CMS Issues Broad-Ranging Medicare Advantage & Part D Proposed Rule - McDermott

CMS Issues Broad-Ranging Medicare Advantage and Part D Proposed Rule


On December 14, 2022, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule regarding Contract Year 2024 Policy and Technical Changes to the Medicare Advantage (MA) and Medicare Prescription Drug Benefit Programs. The proposed rule includes a range of proposals addressing topics that have received significant recent scrutiny, including marketing and prior authorization, along with other significant changes to utilization management, Quality Star Ratings and the Programs of All-Inclusive Care for the Elderly (PACE).

Comments on the proposed rule are due by February 13, 2023. Additional policy and technical changes may be included the forthcoming calendar year 2024 Advance Notice of Methodological Changes for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies, which should be released in early February 2023.

In Depth

Significant New Marketing Requirements and Modifications

CMS proposes many changes to the rules governing MA and Part D marketing. These proposals come in the wake of congressional and press attention to MA marketing practices, including a recent US Senate Finance Committee report that detailed deceptive marketing practices by MA plans and urged CMS to take action to protect Medicare beneficiaries.

CMS proposes more than 20 distinct changes to the marketing regulations, noting that it has seen an increase in beneficiary complaints over the past several years. The broad-ranging proposals include several that address activities of third-party marketing organizations (TPMOs) operating on behalf of more than one MA Organization (MAO)/Part D sponsor. CMS also directly addresses potentially misleading advertising that is national in scope and that CMS characterizes as designed to generate leads. Proposals include the following:

  • Regulating TPMOs. TPMOs that develop materials for more than one MAO/Part D sponsor would have to submit marketing materials directly to CMS, name the plans that have approved/opted into the marketing and display the names of the sponsoring organizations. TPMOs that do not represent all MAOs in a service area would need to notify beneficiaries that they may contact their State Health Insurance Assistance Programs to obtain additional help. CMS would also require TPMOs to list or mention all of the MAO/Part D sponsors that they sell to ensure beneficiaries are aware other options exist.
  • Strengthening the role of plans in monitoring agents, brokers and TPMOs. MAOs/Part D sponsors would be required to establish and implement an oversight plan for monitoring agent and broker activities and reporting identified noncompliance to CMS. They would have to ensure that all agents and brokers go through a CMS-developed list of items that must be asked and/or discussed during the marketing and sale of a plan, and they would have to require that personal beneficiary data collected by a TPMO not be distributed to other TPMOs.
  • Requiring agents and brokers to cover certain topics. CMS proposes a list of items that all agents and brokers must address with beneficiaries in order to ensure they are enrolled in a plan that best meets their healthcare needs.
  • Prohibiting marketing of unavailable benefits and limiting marketing regarding savings. The proposed rule would prohibit marketing of benefits in a service area where those benefits are not available, and would prohibit the marketing of information about savings available to potential enrollees that are based on a comparison of typical expenses borne by uninsured individuals, unpaid costs of dually eligible beneficiaries or other unrealized costs of a Medicare beneficiary.
  • Prohibiting misleading uses of the Medicare name and related logos or information. While current regulations prohibit inaccurate or misleading information, CMS proposes to expand this prohibition to misleading use of the Medicare name, CMS logo, and products or information issued by the federal government (including the Medicare card).
  • Regulating the use of superlatives. CMS would prohibit the use of superlatives (e.g., “best” or “most”) in marketing unless the marketing material provides documentation to support the statement and the documentation is for the current or prior year.
  • Requiring an explanation of effect on current coverage. Agents would be required to explain the effect of a beneficiary’s enrollment choice on the beneficiary’s current coverage whenever the beneficiary makes an enrollment decision.

Prior Authorization, Utilization Management and Medical Necessity

CMS proposes several provisions governing prior authorization, utilization management and medical necessity determinations. These proposals come in the wake of an April 2022 report by the Office of Inspector General raising concerns about MA plan denials of requests for prior authorization. Congress has also focused on MAOs’ use of prior authorization, with the US House of Representatives recently passing bipartisan legislation (not adopted by the Senate) that would reform the MA prior authorization process.

CMS’s proposals include the following:

  • Revising standards for coverage criteria. Generally, MAOs must follow published standards and may not apply unpublished internal criteria. Where no applicable Medicare statute, regulation, national coverage determination or local coverage determination establishes that an item or service must be covered, MAOs may develop internal clinical coverage criteria based on current evidence in widely used treatment guidelines or clinical literature made publicly available. The proposal sets out other requirements for such coverage criteria.
  • Limiting MAOs’ discretion to require use of alternate services or settings. When care can be delivered in more than one way or setting, and a contracted provider has ordered or requested Medicare covered items or services for an MA enrollee, the MAO may only deny coverage of the services or setting because the ordered services fail to meet the regulatory criteria.
  • Regulating the use of prior authorization. CMS proposes that prior authorization may only be used to confirm the presence of diagnoses or other medical criteria that are the basis for coverage determinations for the specific item or service, to ensure basic benefits are medically necessary based on newly specified standards or to ensure that the furnishing of supplemental benefits is clinically appropriate. The proposed rule also would establish that if a plan approves the furnishing of a service through an advance determination of coverage, it may not deny coverage later on the basis of a lack of medical necessity.
  • Requiring a transition period for new enrollees. For beneficiaries undergoing an active course of treatment, the proposed rule would require a minimum 90-day transition period when the beneficiary switches to a new MA plan, and would require that a prior authorization approval remain valid for an enrollee’s full course of treatment.
  • Establishing a utilization management committee. CMS proposes that MAOs establish a utilization management committee, similar to a pharmacy and therapeutics committee, that would review policies annually and ensure consistency with traditional Medicare’s coverage decisions and guidelines.
  • Requiring relevant expertise for coverage determinations. CMS would require that the healthcare professional conducting a medical necessity review have expertise in the field of medicine that is appropriate for the item or service being requested before an MAO or applicable integrated plan issues an adverse determination.

Overpayment Refund Rule

The Medicare statute requires that entities report and return any overpayment within 60 days of when the overpayment is identified. The proposed rule would revise the existing regulatory negligence standard for when an overpayment is “identified,” following a decision that vacated the “reasonable diligence” standard in the MA rule. (UnitedHealthcare Insurance Co. v. Azar, 330 F. Supp. 3d 173, 191 (D.D.C. 2018)).

The proposal would provide that “[a] person has identified an overpayment when the person knowingly receives or retains an overpayment.” The proposal references the False Claims Act definition of “knowingly,” which extends to actual knowledge, reckless disregard and willful blindness.

For more information on this proposal, see our earlier On the Subject.

Quality Rating System: Implementing a Health Equity Index, Measure Changes and More

The proposed rule contains several proposals that would affect the Star Ratings program:

  • Developing a health equity index (HEI). Beginning with the 2027 Star Ratings, CMS proposes to implement an HEI to reward contracts that obtain a high measure-level score for the subset of enrollees with specified social risk factors (i.e., dual eligibility, low-income subsidies and disability). The HEI reward would be in addition to (and would not replace or change) the existing categorical adjustment index.
  • Reducing the weight of patient experience/complaints and access measures. Previously, CMS finalized a weight of 4 for patient experience/complaints and access measures. As a result, these measures were some of the most heavily weighted measures in the 2023 Star Ratings. CMS has continued to receive significant stakeholder feedback on this approach and is reevaluating its weighting. Beginning with the 2026 Star Ratings (covering the 2024 measurement period), CMS proposes to reduce the weight of these measures from 4 to 2. CMS estimates that the change could produce a 10-year savings of $3.28 billion.
  • Removing select measures. CMS proposes to remove the Diabetes Care – Kidney Disease Monitoring (Part C) measure and replace it with a Kidney Health Evaluation for Patients with Diabetes measure. CMS would also remove the Medication Reconciliation Post-Discharge Measure as duplicative of the Transitions of Care measure.

Promoting Health Equity

CMS outlines several proposals to advance health equity, ranging from culturally competent care requirements to provider directories and more.

  • Cultural competency requirement. Although current regulations already require MAOs to provide services in a culturally competent manner, CMS proposes to specify that this includes underserved groups beyond linguistically and culturally diverse populations. Examples of such groups include people with disabilities, people of diverse sexual orientations, and people who live in rural areas and other areas with high levels of deprivation.
  • Provider directories. CMS proposes to codify existing best practices for provider directories to require MAOs to include in their directories each provider’s cultural and linguistic capabilities, including American Sign Language, as well as notations for providers waived to treat patients with medications for opioid use disorder.
  • Digital health education for telehealth. MAOs would be required to identify enrollees with low digital health literacy and to offer those enrollees digital health education. MAOs are not currently subject to digital health literacy requirements.
  • Quality Improvement program. The proposed rule would require MAOs to incorporate activities that reduce disparities in healthcare into their quality improvement program. Examples of such activities include improving communication, developing and using linguistically and culturally appropriate materials, and hiring bilingual staff.

Expanding Access to Behavioral Health Providers and Services

CMS seeks to enhance access to behavioral health services and improve outcomes for those with behavioral health needs, in alignment with the Biden Administration’s strategy to strengthen system capacity for behavioral health and the 2022 CMS Strategic Framework’s goal to expand coverage and access to equitable health.

  • Expanding network adequacy requirements. CMS proposes to add three new behavioral health specialty types to the network adequacy standards (in addition to the current requirements for psychiatry and inpatient psychiatric facilities), and add behavioral health services to the general access to services standards.
  • Closing gaps between physical and behavioral health services. The proposed rule would add behavioral health services to the list of services for which MAOs must have programs for continuity of care and integration of services. CMS proposes to clarify the definition of “emergency medical conditions” to include both physical and mental conditions. Behavioral health services that qualify as emergency services may not be subject to prior authorization. CMS also proposes to implement standards for wait times for primary care and to extend those standards to behavioral services.

Updates to PACE Policies and Application Reviews

CMS proposes a number of changes to streamline its review of PACE applications and standardize operations across programs, including the following:

  • Revising the definition of “contract year.” Under current regulations, a PACE organization’s initial contract year may last from 12 to 23 months. Depending on when the program agreement is signed, CMS’s first trial audit period may occur within 12 months of the contract’s start date. CMS believes that this is not enough time for a new organization to establish its operations before undergoing an audit and therefore proposes to define an initial contract year as 19 to 30 months.
  • Treating substantially incomplete applications as nonapplications. CMS would treat any PACE application that does not include the proper state assurance documents as incomplete and invalid (e.g., using a corporate address as a placeholder).
  • Considering past performance. As part of its initial and service area expansion application reviews, CMS would evaluate an entity’s past performance, including whether the organization was subject to an enrollment or payment sanction, or failed to maintain fiscal soundness.
  • Standardizing the medical clearance process. To reduce variability across organizations, CMS would require PACE organizations to develop and implement comprehensive medical clearance processes.
  • Contracting with certain medical specialties. PACE organizations would be required to execute and maintain contracts with a minimum list of medical specialties, including anesthesiology, cardiology, dentistry, dermatology and many others.

Other Proposals Impacting MA and Part D Plans

  • Implementing the Consolidated Appropriations Act, 2023, and the Inflation Reduction Act. CMS proposes to implement provisions of these acts, including provisions related to dual eligible special needs plan “look-alikes,” Part D special enrollment periods, exceptional condition special enrollment periods, and expanded eligibility for the full low-income subsidy (i.e., to individuals with incomes up to 150% of the federal poverty level and who meet statutory resource requirements).
  • Making the Limited Income Newly Eligible Transition (LI NET) Program permanent. The LI NET demonstration provides transitional point-of-sale coverage for low-income beneficiaries who demonstrate an immediate need for prescriptions, but who have not yet enrolled in a Part D plan, or whose enrollment is not yet effective. Beginning January 1, 2024, the LI NET demonstration would become a permanent part of Part D. The proposed rule clarifies the benefits and beneficiary protections that would be required under the program, in addition to how the LI NET sponsor would be selected and contracted.
  • Revising Part D’s Medication Therapy Management (MTM) Program targeting requirements. To improve access to MTM services and increase the number and percentage of Part D enrollees eligible for MTM services, CMS proposes several changes to the MTM eligibility criteria.
  • Permitting immediate substitutions. CMS would allow Part D sponsors to immediately substitute a new interchangeable biological product for its corresponding reference product, a new unbranded biological product for its corresponding brand name biological product, and a new authorized generic for its corresponding brand name equivalent.

Please contact our team with any questions regarding the proposed rule.