Section 1860D-14(e)(4)(A) of the Act specifies that, as determined appropriate by the Secretary, the LI NET program is to be administered through a contract with a single administrator. Since the beginning of the demonstration, CMS has had one Part D sponsor serve as the sole contractor for administering LI NET. We have found that this approach supports our goal of administrative simplicity by making it unnecessary for each individual plan sponsor to check eligibility and conduct a retroactive enrollment/reimbursement process. In our experience, the benefits of having a single Part D sponsor administer LI NET include the following:

• Providing a single point of contact for beneficiaries and pharmacies attempting to have their claims paid.

• Providing a single point of contact for State Medicaid agencies submitting Medicaid eligibility and attempting to reconcile and coordinate claims.

• Simplifying the filing of retroactive beneficiary claims.

There may be circumstances in which CMS may want to consider contracting with more than one Part D sponsor to administer LI NET. Though we have had stability in LI NET in terms of only having a single LI NET sponsor for the duration of the demonstration, we recognize the need for some protections should it become necessary for another entity to take over as LI NET sponsor and assume responsibility for providing LI NET coverage. The downside of consolidating LI NET functions into a single sponsor is the potential for beneficiary impact should there be a reason that the single LI NET sponsor no longer continues its functions. We believe that this potential for beneficiary impact is mitigated by our proposals to non-renew or terminate the LI NET contract per proposed § 423.2520. Accordingly, while we proposed at new § 423.2512 that the program will be operated by “one or more” Part D sponsors, we intend to initially continue with the current practice of operating the program through a single sponsor because we determined the benefits outweigh potential beneficiary impacts, which have not come to bear since the start of the demonstration in 2010.

We proposed to establish at § 423.2512 the requirements the LI NET sponsor must meet when administering the LI NET program:

• Because LI NET may enroll beneficiaries from across the nation, we proposed to specify at § 423.2512(a)(1) that the LI NET

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2023-07115. Public record. Not legal advice.