Medicare Program; Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Program for Contract Year 2024-Remaining Provisions and Contract Year 2025 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 (PACE)

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 417, 422, 423, and 460

Office of the Secretary

[CMS-4201-F3 and CMS-4205-F]

RINs 0938-AV24 and 0938-AU96

Medicare Program; Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Program for Contract Year 2024—Remaining Provisions and Contract Year 2025 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 (PACE)

AGENCY:

Centers for Medicare & Medicaid Services (CMS), Office of the National Coordinator for Health Information Technology (ONC), 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, agent/broker compensation, health equity, dual eligible special needs plans (D-SNPs), utilization management, network adequacy, and other programmatic areas. This final rule also codifies existing sub-regulatory guidance in the Part C and Part D programs.

DATES:

Effective date:

These regulations are effective June 3, 2024.

Applicability dates:

The provisions in this rule are applicable to coverage beginning January 1, 2025, except as otherwise noted. The updates to marketing and communication provisions at §§ 422.2267(e)(34), 422.2274, and 423.2274 are applicable for all contract year 2025 marketing and communications beginning October 1, 2024. The updated provisions at §§ 422.2267(e)(31)(ii) and 423.2267(e)(33)(ii) are applicable for all contract year 2026 marketing and communications beginning September 30, 2025, however, at plan option for contract year 2025 marketing and communications beginning September 30, 2024, the plan may use the model notice described in §§ 422.2267(e)(31)(ii) and 423.2267(e)(33)(ii) to satisfy the MLI requirements set forth in §§ 422.2267(e)(31)(i) and 423.2267(e)(33)(i).

Sections 422.111(l) and 423.530 are applicable beginning January 1, 2026. This final rule also includes revisions to existing regulations in the Risk Adjustment Data Validation (RADV) audit appeals process, the appeals process for quality bonus payment determination at § 422.260, weighting of new Part C and D Star Ratings measures at §§ 422.166(e)(2) and 423.186(e)(2), and the rule for Part C and D Star Ratings non-substantive measure updates at §§ 422.164(d) and 423.184(d) applicable 60 days after the date of publication. The use and release of risk adjustment data provisions at §§ 422.310(f)(1)(vi), 422.310(f)(1)(vii), and 422.310(f)(3)(v) are applicable 60 days after the date of publication.

FOR FURTHER INFORMATION CONTACT:

Carly Medosch, (410) 786-8633—General Questions.

Naseem Tarmohamed, (410) 786-0814—Part C and Cost Plan Issues.

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

Kristy Nishimoto, (206) 615-2367—Beneficiary Enrollment and Appeal 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) 786-1984—D-SNP Issues.

Joe Strazzire, (410) 786-2775—RADV Audit Appeals Issues.

PartCandDStarRatings@cms.hhs.gov

—Parts C and D Star Ratings Issues.

SUPPLEMENTARY INFORMATION:

I. Executive Summary and Background

A. Executive Summary

1. Purpose

The primary purpose of this final rule is to amend the regulations for the Medicare Advantage (Part C) program, Medicare Prescription Drug Benefit (Part D) program, Medicare cost plan program, and Programs of All-Inclusive Care for the Elderly (PACE). This final rule includes a number of new policies that will improve these programs beginning with contract year 2025 and will codify existing Part C and Part D sub-regulatory guidance.

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

• The Bipartisan Budget Act (BBA) of 2018.

• The Consolidated Appropriations Act (CAA), 2023.

2. Summary of the Major Provisions

a. Part D Medication Therapy Management (MTM) Program: Eligibility Criteria

Section 1860D-4(c)(2) of the Act requires all Part D sponsors to have an MTM program designed to assure, with respect to targeted beneficiaries, that covered Part D drugs are appropriately used to optimize therapeutic outcomes through improved medication use, and to reduce the risk of adverse events, including adverse drug interactions. Section 1860D-4(c)(2)(A)(ii) of the Act requires Part D sponsors to target those Part D enrollees who have multiple chronic diseases, are taking multiple Part D drugs, and are likely to meet a cost threshold for covered Part D drugs established by the Secretary. CMS codified the MTM targeting criteria at § 423.153(d)(2).

Through this final rule, CMS establishes improved targeting criteria for the Part D MTM program that will help ensure more consistent, equitable, and expanded access to MTM services. After consideration of the comments received, we are finalizing proposed changes to the MTM eligibility criteria with modifications that are effective for January 1, 2025, as follows:

We are finalizing the provision at § 423.153(d)(2)(iii) that Part D sponsors must include all core chronic diseases in their targeting criteria for identifying beneficiaries who have multiple chronic diseases, as provided under § 423.153(d)(2)(i)(A). As part of this provision at § 423.153(d)(2)(iii), we are codifying the nine core chronic diseases currently identified in guidance and adding HIV/AIDS, for a total of 10 core chronic diseases. The 10 core chronic diseases are: (1) Alzheimer's disease; (2) Bone disease-arthritis (including osteoporosis, osteoarthritis, and rheumatoid arthritis); (3) Chronic congestive heart failure (CHF); (4) Diabetes; (5) Dyslipidemia; (6) End-stage renal disease (ESRD); (7) Human immunodeficiency virus/acquired immunodeficiency syndrome (HIV/AIDS); (8) Hypertension; (9) Mental health (including depression, schizophrenia, bipolar disorder, and other chronic/disabling mental health conditions); and (10) Respiratory disease (including asthma, chronic obstructive pulmonary disease (COPD), and other chronic lung disorders). Sponsors retain the flexibility to target

additional chronic diseases beyond those codified as core chronic diseases.

We are not finalizing the proposal at § 423.153(d)(2)(i)(B) to decrease the maximum number of Part D drugs a sponsor may require from eight to five for Contract Year 2025. At this time, we are retaining the maximum number of drugs a plan sponsor may require for targeting beneficiaries taking multiple Part D drugs as eight at § 423.153(d)(2)(i)(B). Part D sponsors will maintain the flexibility to set a lower threshold (a number between two and eight Part D drugs) for targeting beneficiaries taking multiple Part D drugs. We may consider revisiting this or similar policies in future rulemaking.

We are finalizing the provision at § 423.153(d)(2)(iv) to require sponsors to include all Part D maintenance drugs in their targeting criteria with minor modifications to the regulatory text to clarify that sponsors must include all Part D maintenance drugs and to provide flexibility for sponsors to include all Part D drugs in their targeting criteria. However, sponsors will not be permitted to limit the Part D maintenance drugs included in MTM targeting criteria to specific Part D maintenance drugs or drug classes. We are also finalizing the requirement at § 423.153(d)(2)(iv) that, for the purpose of identifying Part D maintenance drugs, plans must rely on information in a widely accepted, commercially or publicly available drug information database.

We are finalizing the provision at § 423.153(d)(2)(i)(C) with modification to set the MTM cost threshold at the average cost of eight generic drugs, as defined at § 423.4. CMS will calculate the dollar amount of the MTM cost threshold based on the average daily cost of a generic drug using the PDE data specified at § 423.104(d)(2)(iv)(C).

We are also codifying longstanding guidance at § 423.153(d)(1)(vii)(B)(2) to provide that a beneficiary must be unable to accept the offer to participate in the CMR due to cognitive impairment. We are also finalizing other technical changes at § 423.153(d)(1)(vii)(B)(1)(i) to clarify that the CMR must include an interactive consultation that is conducted in person or via synchronous telehealth.

b. Improving Access to Behavioral Health Care Providers

We are finalizing regulatory changes that will improve access to behavioral health care by adding a new behavioral health provider specialty to our MA network adequacy standards. Specifically, we are finalizing requirements to add a new facility-specialty type to the existing list of facility-specialty types evaluated as part of network adequacy requirements and reviews. The new facility-specialty type, “Outpatient Behavioral Health,” will be included in network adequacy evaluations and can include providers of various types: Marriage and Family Therapists (MFTs), Mental Health Counselors (MHCs), Opioid Treatment Program (OTP) providers, Community Mental Health Centers or other behavioral health and addiction medicine specialists and facilities, including addiction medicine physicians, other providers. Other providers may include nurse practitioners (NPs), physician assistants (PAs) and Clinical Nurse Specialists (CNSs), who furnish addiction medicine and behavioral health counseling or therapy services and meet other specific criteria. Beginning January 1, 2024, MFTs and MHCs were eligible to enroll in Medicare and start billing for services due to the new statutory benefit category established by the Consolidated Appropriations Act (CAA) 2023. We aim to strengthen network adequacy requirements and improve beneficiary access to behavioral health services and providers by expanding our network adequacy evaluation requirements for MA organizations.

To address concerns that NPs, PAs, and CNSs might lack the necessary skills, training, or expertise to effectively address the behavioral health needs of enrollees and that the absence of criteria for incorporating these provider types could result in the creation of “ghost networks” (where providers may be listed in a provider directory without actively treating patients for behavioral health), we are also adopting specific criteria that MA organizations must use to determine when an NP, PA or CNS can be considered part of a network to meet the Outpatient Behavioral Health network adequacy standard. MA organizations must independently verify that the provider has furnished or will furnish such services to 20 patients within a recent 12-month period using reliable information about services furnished by the provider such as the MA organization's claims data, prescription drug claims data, electronic health records, or similar data.

c. Distribution of Personal Beneficiary Data by Third Party Marketing Organizations (TPMOs)

Third-Party Marketing Organizations (TPMOs) are selling and reselling beneficiary contact information to skirt existing CMS rules that prohibit cold calling so they can aggressively market MA and Part D Plans. Beneficiaries are unaware that by placing a call or clicking on a generic-looking web-link they are unwittingly agreeing and providing consent for their personal contact information to be collected and sold to other entities for future marketing activities. As a result, we are finalizing requirements to prohibit personal beneficiary data collected by TPMOs for marketing or enrolling a beneficiary into an MA or Part D plan to be shared with other TPMOs, unless prior express written consent is given by the beneficiary. Furthermore, we are finalizing a one-to-one consent structure where TPMOs must obtain prior express written consent through a clear and conspicuous disclosure for each TPMO that will be receiving the beneficiary's data. This provision is designed to address complaints we have received from beneficiaries and their advocates and caregivers about receiving harassing and unwanted phone and email solicitations from individuals attempting to enroll them in MA and Part D plans. This final rule protects beneficiaries against unwanted calls, texts, email solicitations, and other contacts, while still ensuring that beneficiaries have control over their personal data and can connect with the TPMOs they would like to speak with, creating a more transparent and safer environment for beneficiaries to find the plan that best fits their health needs.

d. Establish Guardrails for Agent and Broker Compensation

Section 1851(j) of the Act requires that CMS develop guidelines to ensure that the use of agent and broker compensation creates incentives to enroll individuals in the MA plan that is intended to best meet their health care needs. To that end, for many years CMS has set upper limits on the amount of compensation agents and brokers can receive for enrolling Medicare beneficiaries into MA and PDP plans. We have learned, however, that many MA and PDP plans, as well as third-party entities with which they contract (such as Field Marketing Organizations (FMOs)) have structured payments to agents and brokers that allow for separate payments for these agents and brokers and have the effect of circumventing compensation caps. We also note that that these separate payments appear to be increasing. In this rule, we are finalizing requirements that will generally prohibit contract terms between MA organizations and agents, brokers or other TPMOs that may interfere with the agent's or broker's ability to objectively assess and

recommend the plan that best fits a beneficiary's health care needs; set a single, increased compensation rate for all plans to be updated annually; revise the scope of items and services included within agent and broker compensation; and eliminate the regulatory framework which currently allows for separate payment to agents and brokers for administrative services. We are also making conforming edits to the Part D agent broker compensation rules at § 423.2274. Collectively, we believe the impact of these changes will better align with statutory requirements to ensure that the use of compensation creates incentives for agents and brokers to enroll individuals in the plan that best fits a beneficiary's health care needs. Further, such changes align with the Biden-Harris Administration's commitment to promoting fair, open, and competitive markets and ensuring beneficiaries can make fully informed choices among a robust set of health insurance options.

e. Special Supplemental Benefits for the Chronically Ill (SSBCI)

We are finalizing regulatory changes that will help ensure that SSBCI items and services offered by MA plans are appropriate and meet applicable statutory and regulatory standards, including that the SSBCI items and services are reasonably expected to improve or maintain the health or overall function of chronically ill enrollees. First, we are finalizing requirements that, by the date on which it submits its bid to CMS, an MA organization must establish a bibliography of relevant acceptable evidence that an item or service offered as SSBCI has a reasonable expectation of improving or maintaining the health or overall function of a chronically ill enrollee. Second, we are clarifying in the regulation that an MA plan must follow its written policies based on objective criteria for determining an enrollee's eligibility for an SSBCI when making such eligibility determinations. Third, we are requiring that the MA plan document both denials and approvals of SSBCI eligibility. Additionally, we are codifying CMS's authority to review and deny approval of an MA organization's bid if the MA organization has not demonstrated, through relevant acceptable evidence, that its proposed SSBCI has a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee. Finally, we are codifying CMS's authority to review SSBCI offerings annually for compliance, considering the evidence available at the time. We believe these revisions to § 422.102(f) will better ensure that the benefits offered as SSBCI are reasonably expected to improve or maintain the health or overall function of the chronically ill enrollee while also guarding against the use of MA rebate dollars for SSBCI that are not supported by acceptable evidence.

The new SSBCI requirements regarding creation of a bibliography and documentation of SSBCI eligibility for enrollees will apply to plans beginning with the CY2025 bid process. The codification of other SSBCI requirements regarding plans' obligation to follow written SSBCI eligibility policies, and our authority to decline to accept a bid if the MA organization has not demonstrated that its proposed SSBCI has a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee do not represent a change in policy and CMS will continue in practice during the CY2025 bid process and in subsequent years.

In addition, we are finalizing new policies to protect beneficiaries and improve transparency regarding SSBCI so that beneficiaries are aware that SSBCI are only available to enrollees who meet specific eligibility criteria. We are modifying and strengthening the current requirements for the SSBCI disclaimer that MA organizations offering SSBCI must use whenever SSBCI are mentioned. Specifically, we are requiring that the SSBCI disclaimer list the relevant chronic condition(s) the enrollee must have to be eligible for the SSBCI offered by the MA organization. The MA organization must convey in its SSBCI disclaimer that even if the enrollee has a listed chronic condition, the enrollee may not receive the benefit because other eligibility and coverage criteria also apply. We are also finalizing specific font and reading pace parameters for the SSBCI disclaimer in print, television, online, social media, radio, other voice-based ads, and outdoor advertising (including billboards). Finally, we are requiring that MA organizations include the SSBCI disclaimer in all marketing and communications materials that mention SSBCI. We believe that imposing these new SSBCI disclaimer requirements will help to ensure that the marketing of and communication about these benefits is not misleading or potentially confusing to enrollees who rely on these materials to make enrollment decisions.

f. Mid-Year Enrollee Notification of Available Supplemental Benefits

In addition, over the past several years, the number of MA plans offering supplemental benefits has increased. The benefits offered are broader in scope and variety and we are seeing an increasing amount of MA rebate dollars directed towards these benefits. At the same time, plans have reported that enrollee utilization of many of these benefits is low. To help ensure MA enrollees are fully aware of all available supplemental benefits and to promote equitable access to care, we will now require MA plans to notify enrollees mid-year of the unused supplemental benefits available to them. The notice will list any supplemental benefits not utilized by the enrollee during the first 6 months of the year (January 1 to June 30). Currently, MA plans are not required to send any communication specific to an enrollee's usage of supplemental benefits and CMS believes such a notice could be an important part of a plan's overall care coordination efforts. As finalized, this policy will educate enrollees on their access to supplemental benefits to encourage greater utilization of these benefits and ensure MA plans are better stewards of the rebate dollars directed towards these benefits.

g. Annual Health Equity Analysis of Utilization Management Policies and Procedures

We are finalizing regulatory changes to the composition and responsibilities of the Utilization Management (UM) committee. These policies will require that at least one member of the UM committee have expertise in health equity. These policies will also require that the UM committee conduct an annual health equity analysis of the use of prior authorization at the plan-level. The analysis will examine the impact of prior authorization on enrollees with one or more of the following social risk factors (SRFs): (i) receipt of the low-income subsidy or being dually eligible for Medicare and Medicaid (LIS/DE); or (ii) having a disability. To enable a more comprehensive understanding of the impact of prior authorization practices on enrollees with the specified SRFs at the plan level, the analysis must compare metrics related to the use of prior authorization for enrollees with the specified SRFs to enrollees without the specified SRFs. Finally, the policies will require MA organizations to make the results of the analysis publicly available on their plan's website in a manner that is easily accessible and without barriers.

h. Amendments to Part C and Part D Reporting Requirements

In this final rule, we are affirming our authority to collect detailed information from MA organizations and Part D plan

sponsors under current regulations, in keeping with the Biden-Harris administration's focus on improving transparency and data in MA and Part D. We are revising §§ 422.516(a)(2) and 423.514(a)(2) as proposed (with a minor clarification in § 422.516(a)) to be consistent with the broad scope of the reporting requirements. This will lay the groundwork for new program-wide data collections to be established through the Paperwork Reduction Act (PRA) process, which will provide advance notice to interested parties and be subject to public comment. An example of increased data collection could be service level data for all initial coverage decisions and plan level appeals, such as decision rationales for items, services, or diagnosis codes to have better line of sight on utilization management and prior authorization practices, among many other issues.

i. Enhance Enrollees' Right To Appeal an MA Plan's Decision To Terminate Coverage for Non-Hospital Provider Services

Beneficiaries enrolled in Traditional Medicare and MA plans have the right to a fast-track appeal by an Independent Review Entity (IRE) when their covered skilled nursing facility (SNF), home health, or comprehensive outpatient rehabilitation facility (CORF) services are being terminated. Currently, Quality Improvement Organizations (QIO) act as the IRE and conduct these reviews. Under current regulations, MA enrollees do not have the same access to QIO review of a fast-track appeal as Traditional Medicare beneficiaries in connection with terminations of these types of services. In this final rule, we are finalizing proposals to: (1) require the QIO, instead of the MA plan, to review untimely fast-track appeals of an MA plan's decision to terminate services in an HHA, CORF, or SNF; and (2) fully eliminate the current provision that requires the forfeiture of an enrollee's right to appeal a termination of services to the QIO when the enrollee leaves the CORF or SNF or ends HHA services. These will bring MA regulations in line with the parallel reviews available to beneficiaries in Traditional Medicare and expand the rights of MA beneficiaries to access the fast-track appeals process in connection with terminations of HHA, CORF, or SNF services.

j. Changes to an Approved Formulary—Including Substitutions of Biosimilar Biological Products

Current regulations permit Part D sponsors to immediately remove from their formularies a brand name drug and substitute its newly released generic equivalent. Part D sponsors meeting the requirements can provide notice of specific changes, including direct notice to affected beneficiaries, after they take place; do not need to provide a transition supply of the substituted drug; and can make these changes at any time including in advance of the plan year. Consistent with these requirements, we proposed in the proposed rule titled “Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, Medicare Parts A, B, C, and D Overpayment Provisions of the Affordable Care Act and Programs of All-Inclusive Care for the Elderly; Health Information Technology Standards and Implementation Specifications,” which appeared in the December 27, 2022

Federal Register

(hereinafter referred to as the December 2022 proposed rule), to permit Part D sponsors also to immediately substitute: (i) a new interchangeable biological product for its corresponding reference product; (ii) a new unbranded biological product for its corresponding brand name biological product; and (iii) a new authorized generic for its corresponding brand name equivalent.

Our proposed regulatory text in the December 2022 proposed rule did not specify how Part D sponsors could treat substitution of biosimilar biological products other than interchangeable biological products. Under current policy, Part D sponsors have to obtain explicit approval from CMS prior to making a midyear formulary change that removes a reference product and replaces it with a biosimilar biological product other than an interchangeable biological product. Further, if such a change is approved, the Part D sponsor may apply the change only to enrollees who begin therapy after the effective date of the change. In other words, enrollees currently taking the reference product are able to remain on the reference product until the end of the plan year without having to obtain an exception. In response to comments received on our initial proposal in the December 2022 proposed rule (discussed in section III.P. of this final rule), and to increase access to biosimilar biological products consistent with the Biden-Harris Administration's commitment to competition as outlined in Executive Order (E.O.) 14036: “Promoting Competition in the American Economy,” we proposed in the proposed rule titled “Medicare Program; Contract Year 2025 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; Health Information Technology Standards and Implementation Specifications,” which appeared in the November 16, 2023

Federal Register

(hereinafter referred to as the November 2023 proposed rule) to add substitutions of biosimilar biological products other than interchangeable biological products to the type of formulary changes that apply to all enrollees (including those already taking the reference product prior to the effective date of the change) following a 30-day notice.

Having now considered comments (discussed in section III.P. of this final rule) received on the proposals in both the December 2022 and November 2023 proposed rules, we are finalizing regulations to permit Part D sponsors that meet all requirements: (1) to immediately substitute an interchangeable biological product for its reference product, a new unbranded biological product for its corresponding brand name biological product, and a new authorized generic for its brand name equivalent; and (2) to substitute upon 30 days' notice any biosimilar biological product for its reference product.

k. Increasing the Percentage of Dually Eligible Managed Care Enrollees Who Receive Medicare and Medicaid Services From the Same Organization

We are finalizing, with some modifications, interconnected proposals to: (a) replace the current quarterly special enrollment period (SEP) with a one-time-per month SEP for dually eligible individuals and others enrolled in the Part D low-income subsidy program to elect a standalone PDP, (b) create a new integrated care SEP to allow dually eligible individuals to elect an integrated D-SNP on a monthly basis, (c) limit enrollment in certain D-SNPs to those individuals who are also enrolled in an affiliated Medicaid managed care organization (MCO), and (d) limit the number of D-SNP plan benefit packages an MA organization can offer for full-benefit dually eligible individuals in the same service area that it, its parent organization, or any entity that shares a parent organization with the MA organization offers an affiliated Medicaid MCO. This final rule will increase the percentage of full-benefit dually eligible MA enrollees who are in plans that—directly by the MA

organization or indirectly through the parent organization or a related entity—are also contracted to cover Medicaid benefits, thereby expanding access to integrated materials, unified appeal processes across Medicare and Medicaid, and continued Medicare services during an appeal. It will also reduce the number of MA plans overall that can enroll dually eligible individuals outside the annual coordinated election period, thereby reducing the number of plans deploying aggressive marketing tactics toward dually eligible individuals throughout the year.

l. For D-SNP PPOs, Limit Out-of-Network Cost Sharing

We are finalizing a limitation on out-of-network cost sharing for D-SNP preferred provider organizations (PPOs) for specific services. The final rule will reduce cost shifting to Medicaid, increase payments to safety net providers, expand dually eligible enrollees' access to providers, and protect dually eligible enrollees from unaffordable costs.

m. Contracting Standards for Dual Eligible Special Needs Plan Look-Alikes

Under existing regulations, CMS does not contract with and will not renew the contract of a D-SNP look-alike—that is, an MA plan that is not a SNP but in which dually eligible enrollees account for 80 percent or more of total enrollment. We are finalizing a reduction to the D-SNP look-alike threshold from 80 percent to 70 percent for plan year 2025 and 60 percent for plan year 2026 and subsequent years. This provision will help address the continued proliferation of MA plans that are serving high percentages of dually eligible individuals without meeting the requirements to be a D-SNP.

n. Standardize the Medicare Advantage (MA) Risk Adjustment Data Validation Appeals Process

We are finalizing regulatory language to address gaps and operational constraints included in existing RADV appeal regulations. Currently, if MA organizations appeal both medical record review determinations and payment error calculations resulting from RADV audits, both issues must be appealed and move through the appeals process concurrently, which we foresee could result in inconsistent appeal adjudications at different levels of appeal that impact recalculations of the payment error. This has the potential to cause burden, confuse MA organizations, and negatively impact the operations and efficiency of CMS's appeals processes. This final rule will standardize and simplify the RADV appeals process for CMS and MA organizations, as well as address operational concerns at all three levels of appeal. We are finalizing requirements that MA organizations must exhaust all three levels of appeal for medical record review determinations before beginning the payment error calculation appeals process. This will ensure adjudication of medical record review determinations are final before a recalculation of the payment error is completed and subject to appeal. We are also finalizing several other revisions to our regulatory appeals process to conform these changes to our procedures.

Finally, we are clarifying and emphasizing our intent that if any provision of this final rule is held to be invalid or unenforceable by its terms, or as applied to any person or circumstance, or stayed pending further agency action, it shall be severable from this final rule and not affect the remainder thereof or the application of the provision to other persons not similarly situated or to other, dissimilar circumstances. Through this rule, we adopt provisions that are intended to and will operate independently of each other, even if each serves the same general purpose or policy goal. Where a provision is necessarily dependent on another, the context generally makes that clear (such as by a cross-reference to apply the same standards or requirements).

BILLING CODE P

3. Summary of Costs and Benefits

ER23AP24.000

ER23AP24.001

ER23AP24.002

ER23AP24.003

BILLING CODE C

B. Background and Summary of the Final Rule

In this final rule, CMS addresses many of the remaining proposals from the December 2022 proposed rule in addition to the proposals from the November 2023 proposed rule. There are several proposals from the December 2022 proposed rule that were not finalized. CMS may address these proposals in a future final rule.

We received 3,463 timely pieces of correspondence containing one or more comments on the November 2023 proposed rule. 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.

C. General Comments on the December 2022 Proposed Rule and the November 2023 Proposed Rule Proposed Rule

We received some overarching comments related to the December 2022 and the November 2023 proposed rules, which we summarize in the following paragraphs:

Comment:

A commenter expressed concern that CMS had not provided sufficient time for plan sponsors to understand the impact of recently finalized regulations, and the changes they have implemented, before proposing more policies that build on these areas. They recommended that in future years CMS allows time to measure and observe the impact of policy changes on plan sponsors and their members prior to layering new proposals.

Response:

We appreciate the commenter's concern regarding the plans having enough time to understand the impact of finalized regulations. We will take their recommendation into consideration for future rulemaking.

Comment:

A commenter requested that CMS extend the comment period by 60 days, through March 5, 2024, so they could effectively use the extended period in planning and preparing a response.

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 November 3, 2023. We did not extend the comment period because we believe the required 60 days provided the public with adequate time to prepare and submit responses.

Comment:

In response to CMS-4201-P, 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.

D. Status of the Overpayment Proposal in the December 27, 2022, Proposed Rule

Under the governing statute, any Medicare Advantage Organization (MA organization) that “has received an overpayment,” 42 U.S.C. 1320a-7k(d)(1), must “report and return the overpayment,” 42 U.S.C. 1320a-7k(d)(1)(A), no later than “60 days after the date on which the overpayment was identified” 42 U.S.C. 1320a-7k(d)(2)(A). CMS implemented this statutory overpayment provision through a May 23, 2014, final rule titled “Medicare Program; Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs”. See 79 FR 29844. A group of MA organizations challenged that rule's inclusion of instances where an MA organization “should have determined through the exercise of reasonable diligence . . . that [it] has received an overpayment” in the regulation's definition of “identified,” 42 CFR 422.326(c). The District Court for the District of Columbia held that this regulatory provision was impermissible under the statute.

See UnitedHealthcare Ins. Co.

v.

Azar,

330 F. Supp. 3d 173, 191 (D.D.C. 2018),

rev'd in part on other grounds sub nom. UnitedHealthcare Ins. Co.

v.

Becerra,

16 F.4th 867 (D.C. Cir. 2021),

cert. denied,

142 S. Ct. 2851 (U.S. June 21, 2022) (No. 21-1140). CMS views the District Court's ruling as having invalidated the definition of “identified” set out in 42 CFR 422.326(c). However, MA organizations remain obligated to report and return all overpayments that they have identified within the meaning of the statute, 42 U.S.C. 1320a-7k(d)(2)(A). In the December 27, 2022 proposed rule titled “Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, Medicare Parts A, B, C, and D Overpayment Provisions of the Affordable Care Act and Programs of All-Inclusive Care for the Elderly; Health Information Technology Standards and Implementation Specifications” (the December 2022 proposed rule), CMS proposed revisions to regulations primarily governing Medicare Advantage (MA or Part C) and the Medicare Prescription Drug Benefit (Part D) (87 FR 79452). CMS proposed in the December 2022 proposed rule to remove the existing definition of “identified” in the Parts C and D overpayment regulations at 42 CFR 422.326 and 423.360 (as well as the corresponding Parts A and B regulation) (

see

87 FR 79559). Under the Parts C and D overpayment proposal, an MA organization or Part D sponsor would have identified an overpayment when it had actual knowledge of the existence of the overpayment or acted in “reckless disregard” or “deliberate ignorance” of the overpayment. CMS has received inquiries regarding this proposal and want to be clear that it remains under consideration and that CMS intends to issue a final rule to revise the definition of “identified” in the overpayment rules as soon as is reasonably possible.

E. Information on Cyber Resiliency

In light of recent cybersecurity events impacting health care operations nationally, we expect all payers to review and implement HHS's voluntary

HPH Cyber Performance Goals

(CPGs). These CPGs are part of

HHS' broader cybersecurity strategy

and designed to help health care organizations strengthen cyber preparedness, improve cyber resiliency, and ultimately protect patient health information and safety. We welcome input on our approach via email at

hhscyber@hhs.gov.

II. Strengthening Current Medicare Advantage and Medicare Prescription Drug Benefit Program Policies

A. Definition of Network-Based Plan (§§ 422.2 and 422.114)

Private-fee-for-service (PFFS) plans were established by the Balanced Budget Act of 1997 (Pub. L. 105-33) and were originally not required to have networks. The Medicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110-275) (MIPPA) revised the PFFS requirements to require that, beginning with contract year 2011, PFFS plans have a network when operating in the same service area as two or more network-based plans. For purposes of this requirement, section 1852(d)(5)(C) of the Act and § 422.114(a)(3)(ii) define network-based plans as a coordinated care plan (as described in section 1851(a)(2)(A) of the Act and § 422.4(a)(1)(iii)), a network-based MSA plan, and a section 1876 reasonable cost plan. The statutory and regulatory definitions both specifically exclude an MA regional plan that meets access requirements substantially through means other than written contracts, per § 422.112(a)(1)(ii).

When codifying this requirement in the final rule that appeared in the

Federal Register

September 18, 2008, titled “Medicare Program; Revisions to the Medicare Advantage and Prescription Drug Benefit Programs,” (73 FR 54226), we included the definition of network-based plan in the section of the regulations for PFFS plans, as the definition was integral to the new requirement for PFFS plans (73 FR 54249). A network-based plan, however, has meaning in contexts other than PFFS. To ensure that the definition is readily and more broadly accessible for those seeking requirements related to network-based plans, we proposed in the December 2022 proposed rule (87 FR 79569) to move the definition of a network-based plan from § 422.114(a)(3)(ii) to the definitions section in § 422.2. Further, we proposed that the PFFS provision at § 422.114(a)(3)(ii) will continue to include language specifying the network requirement.

This proposed change has no policy implications for other provisions in part 422 in which the definition or description of network plans plays a role, for example, the network adequacy provisions at § 422.116 and the plan contract crosswalk provisions at § 422.530. However, in specifying the network adequacy requirements for the various plan types, § 422.116(a)(1)(i) references the current definition of a network-based plan at § 422.2 even though the definition for network-based plan currently remains at § 422.114(a)(3)(ii) because CMS inadvertently finalized what was intended to be a conforming change to § 422.116(a)(1)(i)

1

before we finalized our proposal to move the definition of network-based plan to § 422.2. In this final rule, we are moving the definition to § 422.2, making the current cross reference at § 422.116(a)(1)(i) correct. With respect to the regulation at § 422.530(a)(5), that provision specifically addresses the types of plans to which it applies and when CMS considers a crosswalk to be to a plan of a different type and refers to network-based PFFS plans without citing a specific definition. Therefore, we do not believe any amendment to § 422.530 is necessary in connection with moving the definition of network-based plan to § 422.2.

1

Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Program of All-Inclusive Care for the Elderly (88 FR 22120).

We did not receive any public comments on our proposal to move the definition and are finalizing the proposal for the reasons outlined in the December 2022 proposed rule with slight modifications to reorganize the regulation text for additional clarity.

B. Past Performance

We established at §§ 422.502(b) and 423.503(b) that we may deny an application submitted by MA organizations and Part D sponsors that failed to comply with the requirements of a previous MA or Part D contract, which we refer to as “past performance.” We proposed several technical changes to the regulation text related to past performance. These changes are intended to clarify the basis for application denials due to past performance and to ensure that the factors adequately account for financial difficulties that should prevent an organization from receiving a new or expanded MA or Part D contract.

One factor we consider regarding the past performance of MA organizations and Part D sponsors is their record of imposition of intermediate sanctions, because intermediate sanctions represent significant non-compliance with MA or Part D contract requirements. To clarify the basis for application denials due to intermediate sanctions, at §§ 422.502(b)(1)(i)(A) and 423.503(b)(1)(i)(A) we proposed to change “Was subject to the imposition of an intermediate sanction” to “Was under an intermediate sanction.” We proposed this revision because MA organizations and Part D sponsors may have a sanction imposed in one 12-month past performance review period and effective for all or part of the subsequent 12-month review period. For instance, CMS could impose a sanction in December 2022 that remains in effect until September 2023. The sanction would be in effect for the past performance review period that runs from March 2022 through February 2023 (for Contract Year 2024 MA and Part D applications filed in February 2023) and for the past performance review period that runs from March 2023 through February 2024 (for Contract Year MA and Part D applications filled in February 2024). Our proposal reflects our stated intent to deny applications from MA organizations and Part D sponsors when an active sanction existed during the relevant 12-month review period when we previously codified that intermediate sanctions are a basis for denial of an application from an MA organization or Part D sponsor in “Medicare and Medicaid Programs; Contract Year 2022 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly,” which appeared in the

Federal Register

on January 19, 2021 (86 FR 5864) hereinafter referred to as the “January 2021 final rule.” When we codified this requirement, a commenter requested that sanctions lifted during the 12 months prior to the application denial be excluded from past performance. We responded that “The applying organization will receive credit for resolving the non-compliance that warranted the sanction during the next past performance review period, when, presumably, the organization will not have an active sanction in place at any time during the applicable 12-month review period” (86 FR 6000 through 6001). Since an intermediate sanction may be active during multiple consecutive review periods, our proposed language clarifies that an organization's application may be denied as long as the organization is under sanction, not just during the 12-month review period when the sanction was imposed.

An additional factor we consider regarding the past performance of MA organizations and Part D sponsors is involvement in bankruptcy proceedings. At §§422.502(b)(1)(i)(C) and 423.503(b)(1)(i)(C) we proposed to incorporate federal bankruptcy as a basis for application denials due to past performance and to conform the two paragraphs by changing the text to “Filed for or is currently in federal or state bankruptcy proceedings” from “Filed for or is currently in State bankruptcy proceedings,” at § 422.502(b)(1)(i)(C) and “Filed for or is currently under state bankruptcy proceedings” at § 423.503(b)(1)(i)(C). We codified state bankruptcy as a basis for an application denial for the past performance of an MA or Part D sponsor in “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, 2022 (87 FR 27704). We codified that requirement because bankruptcy may result in the closure of an organization's operations and entering into a new or expanded contract with such an organization is not in the best interest of the MA or Prescription Drug programs or the beneficiaries they serve. This concern is equally applicable to both federal and state bankruptcy, so we proposed to revise the regulation so that applications from MA organizations or Part D sponsors that have filed for or are in state or federal bankruptcy proceedings may be denied on the basis of past performance. In addition, we also proposed to correct two technical issues identified since the final rule was published in May 2022. At § 422.502(b)(1)(i)(B), we proposed to change the reference to the requirement to maintain fiscally sound operations from § 422.504(b)(14) to the correct reference at § 422.504(a)(14). We also proposed to remove the duplication of § 422.502(b)(1)(i)(

A

) and (

B

).

We invited public comment on this proposal and received several comments in support of this proposal. We received no comments opposing this proposal. Therefore, we are finalizing this proposal without modification.

III. Enhancements to the Medicare Advantage and Medicare Prescription Drug Benefit Programs

A. Effect of Change of Ownership Without Novation Agreement (§§ 422.550 and 423.551)

In accordance with standards under sections 1857 and 1860 of the Act, each Medicare Advantage (MA) organization and Part D sponsor is required to have a contract with CMS to offer an MA or prescription drug plan. Further, section 1857(e)(1) and 1860D-12(b)(3)(D) of the Act authorizes additional contract terms consistent with the statute and which the Secretary finds are necessary and appropriate. Pursuant to this authority and at the outset of the Part C and Part D programs, we implemented regulations at §§ 422.550 and 423.551, respectively. These regulations require the novation of an MA or Part D contract in the event of a change of ownership involving an MA organization or Part D sponsor (63 FR 35106 and 70 FR 4561).

Our current regulations at §§ 422.550 and 423.551, as well as our MA guidance under “Chapter 12 of the Medicare Managed Care Manual—Effect of Change of Ownership”

2

require that when a change of ownership occurs, as defined in the regulation, advance notice must be provided to CMS and the parties to the transaction must enter into a written novation agreement that meets CMS's requirements. If a change of ownership occurs and a novation agreement is not completed and the entities fail to provide advance notification to CMS, the current regulations at §§ 422.550(d) and 423.551(e) indicate that the existing contract is invalid. Furthermore, §§ 422.550(d) and 423.551(e) provide that if the contract is not transferred to

the new owner through the novation agreement process, the new owner must enter into a new contract with CMS after submission of an MA or Part D application, if needed.

2

https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c12.pdf.

The current regulations do not fully address what happens when the contract becomes “invalid” due to a change of ownership without a novation agreement and/or advance notice to CMS, or in other words, what happens to the existing CMS contract that was held by the purchased entity. In that circumstance, CMS would still recognize the original entity as the owner, even if the contract is now held by a different entity. Therefore, we proposed to revise §§ 422.550(d) and 423.551(e) to make it clear that in such a circumstance, CMS may unilaterally terminate the affected contract in accordance with §§ 422.510(a)(4)(ix) and 423.509(a)(4)(ix), which establish that failure to comply with the regulatory requirements contained in part 422 or part 423 (if applicable) is a basis for CMS to unilaterally terminate an MA or Part D contract.

In addition, we are strengthening CMS's enforcement authority regarding this process through the proposed amendments to §§ 422.550(d) and 423.551(e). Pursuant to CMS's authority under sections 1857 and 1860 of the Act, we proposed to amend the regulations at §§ 422.550(d) and 423.551(e) to outline the enforcement process CMS will follow, which includes imposing applicable sanctions before terminating a contract that has a change in ownership without a novation agreement in accordance with CMS requirements.

In the interest of protecting and effectively managing the MA and Part D programs, CMS, through either the novation agreement or the application process, must ensure that MA organizations and Part D Sponsors—through their respective legal entities—are eligible to contract with CMS. If CMS has no chance to assess the qualifications of the new entity and a change in ownership from one legal entity to another occurs without CMS approval of a novation agreement, CMS's ability to ensure the integrity of the MA and Part D programs and ability to monitor a contract's activity under the new legal entity would be compromised, thereby putting enrollees at risk. Thus, any change in ownership from one legal entity to another requires CMS to determine whether the new entity meets the statutory and regulatory requirements for operating a contract under the MA or Part D programs.

We proposed to impose enrollment and marketing sanctions, as outlined in §§ 422.750(a)(1) and (a)(3) and 423.750(a)(1) and (a)(3) on the affected contract. Such sanctions will remain in place until CMS approves the change of ownership, (including execution of an approved novation agreement) or the contract is terminated. We also proposed to provide an opportunity for organizations to demonstrate that the legal entity assuming ownership by way of a change of ownership without a novation agreement meets the requirements set forth by our regulations. This may be completed in the following ways:

• If the new owner does not participate in the same service area as the affected contract, at the next available opportunity, it must apply for and be conditionally approved for participation in the MA or Part D program and, within 30 days of the conditional approval (if not sooner), submit the documentation required under §§ 422.550(c) or 423.551(d) for review and approval by CMS (note that organizations may submit both the application and the documentation for the change of ownership concurrently); or

• If the new owner currently participates in the MA or Part D program and operates in the same service area as the affected contract, it must, within 30 days of imposition of intermediate sanctions, submit the documentation required under §§ 422.550(c) or 423.551(d) for review and approval by CMS.

• If the new owner is not operating an MA or Part D contract in the same service area and fails to apply for an MA or Part D contract in the same service area at the next opportunity to apply, the existing contract will be subject to termination in accordance with §§ 422.510(a)(4)(ix) or 423.509(a)(4)(x). Or, if the new owner is operating in the same service area and fails to submit the required documentation within 30 days of imposition of intermediate sanctions, the existing contract will be subject to termination in accordance with §§ 422.510(a)(4)(ix) or 423.509(a)(4)(x).

Imposition of intermediate sanctions under §§ 422.750(a)(1) and (a)(3) and 423.750(a)(1) and (a)(3) triggers the past performance rules applicable under §§ 422.502(b)(1) or 423.503(b)(1). Imposition of intermediate sanctions is a factor considered under CMS's evaluation and determination of an organization's information from a current or prior contract during the MA and Part D application process.

We solicited comments on these proposals. We appreciate stakeholders' input on the proposed changes. We received the following comments and have provided responses.

Comment:

A commenter suggested that CMS not terminate a contract when a change of ownership has occurred without notification to CMS, but rather suggested CMS apply a substantial penalty or fine to the new legal entity.

Response:

In the interest of managing the MA and Part D programs and protecting all enrollees, CMS must ensure, through the application process, that MA organizations and Part D sponsors are eligible to contract with CMS. This is existing policy that is also consistent with statutory requirements under sections 1855 and 1857 and 1860D-12 of the Act. The option to terminate the contract is a critical tool for CMS to ensure that only qualified entities can contract with CMS to serve enrollees. Imposing a substantial penalty or fine on the new owner would not protect enrollees who are already in MA or Part D plans that cannot adequately serve them. Moreover, under §§ 422.550(d)(2) and 423.551(e)(2), entities can cure any deficiencies within 30 days of the imposition of intermediate sanctions. If an entity wishes to avoid termination, it will have the opportunity to do so.

Comment:

A commenter indicated that the proposed approach should not apply to those changes of ownership that occur under the same parent organization.

Response:

In order to ensure the integrity of the MA and Part D programs, CMS must review any change in ownership from one legal entity to another, regardless of the relationship to the parent organization, to confirm whether the new legal entity meets the regulatory requirements for operating a contract in a given service area. As previously indicated, our current regulations at §§ 422.550 and 423.551, as well as our MA guidance under “Chapter 12 of the Medicare Managed Care Manual—Effect of Change of Ownership,”

3

require that when a change of ownership occurs, as defined in the regulation, advance notice must be provided to CMS and the parties to the transaction must enter into a written novation agreement that meets CMS's requirements.

3

https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c12.pdf.

Comment:

A commenter expressed concern that CMS's application timelines would negatively impact potential changes of ownership and suggested instead that CMS not impose the proposed sanctions or that CMS implement the sanctions for a period of

time that is less time than the application cycle.

Response:

As previously noted, CMS must determine whether the new legal entity involved in the change in ownership meets all CMS requirements for operating a MA contract. CMS must also have the opportunity to review and evaluate the new entity. When a change in ownership from one legal entity to another occurs without CMS approval, it compromises CMS's ability to ensure the integrity of the MA and Part D programs and hampers CMS's ability to monitor a contract's activity under the new legal entity, thereby putting enrollees at risk. The ability of CMS to ensure that MA and Part D plans are adequate to cover enrollees' health care needs outweighs concerns about potential timeline issues.

We believe that our process provides a sufficient opportunity for organizations to demonstrate, and CMS to determine, that they meet all CMS's requirements as set forth in our regulations.

Comment:

A commenter asked CMS to clarify the types of sanctions that would be applicable when a change of ownership without novation agreement occurs.

Response:

CMS would impose enrollment and marketing sanctions, which are outlined in our regulations at § 422.750(a)(1) and (a)(3) and § 423.750(a)(1) and (a)(3). These sanctions will remain in place until CMS approves the change of ownership (including execution of an approved novation agreement) or the contract is terminated.

After considering the comments received and for the reasons discussed in the proposed rule and our responses to comments, we are finalizing our proposal to amend the regulations at §§ 422.550(d) and 423.551(e) with technical corrections to the cross-references proposed in § 423.551(e). The cross-references in paragraphs (e)(1) and (e)(2) have been corrected to reflect the appropriate Part D sections in the final regulatory text in this final rule. In addition, we are finalizing minor grammatical and organizational revisions to the regulations to improve the readability and clarity of the text.

B. Part D Global and Targeted Reopenings (§§ 423.308 and 423.346)

1. Executive Summary

2. Provisions of the Proposed Regulation (Preamble)

Pursuant to the authority under section 1860D-15(f)(1)(B) of the Act, the Secretary has the right to inspect and audit any books and records of a Part D sponsor or MA organization that pertain to the information regarding costs provided to the Secretary. We stated in the January 2005 Part D final rule (70 FR 4194, 4316) that this right to inspect and audit would not be meaningful, if upon finding mistakes pursuant to such audits, the Secretary was not able to reopen final payment determinations. Therefore, we established that CMS may rectify any final payment determination issues in a reopening provision at § 423.346. In the January 2005 Part D final rule, we established that a reopening was at CMS' discretion and could occur within the following timeframes after the final payment determination was issued: (1) 12 months for any reason, (2) 4 years for good cause, or (3) at any time when there is fraud or similar fault. We operationalized this provision by conducting program-wide reopenings (that is, global reopenings) and, when necessary, reopenings targeted to specific sponsors' contracts (that is, targeted reopenings).

In our December 2022 proposed rule, we proposed to codify the definitions of “global reopening” and “targeted reopening.” We also proposed to modify the timeframe CMS may perform a reopening for good cause from within 4 years to within 6 years to align with the 6-year overpayment look-back period described at § 423.360(f) and to help ensure that payment issues, including overpayments, can be rectified. In addition, we proposed to codify the circumstances under which CMS will notify the sponsor(s) of our intention to perform a final payment determination reopening and the requirement for CMS to announce when it has completed a reopening. We are finalizing our proposed changes without modifications.

a. Summary of the Current Process

Under the current process and under § 423.346, CMS performs a reopening of a Part D payment reconciliation (that is, the initial payment determination) as a result of revisions of prescription drug event (PDE) data and/or direct and indirect remuneration (DIR) data due to plan corrections, CMS system error corrections, post reconciliation claims activity, and audit and other post reconciliation oversight activity. Based on our experience in the Part D program and the PDE and DIR data changes, we understood that this process would require CMS to perform an initial payment determination reopening every contract year.

By calendar year 2013, CMS had reopened the 2006, 2007, and 2008 Part D payment reconciliations and, approximately 4 years after those reopenings were completed, began subsequent Part D payment reconciliation reopenings (consistent with the timing described at § 423.346(a)(2)). These reopenings included all Part D contracts that met the following criteria: (1) were in effect during the contract year being reopened, and (2) were either in effect at the time CMS completed the reopening or, if nonrenewed or terminated pursuant to § 423.507 through § 423.510 (collectively referred to as “terminated” for the purposes of these reopening provisions), had not completed the final settlement process by the time CMS completed the reopening. CMS has referred to this type of program-wide reopening as a “global reopening.” See, for example, HPMS memorandum, “Reopening of the 2006, 2007, and 2008 Part D Payment Reconciliations,” April 2, 2012 (available at

https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/part%20dreopeningannoucement_199.pdf

).

In addition to “global reopenings,” CMS has performed reopenings as part of our process to correct certain issues. We would consider performing a reopening to correct issues such as those associated with CMS-identified problems with an internal CMS file that CMS used in a Part D payment reconciliation, a coverage gap discount program reconciliation, or a reopening; CMS corrections to a PDE edit that impacted a specific plan type (for example, EGWPs); fraud or similar fault of the Part D sponsor or any subcontractor of the Part D sponsor; or a Part D sponsor's successful appeal of a reconciliation result. See, for example, HPMS memorandum, “Second reopening of the 2011 Final Part D Payment Reconciliation,” July 7, 2017 (available at

https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/second%20reopening%20of%20the%202011%20part%20d%20reconciliation_final_403.pdf

) and HPMS memorandum, “Reopening of the 2014 Final Part D Reconciliation for Employer Group Waiver Plans (EGWPs),” January 11, 2017 (available at

https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/cy14%20egwp%20reopening%20announcement_01-11-17_404.pdf

). These reopenings are not program-wide, but rather are targeted to the Part D contracts that are impacted by the particular issue that needs to be addressed by CMS (that is, “targeted reopenings”). The targeted reopenings

are not performed on a predictable schedule, and instead are utilized by CMS in the confines of the reopening timeframes described in the current regulation at § 423.346(a)(1) through (3).

Although CMS has in recent experience utilized targeted reopenings as part of our process to correct certain issues, under the current process, if a particular issue was program-wide, CMS would perform a global reopening to address that issue. This global reopening could be in addition to the scheduled global reopening that CMS has performed approximately 4 years after the Part D payment reconciliation for that year.

b. Aligning the Timing of Reopenings to the Overpayment Look-Back Period

Pursuant to the current § 423.346(a)(2), CMS may reopen and revise an initial or reconsidered final payment determination within 4 years after the date of the notice of the initial or reconsidered determination to the Part D sponsor, upon establishment of good cause for reopening. As already discussed, this paragraph (a)(2) has set up our current global reopening schedule. CMS performs the Part D payment reconciliation (that is, the initial payment determination) for a contract year, and then within 4 years of announcing the completion of that reconciliation, CMS performs a global reopening on that contract year.

This reopening process is used to recoup overpayments associated with PDE and DIR related overpayments. Pursuant to the current overpayment provision at § 423.360(f), there is a “look-back period” in which a Part D sponsor must report and return any overpayment identified within the 6 most recent completed payment years. As described at § 423.360, an overpayment occurs after the “applicable reconciliation.” The applicable reconciliation refers to the deadlines for submitting data for the Part D payment reconciliation.

The following example illustrates the timing of the look-back period. The deadlines for submitting data for the 2021 Part D payment reconciliation were in June 2022. Prior to the deadlines for submitting data for the 2021 Part D payment reconciliation, a PDE or DIR related overpayment could not exist for 2021, and the latest year for which an overpayment could occur was 2020. Therefore, prior to the deadlines for submitting data for the 2021 Part D payment reconciliation, the look-back period was 2015-2020.

This 6-year look-back period along with the 4-year reopening timeframe described at § 423.346(a)(2) results in overpayments being reported for a contract year after CMS has performed the global reopening for that contract year. Continuing the prior example, if a Part D sponsor identified a PDE or DIR related overpayment associated with contract year 2016 in May 2022 (that is, prior to the deadlines for submitting data for the 2021 Part D payment reconciliation), that overpayment falls within the 2015-2020 look-back period, and the sponsor would have reported the overpayment to CMS mid-2022. However, CMS completed the global reopening of the 2016 Part D payment reconciliation in January 2022. This discrepancy between the 4-year reopening timeframe and the 6-year overpayment look-back period results in operational challenges for CMS, as discussed subsequently in this section.

CMS had described a process for recouping PDE and DIR related overpayments after the global reopening for the contract year at issue had been completed. In the preamble to our final rule, “Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs,” 79 FR 29843 (May 23, 2014) and in subsequent subregulatory guidance, we stated that overpayments reported after the global reopening would be reported by the sponsor with an auditable estimate and that CMS would recoup the overpayment by either requesting a check or offsetting monthly prospective payments for the amount provided in the auditable estimate. See HPMS memorandum, “Reopening Process and Updates to the PDE/DIR-related Overpayment Reporting,” April 6, 2018 (available at

https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/hpms%2520memo_reopen%2520and%2520overpay_04-06-2018_205.pdf

). For PDE and DIR related overpayments, that approach presents challenges primarily because sponsors have also reported PDE and DIR related underpayments after the global reopening, which we do not have a method to process other than the reopening process.

We have contemplated doing targeted reopenings to reconcile the changes in PDE and DIR data, but that also presents operational challenges. Targeted reopenings are conducted using the same payment reconciliation system that conducts the Part D payment reconciliation, the coverage gap discount program reconciliation, and the scheduled global reopening. Given the volume of reporting after the scheduled global reopening, it would be challenging to find the time and resources to run multiple targeted reopenings.

Therefore, we proposed to modify § 423.346(a)(2) such that CMS may reopen and revise an initial or reconsidered final payment determination after the 12-month period (described at § 423.346(a)(1)), but within 6 years after the date of the notice of the initial or reconsidered determination to the Part D sponsor, upon an establishment of good cause for reopening. This change will allow CMS to process all changes to PDE data and DIR data after the overpayment look-back period for a contract year. Once a contract year falls outside of the look-back period, we would perform the global reopening for that contract year within the new 6-year timeframe, to recoup the PDE and DIR related overpayments reported by sponsors for that contract year (and process underpayments).

Prior to the new reopening timeframe going into effect, CMS will provide operational guidance, as has been done for past regularly scheduled global reopenings. The following example describes the timing for performing the scheduled global reopening. The data for the 2020 Part D payment reconciliation was due in June 2021. That reconciliation was completed in November 2021. Assuming a 4-year schedule, the DIR data for the contract year 2020 global reopening would be due to CMS by the end of July 2025, PDE data would be due in September 2025, and the 2020 global reopening would be completed the end of 2025 or early 2026. However, the 2020 contract year remains in the overpayment look-back period through June 2027. Under the 6-year timeframe, data for the 2020 global reopening would be due middle to late 2027, and the global reopening would be completed late 2027 or early 2028, after the 6-year look-back period.

Comment:

We received a comment that supported our proposal and our efforts to align the look-back period with the reopening timeframe.

Response:

We thank the commenter for the support.

Comment:

A commenter stated that while they do not have a conceptual problem with expanding the timeframe for overpayments associated with PDE record data and DIR data, they were concerned that looking back more than 4 years would result in administrative costs that exceed the value of the overpayment recoupment and recommended that CMS withdraw the proposal unless an analysis demonstrates that the expanded timeframe would result in overpayment

recoupments that exceed increased administrative costs.

Response:

We are not, as the commenter states, expanding the timeframe for overpayments. Under the existing requirements, described at § 423.360(f), sponsors are required to report and return any overpayment identified within the 6 most recently completed payment years. To clarify, we proposed to modify the reopening timeframe, described at § 423.346(a)(2), which does not have any impact on the existing timeframe for reporting and returning overpayments.

We decline the commenter's recommendation to withdraw the proposal unless an analysis demonstrates that the expanded timeframe would result in overpayment recoupments that exceed increased administrative costs. We do not believe that expanding the reopening timeframe from within 4 years to within 6 years will result in any additional burden. Additionally, the intent of the proposed change is not strictly focused on overpayment recoupment, but rather, is a remedy to operational challenges associated with the misalignment of the overpayment look-back period and the reopening timeframe.

Comment:

A commenter expressed concerns that DIR fees collected from pharmacies challenge patient access and pharmacies' viability. The commenter was concerned that extending the timeframe at § 423.346(a)(2) from within 4 years to within 6 years without any guardrails or protections in place for community pharmacies could lead to instances in which sponsors take advantage of the process to further claw back payments from pharmacies. To address this concern, the commenter requested that CMS consider establishing protections to prevent sponsors from recouping pharmacy overpayments.

Response:

The intent of the proposed change is to remedy operational challenges associated with the misalignment of the reopening timeframe, described at § 423.346(a)(2), and 6-year overpayment look-back period, described at § 423.360(f). The change in the reopening timeframe from within 4 years to within 6 years does not, in any way, change a sponsor's responsibility to report and return overpayments within the 6-year look-back period. The impact of DIR fees collected from pharmacies, pharmacy claw backs, and the recoupment of overpayments from pharmacies are outside of the scope of the proposed change.

After consideration of comments, we are finalizing the proposed requirements related to aligning the timing of reopenings to the overpayment look-back period without modification.

c. Standards for Performing Global and Targeted Reopenings

Consistent with the existing regulation at § 423.346(a) and (d), reopenings are at CMS's discretion. Under the current process, CMS has used its discretion to perform a scheduled global reopening on a Part D payment reconciliation within the timeframe specified at § 423.346(a)(2). Given the significant time and costs associated with conducting a reopening, it is expected that CMS will use its discretion to conduct a targeted reopening (or an additional global reopening for a program-wide issue) only under limited circumstances. We would contemplate using our discretion to perform a targeted reopening (or an additional global reopening) to correct or rectify a CMS file or CMS-created PDE edit-type issue, revise a payment determination that was based on PDE and/or DIR data that was submitted due to fraudulent activity of the sponsor or the sponsor's contractor, or pursuant to a successful appeal under § 423.350. CMS will not use its discretion to conduct a reopening to reconcile data that will be, or should have been, reconciled in the scheduled global reopening, which would include data from plan corrections, claims activity, and audits completed after the deadline to submit data for the scheduled global reopening. In addition, we are unlikely to conduct a reopening solely pursuant to a sponsor's request.

We proposed that in order to be included in a reopening, a contract must have been in effect (that is, receiving monthly prospective payments and submitting PDE data for service dates in that year) for the contract year being reopened. Intuitively, if a contract was not in the reconciliation for a particular contract year, it cannot be included in the reopening of that contract year's reconciliation. We also proposed that if CMS has sent a nonrenewed or terminated contract the “Notice of final settlement,” as described at § 423.521(a), by the time CMS completes the reopening, described at proposed § 423.346(f), CMS will exclude that contract from that reopening. We established the proposed exclusion based on the timing of the issuance of the “Notice of final settlement” and completion of the reopening, as opposed to the announcement of the reopening, due to the potentially lengthy reopening process and the likelihood that the “Notice of final settlement” will be issued prior to CMS completing the reopening process. For example, under the current timeframe for the scheduled global reopening, CMS has typically announced in the Spring and completed the reopening in December of that year or January of the next. During that timeframe, nonrenewed or terminated contracts will likely go through the final settlement process, and as a result, will not be able to complete the reopening process. This is because, pursuant to § 423.521, after the final settlement amount is calculated and the “Notice of final settlement” is issued to the Part D sponsor, CMS will no longer apply retroactive payment adjustments, and there will be no adjustments applied to amounts used in the calculation of the final settlement amount. We proposed to codify these inclusion criteria at § 423.346(g).

We also proposed at § 423.346(g)(2) that, specifically for targeted reopenings, CMS will identify which contracts or contract types are to be included in the reopening. This is because targeted Part D contract reopenings are impacted by the particular issue that CMS needs to address. Therefore, in order to be included in a targeted reopening, the Part D contract must have been impacted by the issue that causes CMS to perform a reopening. To date, most targeted reopenings have been performed because of a CMS-identified issue that most sponsors were not aware of prior to CMS completing the targeted reopening. Accordingly, sponsors would not be aware of this specific inclusion criteria unless CMS informed the sponsors of the CMS-identified issue and the sponsors' contracts were impacted. Therefore, we proposed that CMS notify sponsors of this specific inclusion criteria via the proposed reopening notification and/or the proposed reopening completion announcement.

We did not receive comments on this section of the proposal and are finalizing the proposed requirements related to the standards for performing global and targeted reopenings without modification.

c. Reopening Notification and Reopening Completion Announcement

We proposed to add new paragraphs (e) and (f) at § 423.346 to codify our existing policy regarding reopening notifications and reopening completion announcements, respectively. We proposed to codify at § 423.346(e) that CMS will notify the sponsor(s) that will be included in the global or targeted reopening of its intention to perform a global or a targeted reopening—that is, the sponsor would receive prior notice

of the reopening—only when it is necessary for the sponsor(s) to submit PDE data and/or DIR data prior to the reopening. In contrast, if it is not necessary for the sponsor(s) to submit data prior to a reopening, we proposed to notify the sponsor(s) only after CMS completes the reopening. For example, if CMS identifies an error in an internal CMS file that CMS used in the reconciliation or reopening, CMS may correct that file and reopen (holding all other data originally used constant), without the need for the sponsor(s) to submit PDE data or DIR data. See, for example, HPMS memorandum, “Second reopening of the 2011 Final Part D Payment Reconciliation,” July 7, 2017 (available at

https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/second%20reopening%20of%20the%202011%20part%20d%20reconciliation_final_403.pdf

).

We proposed at § 423.346(e)(1) that CMS will include in the notification the deadline for submitting PDE data and/or DIR data to be included in the reopening. We also proposed that the deadline to submit this data will be at least 90 calendar days after the date of the notice.

In addition, we proposed at § 423.346(e)(2) that the reopening notification will include inclusion criteria in the form of a description of the contract(s) (either specifically by contract number or generally by contract-type or contract status) that will be included in the reopening. This will put a sponsor on notice of whether its contracts are included in the reopening.

We proposed to codify at § 423.346(f) that CMS will announce when it has completed a reopening, including in cases where CMS issued a notice under proposed paragraph (e). This announcement is consistent with existing policy and past practice. At paragraph (f)(1), we proposed to specify that CMS will provide a description of the data used in the reopening. As in past reopenings, this data could include PDE data described by the processed date on the Prescription Drug Front-end System (PDFS) response report, DIR data described by the date received in the Health Plan Management System (HPMS), as well as any other relevant data used to perform the reopening.

At paragraph § 423.346(f)(2), we proposed to include in the announcement a statement of the contract(s) (either specifically by contract number or generally by contract-type or contract status) that were included in the reopening, consistent with proposed § 423.346(e)(2). We proposed to specify which contracts or contract types are included in the reopening in both the announcement of the completion of the reopening and the reopening notification because CMS' proposal would not require issuing a reopening notification when it is not necessary for the sponsor(s) to submit PDE data and/or DIR data prior to the reopening.

At paragraph § 423.346(f)(3), we proposed to include in the announcement of the completion of the reopening the date by which reports describing the reopening results will be available to the sponsor. In addition, at paragraph (f)(4), we proposed to include the date by which a sponsor must submit an appeal, pursuant to § 423.350, if the sponsor disagrees with the reopening results.

We did not receive comments on this section of the proposal and are finalizing the proposed requirements related to the reopening notification and the announcement of the completion of the reopening without modification.

d. Definitions of “Global Reopening” and “Targeted Reopening”

We proposed to establish definitions of global reopening and targeted reopening at § 423.308. We proposed to define a global reopening as a reopening under § 423.346 in which CMS includes all Part D sponsor contracts that meet the inclusion criteria described at proposed § 423.346(g). We proposed to define a targeted reopening as a reopening under § 423.346 in which CMS includes one or more (but not all) Part D sponsor contracts that the meet the inclusion criteria described at proposed § 423.346(g). Finally, consistent with these proposed definitions, we proposed to include the terms “global reopening” and “targeted reopening” at the beginning of existing § 423.346(a) to clarify that the reopenings that CMS may perform under § 423.346(a) may be global or targeted, as defined in proposed § 423.308.

Comment:

We received a comment supporting our proposal to codify the definitions of “global reopening” and “targeted reopening.”

Response:

We thank the commenter for the support.

We are finalizing the proposed definitions of “global reopening” and “targeted reopening” without modification.

The proposals described in this section of the final rule are consistent with our current guidance and requirements. None of the proposed changes would place additional requirements on Part D sponsors, nor do the proposed changes to §§ 423.308 and 423.346 place any additional burden on the Part D sponsors or their pharmacy benefit managers (PBMs). Our proposed rule does not change the extent to which Part D sponsors comply with the reopening process. Part D sponsors' compliance with this reopening process is evidenced by each Part D sponsor's signed attestation certifying the cost data (pursuant to § 423.505(k)(3) and (5)) that CMS uses in each of the reopenings. In addition, the burden associated with the submission of cost data is already approved under the OMB control numbers 0938-0982 (CMS-10174) and 0938-0964 (CMS-10141). Therefore, as our changes do not result in additional burden, we have not included a discussion a of this provision in the COI section of this rule. In addition, we are not scoring this provision in the Regulatory Impact Analysis section because industry is already complying with this process.

Based on the comments received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the proposed changes to the reopening provision at § 423.346 and the related changes to § 423.308 without modification.

C. Medicare Final Settlement Process and Final Settlement Appeals Process for Organizations and Sponsors That Are Consolidating, Nonrenewing, or Otherwise Terminating a Contract (§§ 422.500(b), 422.528, 422.529, 423.501, 423.521, and 423.522)

In our December 2022 proposed rule, we proposed to amend 42 CFR part 422, subpart K, and part 423, subpart K, to codify in regulation our final settlement process for Medicare Advantage (MA) organizations and Part D sponsors whose contracts with CMS have been consolidated with another contract, nonrenewed, or otherwise terminated. As described subsequently in this section, we are finalizing our proposed changes.

Sections 1857(a) and 1860D-12(b)(1) of the Act require contracts between CMS and the legal entity that offers, respectively, one or more MA plans or Part D plans to beneficiaries. Sections 1857(e)(1) and 1860D-12(b)(3)(D)(i) of the Act provide that these contracts shall contain terms and conditions that the Secretary may find necessary and appropriate in addition to the applicable requirements and standards set forth in the statute and the terms of payment set by the statute. At Part 422, subpart K, and Part 423, subpart K, we have codified provisions relating to the contracts between CMS and MA

organizations and Part D sponsors, including a description of minimum terms that must be included in the contract; the duration of contracts; minimum enrollment, reporting, and prompt payment requirements; and provisions regarding the consolidation, nonrenewal, or termination of a contract. In addition, these contracts require compliance with the regulations governing the program, which are adopted as standards implementing and interpreting the statutory requirement and as new terms and conditions that are not inconsistent with, and necessary and appropriate for administration of, the MA and Part D programs. This final rule will add to those requirements.

CMS makes monthly payments to MA organizations and Part D sponsors for each beneficiary enrolled in a plan for that month. If there is an update to the payment amount that was paid for a month, CMS will make an adjustment to a month's payment for a beneficiary in a later month. For example, if a beneficiary's Medicaid eligibility for a month is changed, CMS will recalculate the payment for that month after receipt of the updated Medicaid eligibility status for a beneficiary and make a retroactive payment update to that month's payment in a later month. In addition, CMS reconciles a number of different payment amounts after specified periods of time to permit plan data submission for a payment year as described subsequently in this section. These reconciliations typically take place the year after a payment year and result in retroactive payment adjustments for the prior payment year.

Generally, MA organizations and Part D sponsors continue to offer plans to beneficiaries from one year to the next. From time to time, a contract between CMS and an MA organization or Part D sponsor may consolidate, nonrenew, or otherwise terminate as a result of a plan-initiated termination, mutual termination, or CMS-initiated termination. Once a contract has consolidated, nonrenewed, or otherwise terminated, the retroactive payment adjustments for a year that would have been made had the contract remained in effect are not paid to the MA organization or Part D sponsor but are held until after the reconciliations for the final payment year are calculated as described subsequently in this section. After such time, all retroactive adjustments to payment for the consolidated, nonrenewed, or otherwise terminated contract are totaled and either a net payment amount is made to the MA organization or Part D sponsor, or an amount is charged to the MA organization or Part D sponsor.

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In the case of a bankrupt or liquidated plan that owes CMS money, CMS still completes the reconciliations, final settlement process, and issues a notice of final settlement, but refers the plan to the Department of Justice to collect the money owed.

The process used to determine the final net payments for an MA organization or Part D sponsor, provide notice of these amounts to the MA organization or Part D sponsor, adjudicate disputes, and receive or remit payment constitutes the

final settlement process

and begins at least 18 months following the end of the last contract year in which the contract was in effect.

Before CMS determines the final settlement amount owed to or from an MA organization or Part D sponsor whose contract has consolidated, nonrenewed, or otherwise terminated, CMS first completes a series of reconciliation activities and calculates the related payment adjustments for both consolidated, nonrenewed, or otherwise terminated contracts as well as ongoing contracts: (1) MA risk adjustment reconciliation (described in § 422.310(g)), (2) Part D annual reconciliation (described in §§ 423.336 and 423.343), (3) Coverage Gap Discount Program annual reconciliation (described in § 423.2320), and (4) medical loss ratio (MLR) report submission and remittance calculation (described in §§ 422.2460, 422.2470. 423.2460, and 423.2470). Each individual reconciliation process allows the MA organization or Part D sponsor to raise concerns about the calculation of that particular reconciliation amount. Once each reconciliation is complete and no errors have been identified, the MA organization or Part D sponsor is presumed to accept that reconciliation amount and it is not reconsidered during the final settlement process.

For a given consolidated, nonrenewed, or otherwise terminated contract, the

final settlement amount

is then calculated by summing the applicable reconciliation amounts from these 4 processes and any retroactive payment adjustments that accumulated after a contract has consolidated, nonrenewed, or otherwise terminated. Note that these reconciliation amounts represent all of the reconciliation amounts that could be included in the final settlement calculation. Whether each reconciliation amount will factor into the final settlement amount for a particular contract will depend on the specifics of that contract. For example, MA risk adjustment reconciliation would not be performed for a prescription drug plan contract.

The

final settlement adjustment period

is the period of time between when the contract consolidates, nonrenews, or otherwise terminates and the date the MA organization or Part D sponsor is issued a notice of the final settlement amount (also referred to herein as the

notice of final settlement

). The length of the final settlement period is determined by the time it takes for these reconciliations and related payment adjustments to be completed. During this time, CMS continues to calculate payment adjustments that reflect changes in beneficiary status.

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CMS tracks all payment adjustments for a terminated contract for use in the final settlement for that contract.

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A beneficiary profile status change reflects a change in a beneficiary's economic or health status, such as low-income status for Part D, Medicaid status, Hospice or ESRD status.

The final settlement adjustment period ends on the date on the

notice of final settlement

that CMS issues to MA organizations and Part D sponsors. At the end of the final settlement adjustment period, CMS will no longer make adjustments to reconciliations for a contract that has consolidated, nonrenewed, or otherwise terminated, that would otherwise have been made for a continuing contract. Once the notice of final settlement has been issued, contracts that have been consolidated, nonrenewed, or otherwise terminated will also be excluded from reopenings, including program-wide reopenings, or reconciliations for prior payment years when the contract was in effect. For example, under § 423.346, CMS has the authority to reopen and revise an initial or reconsidered Part D final payment determination, including the Part D reconciliation amounts included in the final settlement amount, for a prior payment year. However, this reopening would not apply to consolidated, nonrenewed, or otherwise terminated contracts that have already received a notice of final settlement. This allows CMS to largely close out any outstanding financial responsibilities associated with consolidated, nonrenewed, or otherwise terminated contracts, either on the part of CMS or on the part of the MA organization or Part D sponsor.

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Once a contract has completed final settlement, the MA organization or Part D sponsor may still have financial responsibilities under any other applicable statute or regulation.

After determining the final settlement amount, CMS issues a notice of final settlement to the MA organization or Part D sponsor for each contract that has consolidated, nonrenewed, or otherwise

terminated, even if the final settlement amount is $0. The notice of final settlement explains whether the MA organization or Part D sponsor will receive or owe a final settlement amount and provides the information needed to conduct the associated financial transaction. The notice of final settlement includes the information CMS used to calculate the final settlement amount, including the payment adjustments that are reported on all monthly membership reports created from the date the contract ended until the month the final settlement amount was calculated. It also includes information on the process and timeline for requesting a review concerning the accuracy of the final settlement amount calculation.

In our proposed rule, we proposed to codify longstanding and existing guidance pertaining to procedures for the final settlement process described in the previous paragraphs. In addition, we proposed to add a new appeals process for MA organizations or Part D sponsors that disagree with the final settlement amount. MA organizations or Part D sponsors may request an appeal of the final settlement amount within 15 calendar days of the date of issuance of the notice of final settlement. We believe that will provide organizations with sufficient time to request an appeal, as MA organizations and Part D sponsors will already be aware of the reconciliation amounts that factor into the final settlement amount at the time the notice of final settlement is issued, and requiring a request for appeal within this timeframe will help ensure accurate and timely payment of final settlement amounts. If an MA organization or Part D sponsor agrees with the final settlement amount, no response will be necessary or required. Failure to request appeal within 15 calendar days of the date of issuance of the notice of final settlement will indicate acceptance of the final settlement amount. We strongly encourage MA organizations and Part D sponsors to communicate their acceptance to CMS to facilitate prompt payment.

Finally, in addition to codifying our longstanding and existing review process under which MA organizations and Part D sponsors are able to request a reconsideration of CMS's final settlement amount calculation, we proposed to add two additional levels of appeal: (1) an informal hearing conducted by the CMS Office of Hearings to review CMS's initial determination, following a request for appeal of the reconsideration of CMS's initial determination, and (2) a review by the CMS Administrator of the hearing officer's determination if there is an appeal of the hearing officer's determination. We believe that these additional levels of appeal will afford MA organizations and Part D sponsors sufficient opportunities to present objections to the calculation of the final settlement amount. This additional process will only be available to appeal CMS's final settlement amount calculation and will not be used to review any prior payments or reconciliation amounts. MA organizations and Part D sponsors seeking review of prior payments or reconciliation amounts must do so during the appropriate reconciliation process. CMS believes that these additional levels of appeal will only be used in exceptional circumstances given the narrow, mathematical nature of the final settlement process. We anticipate that calculation errors will be rare, and, if they do occur, that they will be quickly corrected to the mutual satisfaction of both parties without a need for further review.

1. Process for MA Organizations and Part D Sponsors That Do Not Request an Appeal

If an MA organization or Part D sponsor that owes a final settlement amount to CMS does not request an appeal or provides an optional response acknowledging and confirming the amount owed to CMS within 15 calendar days of the date of the notice of final settlement, the MA organization or Part D sponsor will be required to remit full payment to CMS within 120 calendar days of receiving the notice of final settlement. If an MA organization or Part D sponsor is owed money and does not appeal the final settlement amount, CMS will remit payment to the MA organization or Part D sponsor within 60 calendar days of the date of issuance of the notice of final settlement. If an MA organization or Part D sponsor does not owe or is not owed a final settlement amount and does not request an appeal of the $0 final settlement amount within 15 calendar days of the date of issuance of the notice of final settlement, no further actions will occur. If an MA organization or Part D sponsor does not appeal the final settlement amount indicated in the notice of final settlement within 15 calendar days of the issuance of the notice of final settlement, no subsequent requests for appeal will be considered.

CMS did not receive comments on this section of the proposal.

2. Process for Appealing the Final Settlement Amount

In cases in which the MA organization or Part D sponsor submits a request for an appeal of the final settlement amount within 15 calendar days of the date of the notice of final settlement, the MA organization or Part D sponsor will have to specify the calculation with which they disagree and the reasons for their disagreement, as well as provide evidence supporting the assertion that CMS's calculation of the final settlement amount described in the notice of final settlement is incorrect. MA organizations and Part D sponsors will not be able to submit new reconciliation data or data that was submitted to CMS after the final settlement notice was issued. CMS will not consider information submitted for the purpose of retroactively adjusting a prior reconciliation.

CMS will not accept requests for appeal that are submitted more than 15 calendar days after the date of issuance of the notice of final settlement. As noted previously, if an MA organization or Part D sponsor does not reply within 15 calendar days, they will be deemed to accept the final settlement amount indicated in the notice of final settlement.

Once CMS has reconsidered the calculation of the final settlement amount in light of the evidence provided by the MA organization or Part D sponsor, CMS will provide written notice of the reconsideration decision to the MA organization or Part D sponsor.

If the MA organization or Part D sponsor does not agree with CMS's reconsideration decision, it will be able to request an informal hearing from a CMS hearing officer. The MA organization or Part D sponsor will have to submit a request for review within 15 calendar days of the date of CMS's reconsideration decision. The MA organization or Part D sponsor will be required to provide a copy of CMS's decision, the findings or issues with which it disagrees, and the reasons why it disagrees with CMS's decision. As the hearing officer's review will be limited to a review of the existing record, the MA organization or Part D sponsor will not be able to submit new evidence to support its assertion that CMS's calculation of the final settlement amount described in the notice of final settlement is incorrect in addition to the evidence submitted during CMS's reconsideration.

The CMS hearing officer will provide written notice of the time and place of the informal hearing at least 30 days before the scheduled date and the CMS

reconsideration official will provide a copy of the record that was before CMS when CMS made its reconsideration decision to the hearing officer. The CMS hearing officer will not receive new testimony or accept new evidence in addition to the evidence submitted by the MA organization or Part D sponsor during CMS's reconsideration to support its assertion that CMS's calculation of the final settlement amount is incorrect.

Once the hearing officer has reviewed the record, the hearing officer will send a written decision to the MA organization or Part D sponsor explaining the basis of the hearing officer's decision. The hearing officer's decision will be final and binding unless the decision is reversed or modified by the CMS Administrator.

If the MA organization or Part D sponsor does not agree with the hearing officer's decision, they will be able to request an additional, final review from the CMS Administrator. The MA organization or Part D sponsor will have to submit a request for review within 15 calendar days of the date of the issuance of CMS hearing officer's decision. The MA organization or Part D sponsor will be able to submit written arguments to the Administrator for review but will not be able to submit evidence in addition to the evidence submitted during CMS's reconsideration.

The CMS Administrator will have the discretion to elect to review the hearing officer's decision or decline to review the hearing officer's decision within 30 calendar days of receiving the request for review. If the Administrator declines to review the hearing officer's decision, the hearing officer's decision will be final and binding. If the Administrator elects to review the hearing officer's decision and any written argument submitted by the MA organization or Part D sponsor, the Administrator will review the information included in the record of the hearing officer's decision and any written argument submitted by the MA organization or Part D sponsor. Based on this review, the Administrator may uphold, reverse, or modify the hearing officer's decision. The Administrator's decision will be final and binding and no other requests for review will be considered.

If an MA organization or Part D sponsor requests an appeal of the final settlement amount, the financial transaction associated with the issuance or payment of the final settlement amount will be stayed until all appeals are exhausted. Once all levels of appeal are exhausted or the MA organization or Part D sponsor fails to request further review within the 15-day timeframe, CMS will communicate with the MA organization or Part D sponsor to complete the financial transaction associated with the issuance or payment of the final settlement amount, as appropriate.

At all levels of review, the MA organization or Part D sponsor's appeal will be limited to CMS's calculation of the final settlement amount. CMS will not consider information submitted for the purposes of retroactively adjusting a prior reconciliation. The MA organization or Part D sponsor will bear the burden of proof by providing evidence demonstrating that CMS's calculation of the final settlement amount is incorrect.

CMS did not receive comments on this section of the proposal.

3. Proposed Amendments to Regulations (§§ 422.500(b), 422.528, 422.529, 423.501, 423.521, and 423.522)

a. Definitions

We proposed to amend §§ 422.500(b) and 423.501 to add several definitions relevant for the codification of the final settlement process.

First, we proposed to add a definition for the term

final settlement amount,

which will be the final payment amount CMS calculates and ultimately pays to the MA organization or Part D sponsor or that an MA organization or Part D sponsor pays to CMS for a Medicare Advantage or Part D contract that has terminated through consolidation, nonrenewal, or other termination. The proposed definition provides that CMS will calculate the final settlement amount by summing retroactive payment adjustments for a contract that accumulate after that contract consolidates nonrenews, or otherwise terminates, but before the calculation of the final settlement amount, including the applicable reconciliation amounts that have been completed as of the date the notice of final settlement has been issued, without accounting for any data submitted after the data submission deadlines for calculating the reconciliation amounts. These reconciliation amounts used in this process are: (1) MA risk adjustment reconciliation (described in § 422.310), (2) Part D annual reconciliation (described in §§ 423.336 and 423.343), (3) Coverage Gap Discount Program annual reconciliation (described in § 423.2320), and (4) MLR report submission, including calculation of remittances (described in §§ 422.2470 and 423.2470).

We proposed to add a definition for the term

final settlement process

as the process by which CMS will calculate the final settlement amount for a Medicare Advantage or Part D contract that has been consolidated, nonrenewed, or otherwise terminated, issue the final settlement amount along with supporting documentation (described previously in section XXX) in the notice of final settlement to the MA organization or Part D sponsor, receive responses from MA organizations and Part D sponsors requesting an appeal of the final settlement amount, and take final actions to adjudicate an appeal (if requested) and make payments to or receive final payments from MA organizations or Part D sponsors. The proposed definition of

final settlement process

will specify that the final settlement process begins after all applicable reconciliations have been completed.

b. Final Settlement Process and Payment

We proposed to add §§ 422.528 (for MA) and 423.521 (for Part D) to our regulations to codify our process for notifying MA organizations and Part D sponsors of the final settlement amount and how payments to or from CMS will be made.

CMS will calculate and notify MA organizations and Part D sponsors of the final settlement amount. At paragraph (a) of proposed §§ 422.528 (for MA) and 423.521 (for Part D), we proposed to codify that CMS will send a notice of final settlement to MA organizations and Part D sponsors. Specifically, proposed paragraphs (a)(1), (a)(2), (a)(3), and (a)(4) specify that the notice will contain at least the following information: a final settlement amount; relevant banking and financial mailing instructions for MA organizations and Part D sponsors that owe CMS a final settlement amount; relevant CMS contact information; and a description of the steps for the MA organizations or Part D sponsor to request an appeal of the final settlement amount calculation.

At paragraph (b) of proposed §§ 422.528 and 423.521, we proposed to establish that MA organizations and Part D sponsors will have 15 calendar days from the date of issuance of the notice to request an appeal. We proposed at paragraphs (b)(1) and (b)(2) of these new regulation sections that, if an MA organization or Part D sponsor agrees with the final settlement amount, no response will be required, and that, if an MA organization or Part D sponsor does not request an appeal within 15 calendar days, CMS will not consider any subsequent requests for appeal of the final settlement amount.

At paragraph (c) of proposed §§ 422.528 and 423.521, we proposed to codify the actions that will take place if an MA organization or Part D sponsor does not appeal the final settlement amount. Specifically, at paragraph (c)(1), we proposed to specify that, if an MA organization or Part D sponsor owed a final settlement amount from CMS does not appeal, CMS will remit payment within 60 calendar days of the date of the issuance of the notice of final settlement. At proposed paragraph (c)(2), we proposed that an MA organization or Part D sponsor that owes money to CMS and does not appeal will have to remit payment in full to CMS within 120 calendar days from issuance of the notice of final settlement. We further specify that an MA organization or Part D sponsor that does not appeal and does not remit payment within 120 calendar days of issuance of the notice will be subject to having any debts owed to CMS referred to the Department of the Treasury for collection.

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In the case of a bankrupt or liquidated plan that owes CMS money, CMS still completes the reconciliations and the final settlement process and issues a notice of final settlement, but refers the plan to the Department of Justice to collect the money owed.

At paragraph (d) of proposed §§ 422.529 (for MA) and 423.522 (for Part D), we proposed to establish the actions following submission of a request for an appeal that will be taken.

At paragraph (e) of proposed §§ 422.529 (for MA) and 423.522 (for Part D), we proposed that after the final settlement amount is calculated and the notice of final settlement is issued to the MA organization or Part D sponsor, CMS will no longer apply retroactive payment adjustments for the terminated contract and there will be no adjustments applied to the final settlement amount.

c. Requesting an Appeal of the Final Settlement Amount

We proposed to add §§ 422.529 (for MA) and 423.522 (for Part D) to our regulations to codify that an MA organization or Part D sponsor will be able to request an appeal of the calculation of the final settlement amount, and the process and requirements for making such a request.

At paragraph (a) of proposed §§ 422.529 and 423.522, we proposed to establish requirements that will apply to MA organizations' and Part D sponsors' requests for appeal of the final settlement amount calculation.

Specifically, at proposed paragraph (a)(1), we proposed to establish the process under which an MA organization or Part D sponsor may request reconsideration of the final settlement amount. We proposed to specify that the 15-calendar-day period for filing the request will begin on the date the notice of final settlement from CMS is issued. We also proposed that MA organizations and Part D sponsors will have to include in their request: (1) the calculation with which they disagree and (2) evidence supporting the assertion that the CMS calculation of the final settlement amount is incorrect. We further specify that CMS will not consider (for purposes of retroactively adjusting a prior reconciliation), and MA organizations and Part D sponsors should not submit, new reconciliation data or data that was submitted to CMS after the final settlement notice was issued.

At proposed paragraph (a)(1)(iii), we proposed to establish that the CMS reconsideration official will review the final settlement calculation and evidence timely submitted by the MA organization or Part D sponsor supporting the assertion that the CMS calculation of the final settlement amount is incorrect. We further proposed to establish that the CMS reconsideration official will inform the MA organization or Part D sponsor of their decision on the reconsideration in writing and that their decision will be final and binding unless the MA organization or Part D sponsor requests a hearing officer review.

At proposed paragraph (a)(2), we proposed to establish that MA organizations and Part D sponsors that disagree with CMS's reconsideration decision under paragraph (a)(1) of this section will be able to request an informal hearing by a CMS hearing officer.

Specifically, at paragraph (a)(2)(i), we establish that MA organizations and Part D sponsors will have to submit their requests for an informal hearing within 15 calendar days of the date of the reconsideration decision. At paragraph (a)(2)(ii), we proposed that MA organizations and Part D sponsors will have to include in their request a copy of CMS's decision, the specific findings or issues with which they disagree, and the reasons for which they disagree. At paragraph (a)(2)(iii), we proposed to establish the informal hearing procedures. Specifically, we proposed that the CMS hearing officer will provide written notice of the time and place of the informal hearing at least 30 calendar days before the scheduled date and the CMS reconsideration official will provide a copy of the record that was before CMS when CMS made its reconsideration decision to the hearing officer. We further proposed that the hearing will be conducted by a hearing officer who will neither receive testimony nor accept new evidence. We finally proposed that the hearing officer will be limited to the review of the record that CMS had when making its decision. At paragraph (a)(2)(iv), we proposed that the CMS hearing officer will send a written decision to the MA organization or Part D sponsor explaining the basis for the decision. At proposed paragraph (a)(2)(v), we proposed to establish that the hearing officer's decision is final and binding, unless the decision is reversed or modified by the CMS Administrator.

We further proposed to establish at paragraph (a)(3) that MA organizations and Part D sponsors that disagree with the hearing officer's decision will be able to request a review by the CMS Administrator.

At paragraph (a)(3)(i), we establish that MA organizations and Part D sponsors will have to submit their requests for a review by the Administrator within 15 calendar days of the date of the decision and may submit written arguments to the Administrator for review. At paragraph (a)(3)(ii), we proposed that the CMS Administrator will have the discretion to elect or decline to review the hearing officer's decision within 30 calendar days of receiving the request for review. We further proposed that if the Administrator declines to review the hearing officer's decision, the hearing officer's decision will be final and binding. We proposed at paragraph (a)(3)(iii) that, if the Administrator elects to review the hearing officer's decision, the Administrator will review the hearing officer's decision, as well as any information included in the record of the hearing officer's decision and any written arguments submitted by the MA organization or Part D sponsor, and determine whether to uphold, reverse, or modify the decision. At proposed paragraph (a)(3)(iv), we proposed that the Administrator's determination will be final and binding.

At proposed paragraph (b), we proposed to establish the matters subject to appeal and that an MA organization or Part D sponsor bears the burden of proof. At proposed paragraph (b)(1), we proposed to establish that the Part D sponsor's appeal will be limited to CMS's calculation of the final settlement amount. We further proposed that CMS will not consider information submitted for the purposes of retroactively adjusting a prior reconciliation. At proposed paragraph (b)(2), we proposed that the MA organization or Part D sponsor will bear the burden of proof by providing evidence demonstrating that

CMS's calculation of the final settlement amount is incorrect.

At proposed paragraph (c), we proposed that if an MA organization or Part D sponsor requests an appeal of the final settlement amount, the financial transaction associated with the issuance or payment of the final settlement amount will be stayed until all appeals are exhausted. Once all levels of appeal are exhausted or the MA organization or Part D sponsor fails to request further review within the 15-calendar-day timeframe, CMS will communicate with the MA organization or Part D sponsor to complete the financial transaction associated with the issuance or payment of the final settlement amount, as appropriate.

Proposed paragraph (d) clarifies that nothing in this section will limit an MA organization or Part D sponsor's responsibility to comply with any other applicable statute or regulation.

CMS did not receive comments on this section of the proposal.

Based on the lack of comments received, we are finalizing the additions to §§ 422.500(b), 422.528, 422.529, 423.501, 423.521, and 423.522 to codify the final settlement process as proposed.

D. Civil Money Penalty Methodology (§§ 422.760 and 423.760)

Sections 1857(g)(3)(A) and 1860D-12(b)(3)(E) of the Act provide CMS with the ability to impose Civil Money Penalties (CMPs) of up to $25,000 per determination (determinations are those which could otherwise support contract termination, pursuant to § 422.509 or § 423.510), as adjusted annually under 45 CFR part 102, when the deficiency on which the determination is based adversely affects or has the substantial likelihood of adversely affecting an individual covered under the organization's contract. Additionally, as specified in §§  422.760(b)(2) and 423.760(b)(2), CMS is permitted to impose CMPs of up to $25,000, as adjusted annually under 45 CFR part 102, for each enrollee directly adversely affected or with a substantial likelihood of being adversely affected by a deficiency. CMS has the authority to issue a CMP up to the maximum amount permitted under regulation, as adjusted annually

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for each affected enrollee or per determination, however CMS does not necessarily apply the maximum penalty amount authorized by the regulation in all instances because the penalty amounts under the current CMP calculation methodology are generally sufficient to encourage compliance with CMS rules.

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

On December 15, 2016, CMS released on its website, the first public CMP calculation methodology for calculating CMPs for MA organizations and Part D sponsors starting with referrals received in 2017. On March 15, 2019, CMS released for comment a proposed CMP calculation methodology on its website that revised some portions of the methodology released in December 2016. Subsequently, on June 21, 2019, CMS finalized the revised CMP calculation methodology document, made it available on its website, and applied it to CMPs issued starting with referrals received in contract year 2019 and beyond.

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9

CMS Civil Money Penalty Calculation Methodology, Revised. June 21, 2019.

https://www.cms.gov/Medicare/Compliance-and-Audits/Part-C-and-Part-D-Compliance-and-Audits/Downloads/2019CMPMethodology06212019.pdf.

On January 19, 2021, CMS published a final rule in the

Federal Register

titled “Medicare and Medicaid Programs; Contract Year 2022 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly.” (86 FR 5864.

https://www.federalregister.gov/documents/2021/01/19/2021-00538/medicare-and-medicaid-programs-contract-year-2022-policy-and-technical-changes-to-the-medicare.

Hereinafter referred to as the January 2019 final rule). In January 2019 final rule, CMS finalized a policy, effective beginning in CY 2022, to update the minimum CMP penalty amounts no more often than every three years. Under this policy, CMS updates the CMP penalty amounts by including the increases that would have applied if CMS had multiplied the minimum penalty amounts by the cost-of-living multiplier released by the Office of Management and Budget (OMB)

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each year during the preceding three-year period. CMS also tracks the yearly accrual of the penalty amounts and announces them on an annual basis.

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

The intent of the minimum penalty increase policy was to establish the CMP calculation methodology document in regulation to ensure consistency and transparency with CMP penalty amounts. Although parts of the regulations at §§ 422.760(b)(3) and 423.760(b)(3) have set standards for CMP penalties, in hindsight, CMS believes that other parts of the regulations unnecessarily complicated CMS's approach to calculating CMPs, which has the effect of limiting CMS's ability to protect beneficiaries when CMS determines that an organization's non-compliance warrants a CMP amount that is higher than would normally be applied under the CMP methodology. In addition, although CMS always has had the authority to impose up to the maximum authorized under sections 1857(g)(3)(A) and 1860D-12(b)(3)(E) of the Act, parts of the minimum penalty increase policy may have inadvertently given the impression that CMS was limiting its ability to take up to the maximum amount permitted in statute and regulation. This was not the intent of the rule. For example, there may be instances where an organization's non-compliance has so substantially adversely impacted one or more enrollees that CMS determines it is necessary to impose the maximum CMP amount permitted under statute, or an amount that is higher than the amount set forth in the CMP methodology guidance, to adequately address the non-compliance. In order to clarify its ability to adequately protect beneficiaries and encourage compliance, CMS proposed to modify its rules pertaining to minimum penalty amounts.

Specifically, we proposed to remove §§ 422.760(b)(3)(i)(E) and 423.760(b)(3)(i)(E), respectively, which is the cost-of-living multiplier. We also proposed to remove §§ 422.760(b)(3)(ii)(A)-(C) and 423.760(b)(3)(ii)(A)-(C), which describes how CMS calculates and applies the minimum penalty amount increase. Lastly, we proposed to revise and add new provisions §§ 422.760(b)(3) and 423.760(b)(3), which explain that CMS will set standard minimum penalty amounts and aggravating factor amounts for per determination and per enrollee penalties in accordance with paragraphs (b)(1) and (b)(2) of paragraph (b) on an annual basis, and restates that CMS has the discretion to issue penalties up to the maximum amount under paragraphs (b)(1) and (2) when CMS determines that an organization's

non-compliance warrants a penalty that is higher than would be applied under the minimum penalty amounts set by CMS.

Once finalized, CMS would continue to follow our existing CMP methodology and would only impose up to the maximum CMP amount in instances where we determine non-compliance warrants a higher penalty. This update will also be incorporated in forthcoming revised CMP calculation methodology guidance.

Comment:

A commenter suggested that removing the minimum penalty amount increase policy would lead to inconsistencies, and a lack of parity, in the CMP amounts we impose.

Response:

We disagree with this comment. First, as discussed above and in the proposed rule, CMS has always had the statutory authority to impose up to the maximum CMP amount authorized under sections 1857(g)(3)(A) and 1860D-12(b)(3)(E) of the Act. Second, CMS would continue to follow our existing CMP methodology, which allows for parity, fairness, and consistency in calculating CMP amounts. We would only impose up to the maximum CMP amount in instances where we determine non-compliance warrants a higher penalty to adequately address the non-compliance.

After consideration of the comments received, we are finalizing our changes to §§ 422.760(b)(3) and 423.760(b)(3) as proposed.

E. Part D Medication Therapy Management (MTM) Program (§ 423.153(d))

1. MTM Eligibility Criteria (§ 423.153(d)(2))

a. Background

Section 1860D-4(c)(2) of the Act requires all Part D sponsors to have an MTM program designed to assure, with respect to targeted beneficiaries, that covered Part D drugs are appropriately used to optimize therapeutic outcomes through improved medication use and to reduce the risk of adverse events, including adverse drug interactions. Section 1860D-4(c)(2)(A)(ii) of the Act requires Part D sponsors to target those Part D enrollees who have multiple chronic diseases, are taking multiple Part D drugs, and are likely to meet a cost threshold for covered Part D drugs established by the Secretary. Since January 1, 2022, Part D sponsors are also required by section 1860D-4(c)(2)(A)(ii)(II) of the Act to target all at-risk beneficiaries (ARBs)

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in their Part D drug management program (DMP) for MTM. CMS has codified the MTM targeting criteria at § 423.153(d)(2).

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Defined at § 423.100.

As discussed in the December 2022 proposed rule (87 FR 79452), MTM eligibility rates have steadily declined over time to 8 percent in 2020. In conjunction with the decreasing eligibility rates, CMS has observed near-universal convergence among Part D sponsors to the most restrictive targeting criteria currently permitted under § 423.153(d)(2). When CMS finalized the current regulatory requirements for targeting criteria over 13 years ago, CMS elected to continue to give plan sponsors significant flexibility in establishing their MTM eligibility criteria. However, sponsors have used this flexibility to adopt increasingly restrictive criteria that we believe are limiting access to MTM for vulnerable, clinically high-risk beneficiaries.

We performed an extensive analysis to identify potential disparities in MTM program eligibility and access, as discussed in the December 2022 proposed rule, and we identified the high cost threshold and increasingly restrictive plan criteria (

e.g.,

targeting select core chronic diseases or specific drugs) as the main drivers of the eligibility gaps. The targeting criteria used by most plans now require three or more chronic diseases, require eight or more Part D drugs, and target a narrow and variable list of chronic diseases. And because of variation in plans' criteria for MTM enrollment, enrollees with equivalent patient profiles (for example, same chronic diseases, same number of chronic diseases, same number of Part D drugs, and similar estimated drug costs) may or may not be eligible for MTM depending on the criteria their plan requires. Under the current MTM cost threshold methodology at § 423.153(d)(2)(i)(C), the annual cost threshold for 2024 is $5,330, which also significantly limits the number of beneficiaries who are eligible to be targeted for MTM enrollment. In the December 2022 proposed rule, CMS proposed changes to the MTM program eligibility criteria to address these concerns and help ensure beneficiaries with more complex drug regimens who would benefit most from MTM services are eligible.

The proposed changes included:

• Requiring plan sponsors to target all core chronic diseases identified by CMS, codifying the current nine core chronic diseases in regulation,

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and adding HIV/AIDS for a total of 10 core chronic diseases;

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The current core chronic diseases are: diabetes*, hypertension*, dyslipidemia*, chronic congestive heart failure*, Alzheimer's disease, end stage renal disease (ESRD), respiratory disease (including asthma*, chronic obstructive pulmonary disease (COPD), and other chronic lung disorders), bone disease-arthritis (osteoporosis, osteoarthritis, and rheumatoid arthritis), and mental health (including depression, schizophrenia, bipolar disorder, and other chronic/disabling mental health conditions). Enumerated in statute (*).

• Lowering the maximum number of covered Part D drugs a sponsor may require from eight to five drugs and requiring sponsors to include all Part D maintenance drugs in their targeting criteria; and

• Revising the methodology for calculating the cost threshold ($5,330 in 2024) to be commensurate with the average annual cost of five generic drugs ($1,004 in 2020).

CMS received many comments on these proposed changes, including the following general comments, and our responses follow.

Comment:

Many commenters cited studies that demonstrated the value of MTM services and supported changes to the targeting criteria to optimize therapeutic outcomes, decrease adverse medication events, and avoid unnecessary costs. Commenters also acknowledged that studies show medication-related problems such as poor medication adherence and polypharmacy are widespread among individuals taking multiple prescription medications. These studies emphasized the value of MTM, including maintaining the wellbeing of Part D enrollees, resolving medication-related problems, improving health outcomes, empowering patients, and coordinating care. Some commenters cited a study that showed net cost savings (

i.e.,

a reduction in total annual health expenditures minus patient copayments, coinsurance, and deductible amounts) divided by the incremental cost of providing MTM services resulted in a return on investment of more than $12 in cost savings for each $1 spent on MTM. Commenters added that when patients better understand the goals of their medication therapy, medication adherence may increase, and hospital readmissions can be reduced. One commenter cited an analysis by a regional Medicare Advantage plan that found enrollees who received a comprehensive medication review (CMR) had an average savings of up to $4,000 in medical claims compared to members who did not receive a CMR. The commenter stated that the analysis also found that all enrollees who received a CMR had a 5 percent reduction in total cost of care compared to those who were eligible for but did not receive a CMR. Another commenter emphasized that access to pharmacists'

clinical skills and increased opportunities for patient-centric care through MTM could help offset shortages of physicians and nurses. Lastly, commenters pointed out that MTM fosters collaboration between clinicians, pharmacists, and patients who take multiple medications and/or have multiple chronic diseases.

Several commenters agreed that the proposed changes to the MTM eligibility criteria have the potential to significantly improve the effectiveness of the MTM program and achieve equity for underserved Medicare patients. One commenter noted studies highlighting that individuals with multiple comorbid chronic conditions tend to have the greatest disparities in accessing the care and treatments they need. The commenter also cited studies that noted that the current MTM eligibility criteria do not optimally target beneficiaries most at risk of underuse or poor adherence and that eligibility is limited to beneficiaries with high drug use and high spending, which systematically excludes beneficiaries who could benefit from these services. Another commenter suggested that rather than using MTM to improve outcomes and reduce health care costs for Part D enrollees with multiple chronic diseases, plan sponsors have instead used it as a cost control tool by focusing on enrollees who take high-cost drugs.

Response:

We thank the commenters for their support of the proposed changes to the MTM eligibility criteria to better focus on beneficiaries with more complex drug regimens who would benefit most from MTM. We appreciate the citation of many studies reinforcing the value of MTM and the need for more equitable access. Almost all of the chronic diseases targeted for MTM identified at section 1860D-4(c)(2)(A)(ii)(I)(aa) of the Act and in the current CMS MTM guidance (See HPMS Memorandum Contract Year 2024 Part D Medication Therapy Management Program Guidance and Submission Instructions dated April 21, 2023) are more prevalent among minorities and lower income populations. As a result, we anticipate that these changes will increase eligibility rates among those populations by promoting more equitable access to MTM services and closing eligibility gaps.

Comment:

Many commenters opposed the proposed eligibility criteria changes partially or in whole, and several expressed significant concerns about the costs and resource burden associated with implementing such a large-scale expansion of the MTM program. Some of these commenters opined that the proposed changes would increase Part D premiums and cost sharing for all enrollees. One commenter estimated that the proposed changes would more than double MTM administrative costs. Some commenters stated that the proposed MTM expansion would be cost-prohibitive without any documented benefit to enrollees. Another commenter suggested finalizing the proposed changes would result in a loss of rebate dollars that would otherwise be used to improve affordability or provide supplemental benefits that support enrollee well-being. Several commenters referenced competing priorities between the proposed MTM expansion and implementation of the Inflation Reduction Act of 2022 (IRA). A few commenters emphasized that many of the same resources needed to support IRA implementation for 2024 and beyond would also be needed to implement changes to the MTM program, and finalizing the MTM changes as proposed would put successful implementation of both the IRA and the MTM expansion at risk.

Response:

We acknowledge the concerns raised regarding the cost and burden of the proposed expansion of MTM. In light of these comments, we are finalizing the proposed changes with modifications that will result in a more moderate program size increase and less burden and lower costs than initially estimated in our December 2022 proposed rule. We provide more details about the specific modifications in the responses to comments later in this section of the preamble.

Comment:

Several commenters who were opposed to the proposed changes raised concerns about a decline in MTM program quality that could result from a significant increase in program size, which would dilute plans' ability to target MTM interventions to those beneficiaries who would most benefit from them. Other commenters were concerned that MTM providers may “water down” their approach due to the increased volume resulting in lower-value programs that satisfy the MTM requirements but are much less likely to improve health outcomes due to shorter consultations or fewer interventions. Another commenter stated that the pool of MTM vendors has decreased while costs have increased due to the loss of competition, hindering the ability of plan sponsors to administer quality MTM programs.

Response:

We understand the commenters' concerns about the impact on the quality of the MTM programs and services delivered due to a large increase in program size as proposed. CMS is finalizing the proposed changes with modifications that will ensure a smaller increase in program size and promote the administration of high-value MTM programs. Currently, due to the increasing cost threshold and variations in the targeting criteria adopted by sponsors, Part D enrollees with more complex drug regimens who would benefit most from MTM services are often not eligible. In addition, enrollees with equivalent patient profiles (for example, with the same chronic diseases and taking the same Part D drugs) may or may not be eligible for MTM depending on the criteria their plan requires. The eligibility criteria changes we are finalizing in this rule aim to address the key drivers of the eligibility gaps, discussed in detail in the December 2022 proposed rule, while maintaining a reasonable program size and the ability of plans to administer effective MTM services.

MTM is a patient-centric and comprehensive approach to improve medication use, reduce the risk of adverse events, and improve medication adherence. To continue to provide quality MTM services to an expanded population and better manage resources, we remind sponsors that the delivery of MTM may be tailored to meet each enrollee's needs. For example, the length of the CMR consultation or number of follow-up interventions needed following targeted medication reviews (TMRs) may vary between MTM enrollees with more complex drug regimens and those who are stable on their medication regimens as long as the minimum level of MTM services is met as specified in § 423.153(d)(1)(vii). Sponsors may also leverage effective MTM programs to improve several measures in the Medicare Part D Star Ratings and display page such as medication adherence, polypharmacy, and gaps in therapy. Lastly, while we acknowledge commenters' concerns regarding the availability of MTM vendors, we note that Part D plan sponsors may use in-house resources, one or more external vendors, or a combination of both, to administer their MTM programs.

Comment:

Some commenters stated that a large increase in the MTM enrollee population would require significant resources and that there would be limited time to hire and train additional staff, implement the necessary processes, and upgrade clinical and administrative infrastructures. Commenters estimated needing to double or triple their staffing to accommodate MTM enrollment increases of up to 60 percent in one year. A commenter stated that many plan sponsors that utilize local

community pharmacists to furnish MTM services would not be able to meet the higher demand in time, or that there would be pressure to use call centers, possibly employing customer service representatives without clinical training, which may lead to lower quality of care or member experience. Other commenters were concerned that rapid expansion of the MTM program size would exacerbate the existing pharmacist workforce shortage or would not be feasible given the expanded scope of pharmacy practice. One commenter also suggested that MTM vendors would drop smaller clients to service larger ones as a result of not being able to hire enough pharmacists to accommodate the increase in MTM enrollees.

Response:

We are optimistic that the increase in demand for MTM services will incentivize plan sponsors to strengthen their hiring efforts. It is not clear what methodology the commenters used to estimate staffing needed to accommodate certain MTM program size increases. However, CMS plans to finalize our proposed changes to the MTM eligibility criteria with the modifications described later in this section of the preamble. CMS believes that this scaled back MTM expansion may alleviate a portion of the staffing concerns raised by commenters.

Comment:

A few commenters, particularly commenters representing dual eligible special needs plans (D-SNPs), were concerned that due to the higher prevalence of chronic diseases in their enrollees, they will be disproportionately impacted by the changes in the MTM eligibility criteria and estimated that the majority of their plan enrollment would be eligible for the MTM program. They asserted that it would not be feasible to perform outreach or offer the MTM services to all their enrollees.

A few other commenters stated that when combined the proposed changes would result in MTM enrollment increases that exceeded the estimated program-wide size (23 percent of Part D enrollees) in the proposed rule (for example, increasing enrollment to 60 percent of their Medicare population, by five times, etc.), depending on the population or type of plan. Commenters asserted that such an increase in MTM enrollment would increase administrative costs, resulting in increased premiums, and could limit the offering of Part D plans.

Response:

We acknowledge that some Part D contracts may have actual MTM enrollment rates above or below the average rate for the program as a whole because they have higher or lower enrollments of beneficiaries with the chronic diseases targeted for MTM under the changes to the MTM requirements we are finalizing in this rule. This is also true under the current MTM requirements, and there is no evidence that higher than average MTM enrollment has increased administrative costs and thus premiums to the point of limiting Part D plans' offerings, including MA-PDs that are D-SNPs. However, based in part on considerations about how the estimated program size under the proposals in the December 2022 proposed rule would impact MTM enrollment differently across contracts and increase the MTM enrollment volume to greater levels than some sponsors could feasibly handle, we are finalizing the proposed changes to the MTM eligibility criteria with modifications that we expect to decrease estimated program size relative to the proposed rule.

Comment:

Some commenters expressed concerns that Part D MTM programs overlap with other programs such as disease management or care management (including post-discharge medication reconciliation; hypertension, diabetes, and dyslipidemia case management; and annual wellness visits) and may cause enrollee confusion, frustration, or complaints due to multiple outreach attempts, beneficiaries not answering calls from the plan sponsor, or beneficiaries requesting to be placed on the plan's do-not-call list. A commenter discussed that MTM-like interventions occur outside of the Part D MTM program and achieve improvements to health outcomes, and many MTM services, such as drug-drug interaction (DDI) analyses, could be automated (outside of CMRs) without beneficiary participation.

Response:

We believe that Part D MTM programs complement efforts under other programs rather than overlap with them. MTM programs—which use a comprehensive approach to improve medication use, reduce the risk of adverse events, and improve medication adherence for beneficiaries at increased risk of medication-related problems due to having multiple chronic diseases and taking multiple Part D drugs—are distinct from disease-specific disease management programs. We acknowledge that recommendations arising from MTM services may result in referrals to other specialized, disease-specific programs that may not be a part of the Part D MTM program. To reduce the risk of beneficiary confusion and frustration, plan sponsors should be mindful of the timing and frequency of enrollee outreach for MTM relative to complementary disease management programs.

In addition, we remind Part D sponsors that while a CMR must be an interactive consultation with the beneficiary and the pharmacist or other qualified provider, other aspects of MTM may be automated as described in CMS MTM guidance (See HPMS Memorandum Correction to Contract Year 2024 Part D Medication Therapy Management Program Guidance and Submission Instructions dated April 21, 2023).

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As described in this guidance, sponsors are required to perform TMRs for all beneficiaries enrolled in their MTM program with follow-up interventions when necessary. Part D sponsors must assess the findings of these reviews to determine if a follow-up intervention is necessary for the beneficiary and/or their prescriber. These assessments could be person-to-person or system generated.

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https://www.cms.gov/files/document/memo-contract-year-2022-medication-therapy-management-mtm-program-submission-v-083121.pdf.

Comment:

Many commenters stated that the proposed eligibility criteria changes would result in a substantive update to the Part D Star Rating MTM Program CMR Completion Rate measure (MTM Star Rating Measure) due to the program size expansion and impacts to resources. Therefore, the commenters urged CMS to move the MTM Star Rating Measure to a display measure for at least 2 years to adjust to the new levels. A few commenters suggested specification changes to the MTM Star Rating Measure. Other commenters suggested that expanding the program size in such a short timeframe would incentivize plans to prioritize quantity over quality of care.

Response:

Per §§ 422.164(d)(2) and 423.184(d)(2), substantively updated Star Ratings measures are moved to the display page for at least 2 years after the substantive update is adopted.

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Refer to sections VII.B.2 and VII.D of this final rule, where we address the proposal to modify the Medication Therapy Management (MTM) Program Completion Rate for Comprehensive Medication Review (CMR) measure and discuss the weight of newly modified measures, respectively. The MTM Program Completion Rate for CMR measure is being updated in this rule to align with the revised targeting criteria finalized at § 423.153(d); the updated

measure will move to the display page entirely for the 2025 and 2026 measurement years and will return as a new measure to the Star Ratings program no earlier than the 2027 measurement year for the 2029 Star Ratings. We will share the additional suggestions for specification changes with the Pharmacy Quality Alliance (PQA), the measure steward.

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Information for measures on the display page are available online at:

https://www.cms.gov/medicare/health-drug-plans/part-c-d-performance-data.

Please download the zipped file “2024 Display Measures” for display measure scores, data and explanatory technical notes.

Comment:

A few commenters suggested that MTM program expansion could be limited to those beneficiaries who are newly eligible for the Part D MTM program or have recently added, removed, or changed drugs. One commenter also asserted that the newly eligible would see the greatest benefit from MTM services, resulting in improved health outcomes and reduced overall costs. This commenter also stated that the value of the CMR declines for enrollees with no changes in health status and that broadening the targeted disease states would increase burden and administrative costs with diminishing benefits for both plan sponsors and enrollees. Another commenter suggested that enrollees who have had a CMR in the last 12 months should requalify for MTM only with the addition of a new drug to their drug regimen and/or a new disease state.

Response:

Section 1860D-4(c)(2)(A)(ii) of the Act requires Part D sponsors to target those Part D enrollees who have multiple chronic diseases, are taking multiple Part D drugs, and are likely to meet a cost threshold for covered Part D drugs established by the Secretary. Since January 1, 2022, Part D sponsors are also required by section 1860D-4(c)(2)(A)(ii)(II) of the Act to target all at-risk beneficiaries (ARBs) in their Part D drug management program (DMP) for MTM. Furthermore, for 2013 and subsequent plan years, the Affordable Care Act (ACA) amended the Act by adding section 1860D-4(c)(2)(C)(i), which requires all Part D sponsors to offer all enrollees targeted for MTM an annual CMR. These requirements are codified in the regulations at § 423.153(d)(1) and (2).

We acknowledge that the needs and goals of newly eligible MTM enrollees may be different from those who have already received MTM services and continue to be eligible for MTM. However, for both populations of beneficiaries, annual CMRs may be an opportunity to understand new information about the beneficiary, including but not limited to if the beneficiary's goals have changed, if they have new or unresolved medication therapy problems, or if they have any social risk factors that may be affecting their medication use that can only be assessed through an interactive consultation.

Comment:

A few commenters suggested that CMS should engage the industry to determine alternative options for better targeting or increased CMR participation rather than finalize the proposed modifications to the eligibility criteria. A commenter stated that many MTM enrollees choose not to participate, and to be more consistent with the Administration's health equity goals, CMS should engage those already eligible, who have the greatest need. Another commenter suggested changes to the Medicare Plan Finder (MPF) that would highlight the value added by specific plans' MTM programs and provide guidance to beneficiaries on why selecting plans based on MTM program specifics may be beneficial. The commenter cited recent precedent in 2019 to 2020 when CMS engaged plans, PBMs, developers, and patient groups on how to improve the MPF, resulting in major improvements supported by a wide range of interested parties. A few commenters also suggested that CMS could engage plans and PBMs to assess MTM and alternative programs to determine whether MTM eligibility criteria expansion is warranted, whether to include cancer as a core chronic condition, the effect of including any additional core chronic diseases on specialized MTM provider training and program size, and whether MTM services are an effective mechanism for management of certain diseases (for example, those with high use of Part B drugs or frequently changing medication regimens).

Response:

Through this rulemaking, we have engaged numerous interested parties to solicit feedback on implementing MTM eligibility criteria changes. We have also engaged in our own analysis. As discussed in the December 2022 proposed rule, we conducted an extensive data analysis that identified several issues with the current MTM targeting criteria, and we proposed specific regulatory changes in an effort to increase MTM eligibility rates, reduce variability of MTM eligibility criteria across plans, and address disparities to ensure that those who would benefit the most from MTM services have access. Taken together, we believed that the proposed changes to the MTM program targeting criteria would balance eligibility and program size while allowing us to address specific problems identified in the Part D MTM program, including marked variability and inequitable beneficiary access to MTM services.

As discussed later in this preamble, we are finalizing the proposals with modifications in response to public comments we received. However, we are committed to addressing the main drivers of the inequities in MTM program eligibility discussed in the December 2022 proposed rule. Accordingly, we will continue to request input from interested parties on improving aspects of the MTM program in the future, including enhanced targeting and better engagement with MTM enrollees. We will also look for opportunities to improve the information available for beneficiaries on CMS' websites about Part D MTM programs.

Comment:

A few commenters suggested that additional analyses are needed to assess the effectiveness of MTM programs, optimize current MTM programs, and review alternative medication management methods already being used by plan sponsors and their contracted providers. One commenter asserted that CMS would be unable to determine which part of the eligibility criteria expansion worked or failed as they believed the metrics for MTM success to be ill-defined. The commenter also asked if CMS has conducted any evaluation of the requirement to target DMP enrollees for MTM enrollment. Another commenter encouraged CMS to find a new approach to measuring MTM success in the future through metrics that assess the quality of MTM services provided and not just the overall volume of services provided. Another commenter noted the documented successes of MTM in a number of situations but recognized room for improvement in the program. The commenter stated that in many cases, MTM benefits patients directly and can decrease the burden of healthcare costs, but that results are not consistent across the board, suggesting a need to increase the overall quality of MTM evaluations. The commenter concurred with researchers in recommending that future studies should consider increasing study size and incorporating multiple sites to bolster the reliability of the results and suggested that CMS could use its authority to influence changes to MTM studies. Another commenter suggested that further study can help improve the MTM program due to limited evidence that MTM improves medication adherence and patient outcomes. The commenter recommended that CMS initiate a study including a large set of geographically diverse, Part D plans to better understand the overall effectiveness of the MTM program and

potential areas for improvement. The commenter also suggested that it would be particularly useful to understand the experience and impact of pharmacists' involvement in MTM programs.

Response:

We routinely analyze CMS and plan-reported data to oversee the Part D MTM programs, including implementation of the new requirement to target DMP ARBs for MTM enrollment. However, we agree that additional analysis would be beneficial to assess MTM program effectiveness, and we will continue to explore ways of conducting such analysis. We appreciate the comments on potential research and analysis topics and agree that the high degree of variability between MTM program targeting criteria has made it difficult to evaluate MTM programs. We are hopeful that standardizing the criteria as finalized in this rule will allow more research to be done on MTM outcomes. We will also engage with industry to develop additional consensus-based measures to evaluate the quality of MTM programs which may be considered for the Star Ratings program in the future, and we are encouraged by recent efforts by the PQA to convene MTM leaders on evidence-based priorities for measurement.

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https://www.pqaalliance.org/mtm-convenes.

Comment:

Another commenter urged CMS to increase transparency regarding the costs of the MTM program (that is, how much plans are saving versus how much they are allocating to pay pharmacists for the services) and whether Part D plans are incentivized to offer robust MTM services.

Response:

We remind commenters that per § 423.153(d)(5)(ii), even though a Part D sponsor must disclose to CMS the amount of the management and dispensing fees and the portion paid for MTM services to pharmacists and others, reports of these amounts are protected under the provisions of section 1927(b)(3)(D) of the Act.

Comment:

A commenter stated that CMS's proposals in the December 2022 proposed rule to add Part D measures to the Star Ratings, such as the focus on polypharmacy measures, may present an opportunity to improve MTM. The commenter felt that the proposed changes to the MTM program eligibility criteria would expand eligibility but do not address the issue of providing MTM to Medicare beneficiaries who could truly benefit from it.

Response:

We thank the commenter for the feedback. We agree that MTM programs may present an opportunity to improve plan performance in Star Ratings measures such as polypharmacy and help with overall improvement of medication use among Part D beneficiaries. Refer to Section VII.B.3 for discussion about the Part D Polypharmacy Use of Multiple Central Nervous System Active Medications in Older Adults (Poly-CNS), Polypharmacy Use of Multiple Anticholinergic Medications in Older Adults (Poly-ACH), and Concurrent Use of Opioids and Benzodiazepines (COB) Measures.

Comment:

Some commenters encouraged CMS to continue to examine policy options that expand access to MTM and improve patient outcomes and, in particular, to release the findings from the fifth and final year of the Part D Enhanced MTM model (Enhanced MTM model). Another commenter suggested that the Enhanced MTM model can address alarming trends of medication underuse and overuse. The commenters also encouraged CMS to collaborate with interested parties to leverage the findings from the Enhanced MTM model and identify best practices in MTM to scale nationally, as well as to guide future reforms before taking action to change MTM.

Response:

CMS will continue to examine policy options within our authority that expand access to MTM and improve patient outcomes. In February 2023, CMS released the fifth and final evaluation report for the Enhanced MTM model available at:

https://www.cms.gov/priorities/innovation/innovation-models/enhancedmtm.

We will continue to review the results of the Enhanced MTM model and collaborate with interested parties to identify best practices and lessons learned that may help improve the traditional Part D MTM programs. We disagree that CMS should leverage model findings or run additional analyses before making changes to the Part D MTM programs, as our disparities analysis discussed in the December 2022 proposed rule identified specific eligibility gaps that need to be addressed. As such, we are moving forward with finalizing modifications to the MTM targeting criteria in this final rule.

Comment:

A commenter urged CMS to require plan sponsors to report MTM enrollee data and analyze the data using demographic information to measure and address disparities among the enrollees.

Response:

Plan sponsors are currently required to report MTM program beneficiary-level data to CMS through the Part D Reporting Requirements (OMB 0938-0992). We used these data and other program data, including demographic information, to perform the MTM disparities analysis. Furthermore, researchers may request access to a Part D MTM data file through ResDAC

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which could be linked to encrypted beneficiary and demographic variables in the

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