CMS ISSUES FINAL MEDICARE PART C AND D POLICY AND TECHNICAL CHANGES REGULATION (CMS-4085-F)

Background: CMS published a proposed rule addressing policy requirements and clarifications under the Part C and D programs on October 22, 2009. When issuing the proposed rule, CMS indicated additional programmatic and operational changes were needed to further improve the oversight and management of the Part C and D programs and to improve beneficiary experience under MA or Part D plans. CMS received comments on the proposed rule from approximately 114 organizations by the close of the comment period on December 8, 2009. The type of commenter is broken out as follows:

Generally, commenters - particularly beneficiary advocates - supported CMS' efforts to improve plan offerings by ensuring that plans offered by the same sponsor are meaningfully different so beneficiaries can more easily make a decision when choosing a plan. Advocates also supported CMS' efforts to clarify and codify existing policy through rulemaking, and its efforts to strengthen plan entrance and exit requirements.

Changes to address public comments and the Patient Protection and Affordable Care Act (PPACA)

Ensuring Meaningful Differences Between Plans:Industry and advocates alike commented that CMS should update the criteria used to assess meaningful differences well before the bidding process for the upcoming year. The final regulation is designed to promote plan offerings with meaningful differences and ensure plan viability. CMS will only approve a bid submitted by an MA organization or Part D sponsor if the plan benefit package or plan cost structures are substantially different from those of other plans offered by the organization or sponsor with respect to key plan characteristics such as premiums, cost-sharing, formulary structure, or benefits offered.

In the final rule, CMS provides MA organizations and Part D sponsors involved in mergers or acquisitions a 2-year transition period from the merger or acquisition to ensure that plans offered by the MA organization or Part D sponsor are significantly different from each other. The final rule also clarifies that if a Part C or Part D plan has failed to attract a significant number of enrollees over a sustained period of time, its contract may not be renewed.

Cost Sharing Protection:Beneficiary advocates were supportive of CMS' proposal to annually establish cost-sharing thresholds for Parts A and B services as an important and overdue beneficiary protection. Advocates were also supportive of the proposal to establish a limit on out-of-pocket cost sharing (also known as a mandatory out-of-pocket, or MOOP, limit) for MA plan enrollees along with the overall review of Part A and B cost sharing amounts.

• Based on input, CMS will initially establish cost-sharing thresholds for those Parts A and B services that have, through a number of years of experience with plan benefit reviews, been identified as particularly likely to have a discriminatory impact on sicker beneficiaries. Some of these service categories are: inpatient catastrophic days; inpatient short stay days; inpatient mental health days; and SNF days.
• In addition to establishing a mandatory maximum out-of-pocket (MOOP) limit on overall cost-sharing for Parts A and B services, CMS also plans to continue offering MA organizations the option of adopting a lower voluntary MOOP limit with greater flexibility in Parts A and B cost sharing than what is available for MA plans that elect to design their benefit packages consistent with the higher, mandatory MOOP limit. Under this approach, the voluntary MOOP limit would be set at an amount lower than the mandatory MOOP limit and would therefore not disadvantage those MA plans that have adopted the voluntary MOOP limit in previous contract years.

Risk Adjustment Data Validation (RADV) Appeals Process:Based on public comments about the proposed RADV appeals process, the final regulation includes medical record review appeal rights.

Fraud, Waste and Abuse (FWA) Training: CMS proposed that downstream entities of Part C plans who are enrolled into the Medicare program would be deemed to have met the FWA training and education requirement. In response to comments, CMS is finalizing the deeming option for both Part C and Part D plans.

Effective date of the final rule

This rule will publish at the Federal Register on April 15, 2010. The rule is effective

June 7, 2010. These regulations are effective 60 days after the date the rule is issued.

However, because health and drug plans under the Part C and D programs operate under contracts with CMS that are effective on a calendar year basis, the provisions will not have an effect prior to contract year January 1, 2011, except where otherwise noted in the rule.