Contract Year 2021 Medicare Advantage and Part D Final Rule (CMS-4190-F1) Fact Sheet

On May 22, 2020, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that implements a subset of the proposals from the February 18, 2020, proposed rule (85 FR 9002). This first final rule focuses on more immediate regulatory actions. The primary purpose of this first final rule is to implement certain changes before the contract year 2021 bid deadline (due by statute on the first Monday in June) stemming from the Bipartisan Budget Act of 2018 (BBA of 2018) and the 21st Century Cures Act (Cures Act). This final rule also codifies several existing CMS policies and implements other technical changes.

CMS intends to address all of the remaining proposals from the February 2020 proposed rule in subsequent rulemaking. Therefore, CMS plans to make any provisions adopted in the subsequent, second final rule, although effective on or before January 1, 2021, applicable no earlier than January 1, 2022. We understand that the entire healthcare sector is focused on caring for and providing coverage for coronavirus disease 2019 (COVID-19), and we believe this approach provides plans with adequate time and information to design the best coverage for Medicare beneficiaries.  

We believe that codifying these policies in regulation provides additional transparency and program stability, and allows Medicare Advantage (MA) organizations and Part D plan sponsors to develop more innovative plan designs.

The provisions in this final rule result in an estimated $3.65 billion net reduction in spending by the federal government over ten years due to a finalized change to the Part C and D Star Rating methodology to remove outliers before calculating Star Ratings cut points, which offsets costs arising from the Medical Loss Ratio (MLR) provisions and other refinements to the MA and Part D Quality Star Ratings system.

This fact sheet discusses the major provisions finalized in this rule, including a number of changes to strengthen and improve the MA and Part D programs and other changes for contract year 2021. The final rule can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection/current.   

Implementing Certain Cures Act Provisions

Medicare Advantage (MA) Plan Options for End-Stage Renal Disease (ESRD) Beneficiaries

The Cures Act amended the Social Security Act (the Act) to allow all Medicare-eligible individuals with ESRD to enroll in MA plans beginning January 1, 2021. CMS codified this statutory change in regulation. This final rule takes an important step in improving the lives of beneficiaries with ESRD, which is a priority in alignment with the Executive Order on Advancing American Kidney Health. By implementing the changes of the Cures Act to remove the barrier that beneficiaries with ESRD now face in terms of enrolling in MA plans, we are empowering them to choose the type of Medicare coverage that best meets their needs. This final rule also implements related MA and Medicare fee-for-service (FFS) payment changes made by the Cures Act—FFS coverage of kidney acquisition costs for MA beneficiaries and exclusion of such costs from MA benchmarks. 

Enhancements to the Part C and D Programs

Medicare Advantage (MA) and Part D Prescription Drug Program Quality Rating System

The Part C and D Star Ratings enhancements support CMS efforts to increase transparency and stability in the program. CMS increased the predictability and stability in the Star Ratings by directly reducing the influence of outliers on cut points by adding Tukey outlier deletion prior to clustering. We also increased measure weights for patient experience/complaints measures and access measures from 2 to 4, reflecting CMS’s commitment to put patients first and to empower patients to work with their doctors to make healthcare decisions that are best for them. CMS also updated the classification of the Statin Use in Persons with Diabetes (SUPD) measure from an intermediate outcome measure to a process measure in order to align with a clarification from the Pharmacy Quality Alliance (PQA)[1], the SUPD measure steward. Additionally, CMS adopted a series of changes in the March 31, 2020, Interim Final Rule with Comment (CMS-1744-IFC) for the 2021 and 2022 Star Ratings to accommodate challenges arising from the COVID-19 public health emergency.  These changes modify the calculation of the 2021 and 2022 Part C and D Star Ratings to address the expected disruption to data collection and impact on measure scores posed by the COVID-19 pandemic to avoid inadvertently creating incentives to place cost considerations above patient safety.

Medical Loss Ratio (MLR)

CMS amended the MA MLR regulations to allow MA organizations to include in the MLR numerator as “incurred claims” all amounts paid for covered services, including amounts paid to individuals or entities that do not meet the definition of “provider” as defined at § 422.2, in alignment with changes to MA supplemental benefits in recent years. In addition, CMS added a deductible-based adjustment to the MLR calculation for MA medical savings account (MSA) contracts receiving a credibility adjustment. This adjustment removes a potential deterrent to the offering of MSAs by MA organizations that may be concerned about their inability to meet the MLR requirement as a result of random variations in claims experience, the risk of which is greater under health insurance policies with higher deductibles. This provision aligns with the objectives of President Trump’s Executive Order on Protecting and Improving Medicare for Our Nation’s Seniors, which directed the Secretary of the Department of Health and Human Services to propose regulatory changes that reduce barriers to obtaining MSAs.

Codifying Existing Part C and D Program Policy 

Medicare Advantage (MA) and Cost Plan Network Adequacy

CMS strengthened network adequacy rules for MA plans by codifying our existing network adequacy methodology and finalizing new policies to provide support for more plan options in rural areas and encourage the use of telehealth in all areas. In rural areas, we are reducing the required percentage of beneficiaries that must reside within the maximum time and distance standards from 90% to 85%. This may expand MA plan options for beneficiaries by helping MA organizations to build networks in these areas. To encourage and account for telehealth providers in contracted networks, we provide MA plans a 10% credit towards the percentage of beneficiaries that must reside within required time and distance standards when the plan contracts with telehealth providers for Dermatology, Psychiatry, Cardiology, Otolaryngology, Neurology, Ophthalmology, Allergy and Immunology, Nephrology, Primary Care, Gynecology/ OB/GYN, Endocrinology, and Infectious Diseases. To recognize greater competition and greater use of other dialysis treatment modalities in different communities, we are providing for a more flexible approach to meeting network adequacy standards for Outpatient Dialysis than the current pre-determined time and distance requirements.  Finally, in order to take into account the adverse effects that Certificate of Need laws have on access, we are codifying that MA organizations may receive a 10% credit towards the percentage of beneficiaries residing within published time and distance standards for affected provider and facility types in states that have CON laws, or other state imposed anticompetitive restrictions, that limit the number of providers or facilities in a county or state.

Special Election Periods (SEPs) for Exceptional Conditions

In the final rule, CMS is codifying a number of SEPs that we have implemented through sub-regulatory guidance as exceptional circumstances SEPs. This includes the SEP for Employer/Union Group Health Plan elections and the SEP for Individuals Who Disenroll in Connection with a CMS Sanction. The scope of the SEP for Individuals Affected by a FEMA-Declared Weather-Related Emergency or Major Disaster is expanded so that it applies to FEMA-declared emergencies, as well as emergency declarations issued by a federal, state or local government entity; it will be renamed the SEP for Government Entity-Declared Disaster or Other Emergency.  In addition, we are also codifying the SEP for Individuals Involuntarily Disenrolled from an MA-PD plan Due to Loss of Part B, which was inadvertently omitted from the proposed rule. Two SEPs that did not previously exist in guidance are also being finalized: the SEP for Individuals Enrolled in a Plan that has been identified by CMS as a Consistent Poor Performer and the SEP for Individuals Enrolled in a Plan Placed in Receivership. CMS expects codifying our current policy for these SEPs will provide transparency and stability for stakeholders about the MA and Part D programs and about the nature and scope of these SEPs by ensuring that these SEPs are changed only through additional rulemaking.

Implementing Certain BBA of 2018 Provisions

Special Supplemental Benefits for the Chronically Ill (SSBCI)

As part of codifying existing guidance concerning these benefits, CMS is finalizing a minor policy modification to SSBCI. Previously, CMS limited the chronic conditions an enrollee must have to be eligible under SSBCI to those conditions outlined in the Medicare Managed Care Manual (Chapter 16b).  However, the agency recognizes that there may be other chronic conditions that may meet the statutory definition of a chronic condition, but are not included in Chapter 16b. Therefore, beginning in contract year 2021, CMS is allowing plans to target other chronic conditions.

“Look-Alike” Dual Eligible Special Needs Plans

CMS is finalizing our proposal to limit Dual Eligible Special Needs Plan (D-SNP) “look-alikes.” These look-alike plans have similar levels of dual eligible enrollment as D-SNPs but avoid the federal regulatory and state contracting requirements applicable to D-SNPs. The Medicare Prescription Drug, Improvement, and Modernization Act created D-SNPs to allow for MA products that exclusively serve individuals dually eligible for Medicare and Medicaid. D-SNPs must meet a number of additional requirements, relative to non-SNP MA plans, related to health risk assessments and coordination of care. Most recently, the Bipartisan Budget Act (BBA) of 2018 required CMS to establish additional requirements related to Medicaid integration for D-SNPs. Phasing out D-SNP look-alikes will strengthen the ability of states and CMS to meaningfully implement existing and new statutory requirements for D-SNPs that Congress created in the BBA.

Under the final rule, CMS will not enter into a contract:

• Starting for 2022, for a new MA plan – other than a SNP – that projects in its bid that 80 percent or more of the plan’s total enrollment will be entitled to Medicaid, or
• Starting for 2023, for a renewing MA plan – other than a SNP – that has actual enrollment of 80 percent or more of enrollees who are entitled to Medicaid, unless the MA plan has been active for less than one year and has enrollment of 200 or fewer individuals at the time of such determination.

Relative to our initial proposal, the final rule allows one additional year for existing D-SNP look-alikes to phase out. Under the final rule, D-SNP look-alikes would be able to transition their membership into a D-SNP or another qualifying zero-premium plan offered by the MA organization beginning for the 2021 plan year. 

Effective Dates and Applicability Dates of Policies Finalized in CMS-4190-F1

###