5864 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 405, 417, 422, 423, 455, 

and 460 

[CMS–4190–F2] 

RIN 0938–AT97 

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 AllInclusive Care for the Elderly 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), Department 

of Health and Human Services (HHS). 

ACTION: Final rule. 

SUMMARY: This final rule will revise 

regulations for the Medicare Advantage 

(Part C) program, Medicare Prescription 

Drug Benefit (Part D) program, Medicaid 

program, Medicare Cost Plan program, 

and Programs of All-Inclusive Care for 

the Elderly (PACE) to implement certain 

sections of the Bipartisan Budget Act of 

2018 and the Substance Use Disorder 

Prevention that Promotes Opioid 

Recovery and Treatment—(SUPPORT) 

for Patients and Communities Act 

(hereinafter referred to as the SUPPORT 

Act), enhance the Part C and D programs 

and the PACE program, codify several 

existing CMS policies, make required 

statutory changes, implement other 

technical changes, and make routine 

updates. As stated in the final rule that 

appeared in the Federal Register on 

June 2, 2020, CMS is fulfilling its 

intention to address the remaining 

proposals from the February 2020 

proposed rule here. Although the 

provisions adopted in this second final 

rule will be in effect during 2021, most 

provisions will apply to coverage 

beginning January 1, 2022. 

Notwithstanding the foregoing, for 

proposals from the February 2020 

proposed rule that would codify 

statutory requirements that were already 

in effect prior to this rule’s appearance 

in the Federal Register, CMS reminds 

organizations, plan sponsors, and other 

readers that the statutory provisions 

apply and will continue to be enforced. 

Similarly, for the proposals from the 

February 2020 proposed rule that would 

implement the statutory requirements in 

sections 2007 and 2008 of the SUPPORT 

Act, CMS intends to implement these 

statutory provisions consistent with 

their effective provisions. 

DATES: 

Effective Date: These regulations are 

effective March 22, 2021. 

Applicability Dates: Most of the 

provisions in this rule will be applicable 

to coverage beginning January 1, 2022, 

except as noted below. 

The Part D Income Related Monthly 

Adjustment Amount (IRMAA) 

calculation update in § 423.286(d)(4)(ii) 

is applicable March 22, 2021. The 

provision defining targeted beneficiaries 

for MTM at § 423.153(d)(2) is applicable 

March 22, 2021. The provisions on 

automatic escalation to the independent 

outside entity under a Medicare Part D 

drug management program (DMP) at 

§§ 423.590(i) and 423.600(b) and the 

related provisions on information on 

appeal rights in the beneficiary notices 

at §§ 423.153(f)(5)(ii)(C)(3), 

423.153(f)(6)(ii)(C)(4), and 

423.153(f)(8)(i) are applicable March 22, 

2021. The provisions defining the term 

‘‘parent organization’’ for MA and Part 

D plans at §§ 422.2 and 423.4 are 

applicable March 22, 2021. The General 

Requirements for Applicable Integrated 

Plans and Continuation of Benefits 

provisions at §§ 422.629 and 422.632 are 

applicable March 22, 2021. 

In order to help ensure that Part D 

sponsors have sufficient 

implementation time, the beneficiary 

real time benefit tool (RTBT) 

(§ 423.128(d)(4)) requirement will not be 

applicable until January 1, 2023. 

Due to operational considerations, 

revisions to the Special Needs Plan 

Model of Care requirements in 

§ 422.101(f) are intended for 

implementation (that is, applicability) 

for models of care for contract year 

2023. Plans that are required to submit 

models of care for contract year 2022 are 

due to submit MOCs by February 17, 

2021; those submissions will be 

evaluated based on the regulations in 

effect at that time (that is, without the 

amendments adopted here) and SNPs 

must implement and comply with their 

approved MOCs in connection with 

coverage in 2022. Moving the applicable 

implementation of the SNP MOC 

provisions to contract year 2023 will 

allow SNPs and CMS to construct the 

necessary processes for full 

implementation and enforcement of the 

final rule. When MOCs for contract year 

2023 are submitted for review and 

approval in early 2022, the regulations 

in this final rule will be used to evaluate 

those MOCs for approval. 

SUPPLEMENTARY INFORMATION: The Code 

of Federal Regulations (CFR) will be 

updated consistent with the respective 

effective date of each provision. The 

applicability and effective dates are 

discussed in the summary and preamble 

for each of these items. Because CMS is 

finalizing the call center, marketing, and 

communications requirements under 

§§ 422.111(h)(1), 422.2260 through 

422.2274, §§ 423.128(d)(1), and 

423.2260 through 423.2274 as 

applicable for the contract year and 

coverage beginning January 1, 2022, 

these requirements will apply to call 

center operations, marketing, and 

mandatory disclosures occurring in 

2021 for enrollments made for contract 

year 2022. 

FOR FURTHER INFORMATION CONTACT: 

Cali Diehl, (410) 786–4053, Theresa 

Wachter, (410) 786–1157, or Christopher 

McClintick, (410) 786–4682—General 

Questions. 

Kimberlee Levin, (410) 786–2549— 

Part C Issues. 

Lucia Patrone, (410) 786–8621—Part 

D Issues. 

Kristy Nishimoto, (206) 615–2367— 

Beneficiary Enrollment and Appeals 

Issues. 

Daniel Deisroth, (443) 431–4171— 

PACE Issues. 

Debra Drew, (410) 786–6827— 

Program Integrity Issues. 

Tobey Oliver, (202) 260–1113—D– 

SNP Appeals and Grievances. 

I. Executive Summary and Background 

A. Executive Summary 

1. Purpose 

The primary purpose of this final rule 

is to implement certain sections of the 

following federal laws related to the 

Medicare Advantage (MA or Part C) and 

Prescription Drug Benefit (Part D) 

programs: 

• The Bipartisan Budget Act of 2018 

(hereinafter referred to as the BBA of 

2018), and 

• The Substance Use-Disorder 

Prevention that Promotes Opioid 

Recovery and Treatment (SUPPORT) for 

Patients and Communities Act 

(hereinafter referred to as the SUPPORT 

Act). 

The rule also includes a number of 

changes to: Strengthen and improve the 

Part C and D programs and the PACE 

program, codify in regulation several 

CMS interpretive policies previously 

adopted through the annual Call Letter 

and other guidance documents, make 

required statutory changes, implement 

other technical changes, and make 

routine updates. 

In the June 2020 final rule (85 FR 

33796), CMS addressed a selection of 

proposals from the February 2020 

proposed rule (85 FR 9002). In this final 

rule, CMS is addressing the remaining 

proposals from the February 2020 

proposed rule with two exceptions: (1) 


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1Bohnert KM, Ilgen MA, Louzon S, McCarthy JF, 

Katz IR. Substance use disorders and the risk of 

suicide mortality among men and women in the 

U.S. Veterans Health Administration. Addiction. 

2017 Jul;112(7):1193–1201. doi: 10.1111/add.13774. 

Maximum Out-of-Pocket (MOOP) Limits 

for Medicare Parts A and B Services 

(§§ 422.100 and 422.101) and (2) Service 

Category Cost Sharing Limits for 

Medicare Parts A and B Services and 

per Member per Month Actuarial 

Equivalence Cost Sharing (§§ 422.100 

and 422.113). Therefore, we may 

address the two remaining proposals 

from the February 18, 2020, proposed 

rule (85 FR 9002) not included in this 

final rule in subsequent rulemaking. 

In so doing, the final rule addresses 

the following needs for federal 

regulatory action as set forth below: 

• The regulations implementing the 

provisions of BBA of 2018 relating to 

Medicare Advantage Special Needs 

Plans address, as directed by law, care 

management requirements through the 

development and implementation of 

models of care. Given the context of 

these provisions is a federal program, 

Congress has mandated a federal 

regulatory approach with respect to 

these provisions. 

• The provisions implementing the 

provisions of BBA of 2018 relating to 

the Coverage Gap Discount Program and 

the Part D Income Related Monthly 

Adjustment Amount (IRMAA) improve 

the operation of government programs 

by ensuring the regulations conform to 

the statute and the distribution of 

resources determined by Congress in 

statute. Given the context of these 

provisions is a federal program, 

Congress has mandated a federal 

regulatory approach with respect to 

these provisions. 

• The provisions implementing the 

SUPPORT Act address the misuse and 

abuse of opioids in the manners 

directed by Congress. This includes the 

provisions related to Mandatory Drug 

Management Programs, Beneficiaries 

with History of Opioid-Related 

Overdose Included in Drug Management 

Programs, Automatic Escalation to 

External Review under a Medicare Part 

D Drug Management Program for AtRisk Beneficiaries, Suspension of 

Pharmacy Payments Pending 

Investigations of Credible Allegations of 

Fraud and Program Integrity 

Transparency Measures, Section 2008 of 

the SUPPORT Act, Section 6063 of the 

SUPPORT Act, Beneficiaries’ Education 

on Opioid Alternatives, and 

Beneficiaries with Sickle Cell Disease. 

Given the context of these provisions is 

a federal program or impacts on several 

federal programs, Congress has 

mandated a federal regulatory approach 

with respect to these provisions. 

• The provisions which strengthen 

and improve the PACE program with 

respect to Service Delivery Request 

Processes under PACE improve the 

operation of government programs by 

ensuring documentation is available for 

oversight required by statute. Given the 

context of these provisions is a federal 

program, a federal regulatory approach 

is appropriate with respect to these 

provisions. 

• The provisions relating to 

Beneficiary Real Time Benefit Tools 

address inadequate and incomplete 

information available to Part D 

beneficiaries with regards to the choices 

they have for prescription drugs. Given 

the context of these provisions is a 

federal program, a federal regulatory 

approach is appropriate with respect to 

these provisions. 

• The provisions relating to 

permitting a second, ‘‘preferred,’’ 

specialty tier in Part D address 

externalities caused by the current 

specialty tier regulation—specifically 

the absence of negotiation leverage and 

incentives within the Part D specialty 

tier. Given the context of these 

provisions as a federal program, a 

federal regulatory approach is 

appropriate with respect to these 

provisions. 

• The provisions relating to the 

Medicare Advantage (MA) and Part D 

Prescription Drug Program Quality 

Rating System improve the operation of 

government programs by making 

updates to reflect changes in measures 

(thereby ensuring the government 

program does not use outdated 

methodologies) and clarifying existing 

regulations (thereby answering 

questions regulated parties may have). 

These and other provisions also codify 

sub-regulatory guidance, which is an 

improvement in that regulated parties 

and CMS have greater clarity regarding 

the application of these policies as a 

rule. Given the context of these 

provisions is a federal program, a 

federal regulatory approach is 

appropriate with respect to these 

provisions. 

2. Summary of the Major Provisions 

a. Mandatory Drug Management 

Programs (DMPs) (§ 423.153) 

Section 704 of the Comprehensive 

Addiction and Recovery Act of 2016 

(hereinafter referred to as CARA) 

included provisions permitting Part D 

sponsors to establish drug management 

programs (DMPs) for beneficiaries atrisk for misuse or abuse of frequently 

abused drugs (FADs). Under the DMPs 

in place today, Part D sponsors engage 

in case management of potential at-risk 

beneficiaries (PARBs) through contact 

with their prescribers to determine 

whether the beneficiary is at-risk for 

prescription drug misuse or abuse. If a 

beneficiary is determined to be at-risk, 

after notifying the beneficiary in 

writing, the sponsor may limit their 

access to coverage of opioids and/or 

benzodiazepines to a selected prescriber 

and/or network pharmacy(ies) and/or 

through a beneficiary-specific point-ofsale (POS) claim edit. 

While the majority of Part D sponsors 

have already voluntarily implemented 

DMPs, CMS proposed regulations to 

implement section 2004 of the 

SUPPORT Act which require Part D 

sponsors to establish DMPs for plan 

years beginning on or after January 1, 

2022. 

CMS is finalizing the requirement for 

mandatory DMPs with an additional 

modification so that plans without a 

Pharmacy and Therapeutics (P&T) 

committee can comply with the DMP 

regulation. 

b. Beneficiaries With History of OpioidRelated Overdose Included in Drug 

Management Programs (DMPs) 

(§ 423.153) 

A past overdose is the risk factor most 

predictive for another overdose or 

suicide-related event.1 In light of this 

fact, in section 2006 of the SUPPORT 

Act, Congress required CMS to include 

Part D beneficiaries with a history of 

opioid-related overdose (as defined by 

the Secretary) as PARBs under a Part D 

plan’s DMP. CMS is also required under 

this section to notify the sponsor of such 

identifications. In line with this 

requirement, in lieu of modifying the 

definition of ‘‘potential at-risk 

beneficiary’’ at § 423.100 as proposed, 

CMS is finalizing the clinical guideline 

criteria at new paragraph 

§ 423.153(f)(16)(ii)(2) to include a Part D 

eligible individual who is identified as 

having a history of opioid-related 

overdose, beginning January 1, 2022. 

Inclusion of beneficiaries with a history 

of opioid-related overdose as PARBs in 

DMPs will allow Part D plan sponsors 

and providers to work together to 

closely assess these beneficiaries’ opioid 

use and determine whether any 

additional action is warranted. The 

clinical guideline criteria CMS is 

finalizing at § 423.153(f)(16)(ii)(2) 

specify that both a principal diagnosis 

of opioid-related overdose and a recent 

Part D opioid prescription are required 

components to meet the definition of a 

PARB based on the history of opioidrelated overdose. Additionally, CMS is 

making some revisions to the 

terminology used in the clinical 


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guideline criteria at 

§ 423.153(f)(16)(ii)(2) from what was 

initially proposed in the definition at 

§ 423.100 to better characterize the data 

sources and opioid prescription criteria 

to be used to identify beneficiaries 

meeting the definition of a PARB based 

on a history of opioid-related overdose. 

The clinical guideline criteria mirror the 

definition of ‘‘potential at-risk 

beneficiary’’ that was initially proposed 

but relocated to § 423.153(f)(16)(ii)(2) to 

improve clarity of the regulation text. 

c. Beneficiaries’ Education on Opioid 

Risks and Alternative Treatments 

(§ 423.128) 

Sponsors of Part D prescription drug 

plans, including MA–PDs and 

standalone PDPs, must disclose certain 

information about their Part D plans to 

each enrollee in a clear, accurate, and 

standardized form at the time of 

enrollment and at least annually 

thereafter under section 1860D– 

4(a)(1)(a) of the Act. Section 6102 of the 

SUPPORT Act amended section 1860D– 

4(a)(1)(B) of the Act to require that Part 

D sponsors also must disclose to each 

enrollee information about the risks of 

prolonged opioid use. In addition to this 

information, with respect to the 

treatment of pain, MA–PD sponsors 

must disclose coverage of nonpharmacological therapies, devices, and 

non-opioid medications under their 

plans. Sponsors of standalone PDPs 

must disclose coverage of nonpharmacological therapies, devices, and 

non-opioid medications under their 

plans and under Medicare Parts A and 

B. Section 6102 also amended section 

1860D–4(a)(1)(C) to permit Part D 

sponsors to disclose this opioid risk and 

alternative treatment coverage 

information to only a subset of plan 

enrollees rather than disclosing the 

information to each plan enrollee. We 

are finalizing our proposal with only 

one modification to make the 

requirement applicable beginning 

January 1, 2022, rather than January 1, 

2021 as proposed. 

d. Automatic Escalation to External 

Review Under a Medicare Part D Drug 

Management Program (DMP) for At-Risk 

Beneficiaries (§§ 423.153, 423.590, and 

423.600) 

CMS proposed that, if on 

reconsideration a Part D sponsor affirms 

its denial of a DMP appeal, the case 

shall be automatically forwarded to the 

independent outside entity for review 

and resolution by the expiration of the 

adjudication timeframe applicable to the 

plan level appeal. We also proposed 

conforming revisions to the notices that 

are sent to beneficiaries. In the February 

2020 proposed rule, we solicited 

feedback on these proposals. As a result, 

we received several comments related to 

the timeframe in which a plan sponsor 

has to forward the case file to the IRE. 

Specifically, commenters requested that 

plan sponsors have additional time 

beyond the applicable adjudication 

timeframe in which to assemble and 

forward the administrative case file to 

the IRE. As a result of this feedback, we 

are finalizing the automatic escalation 

provision with a modification to reflect 

that plan sponsors must forward the 

case file to the independent outside 

entity no later than 24 hours following 

the expiration of the adjudication 

timeframe applicable to the plan level 

appeal. This approach is consistent with 

regulations applicable to cases that must 

be forwarded to the IRE if the plan 

sponsor is untimely in its decision 

making and, we believe, remains 

consistent with the enrollee protections 

set forth in the SUPPORT Act. We are 

also finalizing the provisions related to 

beneficiary notices. The following 

provisions of this final rule are 

applicable 60 days after the publication 

date of this final rule: §§ 423.590(i) and 

423.600(b) related to auto-forwarding 

redeterminations made under a DMP to 

the IRE and the provisions related to 

information on appeal rights in the 

beneficiary notices at 

§§ 423.153(f)(5)(ii)(C)(3), 

423.153(f)(6)(ii)(C)(4), and 

423.153(f)(8)(i). 

e. Suspension of Pharmacy Payments 

Pending Investigations of Credible 

Allegations of Fraud and Program 

Integrity Transparency Measures 

(§§ 405.370, 422.500, 422.503, 423.4, 

423.504, and 455.2) 

In the proposed rule, CMS proposed 

to undertake rulemaking to implement 

the provisions outlined in sections 2008 

and 6063 of the SUPPORT Act, which 

are summarized in the following 

sections (1) and (2). Implementing these 

provisions will allow CMS, MA 

organizations and Medicare Part D plan 

sponsors (including MA organizations 

offering MA–PD plans) to share data and 

information regarding unscrupulous 

actors, take swift action based on such 

data and information, and achieve 

enhanced outcomes in our efforts to 

fight the opioid crisis. In addition, this 

regulation will provide the means for 

more effective referrals to law 

enforcement based on plan sponsor 

reporting, ultimately resulting in 

reduced beneficiary harm and greater 

savings for the Medicare program. 

(1) Section 2008 of the SUPPORT Act 

Title XVIII of the Social Security Act 

(the Act) provides authority for CMS to 

suspend payments to Medicare fee-forservice (FFS) providers and suppliers 

pending an investigation of a credible 

allegation of fraud, unless a good cause 

exception applies. While Part D plan 

sponsors currently have the discretion 

to suspend payments to pharmacies in 

the plans’ networks, section 2008 

requires that plan sponsors’ payment 

suspensions based on credible 

allegations of fraud be implemented in 

the same manner as CMS implements 

such payment suspensions in FFS 

Medicare. Under this provision, plan 

sponsors are required to notify the 

Secretary of the imposition of a payment 

suspension that is based on a credible 

allegation of fraud and may do so using 

a secure website portal. The reporting 

requirement applicable to plan sponsors 

will only apply to suspended payments 

based on credible allegations of fraud as 

required by section 2008 and will not 

extend to other payment suspensions for 

which plan sponsors already have 

authority. Section 2008 also clarifies 

that a fraud hotline tip, without further 

evidence, is not considered a credible 

fraud allegation for payment suspension 

purposes. The statutory effective date 

for section 2008 is for plan years 

beginning on or after January 1, 2020. 

(2) Section 6063 of the SUPPORT Act 

Section 6063 requires, effective not 

later than 2 years after the date of 

enactment, the Secretary to establish a 

secure internet website portal to enable 

the sharing of data among MA plans, 

prescription drug plans, and the 

Secretary, and referrals of 

‘‘substantiated or suspicious activities’’ 

of a provider of services (including a 

prescriber) or a supplier related to fraud, 

waste, or abuse to initiate or assist with 

investigations conducted by eligible 

entities with a contract under section 

1893 of the Act, such as a Medicare 

program integrity contractor. The 

Secretary is also required to use the 

portal to disseminate information to all 

MA plans and prescription drug plans 

on providers and suppliers that were 

referred to CMS for fraud, waste, and 

abuse in the last 12 months; were 

excluded or the subject of a payment 

suspension; are currently revoked from 

Medicare; or, for such plans that refer 

substantiated or suspicious activities to 

CMS, whether the related providers or 

suppliers were subject to administrative 

action for similar activities. The 

Secretary is required to define what 

constitutes substantiated or suspicious 

activities. Section 6063 specifies that a 


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fraud hotline tip without further 

evidence shall not be treated as 

sufficient evidence for substantiated 

fraud, waste, or abuse. 

Section 6063 also requires the 

Secretary to disseminate quarterly 

reports to MA plans and prescription 

drug plans on fraud, waste, and abuse 

schemes and suspicious activity trends 

reported through the portal. The 

Secretary’s reports are to maintain the 

anonymity of information submitted by 

plans and to include administrative 

actions, opioid overprescribing 

information, and other data the 

Secretary, in consultation with 

stakeholders, determines important. 

Beginning with plan year 2021, 

section 6063 also requires Part D plan 

sponsors to submit to the Secretary 

information on investigations, credible 

evidence of suspicious activities of 

providers or suppliers related to fraud, 

and other actions taken by the plans 

related to inappropriate opioid 

prescribing. The Secretary is required to 

issue regulations that define the term 

inappropriate prescribing with respect 

to opioids, identify a method to 

determine if providers are 

inappropriately prescribing, and 

identify the information plan sponsors 

are required to submit. 

The applicability date of the section 

2008 and section 6063 provisions will 

be for plan years beginning on or after 

January 1, 2022 because of several 

factors. The first factor is the need to 

ensure that the web-based portal is 

complete and operational for plan 

sponsor’s use. While the development of 

the web-based portal began when the 

legislation was enacted, CMS was 

unable to complete the development of 

the portal in time for its full 

implementation in plan year 2021. In 

addition, the portal has required several 

key updates to reflect the requirements 

in this regulation. Additional factors 

include the time needed for plan 

sponsors to determine internal 

procedures to meet the requirements 

outlined in this rule; the need for CMS 

to obtain feedback from plan sponsors to 

address any challenges encountered 

with the web-based portal; and the need 

to provide plan sponsors with the 

opportunity to address any other 

operational challenges with 

implementing these provisions, 

including potential changes that may be 

needed due to the COVID–19 public 

health emergency. Furthermore, the 

applicability date is later than the 

effective dates in the SUPPORT Act 

because the publication of this final rule 

is occurring after the bid deadline for 

plan year 2021. However, where the 

statute is self-implementing, the delay 

in applicability of these regulations is 

not a barrier to enforcement of the 

statutory provisions. 

f. Medicare Advantage (MA) and Part D 

Prescription Drug Program Quality 

Rating System (§§ 422.162, 422.164, 

422.166, 422.252, 423.182, 423.184, and 

423.186) 

In the Medicare Program; Contract 

Year 2019 Policy and Technical 

Changes to the Medicare Advantage, 

Medicare Cost Plan, Medicare Fee-forService, the Medicare Prescription Drug 

Benefit Programs, and the PACE 

Program Final Rule (hereinafter referred 

to as the April 2018 final rule), we 

codified the methodology for the Star 

Ratings system for the MA and Part D 

programs, respectively, at §§ 422.160 

through 422.166 and §§ 423.180 through 

423.186. We have stated we will 

propose through rulemaking any 

changes to the methodology for 

calculating the ratings, the addition of 

new measures, and substantive measure 

changes. 

At this time we are codifying 

additional existing rules for calculating 

the ratings used for MA Quality Bonus 

Payments, implementing updates to the 

Health Outcomes Survey measures, 

adding new Part C measures, clarifying 

the rules around contract consolidations 

and application of the adjustment for 

extreme and uncontrollable 

circumstances when data are missing 

due to data integrity concerns, and 

making additional technical 

clarifications. Unless otherwise stated, 

data will be collected and performance 

measured using these rules and 

regulations for the 2022 measurement 

period and the 2024 Star Ratings. 

g. Permitting a Second, ‘‘Preferred,’’ 

Specialty Tier in Part D (§§ 423.104, 

423.560, and 423.578) 

We are finalizing regulations to allow 

Part D sponsors to establish up to two 

specialty tiers and design an exceptions 

process that exempts drugs on these 

tiers from tiering exceptions to nonspecialty tiers. Under this final rule, 

Part D sponsors will have the flexibility 

to determine which Part D drugs are 

placed on either specialty tier, subject to 

the ingredient cost threshold established 

according to the methodology we 

proposed and the requirements of the 

CMS formulary review and approval 

process under § 423.120(b)(2). To 

maintain Part D enrollee protections, we 

will codify a maximum allowable cost 

sharing that would apply to the higher 

cost-sharing specialty tier. Further, we 

will require that if there are two 

specialty tiers, one must be a 

‘‘preferred’’ tier that offers lower cost 

sharing than the proposed maximum 

allowable cost sharing. 

We note that we did not propose to 

revise and are not revising 

§ 423.578(c)(3)(ii), which requires Part D 

sponsors to provide coverage for a drug 

for which a tiering exception was 

approved at the cost sharing that applies 

to the preferred alternative. Because the 

exemption from tiering exceptions for 

specialty tier drugs under 

§ 423.578(a)(6)(iii) as proposed would 

apply only to tiering exceptions to nonspecialty tiers, the existing requirement 

at § 423.578(c)(3)(ii) will require Part D 

sponsors to permit tiering exception 

requests for drugs on the higher costsharing specialty tier to the lower costsharing, specialty tier. 

To improve transparency, we will 

codify current methodologies for cost 

sharing and calculations relative to the 

specialty tier, with some modifications. 

First, we will codify a maximum 

allowable cost sharing permitted for the 

specialty tiers of between 25 percent 

and 33 percent, depending on whether 

the plan includes a deductible, as 

described further in section IV.E.4. of 

this final rule. We determine the 

specialty-tier cost threshold—meaning 

whether the drug has costs high enough 

to qualify for specialty tier placement— 

based on a 30-day equivalent supply. 

Additionally, we base the determination 

of the specialty-tier cost threshold on 

the ingredient cost reported on the 

prescription drug event (PDE). We will 

also maintain a specialty-tier cost 

threshold for both specialty tiers that is 

set at a level that, in general, reflects 

drugs with monthly ingredient costs 

that are in the top 1 percent, as 

described further in section IV.E.6. of 

this final rule. Finally, we will adjust 

the specialty-tier cost threshold, in an 

increment of not less than 10 percent, 

when an annual analysis of PDE data 

shows that an adjustment is necessary to 

recalibrate the specialty-tier cost 

threshold so that it only reflects Part D 

drugs with the top one percent of 

monthly ingredient costs. We will 

determine annually whether the 

adjustment would be triggered and 

announce the specialty-tier cost 

threshold annually via an HPMS 

memorandum or a comparable guidance 

document. 

We are finalizing these provisions as 

proposed, except that we are not 

finalizing our proposal to specify a 

specialty-tier cost threshold of $780. 

Additionally, in response to comments, 

we are finalizing new paragraph 

§ 423.104(d)(2)(iv)(A)(6), which 

describes the eligibility for placement 

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approved Part D drugs. These provisions 

will apply for coverage year 2022. 

To retain the policies in effect before 

coverage year 2022, we are amending 

the definition of specialty tier at 

§ 423.560 by adding paragraph (i) to 

clarify that the existing definition will 

be in effect before coverage year 2022, 

and paragraph (ii) to cross reference the 

definition which appears in 

§ 423.104(d)(2)(iv), which will apply 

beginning coverage year 2022. 

Additionally, as discussed in section 

IV.E.2. of this final rule, we are 

amending § 423.578(a)(6)(iii) by adding 

paragraph (A) to cross reference the 

definition of specialty tier which will 

apply before coverage year 2022, and 

paragraph (B) to cross reference 

placement of the definition of specialty 

tier at § 423.104(d)(2)(iv) which will 

apply beginning coverage year 2022. 

Additionally, paragraph (A) will remove 

the phrase ‘‘and biological products,’’ 

and paragraph (B) will (1) reflect the 

possibility of a second specialty tier, 

and (2) clarify that Part D sponsors may 

design their exception processes so that 

Part D drugs on the specialty tier(s) are 

not eligible for a tiering exception to 

non-specialty tiers. 

h. Beneficiary Real Time Benefit Tool 

(RTBT) (§ 423.128) 

This rule finalizes regulations to 

require that Part D plan sponsors 

implement a beneficiary real-time 

benefit tool (RTBT) by January 1, 2023. 

The RTBT must allow enrollees to view 

the information included in the 

prescriber RTBT system, which will 

include accurate, timely, and clinically 

appropriate patient-specific real-time 

formulary and benefit information 

(including cost, formulary alternatives 

and utilization management 

requirements). This rule permits plans 

to use existing secure patient portals to 

fulfill this requirement, to develop a 

new portal, or use a computer 

application. Plans are required to make 

this information available to enrollees 

who call the plan’s customer service call 

center. 

In order to encourage enrollees to use 

the beneficiary RTBT, plans are 

permitted to offer rewards and 

incentives (RI) to their enrollees who log 

onto the beneficiary RTBT or seek to 

access this information via the plan’s 

customer service call center, provided 

the value of the RI offered is a 

reasonable amount. 

i. Service Delivery Request Processes 

Under PACE (§§ 460.104 and 460.121) 

Currently, PACE participants or their 

designated representatives may request 

to initiate, eliminate or continue a 

service, and in response, the PACE 

organization must process this request 

under the requirements at 

§ 460.104(d)(2). These requests are 

commonly referred to by CMS and the 

industry as ‘‘service delivery requests.’’ 

In response to feedback from PACE 

organizations and advocacy groups, and 

based on our experience monitoring 

PACE organizations’ compliance with 

our current requirements, we proposed 

moving the requirements for processing 

service delivery requests from 

§ 460.104(d)(2) and adding them to a 

new § 460.121 in order to increase 

transparency for participants and reduce 

confusion for PACE organizations. We 

also proposed modifying these 

provisions in order to reduce 

unnecessary burden on PACE 

organizations and eliminate 

unnecessary barriers for participants 

who have requested services that a 

PACE organization would be able to 

immediately approve. Specifically, we 

proposed to more clearly define what 

constitutes a service delivery request, 

and provide transparent requirements 

for how those requests would be 

processed by the PACE organization, 

including who can make a request, how 

a request can be made, and the 

timeframe for processing a service 

delivery request. We also proposed 

allowing the interdisciplinary team 

(IDT) to bypass the full processing of a 

service delivery request under the new 

proposed requirements in § 460.121 

when the request can be approved in 

full by an IDT member at the time it is 

made. For all other service delivery 

requests that are brought to the IDT, we 

proposed maintaining the requirement 

that an in-person reassessment must be 

conducted prior to a service delivery 

request being denied, but we proposed 

eliminating the requirement that a 

reassessment (either in-person or 

through remote technology) be 

conducted when a service delivery 

request can be approved. Lastly, we 

proposed adding participant 

protections; specifically, we proposed 

increasing notification requirements in 

order to ensure participants understand 

why their request was denied, and we 

proposed adding reassessment criteria 

in order to ensure reassessments are 

meaningful to the service delivery 

request, and that the IDT takes them 

into consideration when rendering a 

decision. 

We are finalizing these provisions as 

proposed, with some minor 

modifications. For example, all 

references to ‘‘service delivery requests’’ 

in §§ 460.104, 460.121 and 460.122 have 

been replaced with the term ‘‘service 

determination request.’’ In addition, we 

have modified § 460.121(d)(2) to limit 

service determination requests to 

requests that are received by PACE 

organization employees and contractors 

who provide direct care in the 

participant’s residence, the PACE 

center, or while transporting 

participants. 

j. Beneficiaries With Sickle Cell Disease 

(SCD) (§ 423.100) 

Beneficiaries with active cancerrelated pain, residing in a long-term care 

facility, or receiving hospice, palliative, 

or end-of-life care currently meet the 

definition of ‘‘exempt beneficiary’’ with 

respect to DMPs in § 423.100. Section 

1860D–4(c)(5)(C)(ii)(III) of the Act 

provides the Secretary with the 

authority to elect to treat other 

beneficiaries as exempted from DMPs. 

Due to concerns of misapplication of 

opioid restrictions in the sickle cell 

disease (SCD) patient population, CMS 

proposed that beneficiaries with SCD be 

classified as exempt beneficiaries. CMS 

is finalizing the definition of an 

exempted beneficiary to include 

beneficiaries with SCD as proposed with 

one modification to clarify that this 

definition is applicable starting in plan 

year 2022. 

3. Summary of Costs and Benefits 

Provision Description Primary impact to plans and sponsors, enrollees, 

and medicare trust fund as applicable 

a. Mandatory Drug Management Programs (DMPs) 

(§ 423.153).

This provision will codify the SUPPORT Act requirement making it mandatory that Part D sponsors implement DMPs, starting in plan year 2022. There is a 10 year cost of $4.0 million. Part D sponsors 

will incur s a special first year cost of 3.2 million with 

ongoing costs of $0.1 million in later years. 


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Provision Description Primary impact to plans and sponsors, enrollees, 

and medicare trust fund as applicable 

b. Beneficiaries with History 

of Opioid-Related Overdose Included in Drug 

Management Programs 

(DMPs) (§ 423.153).

As finalized, this provision will require that, starting in 

plan year 2022, CMS identify beneficiaries enrolled in 

Medicare Part D with a history of opioid-related overdose (as defined by the Secretary) and include such 

individuals as PARBs for prescription drug abuse or 

misuse under sponsors’ DMPs. 

Part D beneficiaries with a history of opioid-related 

overdose have higher than average drug costs. CMS 

estimates that as a result of reduced utilization of 

drugs for beneficiaries participating in DMPs, there 

will be a savings of 5 percent of the current annual 

drug costs for enrollees with a history of opioid overuse. After the first year, the reduction in drug utilization may result in an annual savings of $7.7 million to 

the Medicare Trust Fund resulting from reduced drug 

spending by beneficiaries. The costs for case management and related paperwork is estimated at $10.1 

million annually. 

c. Beneficiaries’ Education 

on Opioid Risks and Alternative Treatments 

(§ 423.128).

CMS is finalizing requirements that Part D sponsors 

and MA–PDs must provide information on the risks of 

opioids and alternative therapies to all Part D beneficiaries with modification starting in plan year 2022. 

The requirements set forth under 1860D–4(a)(1)(B) will 

cost approximately $0.5 million in the first year to account for one-time programming costs and $0.4 million in the following years. 

d. Automatic Escalation to 

External Review under a 

Medicare Part D Drug 

Management Program 

(DMP) for At-Risk Beneficiaries (§§ 423.153, 

423.590, and 423.600).

Under this final rule, if a Part D sponsor denies a DMP 

appeal, the case shall be automatically forwarded to 

the independent outside entity for review and resolution. A plan sponsor must forward the case to the 

independent outside entity no later than 24 hours following the expiration of the adjudication timeframe 

applicable to the plan level appeal. Finally, this final 

rule establishes conforming revisions to the notices 

that are sent to beneficiaries. 

We estimate there will be about 28,600 appeals per 

year, of which 0.08 percent will be denied and automatically escalated to the independent review entity 

(IRE). Therefore, there are approximately 23 cases 

(0.08 percent * 28,600) annually affected by this provision. Since most IRE cases are judged by a physician at a wage of $202.46, and typically an IRE will 

take at most 1 hour to review, the total burden is 

about $4,656.58 (23 cases * $202.46 * 1 hour). 

e. Suspension of Pharmacy 

Payments Pending Investigations of Credible Allegations of Fraud and Program Integrity Transparency Measures 

(§§ 405.370, 422.500, 

422.503, 423.4, 423.504, 

and 455.2).

CMS is finalizing policies to implement two sections of 

the SUPPORT Act, which will—(1) require Part D 

plan sponsors to notify the Secretary of the imposition of a payment suspension on pharmacies that is 

based on a credible allegation of fraud, impose such 

payment suspensions consistent with the manner in 

which CMS implements payment suspensions in feefor service Medicare, and report such information 

using a secure website portal; (2) define inappropriate prescribing with respect to opioids; (3) require 

plan sponsors to submit to the Secretary information 

on investigations and other actions related to inappropriate opioid prescribing; (4) define ‘‘substantiated 

or suspicious activities’’ related to fraud, waste, or 

abuse; and (5) establish a secure portal which would 

enable the sharing of data and referrals of ‘‘substantiated or suspicious activities’’ related to fraud, waste, 

or abuse among plan sponsors, CMS, and CMS’s 

program integrity contractors. 

While we believe there may be savings generated 

through actions taken by plans that will conduct their 

own due diligence from the reporting and sharing of 

administrative actions between CMS and plans sponsors, as well as additional law enforcement actions, 

we cannot estimate the impact at this time. The Part 

C and Part D sponsors will incur an initial aggregate 

cost of $15.2 million with level subsequent year aggregate costs of $9.6 million. 

f. Medicare Advantage (MA) 

and Part D Prescription 

Drug Program Quality Rating System (§§ 422.162, 

422.164, 422.166, 

422.252, 423.182, 

423.184, and 423.186).

We are codifying additional existing rules for calculating 

MA Quality Bonus Payments ratings, implementing 

updates to the Health Outcomes Survey measures, 

adding new Part C measures, clarifying the rules 

around contract consolidations and application of the 

adjustment for extreme and uncontrollable circumstances when data are missing due to data integrity concerns, and making additional technical 

clarifications. 

There will be no, or negligible, impact on the Medicare 

Trust Fund from these provisions. 

g. Permitting a Second, 

‘‘Preferred,’’ Specialty Tier 

in Part D (§§ 423.104, 

423.560, and 423.578).

CMS is finalizing regulations to (1) allow Part D sponsors to establish a second, ‘‘preferred,’’ specialty tier 

at a lower cost-sharing threshold than the current 

specialty tier; (2) codify the existing maximum cost 

sharing for the highest specialty tier; (3) codify a 

methodology to determine annually the specialty-tier 

cost threshold using ingredient cost and increase the 

threshold when certain conditions are met; (4) require 

sponsors to permit tiering exceptions between the 

two specialty tiers; and (5) permit sponsors to determine which drugs go on either specialty tier. 

Permitting Part D sponsors to establish a second, ‘‘preferred,’’ specialty tier is unlikely to have a material 

impact on Part D costs to either the government or 

Part D enrollees. 


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Provision Description Primary impact to plans and sponsors, enrollees, 

and medicare trust fund as applicable 

h. Beneficiary Real Time 

Benefit Tool (RTBT) 

(§ 423.128).

CMS is finalizing regulations to require that each Part D 

plan implement a beneficiary real time benefit tool by 

January 1, 2023. he RTBTl must enable enrollees to 

have the information included in the prescriber RTBT 

system which includes accurate, timely, and clinically 

appropriate patient-specific real-time formulary and 

benefit information (including cost, formulary alternatives and utilization management requirements). 

Adoption of a beneficiary RTBT will be an additional 

cost and burden on Part D sponsors. Based on our 

estimates, we believe this will cost Part D plans 

about $4.0 million for all plans in the first year based 

on the costs for them to reprogram their computer 

systems. 

Additionally, the voluntary provision of rewards by Part 

D sponsors to enrollees using RTBT will have an impact of $0.7 million in the first year, in order to implement the program, and $0.4 million in subsequent 

years in order to maintain the program. These are 

maximum impacts assuming all Part D sponsors 

choose to implement the rewards and incentives, and 

it remains to be seen whether or not this will be the 

case. 

i. Service Delivery Request 

Processes under PACE 

(§§ 460.104 and 460.121).

CMS is finalizing the process by which PACE organizations address service determination requests. Currently the IDT must determine the appropriate member(s) of the IDT to conduct a reassessment, perform 

a reassessment, and render a decision on each service determination request. However, our experience 

shows that approximately 40 percent of all requests 

could be immediately approved in full by an IDT 

member. We are therefore removing the obligation 

for a request to be brought to the IDT or for a reassessment to be conducted when a member of the 

IDT receives and can approve a service determination request in full at the time it is made. We are also 

removing the requirement to conduct a reassessment 

in response to a service determination request except when a request would be partially or fully denied. 

The proposed revisions create efficiencies which are 

estimated to create cost savings of $16.8 million in 

the first year and gradually increase to $ 21.3 million 

in 2031. The net savings over 10 years is $193.8 million. The savings are true savings to PACE organizations as a result of reduced administrative burden. 

j. Beneficiaries with Sickle 

Cell Disease (SCD) 

(§ 423.100).

CMS is finalizing that beneficiaries with SCD are classified as exempted from DMPs starting in plan year 

2022. 

We estimate that the impact of this provision is negligible because it will result in under 70 beneficiaries 

(i.e., beneficiaries with SCD who meet DMP inclusion 

criteria by meeting the definition of a PARB) being 

exempted from DMPs. 

B. Background 

We received approximately 667 

timely pieces of correspondence 

containing multiple comments for the 

provisions implemented within this 

final rule from the proposed rule titled 

‘‘Medicare and Medicaid Programs; 

Contract Year 2021 and 2022 Policy and 

Technical Changes to the Medicare 

Advantage Program, Medicare 

Prescription Drug Benefit Program, 

Medicaid Program, Medicare Cost Plan 

Program, and Programs of All-Inclusive 

Care for the Elderly’’ which appeared in 

the Federal Register on February 18, 

2020 (85 FR 9002) (February 2020 

proposed rule). Comments were 

submitted by MA health plans, Part D 

sponsors, MA enrollee and beneficiary 

advocacy groups, trade associations, 

providers, pharmacies and drug 

companies, states, telehealth and health 

technology organizations, policy 

research organizations, actuarial and 

law firms, MACPAC, MedPAC, and 

other vendor and professional 

associations. As mentioned previously, 

we are finalizing the policies from the 

February 2020 proposed rule in more 

than one final rule. The first part titled 

‘‘Medicare Program; Contract Year 2021 

Policy and Technical Changes to the 

Medicare Advantage Program, Medicare 

Prescription Drug Benefit Program, and 

Medicare Cost Plan Program’’ appeared 

in the Federal Register on June 2, 2020 

(85 FR 33796), and contained a subset 

of regulatory changes that impacted MA 

organizations and Part D sponsors more 

immediately, including information 

needed to submit their bids by the 

statutory deadline (the first Monday in 

June). The majority of the remaining 

provisions are addressed here in this 

final rule. 

The proposals we are finalizing in this 

final rule range from minor 

clarifications to more significant 

modifications based on the comments 

received. Summaries of the public 

comments received and our responses to 

those public comments are set forth in 

the various sections of this final rule 

under the appropriate headings. 

We also note that some of the public 

comments received for the provisions 

implemented in this final rule were 

outside of the scope of the proposed 

rule. CMS did not make any proposals 

in the February 2020 proposed rule on 

these topics, and as such, these out-ofscope public comments are not 

addressed in this final rule. The 

following paragraphs summarize the 

out-of-scope public comments. 

We received comments about how 

CMS will assess compliance with PACE 

regulatory requirements, 

recommendations for changes to PACE 

grievance requirements, and a 

recommendation to require plan 

sponsors to automatically escalate all 

adverse Part D benefit appeals to the 

independent review entity. Related to 

Star Ratings, we received comments that 

CMS should only apply the Categorical 

Adjustment Index if it positively 

impacts a contract’s Star Rating, and 

that we adopt completely new Star 

Ratings measures or change HEDIS 

measures during the COVID–19 

pandemic. Related to establishing 

pharmacy performance measure 

reporting requirements, we received 

comments in favor of abolishing Direct 

and Indirect Remunerations, applying 

100 percent of direct pharmacy price 

concessions at the point-of sale, 

prohibiting use of a scoring method that 


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2For more information pertaining to chapter 16b 

of the Medicare Managed Care Manual, please see: 

https://www.cms.gov/regulations-and-guidance/ 

guidance/manuals/downloads/mc86c16b.pdf. 

solely uses contractual pay-forperformance metrics, and the inclusion 

of clinical data as part of any 

standardized performance measures. 

With regard to our proposals to permit 

Part D sponsors to maintain up to two 

specialty tiers, several commenters 

expressed that, in general, tieredformulary structures have misaligned 

incentives, and that specialty tiers 

(particularly a second specialty tier), 

exacerbate the impact of such 

misaligned incentives. These 

commenters expressed concerns over 

the transparency of Part D rebate 

mechanisms and suggested that Part D 

sponsors have incentives to grant more 

expensive products with preferred 

status even when preferred products are 

not always the least expensive products, 

which the commenters posited increases 

costs for both Part D enrollees and the 

government. Some commenters 

suggested that CMS should eliminate 

the specialty tier, reasoning that 

elimination of the specialty tier would 

only produce modest increases in 

premiums and cost sharing in other 

tiers. Some commenters also suggested 

that the tiers should be relabeled and 

reordered in the hierarchy relative to 

Part D enrollee cost sharing to be more 

consistent with current industry 

practices. Some commenters suggested 

that CMS should mandate that denials 

at the pharmacy counter trigger the 

appeals process. Other commenters 

suggested that Part D enrollees 

stabilized on a specialty drug be exempt 

from unfavorable coverage changes (for 

example, increased cost sharing) 

resulting from a secondary specialty 

tier. Some commenters suggested that 

CMS should adjust the Part D rebate 

sharing formulas to remove plan 

incentives for high-cost, high-rebate 

brand drugs. Some commenters 

encouraged CMS to investigate 

alternative catastrophic reinsurance 

models to incent the most savings for 

health plans implementing a preferred 

specialty tier. Some commenters 

suggested that, like private insurance 

plans with more than one specialty tier, 

CMS should establish an out-of-pocket 

max in Part D. Some commenters 

suggested a comprehensive reform of 

the Part D program. Some commenters 

suggested that transitioning to a 

biosimilar biological product on a lower 

specialty tier may have negative clinical 

implications for a patient stabilized on 

a reference product. (We refer readers to 

the Food and Drug Administration 

(FDA) regarding the safety and efficacy 

of biosimilar biological products, and 

their use in patients who have 

previously been treated with the 

reference product, as well as in patients 

who have not previously received the 

reference product.) Some commenters 

took the opportunity to suggest that 

CMS should expand the scope of our 

mid-year formulary change policy to 

include biosimilar biological products, 

reasoning that they are ‘‘equivalent’’ to 

the reference biological products. Some 

commenters suggested that CMS should 

improve the exceptions and appeal 

process. Some commenters suggested 

that CMS should ensure independent 

pharmacies cannot be excluded from 

providing non-preferred specialty tier 

drugs. Finally, some commenters 

suggested that CMS should institute 

conflict of interest provisions for 

pharmacy chains owned by PBMs. (We 

note that this rule, as we are finalizing 

it, would not provide Part D sponsors 

with any additional basis to exclude 

independent pharmacies from their 

networks.) 

In response to proposed changes to 

the Coverage Gap Discount Program 

(CGDP), two commenters offered 

suggestions about how the Part D 

program could be more cost effective. 

One of these commenters urged CMS to 

prohibit Part D plans from using 

utilization management tools to steer 

utilization away from lower cost 

biosimilar products. The other 

commenter suggested that Congress 

change the CGDP in a way that would 

result in greater use of lower cost drugs 

throughout the program and suggested 

that the program’s existence shifts the 

lower net cost determinations of generic 

and biosimilar products. 

With regard to Medication Therapy 

Management (MTM), one commenter 

expressed concern about how 

pharmacists are paid for providing 

services, while another questioned the 

overall cost benefit of the MTM 

program. 

A commenter recommended that CMS 

align exemption criteria for the 

Pharmacy Quality Alliance’s Initial 

Opioid Prescribing Measures with DMP 

exemption criteria; however, these 

measures are not developed by CMS and 

are outside the scope of the proposed 

rule. We also received a number of 

comments that did not refer specifically 

to our Part D opioid proposals but more 

generally (1) referenced the opioid 

epidemic, (2) cited concerns that 

existing restrictions on opioid access 

may drive chronic pain patients to illicit 

markets and/or reduce their quality of 

life and functional status, (3) raised 

questions about Drug Enforcement 

Agency (DEA) actions against opioid 

prescribers and whether they address 

the root cause of the opioid epidemic, 

and (4) opined that interventions should 

be focused on illegal drugs. 

II. Implementation of Certain 

Provisions of the Bipartisan Budget Act 

of 2018 

A. Improvements to Care Management 

Requirements for Special Needs Plans 

(SNPs) (§ 422.101) 

Congress authorized special needs 

plans (SNPs) as a type of Medicare 

Advantage (MA) plan designed to enroll 

individuals with special needs. The 

three types of SNPs are those designed 

for: (1) Institutionalized individuals 

(defined in § 422.2 as an individual 

continuously residing, or expecting to 

continuously reside, for 90 days or 

longer in specified facility) or 

institutionalized-equivalent (defined in 

§ 422.2 as living in the community but 

requiring an institutional level of care, 

which is determined using a specified 

assessment instrument and conducted 

consistent with specified standards); (2) 

individuals entitled to medical 

assistance under a State Plan under title 

XIX of the Act; or (3) other individuals 

with severe or disabling chronic 

conditions that would benefit from 

enrollment in a SNP. As noted in the 

proposed rule (85 FR 9013 through 

9014), there have been a number of 

changes to the requirements for MA 

SNPs since their initial authorization. 

We proposed changes to § 422.101(f) to 

implement and extend the latest of 

those statutory changes, made by the 

Bipartisan Budget Act of 2018 (BBA). 

As of July 2019, there were 321 SNP 

contracts with 734 SNP plans that had 

at least 11 members. These figures 

included 208 Dual Eligible SNP 

contracts (D–SNPs) with 480 D–SNP 

plans with at least 11 members, 57 

Institutional SNP contracts (I–SNPs) 

with 125 I–SNP plans with at least 11 

members, and 56 Chronic or Disabling 

Condition SNP contracts (C–SNPs) with 

129 C–SNP plans with at least 11 

members. For more discussion of the 

history of SNPs, please see Chapter 16b 

of the Medicare Managed Care Manual 

(MMCM).2 The proposed rule 

summarized current processes and 

requirements for the models of care that 

all SNPs must use and follow under 

current law. (85 FR 9014) 

The Bipartisan Budget Act of 2018 

(BBA), enacted into law on February 9, 

2018, amended section 1859(f) of the 

Act to include new care management 

requirements for C–SNPs. We proposed, 

and are finalizing here, regulations to 


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implement the provisions of the BBA of 

2018 and establishes new care 

management requirements at 

§ 422.101(f) for all SNPs, including 

minimum benchmarks for SNP models 

of care. Due to operational 

considerations, the requirements we are 

finalizing at § 422.101(f) are intended 

for implementation for coverage 

beginning contract year 2023. Plans that 

are required to submit MOCs for 

contract year 2022 are due to submit 

MOCs by February 17, 2021; those 

submissions will be evaluated based on 

the regulations in effect at that time 

(that is, without the amendments 

adopted here) and SNPs must 

implement and comply with their 

approved MOCs in connection with 

coverage in 2022. Moving the applicable 

implementation of the SNP MOC 

provisions to contract year 2023 will 

allow SNPs and CMS to construct the 

necessary processes for the full 

implementation and enforcement of this 

final rule. When MOCs for contract year 

2023 are submitted for review and 

approval in early 2022, the regulations 

in this final rule will be used to evaluate 

those MOCs for approval. 

Specifically, we proposed the 

following: 

• First, we proposed to implement 

the requirement in section 

1859(f)(5)(B)(i) of the Act regarding the 

interdisciplinary team, or sometimes 

called the interdisciplinary care team 

(ICT), in an amendment to 

§ 422.101(f)(1)(iii) that would require 

the team to include providers with 

demonstrated expertise, including 

training in an applicable specialty, in 

treating individuals similar to the 

targeted population of the plan, and in 

addition to implementing the statutory 

requirement for C–SNPs, extend the 

requirement to all SNPs. 

• Second, we proposed to implement 

the requirement in section 

1859(f)(5)(B)(ii) of the Act requiring 

compliance with requirements 

(developed by CMS) to provide a faceto-face encounter with each enrollee in 

a new paragraph (f)(1)(iv) of § 422.101 

that would extend the requirement to all 

SNPs. Under our proposal, face-to-face 

encounters would have to be between 

each enrollee and a member of the 

enrollee’s ICT or the plan’s case 

management and coordination staff on 

at least an annual basis, beginning 

within the first 12 months of 

enrollment, as feasible and with the 

individual’s consent; we also proposed 

that a face-for-face encounter must be 

either in-person or through a visual, 

real-time, interactive telehealth 

encounter. 

• Third, we proposed to codify the 

requirement in section 1859(f)(5)(B)(iii) 

of the Act that, as part of the C–SNP 

model of care, the results of the initial 

assessment and annual reassessment 

required for each enrollee be addressed 

in the individual’s individualized care 

plan. As with the other provisions in 

section 1859(f)(5)(B) of the Act, we 

proposed to extend this requirement to 

the model of care for all SNPs, in 

revisions to § 422.101(f)(1)(i). 

• Fourth, we proposed to codify the 

requirement in section 1859(f)(5)(B)(iv) 

of the Act that the evaluation and 

approval of the model of care take into 

account whether the plan fulfilled the 

previous MOC’s goals and to extend this 

evaluation component to all SNP 

models of care, rather than limiting it to 

C–SNPs. We proposed a new provision 

at § 422.101(f)(3)(ii) to require that, as 

part of the evaluation and approval of 

the SNP model of care, National 

Committee for Quality Assurance 

(NCQA) must evaluate whether goals 

were fulfilled from the previous model 

of care. We also proposed, in new 

paragraphs (f)(3)(ii)(A) through (C) that: 

(A) Plans must provide relevant 

information pertaining to the MOC’s 

goals as well as appropriate data 

pertaining to the fulfillment of the 

previous MOC’s goals; (B) plans 

submitting a new model of care must 

provide relevant information pertaining 

to the MOC’s goals for review and 

approval; and (C) if the SNP model of 

care did not fulfill the previous MOC’s 

goals, the plan must indicate in the 

MOC submission how it will achieve or 

revise the goals for the plan’s next MOC. 

We also proposed to move an existing 

regulation at § 422.101(f)(2)(vi) that 

requires all SNPs must submit their 

MOC to CMS for NCQA evaluation and 

approval in accordance with CMS 

guidance to a new paragraph at 

§ 422.101(f)(3)(i), using the same 

language. 

• Lastly, we proposed to implement 

new regulation text at § 422.101(f)(3)(iii) 

to impose the requirement for 

benchmarks to be met for a MOC to be 

approved. Section 1859(f)(5)(B)(v) of the 

Act requires that the Secretary establish 

a minimum benchmark for each element 

of the C–SNP model of care, and that the 

MOC can only be approved if each 

element meets a minimum benchmark. 

The proposed regulation in 

§ 422.101(f)(3)(iii) would extend these 

benchmarks for all SNP models of care. 

We proposed to extend the new 

requirements enacted by the BBA of 

2018 to all SNP plan types for several 

reasons. We explained that these 

additional requirements are consistent 

with current regulations and subregulatory guidance CMS provides to all 

SNPs regarding care management and 

MOC compliance. Second, we believe 

that these proposed regulations are 

important safeguards to preserve the 

quality of care for all special needs 

individuals, including those enrolled in 

D–SNPs and I–SNPs and not just those 

enrolled in C–SNPs. Given the 

prevalence of medically complex 

chronic conditions among I–SNP and 

D–SNP enrollees, we believe the proper 

application of these new care 

improvement requirements would 

improve care for enrollees with complex 

chronic conditions. Finally, we stated 

that the application of multiple, 

different MOC standards would be 

operationally complex and burdensome 

for MA organizations that sponsor 

multiple SNP plan types, for instance, a 

D–SNP and a C–SNP. Our proposal 

would streamline operational and 

administrative obligations by making 

the different SNPs have similar 

requirements as well as establish 

minimum standards to benefit all 

special needs individuals in these plans. 

In the proposed rule, we solicited 

comment on the extension of the new 

care management and MOC 

requirements for C–SNPs to the care 

management and MOC requirements for 

all SNP types and then discussed each 

of the specific proposed policies in turn. 

We address comments about the 

extension of the requirements to all SNP 

types first, followed by a review of each 

proposed policy and the relevant 

comments and the response to such 

comments. 1. Extension of the C–SNP 

requirements to all SNP types 

Comment: CMS received a number of 

comments in support of or in opposition 

to the extension of C–SNP requirements, 

added to section 1859(f)(5) of the Act by 

the BBA of 2018, to apply to all SNP 

types, instead of limiting the 

applicability of these requirement to just 

C–SNPs. A handful of commenters were 

concerned about the applicability of 

several of the proposed regulations to I– 

SNP and D–SNP care management 

protocols with some arguing that the 

proposed rule would result in 

requirements that are duplicative of the 

current MOC approval process 

requirements. Several commenters 

specifically noted that SNPs of all types 

have existing processes and practices 

that cover the areas discussed in the 

proposed rule. They contend that the 

NCQA Model of Care, review, and 

scoring guidelines comprehensively 

cover the coordination of care, provider, 

and quality requirements outlined in the 

proposed rule. In addition, commenters 

noted that CMS audits include review of 


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performance by SNPs on these 

processes. 

Response: Regarding the extension of 

section 1859(f)(5) of the Act to include 

all SNP types, we agree this rule is 

consistent with current CMS policy, 

including several current regulations 

implementing section 1859; the statute 

and several regulations establish similar 

requirements for all SNPs regardless of 

type. Specifically, section 1859(f)(5)(A) 

of the Act requires that MA 

organizations offering a SNP implement 

an evidence-based model of care. The 

MOC and other SNP-specific 

requirements have been incorporated 

into the MA application for MAOs that 

wish to offer a SNP so that these MAOs 

can demonstrate that they meet CMS’ 

SNP specific requirements and are 

capable of serving the vulnerable special 

needs individuals who enroll in SNPs. 

In the Medicare Program; Medicare 

Advantage and Prescription Drug 

Benefit Programs: Negotiated Pricing 

and Remaining Revisions (74 FR 1493), 

known hereafter as the January 2009 

final rule, CMS outlined the overarching 

purpose of section 422.101(f) and noted 

that SNPs, regardless of type, are 

required to meet the same requirements 

including that each plan must have 

networks with clinical expertise specific 

to the special needs population of the 

plan; use performance measures to 

evaluate models of care; and be able to 

coordinate and deliver care targeted to 

people with disabilities, frail older 

adults, and those near the end of life 

based on appropriate protocols. (74 FR 

1498 through 1450) CMS’s belief that 

these measures are critical to providing 

care to the types of special needs 

populations served by SNPs has not 

changed in the intervening years since 

finalizing § 422.101(f) in 2009. As noted 

in this section of this rule, for each 

specific provision we proposed and are 

finalizing at § 422.101(f), CMS is 

codifying certain requirements that are 

part of the current SNP MOC approval 

process. Rather than forcing a 

duplication of processes, we believe that 

SNPs have already implemented many 

of these new requirements into their 

MOC. Understanding this, we proposed 

and are finalizing these provisions in 

line with current MOC review and 

scoring guidelines, covering all facets of 

the MOC including care coordination, 

provider, and quality requirements. 

As discussed in the proposed rule, 

extending the statutory requirements for 

C–SNPs to all SNPs will provide 

improvements to the care coordination 

model in all SNPs. For example, section 

1859(f)(5)(B)(ii), as added by the BBA of 

2018, requires C–SNPs to provide faceto-face encounters with each enrollee on 

an annual basis, consistent with 

standards adopted by CMS. We 

proposed and are finalizing, at 

§ 422.101(f)(1)(iv), that all SNPs provide 

for face-to-face encounters between each 

enrollee and a member of the enrollee’s 

interdisciplinary team or the plan’s case 

management and coordination staff on 

at least an annual basis, beginning 

within the first 12 month of enrollment, 

as feasible and with the individual’s 

consent. Face-to-face encounters are 

appropriate to require for all SNP 

enrollees because these SNP enrollees 

have similar healthcare needs, including 

the need for treatment of multiple 

chronic conditions and for services such 

as care coordination. 

Comment: Another comment 

supported the proposal, but added that 

CMS should explore the application of 

a more rigorous set of requirements 

focused on person-centered care to 

strengthen the MOC and meet the needs 

of SNP enrollees. 

Response: We thank the commenter 

for their comment and suggestions. As 

proposed and finalized, the new 

provisions in § 422.101(f) provide both 

a structure for creating a care 

management process specifically 

designed to provide targeted care to 

individuals with special needs and 

allow flexibilities enabling plans to 

create innovative approaches to personcentered care. As noted in the Interim 

Final Rule with comment, titled 

‘‘Medicare Program; Revisions to the 

Medicare Advantage and Prescription 

Drug Benefit Programs’’ (CMS–4138– 

IFC), issued in September 2008 

(‘‘September 2008 IFC’’) (73 FR 54225, 

54228), we expect the MA organizations 

that have the commitment and resources 

to serve vulnerable special needs 

beneficiaries through SNPs will 

perpetually evaluate their own model of 

care by collecting and analyzing 

performance data to continually 

improve their model of care. We also 

noted in the September 2008 IFC that 

CMS would continue to evaluate models 

of care through the analysis of SNP 

performance data and monitoring visits, 

the review of scientific research on the 

efficacy of other care models, and 

feedback from beneficiaries, advocacy 

groups, and healthcare professionals (73 

FR 54228). The revisions to § 422.101(f) 

adopted in this final rule represent a 

continuation of this process to evaluate 

and refine SNP care management. 

This final rule establishes and 

clarifies delivery of care standards for 

SNPs and codifies standards which we 

have included in other CMS guidance 

and instructions. As such, we are 

finalizing the revisions to paragraph (f) 

to § 422.101 generally as proposed to 

extend certain statutory requirements to 

all SNPs. 

1. The Interdisciplinary Team (ICT) in 

the Management of Care 

As amended by the BBA of 2018, 

section 1859(f)(5)(B)(i) of the Act 

requires the interdisciplinary team (ICT) 

of each C–SNP to include providers 

with specified expertise and training. 

We proposed to implement this through 

an amendment to § 422.101(f)(1)(iii) that 

would apply the requirement to all 

SNPs. We proposed to require that each 

MA organization offering a SNP plan 

must provide each enrollee with an ICT 

that includes providers with 

demonstrated expertise and training, 

and, as applicable, training in a defined 

role appropriate to their licensure in 

treating individuals similar to the 

targeted population of the plan. 

We explained in the proposed rule 

that MIPPA required SNPs to conduct 

initial and annual comprehensive health 

risk assessments, develop and 

implement an individualized plan of 

care, and implement an ICT for each 

beneficiary. Specifically, Section 

1859(f)(5)(A)(ii)(III) of the Act requires 

all SNPs to use ICTs as part of offering 

a specialized MA plan for special needs 

individuals. As stated in the proposed 

rule, we believe that the combination of 

MIPPA’s statutory elements and our 

regulatory prescription for the SNP 

model of care establishes a standardized 

architecture for effective care 

management while giving plans the 

flexibility to design the unique services 

and benefits that enable them to meet 

the needs and preferences of their target 

population. We believe our proposal, 

which amends paragraph (f)(1)(iii) and 

applies the additional requirements 

pertaining to demonstrated expertise 

and training of interdisciplinary team 

providers to all SNPs, is consistent with 

the MIPPA requirements and the 

rulemakings that first adopted 

requirements for the use of 

interdisciplinary teams (73 FR 54228, 74 

FR 1498). 

All SNPs must have an ICT to 

coordinate the delivery of services and 

benefits, but the current regulation 

provides flexibility as necessary for each 

SNP: One SNP may choose to contract 

with an ICT to deliver care in 

community health clinics; and another 

SNP may hire its team to deliver care in 

the home setting. Under the current 

rule, and our proposal, all SNPs must 

coordinate the delivery of services and 

benefits through integrated systems of 

communication among plan personnel, 

providers, and beneficiaries. However, 

as we explained in the proposed rule, 

one SNP may coordinate care through a 


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3Please see Chapter 5 of the MMCM, which can 

be found at: https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/downloads/ 

mc86c05.pdf. 

4The scoring guidelines can be found at: https:// 

snpmoc.ncqa.org/wp-content/uploads/MOCScoring-Guidelines_CY-2021-1.pdf. See section 

MOC 2, Element D. 

telephonic connection among all 

stakeholders and another SNP may 

coordinate care through an electronic 

system using Web-based records and 

electronic mail accessed exclusively by 

the plan, network providers, and 

beneficiaries. All SNPs must coordinate 

the delivery of specialized benefits and 

services that meet the needs of their 

most vulnerable beneficiaries. However, 

D–SNPs may need to coordinate 

Medicaid services while an institutional 

SNP may need to facilitate hospice care 

for its beneficiaries near the end of life. 

We provided these examples in the 

proposed rule to demonstrate the variety 

of ways SNPs currently implement their 

systems of care and how we believe all 

SNP enrollees should have access to a 

team of providers with expertise and 

training that are appropriate for each 

individual enrollee. 

We received the following comments 

and our responses follow: 

Comment: A commenter 

recommended that CMS clarify that 

‘‘providers,’’ as used in this section, 

follows the definition of ‘‘provider’’ in 

42 CFR 422.2, and also recommended 

that CMS provide additional details 

about what constitutes ‘‘demonstrated 

expertise and training.’’ Specifically, the 

commenter requested that CMS clarify 

whether there are minimal expertise or 

training requirements that the provider 

must meet or whether each special 

needs plan would have discretion to 

make this determination. 

Response: As proposed and finalized, 

§ 422.101(f)(1)(iii) requires SNPs to use 

an interdisciplinary team that includes 

a team of providers with demonstrated 

expertise and training, and, as 

applicable, training in a defined role 

appropriate to their licensure in treating 

individuals similar to the targeted 

population of the plan. Our current 

guidance for the MOC approval process 

provides that a SNP’s MOC describe the 

composition of the ICT, including how 

the SNP determines ICT membership 

and the roles and responsibilities of 

each member. Additional information 

can be found in Chapter 5 of the 

MMCM, section 20.2.2, specifically 

guidance on MOC 2, Element D.3 A 

compliant and well-developed MOC 

includes a description that specifies 

how the expertise and capabilities of the 

ICT members align with the identified 

clinical and social needs of the SNP 

beneficiaries. As proposed and as 

finalized, the requirement in 

§ 422.101(f)(1)(iii) to have training in a 

defined role appropriate to their 

licensure in treating individuals similar 

to the targeted population of the plan 

means that individual providers and 

providers in one type of SNP (compared 

to other SNPs) may have training and 

expertise that differ based on the SNPtype or each individual enrollee’s needs. 

For example, a C–SNP that targets 

diabetes mellitus may seek to establish 

an ICT for each enrollee that has a 

specialist with training and expertise in 

endocrinology while a D–SNP may want 

to establish ICTs for individual 

enrollees that focus on a particular set 

of chronic conditions or focus on 

specific service delivery needs for an 

enrollee, such as long-term services and 

supports. This is consistent with our 

current guidance and we believe that 

any additional burden here for SNPs 

will be minimal. 

As defined in § 422.2, a provider is: 

(1) An individual who is engaged in the 

delivery of health care services in a 

State and is licensed or certified by the 

State to engage in that activity in the 

State; or (2) an entity that is engaged in 

the delivery of health care services in a 

State and is licensed or certified to 

deliver those services if such licensing 

or certification is required by State law 

or regulation. Therefore, the providers 

in the ICT must be licensed or certified 

to furnish the health care services they 

deliver. Under this new regulation, 

providers in an ICT must also be trained 

in a defined role appropriate to their 

licensure in treating individuals similar 

to the targeted population of the plan, 

when applicable. We expect that plans 

are already meeting this requirement 

that members of the ICT have training 

and expertise specific to the SNP’s 

target population based on MOC scoring 

guidelines provided to all SNPs by 

NCQA; for example, MOC submissions 

specify how the expertise and 

capabilities of the ICT members align 

with the identified clinical and social 

needs of the SNP enrollees and describe 

how specific care plans for enrollees are 

used to determine the composition of 

the ICT.4 In conclusion, under the 

amendment to paragraph (f)(1)(iii) that 

we are finalizing here, all members of 

the ICT must be licensed or certified to 

deliver the applicable health care 

furnished to enrollees of the SNP in 

compliance with § 422.2 and all of the 

members of the ICT must have 

demonstrated expertise and training, 

and, as applicable, training in a defined 

role appropriate to their licensure in 

treating individuals similar to the 

targeted population of the plan. The 

revisions at § 422.101(f)(1)(iii) are being 

finalized as applicable beginning with 

2023 so MOCs for that period will be 

reviewed and approved based on 

demonstrated compliance with this final 

rule. The specifics of the expertise and 

necessary training will vary with the 

SNP and the covered population, and 

we are not adopting specific, uniform 

minimum requirements for all providers 

in all SNPs ICTs. 

The revisions at § 422.101(f)(1)(iii) are 

being finalized as applicable beginning 

2023 so MOCs for that period and 

subsequent years will be reviewed and 

approved based on demonstrated 

compliance with the amendments to the 

regulation that we are finalizing here. 

Comment: CMS received several 

comments regarding the extension of the 

new statutory interdisciplinary team 

requirements to D–SNPs and I–SNPs. 

Some commenters believed that plan 

implementation of additional ICT 

requirements would be unnecessarily 

burdensome because some D–SNPs have 

difficulty contracting with and requiring 

specialists to take part in the ICT 

process. Other commenters noted that 

the new rule would be redundant, given 

existing regulations and policies are 

already in place, including regulations 

applying to the institutional settings in 

which I–SNP beneficiaries reside. Some 

of these commenters noted that adding 

ICT requirements will increase the 

burden on long-term care facilities and 

may require some patients to be 

managed to different standards than 

others. Others noted that this provision 

could interfere with plans’ current 

practices that promote the identification 

of providers from disciplines that are 

most relevant to the beneficiary’s needs. 

Another commenter noted that for D– 

SNPs, there are credentialing and 

network adequacy standards already in 

place to ensure appropriate access for 

D–SNP enrollees to high-quality 

providers. Lastly, CMS received a 

comment stating that the ICT should 

include the enrollee’s managed care 

long term services and supports 

(MLTSS) care manager in cases where 

the enrollee receives those services. 

Response: We believe the revisions 

we proposed and are finalizing at 

§ 422.101(f)(1)(iii) are consistent with 

the current review and approval process 

for each MOC submission under MOC 2, 

Element D. While there might be 

overlap and redundancies for 

§ 422.101(f)(1)(iii) and existing 

standards either for SNPs and SNP 

MOCs or for institutional providers that 

furnish services to SNP enrollees, that 

only reinforces that finalizing 


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§ 422.101(f)(1)(iii) as proposed is 

appropriate. As SNPs are designed to 

furnish services and coordinate care 

based on the needs of its target 

population, ensuring that the providers 

and ICT that deliver that care have 

expertise that is specific to the target 

population is consistent with the overall 

goals of SNPs. 

As noted in Chapter 5 of the MMCM, 

section 20.2.2, the role and conditions 

of MOC approval for the ICT are 

described in MOC 2 Element D. All 

SNPs are required in § 422.101(f) to 

implement an evidence based model of 

care (MOC) that has been evaluated and 

approved by the NCQA. As part of the 

approval process, SNPs are also 

required to meet ICT requirements 

under Element D. Each SNP must 

describe how its organization 

determines the composition of ICT 

membership. Under factor 1 of MOC 2, 

Element D, all SNPs must explain how 

the SNP facilitates the participation of 

beneficiaries and their caregiver(s) as 

members of the ICT. In addition, each 

SNP must describe how the 

beneficiary’s Health Risk Assessment 

Tool (HRAT) and ICP are used to 

determine the composition of the ICT 

for each enrollee, including where 

additional team members are needed to 

meet the unique needs of a beneficiary. 

Lastly, SNPs must explain how the ICT 

uses health care outcomes to evaluate 

processes established to manage 

changes or adjustments to the 

beneficiary’s health care needs on a 

continuous basis. The new regulation 

text concerning the ICT and the need to 

include providers with certain expertise 

and training are similar to these existing 

requirements and standards for the 

MOC, so any additional burden should 

be minimal. To the extent that a SNP is 

already using the needs and assessments 

of each enrollee to identify ICT 

members that are qualified and trained 

to meet that individual enrollee’s 

unique needs (and does this for each 

enrollee), this new standard may require 

some additional documentation from 

the SNP about the demonstrated 

expertise, licensure and training of the 

ICT. CMS believes plans will be able to 

implement the new ICT provisions 

without significant changes to current 

processes based on two critical factors: 

(1) All SNPs are already required under 

§ 422.101(f)(1)(iii) to establish an ICT 

for each enrollee, and thus, plans have 

in place steps for reviewing ICT 

composition and qualification; and (2) 

more importantly, SNPs are currently 

employing a process similar to the new 

provision for establishing an ICT as part 

of the MOC application approval 

process. Again, the new ICT provision is 

a natural extension of and generally 

codifies elements of the current MOC 

approval process covering the ICT, 

which should facilitate a seamless 

transition for SNPs as they implement 

the necessary processes to comply with 

new ICT requirements. These changes to 

the MOC, and the others contained in 

the amendments to § 422.101(f) will 

apply to MOCs and SNP performance 

for 2023. This means that SNPs 

submitting MOCs for 2023 will need to 

develop and implement their MOCs for 

2023 based on the amendments in this 

final rule. However, CMS will not 

require SNPs that currently employ 

MOCs that have been approved by 

NCQA and are not due for review and 

approval in 2023 to resubmit their 

MOCs to demonstrate compliance with 

§ 422.101(f)(1)(iii) as amended in this 

rule; so long as the SNP and its MOC 

meets all other requirements, the SNP 

may continue to operate under its 

current MOC based on how similar the 

ICT provision of this final rule is to 

current law and policy. We strongly 

encourage D–SNPs and I–SNPs that do 

not have MOCs up for review and 

approval for 2023 to review their MOCs 

and implement changes as necessary to 

ensure the interdisciplinary team for 

each enrollee includes a team of 

providers with demonstrated expertise 

and training, and, as applicable, training 

in a defined role appropriate to their 

licensure in treating individuals similar 

to the targeted population of the plan. 

While the commenter states that some 

SNPs may face obstacles when seeking 

ICT participation from some providers 

(including certain types of specialists), 

CMS has not seen evidence suggesting 

such difficulties. Due to the similarity of 

§ 422.101(f)(1)(iii) as revised in this rule 

to CMS’s current policy and the 

standards used in NCQA reviews, it is 

likely that any difficulty that would lead 

to an inability to comply with this 

provision would have been apparent in 

past reviews of MOCs. 

As we noted in the preamble of the 

proposed rule, SNPs are in the best 

position to identify an ICT with the 

appropriate expertise and training 

necessary to meet the clinical needs for 

each enrollee, based on the medical and 

behavioral health conditions of their 

member population and the SNP’s 

developed expertise. We expect that an 

MA organization that offers a SNP for a 

particular population based on a 

chronic condition, on residence in an 

institution or needing a similar level of 

care as those who reside in an 

institution, or on eligibility for both 

Medicare and Medicaid, will have 

considered the needs of such 

populations in designing the plan and 

the network of providers. MA 

organizations are not required to offer 

SNPs and those that choose to do so 

must be capable of meeting the unique 

needs of the targeted population, 

including gaining the participation of 

specialists and other health care 

providers that have the most or best 

expertise for serving these vulnerable 

populations, consistent with the 

regulatory requirements. With respect to 

the inclusion of the enrollee’s MLTSS 

care manager, we again defer to SNPs to 

determine the appropriate composition 

of the beneficiary’s ICT in compliance 

with the MOC standards, which 

includes consultation with the 

beneficiary. This final rule is based on 

and reflects a policy that while all SNPs 

must develop and use an ICT to 

coordinate the delivery of services and 

benefits for each enrollee, the 

construction of the ICT must recognize 

and be built to address the needs and 

wishes of each individual enrollee. 

After consideration of the comments 

and for the reasons outlined in the 

response to comments and in the 

proposed rule, we are finalizing the 

amendment to § 422.101(f)(1)(iii) 

regarding ICT expertise and training as 

proposed without modification. 

2. Face-to-Face Annual Encounters 

We proposed to implement section 

1859(f)(5)(B)(ii) of the Act requiring 

compliance with requirements 

(developed by CMS) to provide a faceto-face encounter with each enrollee. 

We proposed that the face-to-face 

encounter be between each enrollee and 

a member of the enrollee’s 

interdisciplinary team or the plan’s case 

management and coordination staff on 

at least an annual basis, beginning 

within the first 12 months of 

enrollment, as feasible and with the 

individual’s consent. We also proposed 

to codify that a face-for-face encounter 

must be either in-person or through a 

visual, real-time, interactive telehealth 

encounter. We proposed to adopt this in 

a new paragraph (f)(1)(iv) in § 422.101 

that would extend the requirement to all 

SNPs. Under our proposal, SNPs would 

be required to provide an annual faceto-face visit that is in-person or by 

remote technology and occurs starting 

within the first 12 months of enrollment 

within the plan. For instance, a plan 

enrolling a beneficiary on October 1 

would need to facilitate a face-to-face 

encounter with that enrollee by 

September 30th of the following year. 

We indicated in the proposed rule that 

SNPs should implement this 

requirement in a manner that honors 


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any enrollee’s decision not to 

participate in any qualifying encounter. 

We received the following comments 

and our responses follow: 

Comment: CMS received a number of 

comments both supporting and 

opposing the requirement for SNPs to 

provide a face-to-face encounter with 

each enrollee. Some plans noted that 

this is already part of their program. 

Some commenters, however, were 

concerned that implementation could be 

a burden for enrollees, while others 

were concerned that the requirements 

would be particularly difficult for SNP 

types with larger enrollments, such as 

D–SNPs. Still others believed that the 

new regulation would be hard for plans 

to track encounters between enrollees 

and providers. Others suggested that 

CMS allow SNPs to use encounters with 

non-ICT plan contracted providers to 

meet this requirement. 

Response: We are finalizing the 

proposal to add § 422.101(f)(1)(iv) to 

require each SNP to provide an annual 

face-to-face encounter with each 

enrollee, with some modifications to 

address concerns raised by the 

commenters. As proposed and finalized, 

the required face-for-face encounter 

must be either in-person or through a 

visual, real-time, interactive telehealth 

encounter. The final rule requires, as 

proposed, that the MA organization 

provide for face-to-face encounters 

between each enrollee and a member of 

the enrollee’s interdisciplinary team or 

the plan’s case management and 

coordination staff. And finally, we are 

also finalizing that the face-to-face 

encounter occur on at least an annual 

basis, beginning within the first 12 

month of enrollment, as feasible and 

with the individual’s consent. However, 

we are finalizing additional flexibility as 

well for SNPs in connection with 

§ 422.101(f)(1)(iv) by including that the 

required face-to-face encounter may also 

be with a contracted health plan 

provider and clarification as to the type 

of encounter that is required. 

As we noted in the proposed rule, we 

intend for this requirement to be met in 

a number of different ways. In the 

proposed rule, we provided examples of 

encounters that would meet the 

requirement, including a visit to or by 

a member of an individual’s 

interdisciplinary team or the plan’s case 

management and coordination staff that 

perform clinical functions, such as 

direct beneficiary care. We agree with 

commenters that have requested that 

encounters with health care providers 

contracted with the enrollee’s SNP 

qualify under the implementation of the 

final rule. This would include the 

enrollee’s regular primary care 

physician, a specialist related to the 

enrollee’s chronic condition, a 

behavioral health provider, health 

educator, social worker, and MLTSS 

plan staff or related MLTSS health care 

providers provided that such providers 

are (i) a member of the enrollee’s 

interdisciplinary team; (ii) part of the 

plan’s case management and 

coordination staff; or (iii) contracted 

plan healthcare providers. Requiring at 

a minimum that a healthcare provider 

with a contractual relationship with the 

SNP be part of the annual face-to-face 

encounter in this way will ensure that 

the annual encounter is a meaningful 

one from the perspective of the 

enrollee’s overall health and wellbeing. 

We also believe that a healthcare 

provider with a contractual relationship 

will facilitate the sharing of critical 

health information among the plan, the 

ICT, and other key healthcare providers, 

and thus ensure coordination of care for 

the enrollee under § 422.112(b), and 

result in increased care coordination 

and facilitate any necessary follow-up 

care or referrals. Therefore, we are 

finalizing the new regulation at 

§ 422.101(f)(1)(iv) with additional text to 

list contracted plan healthcare providers 

as well as members of the ICT and the 

plan’s care coordination team. We defer 

to each SNP to identify which providers 

are part of the plan’s case management 

and coordination staff or contracted 

plan healthcare providers so long as the 

SNP’s policies are reasonable and not a 

means to evade compliance with the 

rule. 

We intend for this mandatory face-toface encounter to serve a clinical or care 

coordination/care management purpose. 

Ensuring that a special needs individual 

has been contacted by the SNP at least 

once a year and that there has been a 

face-to-face encounter that pertains to 

the individual’s health care is a way of 

ensuring that the goals of a SNP are met. 

Examples of the necessary services or 

engagement happening during the 

required encounter include: (i) Engaging 

with the enrollee to manage, treat and 

oversee (or coordinate) their health care 

(such as furnishing preventive care 

included in the individualized care plan 

(ICP)); (ii) annual wellness visits and/or 

physicals; (iii) completion of a health 

risk assessment (HRA), such as the one 

annually required for all SNPs under the 

current regulation at § 422.101(f)(1); (iv) 

care plan review or other similar care 

coordination activities; or (v) health 

related education whereby the enrollee 

receives information or instructions 

critical to the maintenance of their 

health or implementing processes for 

maintaining the enrollee’s health, such 

as the administration of a medication. 

These examples are not the only 

activities that satisfy the new regulatory 

requirement. Encounters may also 

address any concerns related to the 

enrollee’s physical, mental/behavioral 

health, or overall health status, 

including functional status. Plans may 

also use qualifying encounters—those 

that meet qualifications as stipulated in 

this final rule—that are the result of 

plan efforts to satisfy state-mandated 

Medicaid or MTLSS requirements. We 

believe many SNPs would already meet 

this standard in current practice and 

have sufficient encounters on at least an 

annual basis with each enrollee that this 

new regulation will not be burdensome. 

Encounters that are sufficient to meet 

the regulatory requirement we are 

finalizing could occur either through 

regular visits by the enrollee to a 

member of the beneficiary’s 

interdisciplinary team or through the 

care coordination process established by 

the plan’s staff or contracted plan 

healthcare providers. We anticipate that, 

consistent with good clinical practice, 

concerns are addressed and any 

appropriate referrals, follow-up, and 

care coordination activities provided or 

scheduled as necessary as a result of 

these face-to-face encounters. 

We are cognizant that enrollees 

should have the final authority over 

their health care and our proposed 

regulation text reflected this by 

requiring that these face-to-face 

encounters be as feasible and with the 

enrollee’s consent. A SNP must comply 

with this requirement in a manner that 

honors any enrollee’s decision not to 

participate in a face-to-face (either inperson or virtual) encounter. If an 

enrollee does not consent to the 

encounter required by 

§ 422.101(f)(1)(iv), the plan should 

document that in order to demonstrate 

compliance with the regulation. The 

rule addresses feasibility barriers to a 

SNP providing for the required annual 

encounter, such as where a SNP 

enrollee may be non-responsive to plan 

outreach or the state of the member’s 

health (such as if the member is dealing 

with a hospitalization) prohibits a faceto-face encounter with the type of 

provider or staff that are described in 

the final regulation. In these 

circumstances, CMS recognizes that a 

SNP may not be able to comply with the 

rule’s mandate of an annual face-to-face 

encounter and we intend the ‘‘as 

feasible’’ standard in the regulation to 

address such situations. Since the 

enrollee has refused or because the SNP 

could not reach the enrollee after 

reasonable attempts, the plan has 


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complied with the requirement despite 

the lack of a qualified encounter. 

However, plans should document the 

basis or reason that a face-to-face 

encounter is not feasible in order to 

demonstrate that where there are no 

face-to-face encounters in the year, that 

failure is not a violation of the 

regulation. Note that a feasibility barrier 

does not include a SNP having to 

provide a reasonable accommodation, 

such as interpreter services, in order for 

the enrollee to participate in the 

encounter. 

Lastly, restricting the manner of faceto-face encounters to those that are inperson or as a visual, real-time, 

interactive telehealth encounter is 

consistent with section 1859(f)(5)(B)(ii) 

of the Act as amended by section 50311 

of the Bipartisan Budget Act of 2018. 

The statute requires CMS to set 

requirements for face-to-face encounters 

that must happen on an annual basis for 

C–SNPs; and in extending that 

requirement to I–SNPs and D–SNPs, we 

do not believe there is reason to develop 

different standards. For this specific 

requirement, we believe that a real-time, 

interactive, visual telehealth encounter 

permits face-to-face interaction even 

though electronic or 

telecommunications technology is used 

to facilitate the encounter. The realtime, interactive, visual encounter 

serves the same function and permits 

sufficiently similar engagement between 

the enrollee and the required member of 

the ICT, the SNP’s case management or 

care coordination staff, or other 

contracted provider of the SNP as an inperson encounter for purposes of this 

specific requirement; our regulation 

here does not address when or how 

telehealth encounters may be clinically 

appropriate or sufficient but only 

specifically addresses the need for SNPs 

to ensure there is one annual encounter 

of a certain type for each enrollee. While 

not all covered services are necessarily 

appropriate to furnish through 

electronic means, MA plans (including 

SNPs) have broader flexibility in this 

regard under § 422.135. Therefore, faceto-face encounters required for all SNPs 

under this new rule may include visual, 

real-time, interactive telehealth 

encounters. As we noted in the 

Medicare and Medicaid Programs; 

Policy and Technical Changes to the 

Medicare Advantage, Medicare 

Prescription Drug Benefit, Programs of 

All Inclusive Care for the Elderly 

(PACE), Medicaid Fee-For-Service, and 

Medicaid Managed Care Programs for 

Years 2020 and 2021 Final Rule 

(hereinafter referred to as the April 2019 

final rule), we believe MA additional 

telehealth benefits will increase access 

to patient-centered care by giving 

enrollees more control to determine 

when, where, and how they access 

benefits. 

Comment: A few commenters 

suggested that in the implementation of 

the face-to-face encounter requirement 

that SNPs should be allowed to develop 

their own technical specifications for 

capturing compliance with this 

requirement. For example, An MAO 

recommended that SNPs be allowed to 

capture verbal confirmation from 

members or providers of completed 

face-to-face encounters from external 

parties and/or telehealth encounters as 

evidence of compliance. 

Response: CMS believes plans are in 

the best position to develop the 

processes and technical specifications 

for documenting how they meet this 

requirement and that a face-to-face 

encounter for purpose of satisfying this 

regulation has taken place. While 

§ 422.101(f)(1)(iv) imposes some 

parameters for these encounters, there is 

a broad range of flexibility for how SNPs 

may meet the requirement. However, we 

clarify that our guidance here is specific 

to § 422.101(f)(1)(iv) and does not 

address any other Medicare program 

requirements. Because an encounter 

must pertain to the delivery of health 

care to the enrollee, we encourage SNPs 

to take the information from these 

encounters into account and to 

document them consistent with how 

other health care visits are documented. 

Lastly, CMS will monitor compliance 

with the requirement and consider 

additional rulemaking if necessary. 

Comment: Several commenters 

suggested the addition of the face-toface requirement would create 

additional reporting burden for plans 

associated with capturing compliance to 

the rule. 

Response: We are also cognizant that 

new regulations sometimes include 

additional reporting or record keeping 

requirements. The final rule does not 

create any additional, explicit reporting 

requirements. However, SNPs are 

required under § 422.503(b)(4)(vi) to 

adopt and implement an effective 

compliance program, which must 

include measures that prevent, detect, 

and correct non-compliance with CMS’ 

program requirements as well as 

measures that prevent, detect, and 

correct fraud, waste, and abuse. CMS 

will be monitoring compliance by SNPs 

with this requirement. In addition, SNPs 

should have information about all 

health care encounters and deliveries of 

covered services for many purposes, 

including: Payment to providers for 

furnishing services; complying with the 

existing data submission requirements 

in § 422.310; and meeting the 

requirements of § 422.112(b)(4), which 

requires procedures for plans and their 

provider networks to have the 

information necessary for effective and 

continuous patient care and quality 

review. 

Comment: Several commenters stated 

that some enrollees lack access to 

technology that would provide visual, 

real-time, interactive telehealth 

encounter, which may create a barrier to 

beneficiary participation in such 

encounters. Others requested that CMS 

allow telephonic encounters to count 

towards the annual face-to-face 

requirement under the new regulation. 

Response: We are cognizant that 

enrollees should have the final authority 

over their health care and our proposed 

regulation text reflected this by 

requiring that these face-to-face 

encounters be as feasible and with the 

enrollee’s consent. First, SNPs have the 

flexibility to meet the requirement for a 

face-to-face encounter, either in-person 

or virtually. We believe that many 

beneficiaries are already meeting the 

requirement through in-person face-toface encounters with qualified 

healthcare providers, which we believe 

will create minimal additional burden 

for plans implementing this final rule. 

The final rule does not mandate that 

SNPs utilize a visual, real-time, 

interactive telehealth encounter, though 

it is a permissible option when 

appropriate. Second, the SNP must 

comply with this requirement in a 

manner that honors any enrollee’s 

decision not to participate in a face-toface (either in-person or virtual) 

encounter. If an enrollee does not 

consent to the encounter required by 

§ 422.101(f)(1)(iv), the plan should 

document that in order to demonstrate 

compliance with the regulation. The 

rule addresses feasibility barriers to a 

SNP providing for the required annual 

encounter, such as where a SNP 

enrollee may be non-responsive to plan 

outreach or the state of the member’s 

health (such as if the member is dealing 

with a hospitalization in an out-ofnetwork facility) prohibits a face-to-face 

encounter. In these circumstances, CMS 

recognizes that a SNP may not be able 

to comply with the rule’s mandate of an 

annual face-to-face encounter and we 

intend the ‘‘as feasible’’ standard in the 

regulation to address such situations. By 

clarifying that a face-to-face encounter 

for delivery of health care services by a 

contracted provider will satisfy this 

requirement, it seems likely that most 

SNPs will be able to meet this 

requirement for most enrollees, as most 

enrollees in SNPs receive health care 


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5Please see Chapter 5 of the MMCM, which can 

be found at: https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/downloads/ 

mc86c05.pdf. 

services at some point each year. If the 

enrollee has refused or because the SNP 

could not reach the enrollee after 

reasonable attempts, the plan would be 

considered to have complied with the 

requirement despite the lack of a 

qualified encounter. 

This final rule allows many types of 

face-to-face encounters, including 

visual, real-time, interactive telehealth 

encounters, to suffice for meeting the 

requirement. We do not believe that 

telephonic encounters should count 

towards the fulfilling the requirements 

of § 422.101(f)(1)(iv) for several reasons. 

First, the statute at section 

1859(f)(5)(B)(ii) of the Act is specific in 

requiring that the encounters provided 

annually must be face-to-face with 

individuals enrolled in the plan. An 

audio-only encounter does not meet the 

statutory requirement that the encounter 

be face-to-face. Even though the 

statutory requirement is for C–SNPs, we 

believe that requiring all SNPs to meet 

this standard is appropriate in light of 

the health care needs and characteristics 

of the other populations of special needs 

individuals. Second, an audio-only 

encounter does not permit the provider 

to see the patient to use visual clues (for 

example, bruising, physical symptoms, 

or lack of focus) that could indicate 

something is wrong with the patient. 

This is a requirement for only one visit 

of this type a year and does not prohibit 

the use of audio-only encounters when 

those are appropriate for addressing 

other health care needs or visits. 

Further, for enrollees who do not use 

telehealth or lack the technological 

resources for such encounters, in-person 

delivery of health care services from one 

of the types of providers described in 

the regulation satisfies this requirement; 

there is no requirement for telehealthbased encounters to be used instead of 

in-person encounters. However, we will 

continue to monitor the ability of 

beneficiaries to take part in virtual 

encounters, the applicability of nontelephonic face-to-face encounters, and 

to assess the adequacy of substituting 

telephonic encounters in addition to the 

set of qualifying face-to-face encounters 

for I–SNPs and D–SNPs through future 

rulemaking. 

After consideration of the comments 

and for the reasons outlined in the 

response to comments and in the 

proposed rule, we are finalizing 

§ 422.101(f)(1)(iv) regarding face-to-face 

encounters substantially as proposed, 

but with modifications to clarify that the 

required face-to-face encounters pertain 

to the delivery of certain kinds of 

services (health care or care 

coordination services or care 

management) and must be with a 

contracted health care provider or 

certain SNP staff (a member of the 

enrollee’s interdisciplinary team or the 

plan’s case management and 

coordination staff). In addition, our final 

regulation text at paragraph (f)(1)(iv) is 

somewhat reorganized from the 

proposed rule to improve the readability 

of the provision. 

3. Health Risk Assessments and the SNP 

Enrollee’s Individualized Care Plan 

We proposed to codify the 

requirement in section 1859(f)(5)(B)(iii) 

of the Act that, as part of the C–SNP 

model of care, the results of the initial 

assessment and annual reassessment 

required for each enrollee be addressed 

in the individual’s individualized care 

plan. We also proposed to extend this 

requirement to the model of care for all 

SNPs in revisions to § 422.101(f)(1)(i). 

Currently, MA organizations offering 

SNPs must conduct a comprehensive 

initial health risk assessment of the 

individual’s physical, psychosocial, and 

functional needs as well as an annual 

HRA, using a comprehensive risk 

assessment tool that CMS may review 

during oversight activities. The 

proposed revision to paragraph (f)(1)(i) 

would also require the MA organization 

to ensure that results from the initial 

assessment and annual reassessment 

conducted for each individual enrolled 

in the plan are addressed in the 

individual’s individualized care plan 

required under § 422.101(f)(1)(ii). 

We received the following comments 

and our responses follow: 

Comment: Several commenters sought 

clarification concerning what type of 

information must be included in the ICP 

from the HRA. In addition, a few 

commenters wanted to know what 

information plans could omit from the 

ICP while adhering to the regulation. 

Another commenter asked if D–SNPs 

would be permitted to align the HRA 

with other beneficiary assessments that 

some D–SNPs are required to submit for 

a state’s requirement that enrollees be 

assessed as to Medicaid managed longterm services and supports (MLTSS) 

needs. 

Response: Existing CMS guidance 

addresses the first part of these 

comments—pertaining to the 

information from the HRA that must be 

incorporated into the ICP—and that 

guidance is consistent with the 

regulatory provision being finalized at 

§ 422.101(f)(1)(i). Chapter 5 of the 

Medicare Managed Care Manual, section 

20.2.2, addresses how each SNP’s MOC 

includes a clear and detailed 

description of the policies and 

procedures for completing the health 

risk assessment tool (HRAT).5 Because 

this existing guidance adequately 

describes how information from the 

annual HRA is incorporated into the 

enrollee’s ICP, the guidance remains 

applicable. Part of NCQA’s review of 

SNP MOCs is an evaluation of MOC 2, 

Element B, which includes the 

following subfactors: 

• How the organization uses the 

HRAT to develop and update the 

Individualized Care Plan (ICP) for each 

beneficiary (Element 2C). 

• How the organization disseminates 

the HRAT information to the 

Interdisciplinary Care Team (ICT) and 

how the ICT uses that information 

(Element 2D). 

• How the organization conducts the 

initial HRAT and annual reassessment 

for each beneficiary. 

• The detailed plan and rationale for 

reviewing, analyzing and stratifying (if 

applicable), the HRA results. 

Under Element B, the content of and 

methods used to conduct the HRAT 

have a direct effect on the development 

of the ICP and ongoing coordination of 

ICT activities. The HRAT must assess 

the medical, functional, cognitive, 

psychosocial and mental health needs of 

each SNP beneficiary, as noted in 

Chapter 5 of the MMCM, section 20.2.2. 

To meet the requirements of the first 

2 factors of MOC 2, Element B, the 

SNP’s MOC must include a description 

of how the HRAT is used to develop and 

update, in a timely manner, the ICP for 

each beneficiary and how the HRAT 

information is disseminated to and used 

by the ICT. Under factor 3, the 

description must include the 

methodology used to coordinate the 

initial and annual HRAT for each 

beneficiary (for example, mailed 

questionnaire, in-person assessment, 

phone interview) and the timing of the 

assessments. There must be a provision 

in the MOC for reassessing beneficiaries 

if and when warranted by a health 

status change or care transition (for 

example, hospitalization or a change in 

medication). The SNP must describe in 

the MOC the SNP’s process for 

attempting to contact beneficiaries and 

have them complete the HRAT, 

including provisions for beneficiaries 

that cannot or do not want to be 

contacted or complete the HRAT. This 

approach in our current guidance 

provides plans the flexibility to develop 

an ICP that is appropriate for each 

beneficiary based on and using HRA 

information; the requirement added to 


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§ 422.101(f)(1)(i) that each SNP ensure 

that results from the initial assessment 

and annual reassessment conducted for 

each enrollee are addressed in the 

individual’s individualized care plan 

would be met by a SNP that does these 

things in its development of the MOC 

and the ICP. CMS intends to implement 

and enforce the revisions to 

§ 422.101(f)(1)(i) consistent with 

existing CMS guidance regarding the 

information from the HRA and HRAT 

that must be incorporated into the ICP. 

We understand that some D–SNPs 

may be required to complete and use 

other assessments related to the 

Medicaid program. Integrated D–SNPs 

may choose to combine Medicaid and 

Medicare assessments as long as the 

assessment includes a review of the 

medical, functional, cognitive, 

psychosocial and mental health needs of 

each SNP beneficiary and is described 

in the MOC. Other assessments may (or 

may not) require the same elements or 

scope as the HRA required of MA SNPs 

so alignment and overlap of the 

assessments and how they are used 

depends on the specifics of each 

situation. As we implement 

§ 422.101(f)(1)(i), we will continue to 

monitor the alignment of multiple 

assessments on SNP enrollees to 

determine whether further rulemaking 

is necessary. However, plans have 

created an HRA process as part of their 

approved MOC in the past, so we do not 

anticipate that SNPs will have difficulty 

complying with the changes we are 

finalizing to § 422.101(f)(1)(i). To the 

extent that there is overlap and the HRA 

required by § 422.101(f)(1)(ii) can be 

aligned with other assessments 

conducted by the SNP, the MOC should 

include a description of that alignment, 

consistent with the standards in MOC 2, 

Element B of Chapter 5, § 20.2.2. 

We believe the current factors 

outlined in MOC 2, Element B allows 

SNPs the flexibility to align a MOCapproved HRAT with other assessment 

tools (as noted above), and is consistent 

with the intent of the changes being 

finalized here in § 422.101(f)(1)(i). 

Current guidance will be the basis for 

how CMS will implement and enforce 

§ 422.101(f)(1)(i) to ensure that SNPs 

incorporate and address the results from 

the initial assessment and annual 

reassessment conducted for each 

individual enrolled in the individual’s 

individualized care plan. 

After consideration of the comments 

and for the reasons outlined in the 

response to comments and in the 

proposed rule, we are finalizing the 

amendment to § 422.101(f)(1)(i) as 

proposed without modification. 

4. SNP Fulfillment of the Previous 

Year’s MOC Goals 

We also proposed to codify the 

requirement in section 1859(f)(5)(B)(iv) 

of the Act that the evaluation and 

approval of the model of care take into 

account whether the plan fulfilled the 

previous MOC’s goals and to extend this 

evaluation component to all SNP 

models of care, rather than limiting it to 

C–SNPs. We proposed new regulation 

text at § 422.101(f)(3)(ii) to provide that, 

as part of the evaluation and approval 

of the SNP model of care, NCQA must 

evaluate whether goals were fulfilled 

from the previous model of care and 

plans must provide relevant information 

pertaining to the MOC’s goals as well as 

appropriate data pertaining to the 

fulfillment of the previous MOC’s goals. 

Under our proposal, if the SNP MOC 

did not fulfill the previous MOC’s goals, 

the plan must indicate in its MOC 

submission how it will achieve or revise 

those goals for the plan’s next MOC. We 

also proposed to move an existing 

regulation at § 422.101(f)(2)(vi) that 

requires all SNPs to submit their MOC 

to CMS for NCQA evaluation and 

approval in accordance with CMS 

guidance to a new paragraph at 

§ 422.101(f)(3); our proposed paragraph 

(f)(3)(i) contains the same language as 

current § 422.101(f)(2)(vi). 

We also proposed at paragraph 

(f)(3)(ii)(A) through (C) specific 

provisions regarding how NCQA would 

evaluate the MOC in terms of 

achievement of goals from the prior 

MOC. We explained how we intended 

that NCQA would determine whether 

each SNP, as part of NCQA’s process for 

evaluation and approval of MOCs, 

provided adequate information to 

perform the evaluation required by 

§ 422.101(f)(3)(ii) as well as whether the 

SNP met goals from the previous MOC 

submission. After stating that it is 

implicit in the evaluation of the MOC 

and the requirement for the SNP to 

submit relevant information that the 

information submitted by the SNP must 

be adequate for NCQA to use to evaluate 

the MOC, we solicited comment 

whether more explicit requirements on 

this point should be part of the 

regulation text. 

We received the following comments 

on the proposal regarding evaluation of 

outlining and fulfillment of the MOC’s 

goals and our responses follow: 

Comment: CMS received several 

suggestions related to providing 

information for evaluation whether the 

SNP achieved the goals from the prior 

MOC. One commenter proposed CMS 

look to the Healthcare Effectiveness 

Data and Information Set (HEDIS) 

reporting and measures for direction. 

Another commenter suggested that CMS 

evaluate plan performance monitoring 

and evaluation metrics included in the 

MOC, and not goals included in the 

Individual Care Plan. 

Response: We appreciate these 

suggestions as to the type and scope of 

information that should be used to 

evaluate whether a SNP has fulfilled the 

goals of its prior MOC. We clarify that 

it is the goals of the MOC (and whether 

those goals have been met) and not the 

goals of the ICP that are to be evaluated 

by NCQA under § 422.101(f)(3)(ii) as 

proposed and finalized. 

We explained in the proposed rule 

that proposed § 422.101(f)(3)(ii) would 

align with our current guidance on the 

MOC submission and review process 

regarding SNP fulfillment of goals and 

summarized the current review process. 

(85 FR 9016) This includes the type of 

information submitted by SNPs and 

used by NCQA in evaluating whether 

the goals of a prior MOC have been 

fulfilled. Currently, all SNPs are 

required to identify and clearly define 

measurable goals and health outcomes 

as part of their model of care under 

MOC 4, Element B: Measurable Goals 

and Health Outcomes for the MOC, as 

addressed in Chapter 5 of the MMCM. 

It is critical for all SNPs to use the 

results of the quality performance 

indicators and measures to support 

ongoing improvement of the MOC, and 

all SNPs should continuously assess 

and evaluate plan quality outcomes. 

This is reflected in current guidance in 

Chapter 5, § 20.2.2 of the Medicare 

Managed Care Manual. MOC 4, Element 

B currently contains the following 

subfactors: 

• Identify and define the measurable 

goals and health outcomes used to 

improve the health care needs of SNP 

beneficiaries. 

• Identify specific beneficiary health 

outcome measures used to measure 

overall SNP population health outcomes 

at the plan level. 

• Describe how the SNP establishes 

methods to assess and track the MOC’s 

impact on SNP beneficiaries’ health 

outcomes. 

• Describe the processes and 

procedures the SNP will use to 

determine if health outcome goals are 

met. 

• Explain the steps the SNP will take 

if goals are not met in the expected 

timeframe. 

The measures identified in the MOC 

as part of addressing these subfactors 

are the measures that should be used in 

evaluating whether the goals of the prior 

MOC have been fulfilled. Current CMS 

guidance permits the SNP to identify 


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and describe the measures and data 

used by the SNP and does not require 

specific quality measures, such as 

HEDIS, be used. SNPs may use data and 

quality performance that CMS measures 

for the Star Ratings program or through 

the HEDIS surveys (or other surveys and 

required quality performance data) but 

are not limited to those measures and 

data sources. Subfactors 3 and 4 of 

Element B provide for descriptions of 

how the SNP assesses and tracks the 

impact of the MOC and determines if 

health outcome goals are met. As 

proposed and finalized, paragraph 

(f)(3)(ii)(A) does not list specific types of 

data or information but requires 

submission of relevant information 

pertaining to the MOC’s goals and 

whether those goals were fulfilled. For 

example, a SNP may submit plan-level 

health or clinical goals such as 

controlling diabetes or improving 

mental health screening access, and 

provide data showing progress towards 

these goals. This means that the type 

and scope of data required are tied to 

what the MOC’s goals are and how the 

previous MOC addressed MOC 4, 

Element B. At a minimum, the data and 

measures described in the previous 

MOC should be submitted under 

§ 422.101(f)(3)(ii)(A) for determining 

whether the MOC’s goals have been 

fulfilled but other data may be relevant 

and pertinent. We expect SNPs to make 

reasonable determinations about what 

other data could be submitted as 

relevant and pertinent for the NCQA 

evaluation that is required under 

§ 422.101(f)(3)(ii). 

For SNPs submitting their initial 

MOC, NCQA will evaluate the 

information under MOC 4 Element B as 

whether the SNP has set clearly 

definable and measurable goals and 

health outcomes in the MOC for the 

upcoming MOC period of performance. 

For the following submission year, the 

SNP MOC will be evaluated on whether 

the measurable goals and health 

outcomes set in the initial MOC were 

achieved. We proposed specific 

regulation text at § 422.101(f)(3)(ii)(B) 

that plans submitting an initial model of 

care must provide relevant information 

pertaining to the MOC’s goals for review 

and approval and are finalizing that 

provision. This new regulation is 

consistent with our existing regulation 

and we intend that similar standards 

will be used going forward as those that 

are used now regarding the amount of 

information required from SNPs. 

Comment: CMS received several 

comments expressing concern regarding 

the incorporation of MOC performance 

information and data from the previous 

MOC into the next submission. 

Commenters noted that plans would 

need to have complete information on 

the achievement of goals from the 

previous year before submission of the 

next year’s MOC in order to meet the 

new requirement 42 CFR 

422.101(f)(3)(ii), and that this short 

timeframe may prevent plans from being 

able to provide a complete 

representation of their performance 

from the previous year. Others sought 

further clarification regarding how plans 

should operationalize the regulation or 

specific metrics to be evaluated by 

NCQA. 

Response: While we understand the 

commenters’ concern about sufficient 

information being available each year 

about the previous year’s MOC and 

performance, we believe that SNPs and 

NCQA can meet the requirements of the 

regulation. For SNPs submitting a MOC 

renewal after one year (because an 

annual review and approval is 

necessary), preliminary data from the 

immediately prior year can provide 

evidence to the level of fulfillment of 

the previous MOC’s goals. For many I– 

SNPs and D–SNPs, they will be able to 

share findings from multiple years of 

data as part of this requirement because 

their MOCs will not necessarily need to 

be reviewed and approved on an annual 

basis. C–SNPs, which must submit 

annually under section 1859(f)(5)(B)(iv) 

of the Act, will be able to select 

preliminary findings each year from 

measures that provide evidence of 

progress on the MOC’s goals. Further, 

for goals that are tied to building on 

prior performance or making 

incremental progress in the same or 

similar area each year, information 

about performance in more than one 

prior year may be relevant and pertinent 

to show how the SNP is fulfilling the 

MOC’s goals. Under MOC 4, Element B 

of the MOC, SNPs must currently 

provide a description of the processes 

and procedures the plan will use to 

determine if health outcome goals are 

met. By sharing the findings from these 

processes, SNPs can outline achievable 

steps toward long term goals so that 

small steps using limited data year to 

year can be evaluated. Therefore, we 

believe that SNPs can effectively 

demonstrate progress to meet the 

requirements of § 422.101(f)(3)(ii). 

As proposed and finalized, 

§ 422.101(f)(3)(ii) requires, as part of the 

evaluation and approval of the SNP 

model of care, that NCQA evaluate 

whether goals were fulfilled from the 

previous model of care. To serve this 

purpose, the regulation also requires 

that: 

• Plans must provide relevant 

information pertaining to the MOC’s 

goals as well as appropriate data 

pertaining to the fulfillment the 

previous MOC’s goals. 

• Plans submitting an initial model of 

care must provide relevant information 

pertaining to the MOC’s goals for review 

and approval. 

• If the SNP model of care did not 

fulfill the previous MOC’s goals, the 

plan must indicate in the MOC 

submission how it will achieve or revise 

the goals for the plan’s next MOC. 

In each MOC submission and 

evaluation of the MOC, the SNP must be 

able to demonstrate that it is continuing 

to work towards achieving the MOC 

goals even if the SNP requires 

additional time or metrics to evaluate 

the progress. Each MOC should reflect 

modification of the SNP’s strategies to 

meet the goals of the MOC as needed. 

Again, under MOC 4 Element B, SNPs 

are currently submitting health outcome 

measures used to measure overall SNP 

population health outcomes at the plan 

level. SNPs may submit final or 

preliminary findings from these 

measures in order to provide evidence 

of progress as part of each MOC 

submission. 

Comment: Several commenters 

questioned the applicability of the 

proposed regulation to D–SNPs and 

stated that dual eligible enrollees 

experience changes in eligibility based 

on their Medicaid status, which the 

commenters stated impacts the plan’s 

ability to implement and operationalize 

the MOC. 

Response: First, we believe that the 

process for setting health outcome goals 

and choosing a set of measures to 

determine progress permits all SNPs, 

including D–SNPs, to select measures 

that make sense for the population that 

the plan serves in so far as those 

measures speak to benchmarks, specific 

time frames, and how achieving those 

goals will be determined. A SNP that 

believes it suffers from disproportionate 

rates of disenrollment can seek to align 

outcome measures in a way that 

recognizes these perceived challenges; 

however, any measures that the plan 

selects must be approved by NCQA as 

part of the MOC approval process. 

Second, we also believe that the 

extension of the provision in this rule 

requiring fulfillment of the previous 

MOC’s goals is consistent with current 

MOC approval requirements as outlined 

in Chapter 5, section 20.2.2 (Model of 

Care Scoring Criteria), as applied 

currently to all MOC types. The goal of 

performance improvement and quality 

measurement is to improve the SNP’s 

ability to deliver high-quality health 

care services and benefits to its SNP 

enrollees; our commitment to this is 


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reflected in how it is explicitly stated in 

section 20.2.2 under MOC 4: MOC 

Quality Measurement and Performance 

Improvement, Element B: Measurable 

Goals and Health Outcomes for the 

MOC. This goal may be achieved as a 

result of increased organizational 

effectiveness and efficiency through 

incorporation of quality measurement 

and performance improvement concepts 

that drive organizational change. The 

leadership, managers and governing 

body of a SNP must have a 

comprehensive quality improvement 

program in place to measure its current 

level of performance and determine if 

organizational systems and processes 

must be modified, based on 

performance results. 

In addition, section 20.2.2 of Chapter 

5 of the Medicare Managed Care Manual 

provides additional information for 

plans to identify and clearly define 

measurable goals and health outcomes 

for the MOC in listing the five 

subfactors for Element B of MOC 4. 

Under factor 1, the SNP’s description of 

measurable goals must include 

benchmarks, specific time frames, and 

how achieving goals will be determined. 

For factor 2, the SNP must include the 

specific data sources it will use for 

measurement for the stated health 

outcome measures. SNPs have 

flexibility in setting health outcome 

goals, particularly flexibility to align 

those goals with the population being 

served by the plan, but such measures 

must be approved by NCQA in its 

review of the MOC. The rule we are 

finalizing at §§ 422.101(f)(3)(ii) 

maintains the current level of flexibility 

for different SNP types in setting goals 

and the measures and data used to 

determine if the goals are met. By 

allowing such flexibilities, the 

regulation permits SNPs to take into 

account unique challenges facing their 

plan (such as potential changes in 

enrollment due to changes in eligibility 

for enrollees) and to set goals that allow 

SNPs to measure progress against these 

challenges. 

For factor 2, the SNP must identify in 

the MOC the specific data sources it will 

use for measurement for the stated 

health outcome measures. We believe 

that the process for setting health 

outcome goals and choosing a set of 

measures to determine progress permits 

D–SNPs, and all SNPs, to select 

measures that makes sense for the 

population of beneficiaries that the plan 

serves in so far as those measures speak 

to benchmarks, specific time frames, 

and how achieving goals will be 

determined. The regulation we are 

finalizing at § 422.101(f)(3)(ii) maintains 

the level of flexibility for different SNP 

types as it is currently constructed 

through NCQA’s MOC approval process. 

By allowing such flexibilities, plans can 

take into account unique challenges 

facing their plan and to set goals that 

allow SNPs to measure progress against 

these challenges. 

After consideration of the comments 

and for the reasons outlined in the 

response to comments and in the 

proposed rule, we are finalizing the 

amendment to § 422.101(f)(3)(ii) as 

proposed without modification. 

5. Establishing a Minimum Benchmark 

for Each Element of the SNP Model of 

Care 

Finally, we proposed a new regulation 

at § 422.101(f)(3)(iii) imposing the 

requirement that benchmarks for each 

MOC element set by CMS must be met 

for a MOC to be approved. Section 

1859(f)(5)(B)(v) of the Act requires that 

the Secretary establish a minimum 

benchmark for each element of the C– 

SNP model of care and that the MOC 

can only be approved if each element 

meets a minimum benchmark. We 

proposed to implement this requirement 

and a minimum 50% benchmark for all 

SNP models of care because medically 

complex conditions are found in 

enrollees across all SNP types and 

implementation of the benchmark 

requirement only for C–SNPs would be 

operationally challenging for MA 

organizations that operate more than 

one SNP. In the proposed rule, we 

stated that each SNP model of care 

would be evaluated based on a 

minimum benchmark for each of the 

four elements and how that was 

consistent with our current policy. 

Currently, each subfactor of a MOC 

element is valued at 0–4 points with the 

score of each element based on the 

number of factors met for that specific 

element; the aggregate total of all 

possible points across all elements 

equals 60, which is then converted to 

percentage scores based on the number 

of total points received. We proposed 

that each element of the MOC must 

meet a minimum benchmark of 50 

percent of total points as allotted, and 

a plan’s MOC would only be approved 

if each element of the model of care 

meets the applicable minimum 

benchmark. 

We received the following comments 

and our responses follow: 

Comment: CMS received several 

comments that, while receptive to the 

establishment of the minimum 

benchmark as proposed, were 

concerned about the timing of the 

implementation of the rule. Commenters 

sought implementation to begin in 

Contract Year 2022. 

Response: We are finalizing the 

changes to § 422.101(f) as being 

applicable for contract year 2023 and 

subsequent years. While this final rule 

will have an earlier effective date, 

making these provisions applicable for 

the period beginning January 1, 2023 

provides time for MA organizations to 

plan and time for NCQA to implement 

these new standards for use in 

evaluating MOCs developed and 

submitted for 2023. Plans that are 

required to submit MOCs for contract 

year 2022 are due to submit MOCs by 

February 17, 2021; those submissions 

will be evaluated based on the 

regulations in effect at that time (that is, 

without the amendments adopted here) 

and SNPs must implement and comply 

with their approved MOCs in 

connection with coverage in 2022. 

Moving the applicable implementation 

of the SNP MOC provisions to contract 

year 2023 will allow SNPs and CMS to 

construct the necessary processes for the 

full implementation and enforcement of 

this final rule. When MOCs for contract 

year 2023 are submitted for review and 

approval in early 2022, the regulations 

in this final rule will be used to evaluate 

those MOCs for approval. 

Comment: A number of commenters 

asked for additional clarity regarding 

how CMS will implement the scoring of 

each MOC sub-element. 

Response: First, we clarify that NCQA 

evaluates and scores the MOCs, as part 

of the NCQA approval requirement that 

has been in place since 2012 and that 

will be codified at § 422.101(f)(3) under 

this final rule. Second, we intend that 

scoring using the 50 percent 

benchmarks will be consistent with how 

MOCs are evaluated and scored now 

with the addition that the MOC 

submitted by the SNP must score at 

least 50% on each element; the scope, 

content and number of elements and the 

points available for each element remain 

the same as outlined in Chapter 5 of the 

Medicare Managed Care Manual, section 

20.2.2. 

Currently, the MOC narrative in 

Chapter 5 addresses four overarching 

categories: (1) Description of the SNP 

Population, (2) Care Coordination, (3) 

SNP Provider Network, and (4) MOC 

Quality Measurement & Performance 

Improvement. Each of the four 

categories is then comprised of a set of 

required elements, such as Element B: 

Subpopulation—Most Vulnerable 

Beneficiaries under the MOC 1 category. 

These elements and their various factors 

are reviewed and scored by NCQA and 

contribute to the overall score for that 

element. All total, there are 15 elements 

among the 4 MOC categories. A full list 

of categories, elements, and factors, as 


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well as additional guidance pertaining 

to MOC submission requirements and 

structure, can be found in Chapter 5 of 

the MMCM. As we explained in the 

proposed rule, there are a total of 60 

points available, across all categories 

and elements. Each element is scored by 

NCQA on a range of 0 to 4. To meet the 

new standard at § 422.101(f)(3)(iii), each 

MOC must earn at least 2 points for each 

element. 

As proposed and finalized, 

§ 422.101(f)(3)(iii) does not alter the 

current characteristics or the number of 

categories, elements, and factors and the 

mandatory benchmarks will be applied 

at the element level. For example, the 

category MOC 2: Care Coordination is 

made up of five elements: 

• Element A: SNP Staff Structure; 

• Element B: Health Risk Assessment 

Tool (HRAT); 

• Element C: Individualized Care 

Plan (ICP); 

• Element D: Interdisciplinary Care 

Team (ICT); and 

• Element E: Care Transition 

Protocols. 

A SNP will need to meet a minimum 

benchmark score of 50 percent for each 

of Elements A–E. Failing to meet the 

minimum score in any one element 

would result in disapproval of the MOC 

by NCQA during the first round of 

evaluation. The current process and 

procedures for the evaluation is not 

changing under this final rule, so the 

SNP would be able to resubmit a revised 

MOC during the cure period after 

having an opportunity to address the 

failures identified by NQCA and to 

revise how the MOC addresses the 

applicable element(s). 

Starting with the MOC for contract 

year 2023, each SNP will need to meet 

a minimum benchmark score of 50 

percent for each element, and a plan’s 

model of care will only be approved if 

each element of the model of care meets 

the minimum benchmark. CMS and 

NCQA will provide an overview of any 

category and/or element deficiencies in 

our correspondence to plans at the 

completion of NCQA’s MOC evaluation. 

In addition, each SNP MOC will need to 

meet an overall score in order to meet 

NCQA approval, as is the case now. 

Comment: CMS received one 

comment concerned that the 

introduction of this new scoring process 

at the element level would potentially 

derail an otherwise worthy MOC 

submission. 

Response: We believe the final rule is 

largely consistent with existing 

regulations and guidance regarding 

review of SNP MOC standards as plans 

already receive scores at the element 

level, though under our current policy 

approval is based only on the aggregate 

score. However, use of minimum 

benchmarks for each element serves 

important policy goals by ensuring that 

each MOC is minimally compliant and 

that each MOC addresses all of the 

elements. We also have concerns that 

the current system potentially allows a 

MOC to pass while containing a 

significant deficiency in a specific 

element. We believe continued guidance 

and training by CMS and NCQA will 

mitigate disruption that may stem from 

the changes associated with the new 

scoring process under 

§ 422.101(f)(3)(iii). 

As we noted in the proposed rule, we 

anticipate that there will be some 

impact to the number of MOC 

submissions that will not pass NCQA’s 

initial MOC review. Looking at MOC 

score data for contract year 2020, our 

proposed element benchmark of 50 

percent would have impacted 20 of the 

273 MOCs submitted, or 7.3 percent. 

Meaning 20 of the 273 MOCs in 2020 

would have been required to resubmit 

during the cure period of the approval 

process. For comparison, for contract 

year 2020, under our current aggregate 

scoring system, seven plans were 

required to submit revised MOCs based 

on the current scoring system and an 

additional seven plans decided to 

withdraw their MOCs before the 

revision process, for a total of 14 MOCs. 

CMS intends to work with NCQA to 

ensure that the transition for SNPs to 

using the new scoring benchmarks for 

each element is as seamless as possible. 

Further, the cure period will provide an 

opportunity to make revisions to 

address deficiencies identified by 

NCQA for SNPs that must submit their 

MOCs for review and approval by 

NCQA for 2023. 

Comment: A commenter expressed 

concerns that the amended scoring 

process would be particularly 

problematic for D–SNPs that enroll 

beneficiaries with significant and 

complex medical and social needs. 

Response: We believe the MOC 

review and approval processes are 

structured to provide a uniform 

apparatus that already takes into 

account differences among SNP types 

and the populations that they serve. As 

a quality improvement tool, the MOC 

acts as an important roadmap for 

ensuring that the unique needs of SNP 

enrollees are addressed and is a 

fundamental component of SNP quality 

improvement. NCQA uses a review 

process that scores a MOC based on how 

well a plan has addressed process 

details and narrative descriptions. Each 

MOC renewal is an opportunity for a 

SNP to plan for, lay out, and implement 

improvements to its processes for each 

specific element and factor. Even when 

the MOC guidelines focus on quality 

improvement and enrollee health 

outcomes, the MOC review is centered 

on the SNP’s processes and procedures 

used to determine if those health 

outcome goals are met. Under the MOC 

rubric, CMS does not intend for SNPs to 

meet specific metric thresholds 

denoting quality. For example, under 

MOC, Element B, factor 4, the MOC 

must describe how it determines if the 

goals described in factor 1 are met rather 

than address performance on a specific 

metric set by CMS. Regardless of SNP 

type, NCQA applies the review 

standards uniformly across each MOC 

submission under this regulation. 

Comment: A commenter noted 

concern that the MOC benchmark was 

duplicative of the reporting and tracking 

of plan performance under the Star 

Rating system. 

Response: The MOC requirement is 

distinct from the goals and purpose of 

the Star Ratings system so even though 

there may be some overlap in MA 

organization and SNP processes in order 

to successfully implement the MOC and 

achieve high Star Ratings, we do not 

believe that these are duplicative or that 

one should be eliminated in favor of the 

other. 

Section 1859(f)(5)(A)(i) of the Act 

requires that all SNPs be approved by 

NCQA based on standards developed by 

the Secretary; this requirement was 

added by section 164 of the Medicare 

Improvements for Patients and 

Providers Act (hereinafter referred to as 

MIPPA) (Pub. L. 110–275) and became 

effective with the 2012 contract year. As 

provided in §§ 422.4(a)(1)(iv), 

422.101(f), and 422.152(g), the NCQA 

approval process is based on evaluation 

and approval of the SNP MOC. 

Therefore, all SNPs must submit their 

MOCs to CMS for NCQA evaluation, 

and an MA organization must develop 

separate MOCs to meet the needs of the 

targeted population for each SNP type it 

offers. NCQA, based on guidance from 

CMS, has applied scoring standards 

applicable to all SNP types. The MOC 

is a forward-looking tool used by SNPs 

to design processes to perform and 

improve their performance over a set 

time period. The Star Ratings system, on 

the other hand, is used to measure and 

provide comparative information about 

the performance of MA organizations on 

defined measures. Under sections 

1853(o) and 1854(b) of the Act, Star 

Ratings are used in determining 

payment and beneficiary rebates for MA 

plans; CMS has adopted provisions, at 

§§ 422.504(a)(17) and 423.505(a)(26), to 

use historical, sustained poor 


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6Unless our policy specifically distinguishes 

biosimilar biological products from interchangeable 

biological products, we use the term ‘‘biosimilar 

biological product(s)’’ in this preamble to reference 

biosimilar or interchangeable (when such products 

become available) biological products. 

performance on the Star Ratings to 

evaluate compliance with MA and Part 

D program requirements and, thus, 

whether an MA contract should be 

terminated. In this way, the Star Ratings 

are retrospective and provide 

information about past performance, not 

the MA organization’s intentions or 

plans for improvement and to address 

enrollee needs in the coming year. Even 

if past performance can sometimes 

predict future performance, the Star 

Ratings program is not the duplicative 

of a quality improvement program like 

the MOC. There are other differences 

between the Star Ratings program and 

the MOC review and approval process, 

but these differences in purpose are 

fundamental and sufficient to conclude 

that it is appropriate to use a minimum 

benchmark for approval of all SNP 

MOCs. Therefore, we are finalizing 

§ 422.101(f)(3)(iii) as proposed to 

require use of a 50 percent minimum 

benchmark for each MOC element. 

After consideration of the comments 

and for the reasons outlined in the 

proposed rule and our responses to 

comments, we are finalizing 

amendments to § 422.101(f)(1) 

introductory text, (f)(1)(i), (f)(1)(iii), and 

(f)(2) introductory text and adding 

§ 422.101(f)(1)(iv) and (f)(3). These 

provisions are finalized substantially as 

proposed with a modification in 

paragraph (f)(1)(iv) to set standards for 

the required face-to-face encounter. 

B. Coverage Gap Discount Program 

Updates (§§ 423.100 and 423.2305) 

We proposed to amend our 

regulations at §§ 423.100 (definition of 

applicable drug) and 423.2305 

(determination of coverage gap 

discount) to reflect changes to the 

relevant statutory provisions made by 

the BBA of 2018. Sections 53113 and 

53116 of the BBA of 2018 amended 

section 1860D–14A of the Act to (a) 

increase the coverage gap discount for 

applicable drugs from 50 to 70 percent 

of the negotiated price beginning in plan 

year 2019, and (b) revise the definition 

of an applicable drug to include 

biosimilar biological products, also 

beginning in plan year 2019. 

Specifically, section 53116 of the BBA 

of 2018 revised the definition of 

‘‘discounted price,’’ meaning the price 

provided to the beneficiary, in section 

1860D–14A(g)(4)(A) of the Act to mean, 

for a plan year after 2018, 30 percent of 

the negotiated price. This means that 

the coverage gap discount is 70 percent, 

rather than 50 percent. To make our 

regulations consistent with this change, 

we proposed to amend the definition of 

‘‘applicable discount’’ in § 423.2305 to 

provide that, with respect to a plan year 

after plan year 2018, the applicable 

discount is 70 percent of the portion of 

the negotiated price (as defined in 

§ 423.2305) of the applicable drug of a 

manufacturer that falls within the 

coverage gap and that remains after such 

negotiated price is reduced by any 

supplemental benefits that are available. 

Section 53113 of the BBA of 2018 

amended section 1860D–14A(g)(2)(A) of 

the Act to specify that biological 

products licensed under subsection (k) 

of section 351 of the Public Health 

Service Act (that is, biosimilar and 

interchangeable biological products) are 

excluded from the coverage gap 

discount program only with respect to 

plan years prior to 2019. Accordingly, 

CMS has treated biosimilar biological 

products as applicable drugs under the 

Discount Program since 2019. Therefore, 

we proposed to revise the definition of 

applicable drug at § 423.100 to specify 

that such biological products are 

excluded only for plan years prior to 

2019. 6

We received four comments on our 

proposal. The two comments that were 

within the scope of the rule were 

supportive of the proposed changes. 

Therefore, we are finalizing the 

regulatory change as proposed to amend 

the definition of ‘‘applicable discount’’ 

in § 423.2305 to increase the applicable 

discount from 50 to 70 percent of the 

negotiated price beginning in 2019, and 

to revise the definition of applicable 

drug at § 423.100 such that biosimilar 

biological products are excluded only 

for plan years before 2019. As 

previously noted, these changes are 

being made to update the regulations to 

reflect statutory and operational changes 

that became effective in 2019. 

C. Part D Income Related Monthly 

Adjustment Amount (IRMAA) 

Calculation Update for Part D Premium 

Amounts (§ 423.286) 

Section 3308 of the Affordable Care 

Act amended section 1860D–13(a) of the 

Act and established an income-related 

monthly adjustment amount for 

Medicare Part D (hereinafter referred to 

as Part D–IRMAA) for beneficiaries 

whose modified adjusted gross income 

(MAGI) exceeds the same income 

threshold amount tiers established 

under section 1839(i) of the Act with 

respect to the Medicare Part B incomerelated monthly adjustment amount 

(Part B–IRMAA). The Part D–IRMAA is 

an amount that a beneficiary pays in 

addition to the monthly plan premium 

for Medicare prescription drug coverage 

under the Part D plan in which the 

beneficiary is enrolled when the 

beneficiary’s MAGI is above the 

specified threshold. 

The Part D–IRMAA income tiers 

mirror those established for the Part B– 

IRMAA. As specified in section 1839(i) 

of the Act, when the Part B–IRMAA 

went into effect in 2007, individuals 

and joint tax filers enrolled in Medicare 

Part B whose modified adjusted gross 

income exceeded $80,000 and $160,000, 

respectively, were assessed the Part B– 

IRMAA on a sliding scale. As specified 

in section 1839(i)(5) of the Act, each 

dollar amount within the income 

threshold tiers shall be adjusted 

annually based on the Consumer Price 

Index (CPI). As a result of the annual 

adjustment, for calendar year 2010, the 

income threshold amounts had 

increased to reflect four income 

threshold amount tiers for individuals 

and joint tax filers whose modified 

adjusted gross income exceeded $85,000 

and $170,000, respectively. (We note 

that section 3402 of the Affordable Care 

Act froze the income thresholds for 

2011 through 2019 at the level 

established for 2010.) 

Consistent with section 3308 of the 

Affordable Care Act, the Part D–IRMAA 

is calculated using the Part D national 

base beneficiary premium (BBP) and the 

applicable premium percentage (P) as 

follows: BBP × [(P ¥ 25.5 percent)/25.5 

percent]. The premium percentage used 

in the calculation will depend on the 

level of the Part D enrollee’s modified 

adjusted gross income. 

Section 3308 of the Affordable Care 

Act required CMS to provide the Social 

Security Administration (SSA) with the 

national base beneficiary premium 

amount used to calculate the Part D– 

IRMAA no later than September 15 of 

each year, starting in 2010. Also, 

effective in 2010, CMS must provide 

SSA no later than October 15 of each 

year, with: (1) The modified adjusted 

gross income threshold ranges; (2) the 

applicable percentages established for 

Part D–IRMAA in accordance with 

section 1839 of the Act; (3) the 

corresponding monthly adjustment 

amounts; and (4) any other information 

SSA deems necessary to carry out Part 

D–IRMAA. 

To determine a beneficiary’s IRMAA, 

SSA considers the beneficiary’s MAGI, 

together with their tax filing status, to 

determine the percentage of the: (1) 

Unsubsidized Medicare Part B premium 

the beneficiary must pay; and (2) cost of 

basic Medicare prescription drug 

coverage that the beneficiary must pay. 


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Since the implementation of the Part 

D–IRMAA in 2011, subsequent revisions 

to the statute have modified the 

associated income tiers used in IRMAA 

calculations: 

• Section 402 of the Medicare Access 

and CHIP Reauthorization Act (MACRA) 

of 2015, revised the income thresholds 

for the Part B– and Part D–IRMAA 

income groups such that beneficiaries 

with incomes greater than $85,000 but 

not more than $107,000 were required 

to pay 35 percent of Part B and Part D 

program costs; beneficiaries with 

incomes greater than $107,000 but not 

more than $133,500 would pay 50 

percent of Part B and Part D program 

costs; beneficiaries with incomes greater 

than $133,500 but not more than 

$160,000 would pay 65 percent of Part 

B and Part D program costs; while 

beneficiaries with incomes greater than 

$160,000 were required to pay 80 

percent of Part B and Part D program 

costs. 

• Section 53114 of the Bipartisan 

Budget Agreement (BBA) of 2018 

revised the income thresholds again 

such that, beginning in 2019, 

beneficiaries with incomes greater than 

$500,000 ($750,000 for joint tax filers) 

are required to pay 85 percent of 

program costs (an increase from 80 

percent). 

We proposed to revise 

§ 423.286(d)(4)(ii) for consistency with 

the changes made by section 53114 of 

the BBA of 2018 and to make other 

technical changes to ensure that the 

calculations used in the methodology 

for updating Part D–IRMAA are 

described correctly. We proposed to 

remove the language ‘‘the product of the 

quotient obtained by dividing the 

applicable premium percentage 

specified in § 418.2120 (35, 50, 65, or 80 

percent) that is based on the level of the 

Part D enrollee’s modified adjusted 

gross income for the calendar year 

reduced by 25.5 percent and the base 

beneficiary premium as determined 

under paragraph (c) of this section’’ and 

replace it with ‘‘the product of the 

standard base beneficiary premium, as 

determined under paragraph (c) of this 

section, and the ratio of the applicable 

premium percentage specified in 20 

CFR 418.2120, reduced by 25.5 percent; 

divided by 25.5 percent (that is, 

premium percentage¥25.5)/25.5).’’ 

We received no comments on this 

proposal and are finalizing the proposed 

revisions to § 423.286(d)(4)(ii) without 

modification. Although we are 

finalizing this provision as applicable 

60 days after publication, it codifies 

current policies so we anticipate that 

there will be no change in operations or 

administration of the MA and Part D 

programs and encourage MA 

organizations and Part D sponsors to 

take this final rule into account 

immediately. We note that the revisions 

to this provision that we are finalizing 

in this final rule simply codify the Part 

D–IMRAA calculation that is currently 

used by SSA. 

III. Implementation of Several Opioid 

Provisions of the Substance UseDisorder Prevention That Promotes 

Opioid Recovery and Treatment 

(SUPPORT) for Patients and 

Communities Act 

A. Mandatory Drug Management 

Programs (DMPs) (§ 423.153) 

Section 2004 of the SUPPORT Act 

requires that all Part D sponsors must 

have established DMPs no later than 

January 1, 2022. We proposed to amend 

regulatory language at § 423.153(f) to 

reflect this requirement. As discussed in 

the proposed rule preamble, the 

Overutilization Monitoring System 

(OMS) criteria used to identify 

‘‘potential at-risk beneficiaries’’ (PARBs) 

(defined in § 423.100) are based on a 

history of filling opioids from multiple 

doctors and/or multiple pharmacies. 

While implementation of DMPs has 

been optional since codified for 2019, 

85.9 percent of Part D contracts in 

calendar year 2019 and 87.2 percent in 

calendar year 2020 have established 

DMPs to address opioid overutilization 

among their enrollees. Thus, of about 49 

million beneficiaries who were enrolled 

in the Medicare Part D program in 2019, 

about 48.5 million enrollees (99 percent) 

are covered under Part D contracts that 

offer a DMP already. We received the 

following comments on this proposal 

and our responses follow: 

Comment: CMS received numerous 

comments that were generally 

supportive of our proposal to codify the 

statutory requirement that all Part D 

plans implement a DMP. 

Response: We thank commenters for 

their support. 

Comment: Several commenters 

expressed concerns that enrollees being 

treated for pain would be forced, 

through mandatory DMPs, to see a new 

doctor or use a new pharmacy and that 

the proposed regulation would 

undermine the doctor-patient 

relationship. 

Response: The concerns expressed in 

some of these comments appeared to 

reflect a misunderstanding of the 

requirements in section 2004 of the 

SUPPORT Act. Although section 2004 

mandates the establishment of DMPs for 

all Part D sponsors beginning January 1, 

2022, section 2004 did not expand 

DMPs’ scope. Thus, it is not the case 

that a ‘‘mandatory’’ DMP would now 

require all Part D beneficiaries taking 

opioids to be subject to coverage 

limitations or quantity limits. Rather, 

the statute and the regulations we are 

finalizing in this rule will now require 

the few Part D sponsors who have not 

already established a DMP to do so. 

DMPs identify a subset of opioid users 

in the Part D program who may be at the 

highest risk of an adverse health event, 

for example, due to uncoordinated care. 

As mentioned in the proposed rule, 

CMS’ internal analysis estimated that 

only 158 additional PARBs will be 

identified per year by applying the 

current minimum OMS criteria across 

all Part D contracts that do not already 

have DMPs in place. CMS expects that 

only a few of these additional 

beneficiaries will be subject to a 

coverage limitation after case 

management with their opioid 

prescribers. 

CMS does not agree that DMP 

activities undermine the doctor-patient 

relationship. In fact, the goal of case 

management under a DMP is for Part D 

sponsors to assist prescribers in 

coordinating care for PARBs to ensure 

their opioid use is appropriate and 

medically necessary. The case 

management process increases safety 

and accountability within the doctorpatient relationship, as prescribers may 

or may not be aware that there are other 

prescribers of opioids or 

benzodiazepines for their patients. Any 

potential coverage limitation under a 

DMP is put in place only after the plan 

conducts case management, solicits the 

views of the enrollee’s prescriber(s), and 

provides advance written notice to the 

enrollee. If a Part D sponsor implements 

a prescriber and/or a pharmacy 

limitation, the affected beneficiary is 

provided opportunities to select their 

preferred pharmacy and prescriber 

when they receive an Initial Notice of 

their PARB status and a Second Notice 

of their at-risk beneficiary (ARB) status, 

as described in regulation at 

§ 423.153(f)(5)(ii)(4) and 

§ 423.153(f)(6)(ii)(5). The sponsor is 

required to consider the beneficiary’s 

preferences consistent with 

§ 423.153(f)(9). These aspects of DMPs 

safeguard beneficiary’s access to 

coverage of opioids, prescriber and 

pharmacy choice, and the integrity of 

the doctor/patient relationship. 

Comment: Several commenters 

requested that PACE organizations be 

exempt from the requirement to 

establish a DMP. These commenters 

noted that drug utilization management 

programs, quality assurance measures, 

and medication therapy management 

(MTM) program requirements 


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7 Dowell D, Haegerich TM, Chou R. CDC 

Guideline for Prescribing Opioids for Chronic 

Pain—United States, 2016. MMWR Recomm Rep 

2016;65(No. RR–1):1–49. DOI: http://dx.doi.org/ 

10.15585/mmwr.rr6501e1. 

8https://www.cdc.gov/media/releases/2019/ 

s0424-advises-misapplication-guidelineprescribing-opioids.html. 

(§ 423.153(a) through (d)) are currently 

waived for PACE under § 423.458(d). 

Commenters also stated that the PACE 

model of care already addresses opioid 

overutilization through use of a closed 

provider network; care coordination 

through primary care providers and the 

interdisciplinary team; proactive drug 

utilization review; and in-person health 

assessments already required for PACE 

enrollees. 

Some of these commenters noted that, 

while the majority of PACE participants 

do not reside in an LTC facility, PACE 

participants are required to meet their 

state’s eligibility criteria for nursing 

home care and therefore share 

characteristics with beneficiaries who 

are exempt from DMPs because they are 

residents of LTC facilities. They also 

state that PACE organizations typically 

contract with a single pharmacy which 

inherently coordinates access and 

achieves the goals of a DMP. One 

commenter noted that many PACE 

organizations do not have formularies 

and therefore no Pharmacy and 

Therapeutic (P&T) committee to develop 

and carry out DMP policies and 

procedures. 

Response: CMS thanks these 

commenters for their feedback, but 

disagrees that PACE organizations 

should be exempt from the statutory 

requirement to establish a DMP. While 

the DMP statute does outline certain 

exempted beneficiaries, such as 

individuals with cancer or who reside 

in a LTC facility, it does not specify or 

contemplate exemptions based on Part 

D plan type. CMS notes that MA–PDs 

that require enrollees to access routine 

care from contracted and/or employed 

prescribers through an HMO or 

integrated care model are similarly 

required under Part 422 to provide 

coordinated care, but are not exempt 

from the DMP requirement. As 

commenters noted, PACE participants 

are an especially vulnerable Medicare 

population, and for those who live in 

the community, additional monitoring 

will serve as a valuable safeguard to 

help prevent misuse of opioids. 

Depending on the frequency of 

engagement between the participant and 

PACE organization, as well as 

participant preferences, the in-person 

assessments required under §§ 460.104 

and 460.121 may not always coincide 

with identification through the OMS, 

and may present missed opportunities 

to intervene. 

Under the existing regulatory 

framework where DMPs are voluntary, 

approximately 40 percent of PACE 

contracts have reported to CMS that 

they already have a DMP in place. In 

2019, PACE enrollees accounted for 0.03 

percent of all Part D enrollees belonging 

to a plan with a DMP, and 0.07 percent 

of Part D enrollees identified in OMS as 

PARBs because they met the minimum 

OMS criteria. Based on CMS’ analysis 

used in the proposed rule, PACE 

enrollees account for 0.14 percent of 

total Part D enrollees identified as 

PARBs because they meet the criteria for 

history of opioid overdose (see 

discussion in this section of this rule), 

which is proportional to the number of 

PACE enrollees in Part D (for January 

2020, 0.1 percent of all Part D 

enrollment). In other words, the 

likelihood of a PACE participant being 

identified as a PARB, either based on 

OMS criteria or history of opioid 

overdose, is at least as high as the 

likelihood of any Part D enrollee to meet 

those criteria. Therefore, a PACE 

participant is as likely as any other Part 

D enrollee to benefit from case 

management and should not be 

deprived of this aspect of the Part D 

program. As discussed in the proposed 

rule preamble, Part D sponsors with 

DMPs infrequently implement coverage 

limitations after case management. This 

reflects the goals of case management as 

a means through which Part D sponsors 

engage prescribers, gather relevant 

patient-specific information not 

available to CMS, such as more recent 

medical or prescription claims data, and 

seek to coordinate care tailored to the 

unique needs of the beneficiary. CMS 

expects the volume of PARBs identified 

through minimum OMS criteria in the 

PACE organizations that have not yet 

implemented a DMP will continue to be 

minimal and present a low overall 

burden for these organizations. As with 

other Part D plans, such burden 

includes conducting case management, 

implementing any needed coverage 

limitations, and reporting of case 

management outcomes and coverage 

limitations back to CMS via OMS. 

Reporting outcomes of case management 

provides CMS with valuable 

information to help track the safe use of 

opioids and benzodiazepines in the Part 

D program and serves as a means to 

document that case management 

occurred. 

CMS agrees with commenters that a 

PACE organization, or for that matter, 

any Part D plan sponsor, that does not 

have a P&T committee would not be in 

compliance with existing 

§ 423.153(f)(1), which requires approval 

of DMP policies and procedures by the 

‘‘applicable P&T committee.’’ As 

specified in § 423.120(b), only Part D 

sponsors that use formularies must have 

a P&T committee, and CMS did not 

propose to broaden that requirement to 

apply to Part D sponsors that do not use 

formularies. For this reason, after 

consideration of the comments, CMS is 

amending the language at § 423.153(f)(1) 

to account for Part D sponsors, 

including PACE organizations, that do 

not have their own or a contracted P&T 

committee (for example, through their 

PBM) because they do not use a 

formulary. Such sponsors can comply 

with this requirement by having written 

DMP policies and procedures that are 

approved by the Part D sponsor’s 

medical director and applicable clinical 

and other staff or contractors, as 

determined appropriate by the medical 

director. We have also added cross 

references to the existing regulations 

requiring that Part D sponsors have a 

medical director at § 423.562(a)(5), and 

for PACE organizations, at § 460.60(b). 

Comment: Several commenters stated 

general concerns or recommendations 

regarding DMPs. Commenters expressed 

concerns regarding the misapplication 

of the CDC Guideline for Prescribing 

Opioids for Chronic Pain 7 and 

recommended that CMS direct sponsors 

towards appropriate disease-specific 

pain management guidelines. 

Additional recommendations included 

facilitating or encouraging providers to 

refer patients to non-pharmacologic 

therapies for pain; ensuring provider 

education about overdose and naloxone 

prescribing, including evaluation for 

substance use disorder; ensuring shared 

decision-making between beneficiaries 

and prescribers such that access to 

medically necessary opioids is not 

impeded; ensuring beneficiaries with a 

coverage limitation are not forced to use 

a pharmacy in which the sponsor has a 

financial interest; and generally 

ensuring DMP activities are nonpunitive or stigmatizing. 

Response: CMS appreciates the 

concerns and recommendations 

commenters shared regarding case 

management activities. We note that the 

recommendations are not inconsistent 

with the current DMP requirements. 

In finalizing the regulatory framework 

for DMPs (83 FR 16440), CMS made a 

conscious effort that DMP activities 

would not be punitive or stigmatizing 

and would not inappropriately limit 

access or result in abrupt opioid 

tapering. This is consistent with the 

CDC’s commentary 8 published in 2019, 


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9Centers for Disease Control and Prevention. 

What States Need to Know about PDMPs. Accessed 

June 10, 2020 from https://www.cdc.gov/ 

drugoverdose/pdmp/states.html. 

10Additionally, the beneficiary with an overdose 

may or may not meet OMS criteria. 

which advised against the 

misapplication of the Guideline for 

Prescribing Opioids for Chronic Pain, 

including the inflexible application of 

the Guideline’s dosage 

recommendations and policies that 

encourage abrupt tapering, sudden 

discontinuation, or dismissal of the 

patient from their physician. 

CMS agrees that many of the 

suggestions proposed could be of value 

in many cases, and encourages sponsors 

to incorporate them, as appropriate, into 

their DMP policies and procedures, as 

well as protect against the unintended 

consequences identified by the CDC. 

Finally, CMS notes that beneficiaries are 

provided opportunities to select their 

preferred pharmacies and prescribers, if 

their plan intends to apply a pharmacy 

or prescriber limitation under the DMP. 

See § 423.153(f)(5)(ii)(4) and 

§ 423.153(f)(6)(ii)(5). 

Comment: A few commenters stated 

that mandatory DMPs are redundant 

with existing prescription drug 

monitoring programs (PDMPs). 

Response: CMS disagrees that DMPs 

are redundant with PDMPs. PDMPs are 

state-level electronic databases that are 

used to collect information on all 

controlled substance prescriptions in a 

state. While PDMPs, which allow 

providers to access their patients’ 

prescription history, are one tool to 

combat the opioid epidemic, PDMPs do 

not exist in all states, and health plans 

may not have access to them. Also, 

while CMS encourages providers to use 

PDMPs prior to issuing prescriptions for 

controlled substances, it is not 

mandatory for providers to do so in all 

states.9 Therefore, CMS believes that 

DMPs provide additional value for 

ensuring safe opioid prescribing in the 

Part D program through the initiation of 

case management and care coordination 

activities. Moreover, the CARA statute 

required CMS to establish a regulatory 

framework for DMPs. 

Comment: Several commenters 

requested CMS clarify existing guidance 

with regard to identification of PARBs, 

criteria for identifying exempt 

beneficiaries, reporting requirements for 

ARBs, and notice requirements for 

exempt beneficiaries. Several 

commenters provided additional 

recommendations, including 

suggestions to expand the list of 

frequently abused drugs to drugs 

beyond opioids and benzodiazepines 

(for example, other central nervous 

system depressants such as gabapentin) 

and allowing beneficiaries with existing 

beneficiary-specific POS edits that were 

implemented prior to 2019 be integrated 

into the DMP. 

Response: CMS’ proposal was to 

implement the statutory requirement 

that Part D sponsors establish DMPs as 

of January 1, 2022. As discussed in 

section VII.L, CMS also proposed to 

designate beneficiaries with sickle cell 

disease as exempted individuals in the 

regulation for purposes of a Part D 

sponsor’s DMP. CMS did not propose 

any changes to the other existing 

requirements, except to solicit comment 

about case management for PARBs with 

a history of opioid related-overdose, 

which is discussed later in this section. 

CMS will consider revisions to the 

guidance and OMS criteria as 

appropriate. CMS also regularly reviews 

data submitted into OMS and MARx 

and will update guidance and/or 

communicate with sponsors if needed. 

After consideration of the comments 

received, CMS is finalizing the proposal 

to make DMPs mandatory at § 423.153(f) 

with a modification at § 423.153(f)(1) to 

accommodate Part D plans, such as 

PACE organizations, that do not have a 

P&T committee, as described earlier. 

B. Beneficiaries With History of OpioidRelated Overdose Included in Drug 

Management Programs (DMPs) 

(§ 423.153) 

Under section 2006 of the SUPPORT 

Act, CMS is required to identify Part D 

beneficiaries with a history of opioidrelated overdose (as defined by the 

Secretary) and notify the sponsor of 

such identification, as those individuals 

must be included as PARBs for 

prescription drug abuse under their Part 

D plan’s DMP. In line with this 

requirement, CMS proposed to modify 

the definition of ‘‘potential at-risk 

beneficiary’’ at § 423.100 to include a 

Part D eligible individual who is 

identified by CMS as having a history of 

opioid-related overdose, which is also 

defined in this regulation. 

Based on the analyses and rationale 

described in detail in the proposed rule, 

CMS proposed to operationalize this 

definition by: (1) Using diagnosis codes 

that include both prescription and illicit 

opioid overdoses; (2) using a 12-month 

lookback period from the end of each 

OMS reporting quarter for record of 

opioid-related overdose; and (3) using a 

6-month lookback period from the end 

of each OMS reporting quarter for 

record of a recent Part D opioid PDE. 

The number of unique beneficiaries 

identified under this proposal is 

approximately 18,268 annually (based 

on opioid-related overdose claims from 

July 1, 2017 to June 30, 2018). Under 

existing rules, which CMS did not 

propose to change, Part D sponsors with 

DMPs must conduct case management 

for each PARB identified by CMS 

through OMS, which includes sending 

written information to the beneficiary’s 

prescribers that the beneficiary has been 

identified as a PARB. In expanding the 

definition of PARB by adding 

beneficiaries with a history of opioid 

overdose, Part D sponsors must conduct 

the same case management process for 

this additional group of beneficiaries 

that they currently conduct for PARBs 

identified based on their use of multiple 

opioid prescribers and/or pharmacies. 

As discussed in the proposed rule, CMS 

expects that case management for these 

individuals will involve sponsors 

communicating with their provider(s), 

who may or may not already be aware 

of the beneficiary’s overdose history.10

CMS also solicited comments on 

whether the proposal needed any 

additional features to facilitate the case 

management process for PARBs with a 

history of opioid-related overdose. 

CMS received numerous comments 

on this provision, which were largely 

supportive of the proposal, with several 

commenters expressing concerns or 

requesting clarification on various 

aspects as discussed in this section of 

this rule. 

Comment: A few commenters pointed 

out that the regulatory text defining 

potential at-risk beneficiary at § 423.100 

was unclear with regard to whether both 

an overdose diagnosis and an opioid 

PDE were necessary to meet the new 

definition of a PARB based on the 

proposed regulation. 

Response: In response to these 

comments, CMS clarifies that both 

criteria are required to meet the 

definition of a PARB with a history of 

opioid-related overdose. In order to 

improve overall clarity in this final rule, 

in lieu of revising the PARB definition 

at § 423.100 as proposed, we are 

incorporating the elements of the 

proposed definition into the clinical 

guideline regulation as criteria in a new 

paragraph at § 423.153(f)(16)(ii)(2). That 

is, the criteria initially proposed in the 

definition of PARB at § 423.100 have 

been relocated to the DMP clinical 

guidelines section of the regulation at 

§ 423.153(f)(16)(ii)(2). CMS has also 

made some technical changes to the 

criteria now located at 

§ 423.153(f)(16)(ii)(2) to clarify that a 

plan can use its own data to identify 

PARBs. Specifically, instead of referring 

to ‘‘PDE,’’ the criteria will refer to 


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11https://www.cms.gov/Medicare/Coding/ICD10/ 

Downloads/2020-Coding-Guidelines.pdf. 

‘‘claim’’ and the words ‘‘has been 

submitted’’ are struck from the criteria. 

Comment: A few commenters 

expressed concern with identification of 

overdose based on diagnosis code, citing 

anecdotal reports that the codes are 

unreliable due to being assigned 

inappropriately or over-diagnosed in 

beneficiaries taking opioids who present 

for emergency care for other health 

conditions. 

Response: CMS disagrees and was 

unable to find evidence to substantiate 

this claim specific to opioid-related 

overdose in the published literature. In 

the event a situation such as this does 

occur, during the case management 

process the prescriber will likely review 

the diagnosis and determine whether to 

discuss it with their patient on a case by 

case basis. Such review and discussion 

will present an opportunity for the 

provider to evaluate whether the 

diagnosis appears to be inaccurate and 

to communicate this information back to 

the sponsor’s DMP. 

Comment: A commenter suggested 

CMS include both primary and 

secondary diagnosis codes for opioidrelated overdose to avoid underreporting. 

Response: CMS believes the principal 

diagnosis code is the most reliable 

means to identify overdoses in order to 

meet the statutory requirement for the 

reasons that follow. 

According to the ICD–10–CM Official 

Guidelines for Coding and Reporting,11

the principal diagnosis code is the 

condition, after study, to be chiefly 

responsible for occasioning the 

admission of a patient to the hospital. 

The terms principal and primary are 

used interchangeably to define the 

diagnosis that is sequenced first on a 

claim. Other diagnoses, including 

secondary diagnoses, are conditions that 

may coexist at the time of admission, or 

develop subsequently. As such, 

secondary diagnoses may capture 

overdoses not directly related to the 

beneficiary’s recent use of opioids that 

triggered the overdose event. CMS’ 

proposed criteria for identification of a 

PARB based on history of opioid 

overdose specifies ‘‘recent’’ overdose so 

that DMP activities can be the most 

relevant and impactful. Since secondary 

diagnoses may be historical, CMS does 

not believe that they as reliably reflect 

‘‘recent’’ opioid-related overdoses as do 

principal diagnoses. 

Taking program size into account, 

focusing on the principal or primary 

diagnosis chiefly responsible for the 

admission or event is most appropriate 

to capture overdoses related to a 

beneficiary’s recent use of opioids and 

increase the likelihood that the 

beneficiary would benefit from case 

management. Using the same time 

period, diagnosis codes, PDE, and 

lookback period criteria described in the 

proposed rule methodology, CMS 

evaluated the number of PARBs that 

would be identified by the proposed 

definition, both including and 

excluding secondary diagnoses. 

Including secondary diagnosis codes for 

identification of opioid-related 

overdoses was found to increase the 

number of PARBs identified by about 40 

percent (for a total of 25,566) relative to 

the number of PARBs identified only on 

the basis of principal diagnosis (18,268, 

as described in burden estimates). 

However, due to the limitations of 

secondary diagnoses themselves, 

described earlier, CMS believes the 

additional PARBs identified solely on 

the basis of a secondary diagnosis 

would not necessarily be those with the 

most relevant history of opioid-related 

overdose. Therefore, CMS does not 

believe that the increased program size 

due to including secondary diagnosis 

codes for the purpose of identifying 

PARBs is a cost-effective use of DMP 

resources, when these resources would 

be better focused on beneficiaries at 

highest risk of misuse or abuse. 

In evaluating this comment, CMS 

noticed that the proposed regulatory 

language in the definition of PARB at 

§ 423.100 was not sufficiently broad to 

include data sources and methodology 

discussed in the proposed rule. As 

mentioned in response to a prior 

comment, the criteria initially proposed 

in the definition of PARB at § 423.100 

have been relocated to 

§ 423.153(f)(16)(ii)(2). Specifically, in 

the clinical guideline criteria for 

identifying PARBs on the basis of 

history of opioid-related overdose at 

§ 423.153(f)(16)(ii)(2), the words 

‘‘Medicare fee-for-service’’ and ‘‘code’’ 

were stuck from what was in the 

initially proposed definition at 

§ 423.100. This revised language, which 

CMS is finalizing, better reflects CMS’ 

intention to use claims, including 

encounter data, resulting from 

healthcare visits involving opioidrelated overdoses. With this 

modification, the broader criteria will 

encompass both inpatient and 

outpatient locations of care. 

Comment: A commenter requested 

addition of the ICD–10 code Z91.5 for 

method suicide attempt to capture 

intentional overdose in the methodology 

CMS will use to identify PARBs based 

on history of opioid-related overdose. 

Response: CMS disagrees, as the ICD– 

10 code Z91.5 indicates a history of selfharm, and does not specify self-harm via 

opioid use. Although the literature CMS 

cited in the proposed rule preamble 

does reference history of opioid-related 

overdose being a risk factor for future 

overdoses or suicide-related events, the 

SUPPORT Act directs CMS to identify 

beneficiaries with a history of opioidrelated overdose. Thus, including the 

ICD–10 code for history of self-harm 

would be overly inclusive. Other ICD– 

10 codes are more specific to identify 

injury due to opioid-related poisoning 

or overdose, and are used in the 

methodology applied by CMS and 

described in more detail in the February 

2020 proposed rule. CMS believes the 

ICD–10 codes used in this methodology 

will capture both intentional and 

unintentional overdoses. 

Comment: A commenter pointed out 

that using Medicare data will not 

capture overdose history from new 

Medicare enrollees. 

Response: CMS acknowledges this is 

a limitation to the methodology; 

however, it is not feasible to gather all 

non-Medicare claims data for Medicare 

beneficiaries. We believe using 

Medicare claims data strikes the right 

balance to permit inclusion of 

beneficiaries with a history of opioidrelated overdose in DMPs without 

undue burden. 

Comment: A commenter expressed 

the opinion that for beneficiaries with 

overdoses due to illicit opioids, 

coverage limitations on prescription 

opioids would not likely impact future 

overdose risk. 

Response: CMS disagrees with the 

commenter’s assertion given the criteria 

CMS has proposed for identifying a 

PARB based on history of opioid-related 

overdose. The statute requires that 

beneficiaries with a history of opioidrelated overdose be included as PARBs 

without specifying that the overdose 

involve a prescription opioid; therefore, 

we believe it is appropriate to include 

beneficiaries with a history of illicit 

opioid overdose. In the methodology 

presented in the proposed rule, CMS 

discussed the fact that in some cases, it 

is not possible to identify whether an 

opioid that contributed to overdose was 

obtained legally or illicitly. CMS also 

notes that any beneficiaries identified in 

OMS due to a history of opioid 

overdose, regardless of whether such 

overdose was illicit, will have also 

received an opioid prescription, 

consistent with the proposed criteria. 

Thus, there is still a potential role for 

case management, including conveying 

the overdose diagnosis to the 

beneficiary’s prescriber(s), who may 


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12https://www.cms.gov/Medicare/PrescriptionDrug-Coverage/PrescriptionDrugCovContra/ 

RxUtilization. 

13Bohnert KM, Ilgen MA, Louzon S, McCarthy JF, 

Katz IR. Substance use disorders and the risk of 

suicide mortality among men and women in the 

U.S. Veterans Health Administration. Addiction. 

2017 Jul; 11/2(7):1193–1201. doi: 10.1111/ 

add.13774. 

14https://www.hhs.gov/opioids/prevention/safeopioid-prescribing/index.html. 

consider this information for ongoing 

opioid prescribing or referral for other 

health services, with or without the 

implementation of a coverage limitation 

for Part D prescription opioids. For 

example, a prescriber may refer the 

beneficiary for medication-assisted 

treatment, if appropriate, based on 

evaluation of their patient. 

Comment: A commenter suggested 

that CMS’ proposal may discourage 

overdose patients who self-treated with 

naloxone from seeking follow-up 

medical care to avoid an overdose 

diagnosis and potential DMP 

enrollment. 

Response: CMS appreciates the 

commenter’s concerns for these 

beneficiaries, and recognize the stigma 

they may face because of such 

diagnosis. However, the statute requires 

including these beneficiaries as PARBs, 

and the commenter’s concerns do not 

obviate the need for CMS, Part D plan 

sponsors, or health care providers from 

engaging in rigorous patient safety 

programs, especially for this vulnerable 

population. CMS encourages plan 

sponsors, prescribers, and advocacy 

organizations to assist in efforts to 

educate beneficiaries about the risks and 

benefits of opioid use, as well as their 

options for opioid use disorder 

treatment. See section III.D of this final 

rule for additional information about 

CMS’ efforts, as well as the ‘‘Information 

for Patients’’ resource provided on the 

Drug Management Program page of the 

CMS website.12

Comment: A commenter requested 

clarification if a beneficiary would no 

longer be considered a PARB once they 

no longer meet the overdose criteria. 

Response: It depends. Once a 

beneficiary is identified as a PARB 

based on a history of opioid-related 

overdose and reported to Part D 

sponsors, sponsors must review the case 

and submit responses through the OMS. 

CMS will update the guidance, 

including the OMS user guide, to 

account for scenarios appropriate to 

PARBs identified based on a history of 

opioid-related overdose, including 

where these beneficiaries 

simultaneously or at a different time 

meet the definition of a PARB based on 

the existing OMS criteria, or where the 

situation changes while the plan is 

engaged in review/case management. 

Comment: Many commenters, while 

supportive of the proposed regulation, 

asked CMS to clarify expectations for 

case management, outline expectations 

for case management outcomes, and 

provide guidance for management of 

PARBs identified by a history of opioidrelated overdose. 

Response: CMS acknowledges these 

comments about Part D plans 

conducting case management with 

prescribers who are treating PARBs with 

a history of opioid-related overdose. 

Case management is an integral part of 

the DMP process. It serves the purpose 

of engaging in clinical contact with the 

prescribers of FADs, verifying whether 

the beneficiary is at risk for abuse or 

misuse of FADs, and obtaining 

agreement to a coverage limitation on 

FADs, if a limitation is deemed 

necessary. The goal of case management 

under a DMP is to improve patient 

safety and care coordination, while 

protecting beneficiary access to coverage 

of needed medications. 

CMS expects that the overall elements 

of case management should be similar 

for all PARBs, regardless of whether 

identified by existing OMS criteria 

based on use of multiple opioid 

prescribers and/or pharmacies or on a 

history of opioid-related overdose. CMS 

continues to recognize that every case is 

unique and that the approach to case 

management will vary depending on 

many factors, such as the complexity of 

the case and the promptness with which 

prescribers respond to sponsors’ 

outreach. CMS continues to encourage 

sponsors to use flexibility and clinical 

discretion depending on prescriber 

input and patient-related variables. Case 

management activities should align with 

desired goals of the DMP, for example, 

reducing multiple opioid prescribers 

and/or reducing risk of a subsequent 

overdose. In estimating the burden for 

this provision in the proposed rule, 

CMS estimated that beneficiaries with a 

history of opioid-related overdose 

would potentially have a higher rate of 

coverage limitations imposed by 

sponsors than beneficiaries meeting 

minimum or supplemental OMS criteria 

because a history of overdose is the 

most predictive risk factor for another 

overdose or suicide-related event.13

However, this is only a preimplementation estimate and CMS 

continues to emphasize that the 

implementation of coverage limitations 

should be based on individual risk 

factors and goals identified through case 

management. 

Plan sponsors should continue to 

refer to CMS guidance on elements that 

may be incorporated into case 

management, including prescriber 

education on opioid overutilization, 

encouraging prescribers to perform or 

refer their patients for substance use 

disorder screening and/or assessment, 

referral for follow-up treatment with 

pain specialists or addiction treatment 

providers, if indicated, and encouraging 

prescribers to utilize PDMPs to which 

they have access. 

DMPs should notify providers and 

patients of the coverage of naloxone and 

its availability through their plan. The 

U.S. Department of Health and Human 

Services also issues guidance for safe 

opioid prescribing, including naloxone 

co-prescribing.14

Comment: Many commenters 

inquired about sponsor flexibility with 

regard to identification of PARBs based 

on a sponsor’s own claims data, 

applying the criteria to identify PARBs 

with a history of opioid-related 

overdose more frequently than the OMS 

quarterly reports, or using criteria 

beyond those proposed by CMS to 

identify beneficiaries at risk of overdose 

at the time of their first opioid fill. 

Response: CMS appreciates these 

comments. Just as currently permitted 

with the minimum OMS criteria, 

sponsors are permitted to identify 

PARBs with a history of opioid-related 

overdose more frequently than the CMSgenerated reports through OMS. CMS 

expects that Part D sponsors identify 

PARBs consistent with the revised 

clinical guidelines CMS is finalizing at 

§ 423.153(f)(16)(ii)(2). The clinical 

guidelines specify a recent (that is, 

within the past 12 months) claim 

containing a principal diagnosis 

indicating opioid overdose and a recent 

claim (that is, within the past 6 months) 

for an opioid medication. Sponsors are 

required by regulation to submit 

responses through OMS within 30 days 

of the most recent OMS report for all 

CMS-identified or sponsor-identified 

beneficiaries. Sponsors do not need to 

wait to receive an OMS report from 

CMS to initiate case management for 

sponsor-identified cases and send 

beneficiary notices, if applicable. Also, 

as we previously noted, the clinical 

guidelines for identifying PARBs that 

we are finalizing in this rule no longer 

require that history of opioid-related 

overdose be determined by CMS. This 

better reflects sponsors’ ability to 

identify PARBs meeting the clinical 

guidelines using their own data. 

Comment: A commenter requested 

CMS report Part D beneficiaries to 

sponsors through OMS with overdose 

diagnoses, but without a subsequent 


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15CMS data indicates that, historically, 90% of 

FFS claims across all claim types are submitted 

within 3 months and 90% of MA encounters across 

all claim types are submitted within 12 months. 

See: https://www.cms.gov/files/document/ 

medicare-covid-19-data-snapshot-fact-sheet.pdf. 

opioid claim, to proactively target these 

additional beneficiaries who may be at 

risk. Another commenter stated that 

beneficiaries with a history of overdose 

are already being managed outside of 

DMPs and therefore DMP activities may 

be duplicative. 

Response: CMS does not agree with 

the request to report beneficiaries with 

an overdose diagnosis but no 

subsequent opioid claim. As discussed 

in detail in the proposed rule preamble 

(85 FR 9026), it is essential that all Part 

D plan sponsors, including standalone 

PDPs, can identify a prescriber with 

whom to conduct case management. 

Without the presence of an opioid 

claim, Part D DMPs are not implicated. 

This does not preclude plans from 

conducting outreach towards 

beneficiaries with a history of opioidrelated overdose who have not received 

a Part D prescription opioid, if they are 

able to identify them. A plan may offer 

services or interventions tailored to 

these beneficiaries, as the purpose of the 

DMP is not to supplant other health care 

activities that may be of benefit to the 

beneficiary, but rather to promote safe 

opioid prescribing practices and 

utilization in the Part D program. 

However, these beneficiaries should not 

be included in DMPs unless they meet 

the clinical guidelines specified in 

§ 423.153(f)(16). 

Comment: Some commenters 

suggested a 6-month, as opposed to a 

12-month, lookback to identify opioidrelated overdoses. Commenters 

suggested this would enable more 

timely engagement with beneficiaries 

and align with the Pharmacy Quality 

Alliance’s (PQA) Initial Opioid 

Prescribing (IOP) measure. 

Response: CMS agrees that identifying 

beneficiaries as soon as possible after 

their opioid-related overdose is likely to 

make DMP activities most impactful; 

however, we disagree with changing the 

lookback to 6 months for two reasons. 

First, CMS describes the rationale for 

the 12-month lookback. Second, CMS 

describes why it is not relevant to align 

the lookback with PQA’s IOP measure. 

Using a 12-month lookback, CMS 

anticipates that the first report will 

contain the largest proportion of 

overdoses occurring greater than 6 

months prior to the report being 

generated. Going forward, however, 

CMS anticipates that subsequent 

quarterly reports will reflect a greater 

proportion of more recent, and thus, 

more timely, claims and a smaller 

proportion of earlier claims that were 

delayed due to processing errors or late 

submissions.15 CMS expects that with 

regular reporting, the majority of PARBs 

with a history of opioid-related 

overdose will be identified on a timely 

basis. As discussed in the proposed 

rule, 12 months allows CMS to identify 

the majority of overdoses and appears to 

reflect the window of time necessary to 

capture the majority of processed claims 

or encounters. CMS will evaluate the 

implementation of the new clinical 

guidelines to identify PARBs based on 

history of opioid-related overdose and 

revise the operational specifications in 

the future if needed. 

The PQA’s IOP measure set includes 

three separate measures. CMS has 

included one of these measures, IOP–LD 

(Initial Opioid Prescribing—Long 

Duration), in Part D sponsors’ patient 

safety reports. The IOP–LD measure 

does not consider opioid overdoses; 

rather, it evaluates when there has been 

no other opioid prescription in the 90- 

day lookback period prior to the start of 

an opioid with a long duration of 

therapy. Because the IOP–LD measure is 

largely unrelated to the overdose 

lookback window, CMS is not 

persuaded to change the overdose 

lookback to align with the IOP–LD 

measure. 

Comment: A commenter 

recommended that CMS exclude 

beneficiaries with only one opioid 

prescription during the lookback period 

from the definition of PARB with a 

history of opioid overdose. Specifically, 

the commenter raised concerns about 

the efficacy of using plan resources to 

engage emergency department 

prescribers in case management based 

on a one-time, short-term opioid 

prescription. 

Response: While CMS understands 

the commenter’s concerns about 

engaging emergency department 

prescribers in case management, CMS 

disagrees with the recommendation to 

exclude beneficiaries with only one 

opioid prescription during the lookback 

period. Given the level of risk to 

beneficiaries with a history of opioidrelated overdose, CMS strongly believes 

the best policy approach is for plans to 

attempt to engage their opioid 

prescribers through case management, 

even if the prescriber only ordered a 

single prescription for the beneficiary. 

CMS does not believe it is appropriate 

to presume that all such opioid 

prescribers would decline to engage in 

case management, given the statutory 

requirement to include this population 

in DMPs. Additionally, the DMP 

regulation at § 423.153(f)(4)(ii) specifies 

the circumstances under which 

sponsors may implement a coverage 

limitation for FADs in the event 

prescribers are not responsive. Thus, 

reporting these beneficiaries in OMS as 

PARBs despite there only being one PDE 

provides the opportunity for prescriber 

engagement, but still maintains plan 

flexibility through the DMP in the event 

outreach is unsuccessful. 

Comment: A commenter cited their 

concerns with including PARBs with a 

history of opioid-related overdose in 

DMPs in light of the Substance Abuse 

and Mental Health Services 

Administration’s (SAMSHA) 42 CFR 

part 2 (‘‘part 2’’) regulations regarding 

disclosure of substance use disorder 

(SUD) information. The commenter 

expressed concern that because Part D 

sponsors would have to conduct case 

management with prescribers of all 

PARBs, which will include beneficiaries 

with a history of opioid-related 

overdose, CMS is in effect requiring Part 

D sponsors to disclose SUD information 

about beneficiaries to providers and that 

such disclosure would be in violation of 

the part 2 regulations. The commenter 

requested that CMS provide guidance 

and/or a safe harbor for sponsors 

making such disclosures to protect them 

from any compliance issues. 

Response: CMS thanks the commenter 

for the comment. SAMSHA’s part 2 

regulations protect the confidentiality of 

SUD treatment records by restricting the 

circumstances under which part 2 

programs or other lawful holders can 

disclose such records without the 

patient’s consent. CMS considered these 

regulations in the development of our 

February 2020 proposed rule. The 

requirement to include beneficiaries 

with a history of opioid-related 

overdose as PARBs does not require Part 

D sponsors to disclose SUD information 

to providers under a DMP; rather, they 

are communicating to the prescriber as 

part of case management that the 

beneficiary has a history of opioidrelated overdose. A diagnosis of 

overdose is not synonymous with SUD 

or SUD treatment, and CMS will not be 

reporting SUD treatment records, nor 

the specific overdose diagnosis code, to 

Part D plans via the OMS report. We 

anticipate reporting overdose history in 

the form of a binary indicator (e.g. ‘‘yes/ 

no,’’ ‘‘0/1,’’ or other code) on the OMS 

report if the PARB was identified based 

on having a history of opioid-related 

overdose. Additional information, such 

as the date of overdose, may be 

provided as well. CMS will provide the 

updated OMS report file layout and 


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16https://www.cms.gov/Medicare/PrescriptionDrug-Coverage/PrescriptionDrugCovContra/ 

RxUtilization. 17 Ibid. 

OMS technical guidance in advance of 

the 2022 contract year. The information 

CMS will provide in the OMS report 

will be limited such that 42 CFR part 2 

does not apply to the disclosures 

required under this rule. The 

restrictions on disclosure and use of 

SUD information only apply to such 

information that ‘‘would identify a 

patient as having or having had a 

substance use disorder either directly, 

by reference to publicly available 

information, or through verification of 

such identification by another person.’’ 

(42 CFR 2.12(a)(1)(i)). Furthermore, 

under part 2, overdose information that 

does not reveal the identity of an 

individual as a SUD patient is not 

covered by the part 2 rule. The rule does 

not apply to ‘‘[a] diagnosis of drug 

overdose or alcohol intoxication which 

clearly shows that the individual 

involved does not have a substance use 

disorder (e.g., involuntary ingestion of 

alcohol or drugs or reaction to a 

prescribed dosage of one or more 

drugs).’’ (42 CFR 2.12(e)(4)(2)). As 

detailed in the proposed rule preamble, 

the diagnosis codes that CMS will use 

to identify PARBs with a history of 

opioid-related overdose do not capture 

the nature of the intent or circumstances 

of the overdose. CMS is making no 

assumptions as to the factors that 

contributed to the overdose, but rather, 

is deferring to the providers who will be 

engaged in case management to 

appropriately evaluate and triage their 

patients as necessary. 

CMS has suggested in the previously 

cited November 20, 2018 DMP guidance 

memo that an element of case 

management could be encouraging 

prescribers to consider performing or 

referring their patients for SUD 

screening and/or assessment. The 

sponsor should not presume a 

beneficiary has SUD on the basis of the 

opioid overdose diagnosis. 

Comment: A commenter 

recommended that beneficiaries with a 

history of opioid-related overdose be 

excluded from the criteria for 

identifying a PARB if there was a 

subsequent medical claim for opioid 

treatment program (OTP) services or a 

PDE for medication-assisted treatment 

(MAT). The commenter stated that case 

management through the DMP would 

not likely offer benefit since presence of 

either scenario would suggest that an 

intervention had already been made and 

risk factors are being addressed. 

Response: CMS disagrees that 

beneficiaries with a claim for OTP 

services or MAT should be 

automatically excluded from the criteria 

for identifying a PARB. Referral to an 

OTP or initiation of MAT are not the 

only goals of case management through 

a DMP. While a claim for OTP services 

or MAT indicate that an intervention 

has begun, it does not necessarily mean 

that the intervention has been 

successful. CMS believes beneficiaries 

may still benefit from other elements of 

the DMP. For example, a coverage 

limitation on future opioid prescriptions 

may be beneficial for an individual 

while in treatment. 

In reviewing this comment, CMS 

realized that the proposed rule had not 

specified how prescriptions for MAT 

were treated in the context of requiring 

an opioid prescription claim in addition 

to the opioid-related overdose diagnosis 

to meet the new PARB criteria. The 

methodology that CMS used to identify 

PARBs based on the proposed criteria 

excluded PDEs for MAT. Only PDEs for 

non-MAT opioids were included in the 

analysis and corresponding burden 

estimates. This is how CMS plans to 

operationalize the clinical guideline 

criteria for the purposes of reporting 

PARBs with a history of opioid-related 

overdose via OMS. CMS has revised the 

clinical guidelines at 

§ 423.153(f)(16)(ii)(2) to clarify that 

prescriptions for MAT will not satisfy 

the opioid prescription claim criteria for 

identification of PARBs on the basis of 

history of opioid-related overdose. 

Therefore, a beneficiary who has at least 

one claim with a principal diagnosis 

indicating opioid overdose, but only has 

prescription claims for MAT and no 

other opioids, will not be included as a 

PARB in the OMS report. 

Comment: A few commenters 

requested that CMS conduct outreach 

and education to prescribers regarding 

DMPs and the new criteria for 

identifying PARBs based on history of 

opioid-related overdose. 

Response: CMS will update 

educational materials and guidance as 

appropriate. 

Comment: Several commenters 

requested CMS provide updated model 

documents to reflect the new criteria for 

identifying PARBs based on opioidrelated overdose history. 

Response: Revisions have been made 

in accordance with the Paperwork 

Reduction Act (PRA) model notice 

revision process. Revised notices will be 

published in the Federal Register for 

public comment before being finalized 

and posted on the CMS website.16

Comment: Many commenters 

requested that CMS provide technical 

specifications, such as OMS report file 

layout and response codes, well in 

advance (that is, 6 months) of the 

expected implementation date so that 

sponsors would have sufficient time to 

update internal systems. 

Response: CMS appreciates that plans 

will need time to make operational 

changes to incorporate this new 

beneficiary population into their DMPs, 

and intends to issue guidance and 

technical specifications to ensure such 

changes are in place prior to the 

compliance deadline. 

Comment: A commenter 

recommended that naloxone prescribing 

should be mandatory. 

Response: In the proposed rule, CMS 

stated that the provider should consider 

prescribing the beneficiary an opioidreversal agent if they are newly aware of 

the beneficiary’s history of opioidrelated overdose and DMPs should 

notify providers and patients of the 

coverage of naloxone and its availability 

through their plan. CMS does not have 

statutory authority to mandate naloxone 

prescribing in Part D. 

Comment: A commenter suggested 

that naloxone education be added to 

model beneficiary notice letters. 

Response: CMS will consider this 

recommendation during the PRA model 

notice revision process. Revised notices 

will be published in the Federal 

Register for public comment before 

being finalized and posted on the CMS 

website.17

Comment: Some commenters 

requested clarification that the DMP 

exemptions still apply to PARBs 

identified based on history of opioidrelated overdose. 

Response: Section 1860D– 

4(c)(5)(C)(v)(I) of the Act specifies that 

beneficiaries who are not exempted 

individuals and who have a history of 

opioid-related overdose must be 

included as PARBs. Therefore, even if a 

beneficiary has a history of opioidrelated overdose, if the beneficiary also 

meets the regulatory definition of an 

exempted beneficiary, as codified at 

§ 423.100, that beneficiary is not to be 

included in a DMP. Beneficiaries with a 

known exemption will not be reported 

via OMS; however, it is possible that it 

will not be known whether a beneficiary 

is exempt until case management takes 

place. Thus, beneficiaries may initially 

be reported as PARBs but will later be 

found to be exempt. In this scenario, the 

beneficiary would no longer be 

considered a PARB. In response to this 

comment, CMS is making a technical 

change to the definition of potential atrisk beneficiary at § 423.100 to clarify 

that it excludes exempted beneficiaries. 


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This technical change is described in 

more detail in section VI.M. 

After consideration of the comments 

received, CMS is not finalizing the 

remaining changes we had proposed to 

the definition of ‘‘potential at-risk 

beneficiary’’ at § 423.100. Rather, we are 

incorporating those proposed changes 

into the DMP clinical guidelines at 

§ 423.153(f)(16)(ii)(2). Thus, the clinical 

guidelines used to identify PARBs, 

beginning January 1, 2022, will include 

a Part D eligible individual who is 

identified as having a history of opioidrelated overdose and at least one recent 

opioid claim, in addition to the existing 

clinical guidelines based on obtaining 

frequently abused drugs from multiple 

prescribers and/or pharmacies. The 

finalized clinical guidelines for 

identifying PARBs with history of 

opioid-related overdose also include 

modifications to encompass potential 

data sources and clarify the exclusion of 

MAT from the opioid prescription 

component of the guidelines, as 

discussed earlier in this section. 

C. Information on the Safe Disposal of 

Prescription Drugs (§ 422.111) 

Section 6103 of the SUPPORT Act 

amends section 1852 of the Act by 

adding a new subsection (n). Section 

1852(n)(1) requires MA plans to provide 

information on the safe disposal of 

prescription drugs that are controlled 

substances when furnishing an in-home 

health risk assessment. Section 

1852(n)(2) requires us to establish, 

through rulemaking, criteria that we 

determine appropriate with respect to 

information provided to an individual 

during an in-home health risk 

assessment to ensure that he or she is 

sufficiently educated on the safe 

disposal of prescription drugs that are 

controlled substances. 

In order to implement the 

requirements of Section 1852(n)(1) for 

MA plans, CMS in its proposed rule 

(CMS 4190–P) proposed to revise the 

§ 422.111, Disclosure Requirements, to 

add a paragraph (j), which would 

require MA plans that furnish an inhome health risk assessment on or after 

January 1, 2022, to include both verbal 

(when possible) and written information 

on the safe disposal of prescription 

drugs that are controlled substances in 

such assessment. Consistent with 

Section 1852(n)(1), we proposed that 

information must include details on 

drug takeback programs and safe inhome disposal methods. 

In educating beneficiaries about the 

safe disposal of medications that are 

controlled substances, we proposed that 

MA plans would communicate to 

beneficiaries in writing and, when 

feasible, verbally. We proposed that MA 

plans must do the following to ensure 

that the individual is sufficiently 

educated on the safe disposal of 

controlled substances: (1) Advise the 

enrollee that unused medications 

should be disposed of as soon as 

possible; (2) advise the enrollee that the 

US Drug Enforcement Administration 

allows unused prescription medications 

to be mailed back to pharmacies or other 

authorized sites using packages made 

available at such pharmacies or other 

authorized sites; (3) advise the enrollee 

that the preferred method of disposing 

of controlled substances is to bring them 

to a drug take back site; (4) identify drug 

take back sites that are within the 

enrollee’s MA plan service area or that 

are nearest to the enrollee’s residence; 

and (5) instruct the enrollee on the safe 

disposal of medications that can be 

discarded in the household trash or 

safely flushed. Although we did not 

propose to require MA plans to provide 

more specific instructions with respect 

to drug disposal, we did propose that 

the communication to enrollees would 

provide the following additional 

guidance: If a drug can be safely 

disposed of in the enrollee’s home, the 

enrollee should conceal or remove any 

personal information, including Rx 

number, on any empty medication 

containers. If a drug can be discarded in 

the trash, the enrollee should mix the 

drugs with an undesirable substance 

such as dirt or used coffee grounds, 

place the mixture in a sealed container 

such as an empty margarine tub, and 

discard in the trash. 

We also proposed that the written 

communication include a web link to 

the information available on the United 

States Department of Health and Human 

Services website identifying methods 

for the safe disposal of drugs available 

at the following address: https://

www.hhs.gov/opioids/prevention/safelydispose-drugs/index.html. We noted in 

our proposed rule that the safe disposal 

of drugs guidance at this website can be 

used for all medications not just 

medications that are controlled 

substances. We stated in our proposed 

rule that we believed that plan 

communications consistent with the 

standard on this website would furnish 

enrollees with sufficient information for 

proper disposal of controlled substances 

in their community. We thank 

commenters. We received 35 comments 

on this proposal; we summarize these 

comments and our responses to the 

comments follow. 

Comment: A commenter expressed 

concern about the significant 

operational burden required in 

performing a health risk assessment in 

person. This commenter also 

recommends that CMS allow risk 

assessments through telehealth such as 

video conference or a phone call 

particularly in rural areas where access 

is an issue. 

Response: In-home HRAs are 

performed in-person where the 

beneficiary resides and not via 

telehealth. However, we clarify that this 

rule is not requiring MA plans to 

conduct in-home HRAs. In-home HRAs 

are optional and MA plans may choose 

to conduct HRAs in this manner. 

Specifically, the information on the safe 

disposal of controlled substances is only 

required to be furnished when an MA 

plan chooses to conduct an in-home 

HRA. In this final rule, in consideration 

of the comments received, we have 

sought to minimize unnecessary plan 

burden while also ensuring consistency 

with the statutory requirement that 

enrollees who receive an in-home HRA 

are furnished useful and accessible 

information on the safe disposal of 

controlled substances. With the 

exception of MA SNP plans, all other 

MA plans are required under 

§ 422.112(b)(4)(i) to make a best effort to 

conduct an HRA annually and generally 

do so as part of an enrollee’s covered 

annual wellness visit (see 42 CFR 

410.15), but there is no requirement that 

the HRA be conducted in-home. We 

note that MA special needs plans 

(SNPs), as part of their model of care, 

are required to conduct annual HRAs for 

their enrollees (42 CFR 422.101(f)(1)(i), 

but are also not required to conduct inhome HRAs. 

Comment: A commenter asked us to 

clarify whether the requirement to 

furnish information about safe drug 

disposal during an in-home risk 

assessment applies to risk assessments 

conducted at other locations where 

seniors reside, such as senior-living 

centers, nursing homes or assisted living 

facilities. 

Response: If the enrollee’s primary 

residence is in an institutional setting 

(such as a nursing home) the enrollee 

typically will not be responsible for the 

disposal of unused medications. 

Therefore, for purposes of this 

requirement, we would not consider a 

health risk assessment furnished to an 

individual who is residing in an 

institutional setting such as a nursing 

facility to be an ‘‘in-home’’ health risk 

assessment, and the MA plan is not 

required to furnish the enrollee with the 

guidance on the safe disposal of 

controlled substances during the HRA 

as required at § 422.111(j). We have 

added language to § 422.111(j) clarifying 

this exception. 


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Comment: Several commenters 

questioned how CMS will confirm 

compliance with these disclosure 

requirements. The commenter asked 

CMS to clarify any member material 

requirements regarding confirming 

receipt of this information. For example, 

the commenter questioned whether 

enrollee attestations would be required. 

A commenter asked that CMS provide 

additional clarity about what must be 

included in the health risk assessment 

to be compliant with this requirement. 

Response: MA plans conducting an 

in-home HRA must document the visit 

and their provision of the required 

disclosure to the enrollee as described at 

§ 422.111(j). However, we are not 

imposing any additional requirements 

beyond written documentation that 

would otherwise be available to CMS 

upon review or audit that the safe 

disposal instructions have been met. 

Comment: A commenter recommend 

that CMS explore additional methods to 

improve take-back programs, such as 

allowing direct-to-consumer incentives 

for returning unused opioids. The 

commenter proposed that rewards and 

incentives (R&I) could take the form of 

coupons, gift cards, and electronic 

deposits to a digital wallet, or other 

options chosen by the consumer. 

Another commenter also proposed that 

CMS explore mechanisms that reverse 

distributors use to return prescription 

drugs from healthcare providers and 

pharmacies back to manufacturers could 

be leveraged to enable manufacturerfunded incentives that could be shared 

with consumers. These commenters 

stated they believed R&I would help 

spur individuals to return substantially 

more unused prescription opioids. 

Response: This comment is outside of 

the scope of this regulation. MA plans 

may offer R&I programs as specified in 

our regulations at § 422.134 in section 

V.D of this final rule. 

Comment: A commenter stated that 

they will be furnishing free kits in a 

retail pharmacy chain that can be used 

to dispose of medications in the home. 

The commenter asked that CMS require 

plans to inform MA enrollees about this 

option. Another commenter indicated 

that they would be selling in-home drug 

deactivation kits and that CMS should 

inform MA enrollees of this option. This 

commenter recommended that CMS 

require that patient education include 

information about commercially 

available in-home disposal products 

that may be used in disposing of unused 

medications. Another commenter cited 

a report indicating that the use of inhome drug deactivation kits is a 

particularly effective way to facilitate 

the safe in-home disposal of controlled 

medications. This commenter also noted 

that drug deactivation kits would be 

particularly useful in rural areas where 

an authorized collector may not be 

nearby, and that the use of such kits 

would complement Take Back Day 

events and give consumers more 

options. 

Response: We recognize that other 

technologies, such as drug deactivation 

kits, have been developed and can 

provide additional options for the safe 

disposal of unused medications in the 

home. Accordingly, we are revising the 

regulation text at § 422.111(j) (5) to add 

that the written and verbal information 

on the safe disposal of controlled 

medications may also include 

information about the availability of 

drug deactivation kits for in-home 

disposal of unused medications. 

Because these products may not be 

available to all enrollees and may have 

varying associated costs for the enrollee, 

CMS defers to MA organizations to 

determine whether and how to include 

such information. As we discuss in 

more detail in this section of this rule, 

MA plans have the flexibility to amend 

the information they furnish on the safe 

disposal of controlled substances to 

reflect innovations such as home drug 

disposal kits that may become available. 

Comment: Several commenters asked 

that CMS develop a model document 

that all MA plans could present to 

enrollees regarding the safe disposal of 

controlled substances and identification 

of community Rx take back sites. 

Several commenters also recommend 

that this model information be 

developed and provided in a format, 

reading level, and use appropriate 

visuals to ensure understanding by 

Medicare beneficiaries. A commenter 

also asked that CMS consider including 

in the model general information on 

drug take-back sites. Another 

commenter states that with thousands of 

health plans offering Medicare 

Advantage products and thousands of 

health professionals providing HRAs, 

the need for a common educational 

document is clear. 

Response: We do not believe that 

developing a model document will 

allow MA plans the flexibility to tailor 

their information to the local needs or 

changes in this rapidly evolving area. 

For example, the use and expanding 

availability of drug deactivation kits for 

in-home use is a relatively new 

development, and may vary in cost and 

availability across plans and depending 

on location. Other new developments or 

changes in how medications can be 

safely disposed may become available 

and we want to preserve the flexibility 

of MA plans to respond to possible 

future innovations in drug disposal 

methods by updating their information 

without depending on a CMS model 

document to make those changes. We 

believe that within the parameters we 

have established in this regulation, MA 

plans will have the flexibility to tailor 

their information to the specific 

conditions present in the rural, urban or 

metropolitan community where the 

enrollee receiving an in-home HRA 

resides. We expect that as with all 

written information furnished to MA 

enrollees that MA plans will use a 

format, reading level, and use 

appropriate visuals to aid understanding 

by Medicare beneficiaries consistent 

with § 422.2267, which we are adopting 

elsewhere in this rule. 

Comment: Several commenters 

expressed concern about the burden of 

the proposed enrollee disclosure 

requirement. These commenters 

specifically mentioned that a verbal 

explanation of the safe disposal options 

and also the proposed requirement of 

identifying local take back sites are 

particularly burdensome. This 

commenter stated it would be 

impractical to tailor local takeback 

information for every individual 

nationwide who receives an in-home 

HRA. Rather, this commenter urges 

CMS to adopt a rule that the health 

professional’s reference to the safe 

disposal website, where local takeback 

locations can be found, satisfies the 

requirement to provide such 

information. 

Response: The regulations we are 

finalizing in this final rule will require 

the verbal instructions to supplement 

the written guidance on the safe 

disposal of medications when possible. 

However, verbal instruction is not 

required if the enrollee is impaired to a 

degree where they are unable to receive 

verbal information. To assist plans in 

furnishing a verbal communication to 

enrollees and reduce the burden we are 

revising the final rule to specify that MA 

plans will inform enrollees in writing 

and verbally of two or more drug take 

back sites that are consistent with the 

community pattern of access to drug 

take back sites where the enrollee 

resides. The verbal instructions should 

also note that the written instructions 

contain the DEA website where the 

enrollee can identify other community 

drug take back sites through a search 

engine where the enrollee can also find 

current information on the safe disposal 

of drugs. If the enrollee’s spouse or 

caregiver is the responsible party it 

would be appropriate to furnish this 

information (written and verbal) to them 

when conducting an in-home HRA of an 

impaired enrollee. We have amended 


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§ 422.111(j) to clarify the information 

that should be shared with the enrollee 

when a verbal summary of the 

instructions is possible. We believe 

providing this information in both 

written and verbal format is important 

for the effective transmission of this 

information to help enrollees appreciate 

the importance of disposing of unused 

medications that are controlled 

substances and that the written 

document can be used for more details 

on how to dispose of these unused 

medications. With respect to identifying 

local take back sites we recognize that 

simply referencing a website would be 

less burdensome. However, as 

previously noted, in response to these 

comments, we are modifying our 

proposal and will require a written and 

verbal disclosure of at least two drug 

take back locations that are consistent 

with the enrollee’s community pattern 

of access to drug take back sites. 

Specifically, the identified drug take 

back sites must be among the drug take 

back sites that are generally utilized by 

people residing in the same community 

as the enrollee receiving the in-home 

HRA. That is, drug take back sites that 

are physically located within the 

shortest travel times. While the 

identification of two drug take back sites 

available to the enrollee identifies two 

choices we encourage plans to identify 

additional community take back sites. 

Comment: A commenter asked that 

rather than furnishing written guidance 

on the safe disposal of controlled 

substances the information could be 

furnished to all MA enrollees in ANOC/ 

EOC documents. Another commenter 

states that adding this information to the 

MA plan website would also be less 

burdensome for members and health 

plans. One commenter recommends that 

CMS promote inclusion of safe disposal 

information within a member’s 

enrollment welcome packet. 

Response: We are implementing the 

statutory requirement at section 

1852(n)(1), which requires that specific 

information on the safe disposal of 

controlled medications must be 

provided to MA enrollees who are 

furnished an in-home HRA. While we 

acknowledge that this information could 

be beneficial to other enrollees, given 

the specific statutory language 

referencing this subset of enrollees, we 

are not requiring the inclusion of this 

information in other MA plan 

communications, nor are we adding it to 

the EOC template. While not required, 

we recognize that information on safe 

disposal may be useful for all Medicare 

beneficiaries, and therefore we 

encourage MA plans to make it available 

to other plan enrollees, for example by 

posting it on their website. 

Comment: Another commenter asks 

that CMS maintain flexibility for plans 

to provide beneficiary education and 

outreach in a way that best suits the 

needs of individual members while 

minimizing burden. A commenter asks 

that CMS allow plans the flexibility to 

determine what information to provide, 

including relying on existing, externally 

validated sources. For example, the U.S. 

Drug Enforcement Agency (DEA) 

website at www.deatakeback.com 

already hosts an up-to-date, searchable 

database of locations for safe disposal 

(located specifically at https://

apps2.deadiversion.usdoj.gov/ 

pubdispsearch/spring/main?execution=

e2s1), and local law enforcement 

stations routinely collect controlled 

substances or can direct beneficiaries 

elsewhere as needed. 

Response: The proposed regulation at 

§ 422.111(j)(1)(vi) (which we are 

renumbering as § 422.111(j)(6)) requires 

that MA plans include in their written 

guidance a link to the United States 

Department of Health and Human 

Services website identifying methods 

for the safe disposal of drugs available 

at the following address: https://

www.hhs.gov/opioids/prevention/safelydispose-drugs/index.html. 

However, we agree that the previously 

identified DEA website is a useful tool 

for locating drug take back sites 

available in specific communities. We 

will require that MA plans include a 

link to the DEA website in their written 

instructions and will require MA plans 

to provide a verbal summary of the 

written instruction noting the 

availability of the DEA website as a 

source for locating drug take back sites. 

Therefore, we are amending 

§ 422.111(j)(2) to include the DEA link. 

Comment: Several commenters stated 

that pharmacists are trusted and 

qualified and should be the source of 

information to inform enrollees about 

methods for the safe disposal of 

medications. The commenters stated 

that delivering this information to the 

beneficiary at the point of sale where 

the beneficiary gets or refills their 

prescription could be more effective . 

The commenter believed that at these 

times, information on safe disposal is 

more likely to be understood, and the 

drugs are more likely to be disposed of 

safely as part of the beneficiary’s care 

routine (for example, expired 

medications can be disposed of at or 

near the same location where a new 

prescription is filled). 

Response: As we have previously 

noted in this preamble, we are 

implementing the statutory requirement 

at Section 1855(n), which requires MA 

plan to furnish information on the safe 

disposal of controlled substances when 

conducting an in-home HRA. Elsewhere 

in this rule we discuss the statutory 

requirement for this information to be 

furnished as part of a Part D MTM 

program. 

Comment: A commenter expressed 

concern that the various requirements 

for providing beneficiaries with safe 

disposal information may result in a 

beneficiary receiving multiple and 

varied messages with the adverse effect 

of beneficiary confusion and/or 

beneficiary resistance to the safe 

disposal message. This commenter 

recommends that CMS and plans make 

certain such efforts are coordinated with 

pharmacies to ensure consistent 

messaging, particularly around 

treatment alternatives. 

Response: As we have previously 

discussed we are laying out parameters 

rather than mandating model language 

with respect to the information that MA 

plans must furnish to enrollees during 

an in-home HRA. We believe the 

parameters we are finalizing at 

§ 422.111(j) give MA plans the 

flexibility to ensure that their written 

information remains reasonably 

consistent with the current drug 

disposal options available in the 

communities where their enrollees 

reside. 

We thank the commenters for sharing 

their concerns and recommendations 

regarding our proposed implementation 

of Section 1855(n)(1) in the MA 

regulations at § 422.111(j). After careful 

examination of all comments received 

and for the reasons set forth in the 

proposed rule and our responses to 

comments, we are finalizing § 422.111(j) 

with the following modifications from 

the proposal. We are renumbering 

§ 422.111(j). We recognized the that 

DEA website is a useful tool for locating 

drug take back sites available in specific 

communities. We will require that MA 

plans include a link to the DEA website 

in their written guidance and note the 

availability of the DEA website as part 

of the verbal instructions to enrollee’s 

when conducting in-home HRAs. 

Therefore, we are amending 

§ 422.111(j)(2) (as renumbered) to 

include the DEA link at: 

www.deatakeback.com which includes a 

page with a searchable database where 

drug take back sites nearest to a 

person’s home can be identified at the 

following web link: https://

apps2.deadiversion.usdoj.gov/ 

pubdispsearch/spring/ 

main?execution=e2s1. 

We are also amending § 422.111(j)(4) 

to require that the written and verbal 


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instructions identify two or more drug 

take back sites available in the 

community where the enrollee resides. 

We are adding a new provision at 

§ 422.111(j)(5) specifying that as part of 

its educational information on the safe 

disposal of controlled medications, the 

plan may inform enrollees in writing 

and verbally about the availability of 

drug disposal kits for the in-home 

disposal of unused medications. Finally, 

we are revising § 422.111(j) to clarify 

that for purposes of this requirement, a 

health risk assessment is not considered 

‘‘in home’’ if the enrollee’s primary 

place of residence, such as a nursing 

facility, manages the disposal of unused 

medications. 

D. Beneficiaries’ Education on Opioid 

Risks and Alternative Treatments 

(§ 423.128) 

Sponsors of Part D prescription drug 

plans, including MA–PDs and 

standalone PDPs, must disclose certain 

information about their Part D plans to 

each enrollee in a clear, accurate, and 

standardized form at the time of 

enrollment and at least annually 

thereafter under section 1860D– 

4(a)(1)(a) of the Act. Section 6102 of the 

SUPPORT Act amended section 1860D– 

4(a)(1)(B) of the Act to require that Part 

D sponsors also must disclose to each 

enrollee, with respect to the treatment of 

pain, information about the risks of 

prolonged opioid use. In addition to this 

information, with respect to the 

treatment of pain, MA–PD sponsors 

must disclose coverage of nonpharmacological therapies, devices, and 

non-opioid medications under their 

plans. Sponsors of standalone PDPs 

must disclose coverage of nonpharmacological therapies, devices, and 

non-opioid medications under their 

plans and under Medicare Parts A and 

B. Section 6102 also amended section 

1860D–4(a)(1)(C) to permit Part D 

sponsors to disclose this opioid risk and 

alternative treatment coverage 

information to only a subset of plan 

enrollees, such as enrollees who have 

been prescribed an opioid in the 

previous 2-year period, rather than 

disclosing the information to each plan 

enrollee. 

To implement section 6102, we 

proposed to amend our regulations at 

§ 423.128 to require Part D sponsors to 

send information on opioid risks and 

alternative treatment information to all 

Part D enrollees, with the option to 

provide such information to a subset of 

such enrollees, in accordance with 

section 1860D–4(a)(1)(C), in lieu of 

providing it to all enrollees. 

Paragraph (a) of section 423.128 

requires Part D sponsors to disseminate 

specific plan information to enrollees, 

under which a sponsor must disclose 

the information specified in paragraph 

(b) of this section in the manner 

specified by CMS. Paragraph (b) lays out 

information requirements the plan must 

include for qualified prescription drug 

coverage offered under the Part D plan. 

We proposed to revise these 

requirements by adding paragraph 

subsection (b)(11) to mandate that Part 

D sponsors send information about the 

risks associated with prolonged opioid 

use, coverage of non-pharmacological 

therapies, devices, and non-opioid 

medications, for MA–PDs, coverage 

under the plan, and for PDPs, coverage 

under Parts A and B. Additionally, we 

proposed to add subsection (b)(11)(ii), 

which gives Part D sponsors the option 

of sending these resources to a subset of 

enrollees, in lieu of providing it to every 

enrollee. In the proposed rule, as shown 

in Table C1, we suggested 6 different 

enrollee subsets to whom sponsors 

could send the required opioid risk and 

alternate pain treatment coverage 

information, generally grouped by 

retrospective review of prescription 

opioid fills using several different 

timeframes, with the exception of the 

subgroup that contains all Part D 

enrollees. The lookback periods ranged 

from use of any opioids in last 2 years 

to greater than 90 days continuous use 

with a 7-day gap or less in the past year. 

Table C1 also shows the estimated 

number of enrollees in each suggested 

subgroup, as well as the estimated 

percent of total opioid users in Part D 

that each subgroup constitutes. 

TABLE C1—SUGGESTED SUBSET OPTIONS TO RECEIVE EDUCATION ON OPIOID RISKS AND ALTERNATE TREATMENTS * 

Subset Suggested subset 

Number of 

enrollees 

in this subset 

Percent of 

total Part D 

opioid users 

1 .................. All Part D Enrollees ................................................................................................................. 46,759,911 N/A 

2 .................. Any opioid use in last 2 years ................................................................................................. 16,134,063 100 

3 .................. Any opioid use in past year ..................................................................................................... 11,027,271 100 

4 .................. 7 days continuous opioid use .................................................................................................. 7,163,615 65 

5 .................. Greater than 30 days continuous opioid use, 7 day or less gap ............................................ 3,816,731 35 

6 .................. Greater than 90 days continuous opioid use, 7 day or less gap ............................................ 2,698,064 24 

* All figures based on 2018 PDE data as of 7/6/2019, except subset 2 which is based on 2017 and 2018 PDE data. Beneficiaries were excluded from the opioid use subsets if they were in hospice, in a resident facility, or had a palliative care diagnosis (07/01/2018–12/31/2018). 

Beneficiaries were also excluded if they had a cancer diagnosis (01/01/2018–12/31/2018). No exclusions were applied to the all Part D enrollees 

figure (subset 1). 

We specifically solicited comments 

from stakeholders on the various 

suggested subsets of enrollees to whom 

the required information could be sent, 

in order to determine if there was any 

consensus that might inform sponsors’ 

decisions, whether based on our 

suggested subsets or otherwise. 

Comment: Many commenters were 

supportive of our proposal as an 

additional means to support efforts to 

address the national opioid crisis. 

Response: We thank these 

commenters for their support of the 

proposed provision. 

Comment: A few commenters 

expressed concern about overreach in 

sending the required information to all 

Part D enrollees. They highlighted the 

potentially negative reactions enrollees 

may have if they receive this 

information without having record of a 

previous opioid prescription. 

Conversely, other commenters believed 

that it was important for all enrollees to 

receive the information whether or not 

they had a record of a prior opioid 

prescription, noting that successful 

public health campaigns are not always 

tailored to specific populations. Other 

commenters supporting that the 

information be disclosed to all Part D 

enrollees noted that some beneficiaries 

may have paid cash for opioids or used 

illicit ones, and thus would be missed 

in any subset based on prescription 

opioid use. A few commenters believed 

that plans could focus their efforts on 

beneficiaries who have received an 

opioid in the last 7 days, so as to not 


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Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 5895 

18Announcement of Calendar Year (CY) 2020 

Medicare Advantage Capitation Rates and Medicare 

Advantage and Part D Payment Policies and Final 

Call Letter, page 204 (April 1, 2019). https://

www.cms.gov/Medicare/Health-Plans/ 

MedicareAdvtgSpecRateStats/Downloads/ 

Announcement2020.pdf. 

be over-inclusive with the information 

disseminated to them. No other 

commenters suggested a different subset 

of enrollees to whom the information 

should be provided. 

Response: We appreciate the 

commenters’ feedback. Although some 

commenters offered their opinion on the 

enrollee population that might be the 

best group to receive the information, 

there was no consensus to inform 

sponsors’ ultimate decisions on to 

whom to send the information. As we 

have noted, the statute leaves this 

decision to the sponsor’s discretion. 

Comment: Several commenters 

encouraged CMS to develop a model 

document for sponsors to use for 

consistent messaging about the risk of 

opioid use and coverage of alternative 

pain treatments. 

Response: We do not believe a model 

document is appropriate or necessary. 

Both MA–PDs and standalone PDPs 

should be able to describe the risks of 

prolonged opioid use without a model 

document, as they possess the expertise 

in both the coverage and clinical use of 

drugs and their associated risks. In 

addition, Part D sponsors have available 

to them federal government websites as 

resources for consistent messaging. For 

example, the U.S. Department of Health 

and Human Services website (https://

www.hhs.gov/opioids/) contains 

information about opioid risks and pain 

management options, and CMS’ Pain 

Management website (https://

www.medicare.gov/coverage/painmanagement) also contains information 

about the risks of opioids and pain 

management. 

Moreover, we anticipate that sponsors 

will require some flexibility when it 

comes to developing the content for 

these beneficiary notices, given that 

they have the discretion to choose a 

subset of enrollees to whom they will 

send the notices. Also, coverage of 

alternative pain treatments will likely 

vary among plans. Additionally, a plan’s 

beneficiary population can be unique 

and opioid issues may vary regionally 

and over time. Thus, the degree of 

flexibility any model document would 

require to allow each plan to tailor its 

message and information to its specific 

plan population in terms of coverage of 

the risks of prolonged opioid use and 

alternate pain treatments would 

decrease the utility of a model 

document. 

Comment: A commenter suggested 

that this information could be conveyed 

to Part D enrollees through the EOC. 

Response: We respectfully disagree. 

While the EOC does contain information 

about plan coverage of alternate pain 

treatments, such as coverage of physical 

therapy services in an MA–PD, it is a 

very large document containing 

hundreds of pages of material, which is 

not the best method to provide the 

specific, cohesive, and concise 

information on opioid alternatives that 

is required under this provision. 

Moreover, given that Section 6102 of 

the SUPPORT Act provides for specific 

opioid education to Part D beneficiaries, 

we do not believe that adding opioid 

risk and alternative pain treatment 

coverage to a lengthy technical 

document would draw sufficient 

attention to the required information. 

For this reason, we believe that a 

separate beneficiary communication is a 

more effective means of conveying this 

information. We may consider revising 

the EOC template in future years so that 

a plan may include this information; 

however, our current focus is on 

implementing the statutory requirement 

and believe it is best implemented as we 

proposed. 

Comment: Some commenters 

requested clarification on whether Part 

D plans are permitted to send the 

required information electronically 

without prior consent of the beneficiary, 

based on requirements they referenced 

from § 423.128(b), which allowed for 

electronic delivery of EOCs without 

prior beneficiary authorization. 

Specifically, the regulation allowed 

plans to meet the disclosure and 

delivery requirements for certain 

documents by relying on notice of 

electronic posting and provision of the 

documents in hard copy when 

requested, when previously the 

documents, such as the EOC, had to be 

provided in hard copy. 

Response: As stated under 

§ 423.2267(d)(2)(ii), which we are 

finalizing as discussed elsewhere in this 

rule, we will not allow for electronic 

delivery without prior approval from 

the beneficiary for this type of material. 

Part D sponsors may only mail new and 

current enrollees a notice for electronic 

access to the EOC, Provider and 

Pharmacy Directories, and Formulary 

without beneficiary authorization. 

Conversely, the separate beneficiary 

notice on opioid risk and coverage of 

alternate pain treatment is a new 

document that will convey important 

safety information related to a national 

epidemic, and we want to make sure 

that beneficiaries will see the 

information. For this reason, we are not 

making any exceptions to § 423.2267(d) 

for this information, and Part D plans 

must obtain the beneficiary’s consent 

before they may provide this 

information electronically. 

Comment: As we noted earlier in 

section A, we received many general 

comments expressing concern that the 

opioid provisions of the proposed rule 

would limit access to pain medicine, 

including opioids. 

Response: We are not persuaded that 

educating beneficiaries about the risks 

of opioid use and coverage of alternative 

pain treatments will prevent people 

who need opioids for treatment of their 

pain from receiving them. It is 

commonly accepted that beneficiaries 

should discuss their health care 

treatment choices and the potential risks 

associated with each choice with their 

health care providers, and that the more 

education beneficiaries have about their 

options and the associated risks when 

they have these conversations, the better 

able they will be to make the best choice 

for themselves in consultation with 

their providers. 

After consideration of the comments 

received, we are finalizing the new 

requirement at § 423.128(b)(11) to 

disclose information to enrollees about 

opioid risks and alternatives without 

modification except thatthis provision 

will be applicable beginning on January 

1, 2022 rather than January 1, 2021 as 

initially proposed. However, given the 

ongoing national opioid epidemic and 

public health emergency, we strongly 

encourage Part D sponsors to disclose 

this information to their enrollees in 

2021, if possible. We also encourage 

sponsors to include information in these 

notices, as they deem appropriate, to 

help increase awareness among Part D 

enrollees about access to medicationassisted treatment (MAT) and naloxone. 

In this regard, we note that the CMS 

web page (https://www.cms.gov/ 

Medicare/Medicare-Fee-for-ServicePayment/Opioid-Treatment-Program/ 

Index) includes information about the 

dispensing and administration of MAT 

medications (if applicable) now covered 

under the new Opioid Treatment 

Program (OTP) benefit under Medicare 

Part B. We also note that in the CY 2020 

Call Letter, CMS previously encouraged 

Part D sponsors to engage in targeted 

education of enrollees on co-prescribing 

of naloxone,18 and that this beneficiary 

notice may be an ideal avenue to 

include such information. 

E. Eligibility for Medication Therapy 

Management Programs (MTMPs) 

(§ 423.153) 

We proposed to amend Part D 

Medication Therapy Management 


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5896 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

19Accessible at https://www.cdc.gov/mmwr/ 

volumes/65/rr/rr6501e1.htm?CDC_AA_refVal=https

%3A%2F%2Fwww.cdc.gov%2Fmmwr%2Fvolumes

%2F65%2Frr%2Frr6501e1er.htm. 

(MTM) program requirements in 

§ 423.153 to conform with the relevant 

SUPPORT Act provisions. The 

SUPPORT Act modifies MTM program 

requirements for Medicare Part D plans 

by expanding the population of 

beneficiaries who are targeted for MTM 

program enrollment (‘‘targeted 

beneficiaries’’) to include at-risk 

beneficiaries (ARBs), and by adding a 

new service component requirement for 

all targeted beneficiaries. Section 6064 

of the SUPPORT Act amended section 

1860D–4(c)(2)(A)(ii) of the Act by 

adding a new provision requiring that 

ARBs be targeted for enrollment in the 

Part D plan’s MTM program. We 

proposed to codify this requirement at 

§ 423.153(d)(2). Section 6103 of the 

SUPPORT Act amended the MTM 

program requirements in section 

1860D–4(c)(2)(B) of the Act by requiring 

Part D plans to provide MTM enrollees 

with information about the safe disposal 

of prescription drugs that are controlled 

substances, including information on 

drug takeback programs, in-home 

disposal, and cost-effective means for 

safe disposal of such drugs. We 

proposed to codify this requirement by 

adding new paragraphs at 

§ 423.153(d)(1)(vii)(E) and (F). 

1. ARBs and MTM 

Under our proposed revisions to 

§ 423.153(d), ARBs would be targeted 

for enrollment in a sponsor’s MTM 

program. The existing criteria that Part 

D sponsors currently use to target 

beneficiaries for MTM program 

enrollment would remain unchanged, so 

that two groups of enrollees would now 

be targeted for enrollment: (1) Enrollees 

who meet the existing criteria (multiple 

chronic diseases, multiple Part D drugs 

and Part D drug costs); and (2) enrollees 

who are determined to be ARBs under 

§ 423.100. 

Under our proposal, Part D sponsors 

would be required to automatically 

enroll all ARBs in their MTM programs 

on an opt-out only basis as required in 

§ 423.153(d)(1)(v). We did not propose 

to change any existing MTM program 

requirements for targeted beneficiaries 

enrolled in a Part D sponsor’s MTM 

program, including service requirements 

such as annual comprehensive 

medication reviews (CMRs) and targeted 

medication reviews (TMRs). 

Accordingly, the MTM program 

requirements would be the same for all 

targeted beneficiaries enrolled in a Part 

D sponsor’s MTM program, regardless of 

whether they are targeted for enrollment 

based upon the existing criteria or 

because they are ARBs. 

As discussed in detail in the February 

2020 proposed rule (85 FR 9031), CMS 

encourages sponsors to design MTM 

interventions for this new population of 

targeted beneficiaries to reflect their 

simultaneous inclusion in the sponsors’ 

DMPs. CMS also encourages sponsors to 

consult existing clinical guidelines, 

such as those issued by the Centers for 

Disease Control and Prevention for 

Prescribing Opioids for Chronic Pain,19

when developing MTM strategies and 

materials. CMS solicited input into how 

sponsors can best coordinate DMPs and 

MTM programs and effectively perform 

outreach to offer MTM services. We also 

solicited feedback on how to leverage 

MTM services to improve medication 

use and reduce the risk of adverse 

events in this population, how to 

measure the quality of MTM services 

delivered, and how to increase 

meaningful engagement of the new 

target population in MTM. Lastly, we 

solicited comments on the type of 

information that we should use to 

monitor the impact of MTM services on 

ARBs, who will now be targeted for 

MTM services. 

CMS also sought comment in the 

proposed rule on how the CMS 

Standardized Format (CMS–10396; 

OMB control number 0938–1154) might 

be modified in order to accommodate 

the new population of ARBs that will be 

enrolled in Part D sponsors’ MTM 

programs. Additionally, CMS posted the 

CMR Standardized Format with rulerelated changes in conjunction with the 

proposed rule. A version reflecting nonrule related revisions was posted in the 

Federal Register on February 24, 2020 

(85 FR 10444) through the Paperwork 

Reduction Act (PRA) process with a 60- 

day public comment period. We also 

solicited feedback on whether using 

Health Level Seven (HL7®)-enabled 

CMRs could positively impact the 

sharing of CMR data with the prescriber 

for an MTM enrollee, and the value of 

encouraging Part D MTM providers to 

use FHIR-enabled platforms when 

providing MTM to Part D enrollees to 

facilitate integration of the MTM service 

elements into prescribers’ EHRs. 

Comment: CMS received multiple 

comments expressing concerns about 

the timing of the proposed requirements 

to include ARBs in MTM programs and 

to provide information on safe disposal 

of controlled substances to beneficiaries 

enrolled in MTM. Commenters 

requested that CMS postpone 

implementation of the requirement to 

add ARBs to MTM programs until 2022, 

citing the time involved to develop an 

effective MTM program that would 

serve the new population, including the 

need to coordinate between MTM 

providers, behavioral health teams, 

DMPs, and others. They stated that 

plans will need time to create the 

systems required for information 

exchange to facilitate care coordination. 

One commenter pointed out that 

resources are currently being consumed 

by COVID–19 needs. 

Response: Recognizing the impact of 

the COVID–19 public health emergency 

on plans and other stakeholders, we are 

modifying the regulation text at 

§ 423.153(d)(1)(vii)(E) and 

§ 423.153(d)(2)(ii) to specify that these 

changes to MTM programs must be 

implemented by Part D plan sponsors 

beginning January 1, 2022, rather than 

January 1, 2021 as initially proposed. 

The applicability date for 

§ 423.153(d)(2) is 60 days after the date 

of publication of this final rule. 

Comment: Many commenters opined 

on the usefulness of targeting ARBs for 

enrollment in the Part D MTM program. 

Some commenters believe that these 

beneficiaries would benefit from MTM 

interventions that would create 

additional opportunities to provide 

counseling and education to a generally 

underserved population. Other 

commenters expressed concern that 

targeting these beneficiaries for MTM 

would make this vulnerable population 

believe they are being singled out or 

stigmatized, or would increase the size 

of MTM programs. A commenter 

questioned CMS’ authority to propose 

this requirement, calling our proposal 

‘‘bureaucratic over-reach.’’ Other 

commenters stated that providing ARBs 

with both DMP and MTM services 

would be duplicative and potentially 

confusing; a commenter pointed out that 

plans often use one vendor to perform 

DMP-related services and another for 

MTM which could lead to a lack of 

coordination between service providers. 

A few commenters suggested alternative 

mechanisms to provide services to the 

ARBs such as enhancing DMPs or 

making a beneficiary’s at risk status 

another condition to be considered 

when developing MTM targeted 

population. 

Response: Section 6064 of the 

SUPPORT Act, as codified at section 

1860D–4(c)(2)(A)(ii) of the Act, requires 

that Part D plan sponsors include ARBs 

in their MTM programs. As discussed in 

the proposed rule, the MTM program 

requirements are the same for all 

targeted beneficiaries enrolled in a Part 

D sponsor’s MTM program, regardless of 

whether they are targeted for enrollment 

based upon the existing criteria or 

because they are ARBs. In order to 


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Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 5897 

20See HPMS memorandum dated April 5, 2019, 

‘‘CY 2020 Medication Therapy Management 

Program Guidance and Submission Instructions’’ at: 

https://www.cms.gov/Medicare/Prescription-DrugCoverage/PrescriptionDrugCovContra/Downloads/ 

Memo-Contract-Year-2020-Medication-TherapyManagement-MTM-Program-Submission-v-041019- 

.pdf. 

provide services for ARBs, plans will 

need to coordinate services across both 

their DMP and MTM program without 

regard for which vendors furnish such 

services. Part D plan sponsors are 

ultimately responsible for ensuring that 

all delegated functions are compliant 

with CMS requirements. See 42 CFR 

423.505(i)(1). This includes making sure 

that downstream entities used to 

provide a plan’s DMP and/or MTM 

program coordinate, as necessary, to 

ensure that communications with and 

services furnished to plan enrollees 

comply with applicable Part D 

requirements. To the extent that MTM 

can be provided within a plan’s DMP 

while meeting all MTM service 

requirements, this approach would be 

permissible provided it complies with 

all other applicable Part D requirements. 

Further, if a plan wishes to target all 

PARBs for enrollment in its MTM 

program instead of only targeting ARBs, 

it is permitted to do so, provided that 

the plan meets all CMS requirements for 

both DMPs and MTM services. The 

criteria specified in the regulation 

reflect what is required under the Act, 

and do not preclude plans from electing 

to offer MTM services to an expanded 

population of beneficiaries who do not 

meet the eligibility criteria under 

§ 423.153(d).20

Comment: Several commenters asked 

CMS for more direction in developing 

MTM programs that will meet the needs 

of the new cohort of beneficiaries. 

Response: CMS typically gives plans 

the latitude to develop MTM programs 

that meet their beneficiaries’ needs 

within the framework of the applicable 

statutory and regulatory requirements. 

Most Part D plans have gained 

experience with their ARB population 

through DMPs and earlier Part D opioid 

overutilization policy, and we expect 

plans to draw on this experience when 

working with their clinical teams, 

including any downstream entities, in 

developing clinically appropriate MTM 

interventions for these individuals. 

Consistent with section 1860D–4 

(c)(2)(E) of the Act, MTM programs must 

be developed in cooperation with 

licensed and practicing pharmacists and 

physicians. 

Comment: Multiple commenters 

expressed concerns that the addition of 

ARBs to the MTM population could 

impact the Part D MTM Program 

Completion Rate for CMR Star Rating 

measure, and expressed concerns that 

including the new population of MTMeligible beneficiaries in the CMR 

completion rate might adversely affect a 

plan’s overall Star rating. A commenter 

cited internal data indicating an 

expected CMR acceptance rate of 23 

percent for current MTM-eligible 

beneficiaries who also meet the DMP 

criteria for ARBs. Commenters 

requested that CMS proactively 

implement safeguards in the scoring of 

this measure—some commenters 

suggesting the measure be excluded 

from Star Ratings and others asking that 

ARBs be excluded from the measure— 

in order to ensure plans with a high 

population of ARBs are not adversely 

and unintentionally affected. 

Response: CMS appreciates these 

comments but believes it is premature to 

assume that ARBs will be less receptive 

to offers of MTM services than other 

beneficiaries prior to gaining program 

experience. Congress enacted a statutory 

requirement that Part D plans engage 

with this population through their MTM 

programs, and CMS expects plans to 

develop effective engagement strategies 

based on their beneficiary population 

and business model. 

The MTM CMR completion rate is a 

Pharmacy Quality Alliance (PQA) 

endorsed measure. The denominator 

currently used to derive the measure 

includes all individuals who met the 

MTM eligibility criteria; therefore, while 

the methodology for the measure is 

outside the scope of our proposal, as 

currently defined, the measure would 

include ARBs beginning with the 2022 

measurement period. The extent to 

which any potential change in a plan’s 

rating on this measure may affect its 

overall Star Rating would also depend 

on that plan’s performance on all other 

Star Ratings measures. Lastly, CMS 

codified the methodology for the Part C 

and D Star Ratings program in the CY 

2019 Medicare Part C and D Final Rule 

(83 FR 16519 through 16589), published 

in April 2018, for performance periods 

beginning with 2019; that final rule lays 

out the methodology for the 2021 Star 

Ratings and beyond. If the measure 

steward changes the specifications for 

the MTM CMR completion rate 

measure, the process for CMS to update 

the Star Ratings measures is codified at 

§ 423.184(d). 

Comment: A few commenters 

expressed concerns about the types of 

reporting requirements that may be 

included when ARBs are enrolled into 

MTM programs, and requested that CMS 

clarify what those requirements will be. 

A few commenters urged CMS to 

consider reducing reporting elements in 

view of the additional beneficiaries that 

will be added to MTM programs. 

Response: We are requiring plans to 

comply with the requirement to extend 

MTM to ARBs beginning on January 1, 

2022, and therefore this requirement 

will not impact plan reporting until the 

2022 plan year data, which is collected 

in early 2023. Part D reporting 

requirements for the 2021 plan year 

(CMS–10185; OMB control number: 

0938–0992 expires December 31, 2023) 

have been approved by OMB and are 

available at https://www.cms.gov/ 

Medicare/Prescription-Drug-Coverage/ 

PrescriptionDrugCovContra/ 

RxContracting_ReportingOversight. 

Comment: A commenter voiced 

support for conducting CMR sessions 

via telemedicine. 

Response: We appreciate the reminder 

that the CMR can be provided via 

telemedicine, which may be preferable 

in many situations. The regulation at 

§ 423.153(d)(1)(vii)(B)(1)(i) specifies that 

the annual CMR must be provided by an 

interactive, person-to-person, or 

telehealth consultation. 

Comment: A few commenters 

requested additional information on 

when a beneficiary may be considered 

to be ‘‘unable to accept the offer to 

participate’’ in a CMR. These 

commenters contend that it may be 

necessary to conduct outreach to a 

provider in cases where barriers due to 

social determinants of health (SDOH) 

may prevent the beneficiary from 

accepting the offer of a CMR, while 

conducting the CMR with the prescriber 

would allow the member to receive the 

benefits that go with MTM programs. 

Response: As we explained in the 

proposed rule, the only situation in 

which CMS would consider a 

beneficiary to be unable to accept an 

offer to participate in a CMR is when the 

beneficiary is cognitively impaired and 

cannot make decisions regarding his or 

her medical needs. The CMS 

Standardized Format provides 

instructions for those circumstances. 

The flexibility to perform the CMR with 

a prescriber, caregiver or other 

authorized individual does not apply to 

situations where the sponsor is unable 

to reach the beneficiary (such as no 

response by mail, no response after one 

or more phone attempts, or lack of 

phone number or address), if there is no 

evidence of cognitive impairment, or 

where the beneficiary declines the CMR 

offer. Further, perceived barriers due to 

a beneficiary’s SDOH does not mean 

that the beneficiary is unable to 

participate in a CMR. MTM providers 

are expected to make sure that they 

engage the target population in a 

manner that these beneficiaries can 


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understand and use, regardless of any 

language or other barriers that exist. We 

also want to caution that the failure to 

provide services to beneficiaries 

disadvantaged by poverty, language, or 

other SDOH suggests discriminatory 

practices, which may be in violation of 

the Social Security Act or other federal 

requirements regarding access to 

services. 

Comment: A commenter asked CMS 

to clarify the definition of an ARB. 

Response: An ARB, as defined at 

§ 423.100, means a Part D eligible 

individual (1) who is: (i) Identified 

using clinical guidelines (also defined 

in § 423.100); (ii) not an exempted 

beneficiary; and (iii) determined to be 

at-risk for misuse or abuse of such 

frequently abused drugs (FADs) under a 

Part D sponsor’s drug management 

program in accordance with the 

requirements of § 423.153(f); or (2) with 

respect to whom a Part D sponsor 

receives a notice upon the beneficiary’s 

enrollment in such sponsor’s plan that 

the beneficiary was identified as an ARB 

(as defined in paragraph (1) of this 

definition) under the prescription drug 

plan in which the beneficiary was most 

recently enrolled and such 

identification had not been terminated 

upon disenrollment. 

Comment: A commenter asked 

whether CMS expects to ‘‘grandfather’’ 

existing ARBs who have an active 

coverage limitation placed prior to 

January 1, 2021 that extends into the 

2021 plan year, or whether the new 

MTM requirement would apply only to 

ARBs who are newly identified after 

January 1, 2021. 

Response: As discussed earlier, under 

the regulation we are adopting in this 

final rule, Part D plan sponsors must 

comply with the requirement to include 

ARBs in MTM programs by January 1, 

2022. Accordingly, all existing ARBs— 

that is, enrollees with an active 

limitation under a DMP as of January 1, 

2022, although such limitation may 

have commenced prior to January 1, 

2022—as well as ARBs identified on or 

after January 1, 2022, must be targeted 

for enrollment in MTM. 

Comment: CMS received a number of 

comments on how to improve the 

Standardized Format including 

suggestions on the content and format. 

Most commenters indicated that 

electronic sharing of completed CMRs to 

the prescriber’s EHR would promote 

continuity of care. These commenters 

urged CMS to produce a template that 

encouraged HL7®-enabled submissions. 

A commenter asked when a new MTM 

Standardized Format will be available 

for use and when MTM providers will 

be required to start using any newly 

developed format. 

Response: We thank all commenters 

for their suggestions. Comments 

received in response to this regulation 

will be considered when finalizing the 

Standardized Format along with those 

received in response to the PRA package 

for the CMS Standardized Format 

(CMS–10396; OMB control number 

0938–1154) that was published 

separately from the rule. An additional 

30-day notice for CMS–10396 will be 

published for public comment following 

publication of this final rule, and a 

package will be delivered for OMB 

review. The 30-day notice will address 

the comments received in response to 

the rule- and non-rule solicitations, 

provide additional proposed revisions if 

applicable to address the comments, 

and propose a date for when the 

changes would become effective. The 

finalized Standardized Format will be 

released after approval by the OMB. 

Comment: A commenter was 

concerned that the pecuniary interest of 

the sponsor will be the primary driver 

for MTM reviews and that it would 

create an incentive to ‘‘say no’’ to 

appropriate and safe opioid therapies 

for hundreds of thousands of pain 

patients. 

Response: It appears that the 

commenter may be unfamiliar with the 

use and purpose of Part D MTM 

programs. The goal of MTM is to 

improve medication use and therapeutic 

outcomes driven by the individual 

beneficiary clinical needs and does not 

result in any denials of medications or 

services. 

2. Information on Safe Disposal of 

Prescription Drugs That Are Controlled 

Substances for MTM Enrollees 

Section 6103 of the SUPPORT Act 

added a new requirement that Part D 

plans provide beneficiaries enrolled in 

their MTM programs with information 

about the safe disposal of prescription 

drugs that are controlled substances, 

including information on drug takeback 

programs, in-home disposal, and costeffective means for safe disposal of such 

drugs. To implement this new 

requirement, we proposed that Part D 

sponsors would be required to provide 

this information to all beneficiaries 

enrolled in their MTM programs at least 

annually, as part of the CMR or through 

the quarterly TMRs or follow up. 

Furthermore, while not required, we 

encouraged sponsors to provide 

information on safe disposal of all 

medications, not just controlled 

substances, to MTM enrollees. 

Section 6103 of the SUPPORT Act 

states that the information provided to 

beneficiaries regarding safe disposal of 

prescription drugs that are controlled 

substances must meet the criteria 

established in section 1852(n)(2) of the 

Act, including information on drug 

takeback programs that meet such 

requirements determined appropriate by 

the Secretary and information on inhome disposal. Section 1852(n)(2) states 

that the Secretary shall, through 

rulemaking, establish criteria the 

Secretary determines appropriate to 

ensure that the information provided to 

an individual sufficiently educates the 

individual on the safe disposal of 

prescription drugs that are controlled 

substances. We described our proposed 

criteria and requirements for MA plans 

to furnish information on safe disposal 

of controlled substances when 

providing an in-home health risk 

assessment and our proposal to codify 

these requirements in a new provision 

of the regulations at § 422.111(j) in 

section III.C. of the proposed rule. In 

section III.E.2 of the proposed rule, we 

proposed that Part D plans would be 

required to furnish materials in their 

MTM programs regarding safe disposal 

of prescription drugs that are controlled 

substances that meet the criteria 

specified in § 422.111(j). Under this 

proposal, Part D plans, like MA plans, 

would retain the flexibility to refine 

their educational materials based on 

updated information and/or on 

beneficiary feedback, so long as the 

materials meet the proposed criteria. 

Section 1860D–4(c)(2)(B)(ii) of the Act 

expressly directs that the information on 

safe disposal furnished as part of an 

MTM program meet the criteria 

established under section 1852(n)(2) of 

the Act for MA plans. Accordingly, to 

ensure consistency and to avoid 

burdening MA–PD plans with creating 

separate documents addressing safe 

disposal for purposes of conducting inhome health risk assessments and their 

MTM programs, we explained our belief 

that it is appropriate to apply the same 

criteria that would apply under the 

proposed provision at § 422.111(j) to 

MTM programs by including a reference 

to the requirements of § 422.111(j) in the 

regulation at § 423.153(d) governing 

MTM programs. 

Specifically, we proposed to revise 

§ 423.153(d)(1)(vii) to include a 

requirement that all MTM enrollees 

receive at least annually, as part of the 

CMR, a TMR, or another follow up 

service, information about safe disposal 

of prescription drugs that are controlled 

substances, take back programs, inhome disposal, and cost-effective means 

of safe disposal that meets the criteria in 

§ 422.111(j). 


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Comment: A few commenters 

suggested that plans be allowed to 

include information on safe disposal in 

documents other than the TMR or CMR, 

or on a plan website. Another 

commenter suggested that the MTM 

program welcome letter (or written 

initial offer of the CMR) be used to 

convey safe disposal information as 

well, and asked if doing so would meet 

the intent of this requirement. This 

commenter stated that plans may have 

difficulty reaching beneficiaries after 

enrollment in the MTM program if they 

have disenrolled from the plan for any 

reason, and it would be useful for plans 

to have more ways to provide this 

important information. 

Response: As an initial matter, we 

note that plans have no obligation to 

provide MTM services to beneficiaries 

once they have disenrolled from the 

plan. Given the importance of 

information on the safe disposal of 

medicines, we support posting the 

information on plan or network 

pharmacy websites, but we do not 

believe that website postings alone will 

fulfill the statutory requirement that the 

information be provided to individual 

MTM recipients. However, we do agree 

with the comment recommending that 

safe disposal information could be 

provided in an MTM program welcome 

letter. While the statutory language at 

section 1860D–4(c)(2)(B)(ii) of the Act 

does not identify a specific format for 

providing this information, CMS 

believes that using the MTM welcome 

letter meets the statutory intent. 

Beneficiaries would then have an 

opportunity to ask any clarifying 

questions during a follow-up MTM 

service, including during the CMR. 

While not specifically addressed in the 

comments received, we would also 

support sending the safe disposal 

information electronically, for example 

through a member portal, provided the 

plan can document that the individual 

received the information. Accordingly, 

in this final rule we are modifying the 

proposed regulation text at 

§ 423.153(d)(1)(vii)(E) by including a 

reference to ‘‘other MTM 

correspondence or service’’ to give plans 

the flexibility to provide this 

information in the manner they 

determine is most effective for reaching 

the beneficiaries enrolled in their MTM 

program. 

Comment: All those who commented 

on the proposed requirement to include 

materials on safe disposal were 

supportive of the concept. A few 

commenters expressed appreciation that 

the proposed requirements in 

§ 423.153(d) echoed those proposed in 

§ 422.111(j). Some also commented that 

newly-developed disposal technologies 

that make the medications unusable, 

such as in-home deactivation kits, 

provide a viable option for safe disposal 

of controlled substances, and supported 

requiring information about these 

options in the educational materials. 

Response: We appreciate commenters’ 

support for the concept of furnishing 

information on safe disposal to MTM 

enrollees. We agree that the types of 

products referenced by the commenters 

may present additional means for safe 

disposal of prescription drugs that 

would complement the approaches 

described in the proposed rule. 

Therefore, as discussed in section III.C 

of this preamble, in this final rule we 

are modifying the proposed regulation 

text at § 422.111(j)(5) to permit plans to 

include information about the 

availability of in-home deactivation kits 

in the enrollee’s community, where 

applicable. MA–PD plans will be able to 

use the same communication materials 

on safe disposal to educate MTM 

enrollees as they use for enrollees 

receiving this information as part of an 

in-home health risk assessment under 

MA. 

After consideration of the comments 

received, we are finalizing the proposed 

changes to the Part D MTM program 

requirements with the modifications 

discussed. We are finalizing our 

proposal to expand the definition of 

beneficiaries targeted for enrollment in 

MTM programs at § 423.153(d)(2) to 

include ARBs, as defined in § 423.100. 

We are finalizing the provision at 

§ 423.153(d)(1)(vii)(E) with 

modifications to allow plans to meet the 

safe-disposal educational requirement 

through use of a CMR, TMR, or other 

MTM correspondence or service, such 

as an MTM welcome letter. We are 

finalizing as proposed the requirement 

at § 423.153(d)(1)(vii)(F) specifying that 

the information provided must comply 

with all requirements of § 422.111(j). 

Lastly, we are modifying the regulation 

text at § 423.153(d)(1)(vii)(E) and 

§ 423.153(d)(2)(ii) to specify that these 

requirements are applicable beginning 

on January 1, 2022. As noted in the 

Executive Summary of this final rule, 

the revisions to § 423.153(d)(2) as a 

whole are applicable 60 days from the 

date of publication in the Federal 

Register. 

E. Automatic Escalation to External 

Review Under a Medicare Part D Drug 

Management Program (DMP) for At-Risk 

Beneficiaries (§§ 423.153, 423.590, and 

423.600) 

CARA amended the Act to include 

new authority for Medicare Part D drug 

management programs effective on or 

after January 1, 2019. If an enrollee is 

identified as at-risk under a drug 

management program (DMP), the 

individual has the right to appeal an atrisk determination under the rules in 

part 423, subparts M and U. In addition 

to the right to appeal an at-risk 

determination, an enrollee has the right 

to appeal the implementation of pointof-sale claim edits for frequently abused 

drugs that are specific to an ARB or a 

limitation of access to coverage for 

frequently abused drugs to those that are 

prescribed for the beneficiary by one or 

more prescribers or dispensed to the 

beneficiary by one or more network 

pharmacies (lock-in). Section 2007 of 

the SUPPORT Act amended section 

1860D–4(c)(5) of the Act to require that, 

if on reconsideration a Part D sponsor 

affirms its denial of a DMP appeal, in 

whole or in part, the case shall be 

automatically forwarded to the 

independent outside entity contracted 

with the Secretary for review and 

resolution. 

To implement the changes required 

by the SUPPORT Act, we proposed to 

revise the requirements related to 

adjudication timeframes and 

responsibilities for making 

redeterminations at § 423.590 by adding 

paragraph (i) to state that if on 

redetermination the plan sponsor 

affirms, in whole or in part, its decision 

related to an at-risk determination under 

a DMP in accordance with § 423.153(f), 

the plan sponsor must forward the case 

to the IRE by the expiration of the 

applicable adjudication timeframe 

under paragraph (a)(2), (b)(2), or (d)(1) 

of § 423.590. We also proposed revisions 

to the requirements for the content of 

the initial notice at 

§ 423.153(f)(5)(ii)(C)(3) and the 

requirements for the second notice at 

§ 423.153(f)(6)(ii)(C)(4)(iii). Specifically, 

we proposed that these notices explain 

that if on redetermination a plan 

sponsor affirms its at-risk decision, in 

whole or in part, the enrollee’s case 

shall be automatically forwarded to the 

IRE for review and resolution. 

Finally, we proposed to revise 

§ 423.600(b) to clarify that the 

requirement that the IRE solicit the 

views of the prescribing physician or 

other prescriber applies to decisions 

that are auto-forwarded to the IRE. 

We summarize the comments we 

received on these proposals related to 

automatic escalation and respond to 

them as follows. 

Comment: Several commenters 

expressed support for our proposal that 

if on redetermination a plan sponsor 

affirms, in whole or in part, its denial 

related to an at-risk determination under 

a DMP in accordance with § 423.153(f), 


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the plan sponsor must forward the case 

to the IRE for review and resolution. 

One commenter noted that it has been 

their experience in general that most 

patients do not formally contest their atrisk determination status, but the 

commenter supports a beneficiary’s 

right to appeal. Some of the commenters 

that supported the proposal related to 

auto-escalation of these cases to the IRE 

also expressed specific concerns. A few 

commenters noted that requiring denied 

cases to be forwarded to the IRE by the 

expiration of the applicable 

adjudication timeframe will 

significantly decrease the amount of 

time that plans have to review at-risk 

redeterminations. These commenters 

stated that these types of cases generally 

take longer to complete due to more 

outreach and coordination between 

providers than other types of 

redetermination cases and that reducing 

the timeframe to complete these cases in 

order to prepare a case for the IRE will 

decrease the quality of the plan’s 

review. One commenter stated the belief 

that CMS’s proposed timeframe for autoescalation is not realistic or achievable, 

noting that DMP cases are complicated, 

and multiple delegated entities must 

coordinate to prepare a complete case 

file for forwarding. Commenters stated 

that plans need time to prepare case 

files and to ensure their completeness 

by acquiring the complete case 

management information from the DMP 

team, and that plans should have the 

full adjudication time for review of 

these cases. 

Commenters noted that, in situations 

where a plan affirms its denial of an atrisk determination, it would pose 

operational burden and challenges to 

complete a thorough investigation, 

reach a determination, and 

automatically forward the case to the 

IRE within the 72-hour adjudication 

timeframe for expedited determinations 

and the 7-day timeframe for standard atrisk determinations. A couple of 

commenters noted that plans are 

afforded 24 hours after the expiration of 

the adjudication timeframe to prepare 

and forward the case file to the IRE in 

those Part D benefit appeal cases in 

which the plan misses its adjudication 

timeframe. Some of the commenters 

suggested that plans be afforded 24 

hours to prepare and send the case file 

to the IRE and other commenters 

suggested 48 or 72 hours from the end 

of the adjudication timeframe. A 

commenter believes that the process of 

automatic escalation to external review 

should be consistent with Part D 

requirements for standard or expedited 

requests, so as to mitigate any additional 

administrative burden and requests that 

CMS ensure that this process mirror Part 

D requirements so that the systems and 

policies in place are seamless. 

Response: We thank the commenters 

for their overall support and agree with 

those commenters who expressed 

concern that requiring the 

administrative case file to be assembled 

and forwarded to the IRE within the 

applicable adjudication timeframe could 

unnecessarily curtail the amount of time 

a plan has to conduct a thorough review 

of the case. The regulations at 

§ 423.590(c) and (e) that govern Part D 

benefit redeterminations require a case 

to be auto-forwarded to the IRE when 

the plan misses the adjudication 

timeframe. Specifically, a plan has 24 

hours from the end of the applicable 

adjudication timeframe to send the case 

file to the Part D IRE. For consistency 

with how cases currently subject to 

auto-forwarding to the IRE are handled, 

we believe it is reasonable and 

permissible under the statute to allow 

plans up to an additional 24 hours after 

the expiration of the applicable 

redetermination adjudication timeframe 

to assemble and forward the 

administrative case file to the IRE. In 

this final rule, the proposed regulation 

text at § 423.590(i) has been modified to 

state that if on redetermination the plan 

sponsor affirms, in whole or in part, its 

denial related to an at-risk 

determination under a drug 

management program in accordance 

with § 423.153(f), the Part D plan 

sponsor must forward the case to the 

IRE contracted with CMS within 24 

hours of the expiration of the applicable 

adjudication timeframe under paragraph 

(a)(2), (b)(2), or (d)(1) of this section. 

Comment: A few commenters 

disagreed with the proposals related to 

the DMP notices. Commenters stated 

that providing the appeal notification on 

the first notice does not add value to the 

beneficiary, since the first notice has a 

30-day window to gain additional 

information, if necessary, before a final 

decision is made to implement a lockin or POS edits. These commenters 

recommend that appeal language only 

be included on the second notice. To 

reduce member confusion, a few 

commenters urged CMS to consider 

addressing escalation to the IRE only in 

the second notice as it relates to 

redeterminations specifically, and to 

ensure that it is clear the IRE escalation 

process will only apply when a 

redetermination in whole or in part is 

denied. Commenters also noted that if 

CMS is going to update member notices 

for the DMP, it is critically important for 

plans to receive updates to the notices 

in a timely manner to allow plans 

sufficient time to revise, implement, and 

test new notices. A few commenters also 

requested that CMS update the model 

redetermination denial notice to 

account for auto-forwarding of an 

adverse DMP case to the Part D IRE. 

Response: We thank the commenters 

for their perspective on the notices 

intended to inform at-risk beneficiaries 

of their rights under a plan sponsor’s 

DMP. We proposed that the initial and 

second notice explain that if on 

redetermination a plan sponsor affirms 

its at-risk decision, in whole or in part, 

the enrollee’s case shall be 

automatically forwarded to the IRE for 

review and resolution. SUPPORT Act 

section 2007 specifically requires that 

notice of the automatic escalation of 

adverse decisions be included on the 

initial and second notice. Therefore, we 

do not believe we have the discretion to 

omit information on this right from the 

initial notice, as suggested by some of 

the commenters. With respect to the 

model redetermination notice, we plan 

to update that model consistent with 

this final rule. However, we note that 

this notice is a model that plan sponsors 

have the discretion to modify. 

Comment: A few commenters 

requested that CMS train the IRE 

appropriately to ensure consistent 

reviews of drug management cases. One 

commenter noted that these are unique 

case reviews and cannot simply be 

overturned by the IRE based on a 

provider attestation of medical 

necessity. The commenter also stated 

that the IRE should have specific criteria 

in place to conduct these reviews and, 

further, that plans should also have 

recourse to address instances when the 

IRE overturns a plan decision. 

Response: We thank the commenter 

for these comments and note that the 

IRE is already conducting reviews of 

DMP cases based on published 

regulations and guidance that govern 

plan sponsor activities with respect to 

drug management programs. The IRE 

review function is a beneficiary 

protection set forth in statute and there 

may be instances where the 

independent review performed by the 

IRE will result in a plan’s decision being 

overturned based on a finding of 

medical necessity given the facts and 

circumstances of the enrollee’s case, 

including clinical information furnished 

by the enrollee’s prescriber. If a plan 

believes the IRE has made an error in its 

decision making, the IRE’s 

reconsideration decision may be 

reopened consistent with the rules at 

§ 423.1980. 

Comment: A couple of commenters 

expressed support for the proposal to 

require automatic escalation of DMP to 


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external review, but also urged the 

Secretary to either exercise his authority 

or support legislation to extend such 

auto-escalation to external review for all 

adverse appeal decisions regarding Part 

D drugs, similar to the rules applicable 

to Medicare Advantage appeals. 

Response: We appreciate the 

commenters’ support for the proposed 

rules related to automatic escalation of 

DMP appeals, but note that the 

comment related to extending automatic 

escalation to all Part D benefit appeals 

is outside the scope of this rule. 

Comment: While recognizing that the 

automatic escalation provision is 

required under the SUPPORT Act, some 

commenters expressed specific concerns 

with this proposal. One commenter 

encouraged CMS to find a path that 

allows the beneficiary to exercise their 

appeal rights following the standard 

appeals process outlined in Part C and 

D guidance, as must all other Medicare 

beneficiaries who receive an adverse 

redetermination. The commenter stated 

that the SUPPORT Act creates a 

discrepancy in the uniformity of the 

Medicare benefit by devising a unique 

process for ARBs to have their denied 

redeterminations automatically autoforwarded to the IRE. The commenter 

stated that CMS should clarify how the 

IRE might reach a decision other than 

the decision the plan reached in 

consultation with the at-risk 

beneficiary’s prescriber and requested 

that CMS share with plans the 

additional data sources the IRE may 

have that plans will not. The commenter 

also requested that CMS provide plans 

any training materials that may be 

provided to the IRE to help process 

these reconsiderations. Another 

commenter expressed concern that the 

process of automatic escalation to an 

external reviewer sets up the patient’s 

care for review involving third parties 

who may be unreasonably biased with 

an anti-opioid mindset and incentivized 

by institutional conflicts of interest, 

such as the reduction of costs to 

insurance companies. This commenter 

also noted that it has been his 

experience that outside reviews fail to 

reflect adequate perspective on the 

patient, their problems, and their care 

and that the process inevitably involves 

the patient or their doctor negotiating a 

complex and time consuming phone 

triage system and may require an hour 

or more of a physician’s time. 

Response: We appreciate the 

comments, but note that the automatic 

escalation of a beneficiary’s case to the 

IRE is a statutory provision that creates 

a protection for beneficiaries who are in 

a DMP. Part of the competitive process 

of contracting with an outside 

independent entity involves 

consideration of any potential 

institutional conflicts of interest. The 

very nature of an outside independent 

review means that there may be cases 

where the IRE reaches a different 

decision from that reached by a plan, 

based on clinical information supplied 

by the enrollee’s prescriber. The IRE is 

required to follow the same regulations 

and guidance related to DMPs as is 

followed by plan sponsors. There may 

be instances where the IRE’s review of 

supporting documentation received 

from an enrollee’s prescriber reasonably 

supports a different decision from that 

reached by the plan sponsor. With 

respect to the time an enrollee or 

prescriber may have to expend, 

automatic escalation to IRE review 

should reduce the time a beneficiary has 

to spend disputing a limitation on 

access under a DMP because, under this 

final rule, the beneficiary will no longer 

have to request IRE review. In addition, 

the IRE is required to solicit the views 

of the prescribing physician or other 

prescriber when it receives a case from 

a plan sponsor, which may reduce the 

time a physician or other prescriber will 

have to expend providing necessary 

clinical information to the IRE. 

Comment: A commenter asked CMS 

to clarify how an ARB will exercise his 

or her appeal rights and whether the 

auto-forwarded denied appeal be 

considered the first level of appeal. 

Response: As with Part D benefit 

appeals, an ARB exercises his or her 

right to appeal by requesting a 

redetermination from the plan, which is 

the first level of appeal. The IRE review 

is the second level of appeal, including 

those DMP cases that will be subject to 

auto-forwarding under this final rule. 

Comment: A commenter questioned 

what the impact will be if the plan does 

not auto-forward the denied appeal 

within the required timeframe. 

Response: The SUPPORT Act requires 

plans to auto-forward to the IRE for 

review and resolution those 

redeterminations where a plan affirms 

its denial, in whole or in part. As with 

other regulatory requirements, CMS can 

exercise enforcement authority to 

ensure plan compliance. Pursuant to 

contract provisions at § 423.505(b)(7), 

plan sponsors must comply with all 

requirements of 42 CFR part 423, 

subpart M governing coverage 

determinations, grievances, and appeals, 

and formulary exceptions and CMS may 

impose sanctions on any plan sponsor 

with a contract for violations listed in 

§ 423.752(a). 

Comment: A commenter questioned 

how these auto-forwarded 

redeterminations will be differentiated 

by CMS from other reviews forwarded 

to the IRE and requested that CMS 

clarify whether the auto-forwarded 

denial or the IRE’s decision on the autoforwarded redetermination will be 

included in reporting or audit universes. 

Response: Adverse redetermination 

decisions related to coverage limitations 

imposed under a plan sponsor’s DMP 

that will be auto-forwarded to the IRE 

consistent with this final rule will be 

reported by plan sponsors as adverse 

redetermination decisions. For purposes 

of any necessary data gathering, the Part 

D IRE will be able to distinguish cases 

that are auto-forwarded for untimeliness 

from the DMP appeals auto-forwarded 

to the Part D IRE. With respect to the 

audit universes, if a plan sponsor’s 

decision was made during the relevant 

universe period, those redeterminations 

will be reported in the redeterminations 

universe. If the determination was fully 

or partially overturned by the IRE, ALJ, 

or MAC during the relevant universe 

period, the overturn decision will be 

reported in the Part D effectuations of 

overturned decisions universe. 

Comment: Some commenters 

suggested that CMS define what a plan 

sponsor is to include in a case packet for 

auto-forwarded denials. 

Response: We appreciate the 

commenters’ suggestion and note that 

the Part D IRE’s reconsideration 

procedures manual and case file 

transmittal form lists the documents 

that should be included by plan 

sponsors as part of the administrative 

case file. These documents will be 

updated, as necessary. For example, the 

case file transmittal form will be 

modified so that a plan sponsor can 

clearly indicate that a case is being 

automatically forwarded to the Part D 

IRE as a result of an adverse DMP 

redetermination. 

Comment: A commenter asked 

whether the plan is required to notify 

the ARB, their prescriber(s) or others 

and, if so, questioned if there is a 

required timeframe to complete the 

notification. 

Response: Redetermination decisions 

related to a denied redetermination 

involving a DMP are subject to existing 

notice requirements at §§ 423.590(a)(d) 

and (g). 

Comment: A commenter who 

expressed support for the proposal 

requested clarification on whether the 

Part D sponsor or the Part C plan would 

be responsible for making this 

determination when the member is 

enrolled in a standalone PDP. The 

commenter requested clarification on 

whether it is the Part D sponsor’s 

responsibility to forward a 

redetermination to IREs for all drugs for 


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5902 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

any member enrolled in a DMP. We 

believe the commenter is asking about a 

situation where an individual is 

enrolled in an MA plan and a separate, 

standalone Part D drug plan and 

whether it is the responsibility of the 

standalone Part D drug plan to forward 

an adverse DMP plan appeal to the IRE. 

Response: Consistent with section 

1860D–4(c)(5)(E) of the Act, it is the 

responsibility of an enrollee’s Part D 

plan sponsor to auto-forward to the IRE 

an adverse redetermination decision 

related to an individual’s identification 

as an ARB, a coverage determination 

made under a DMP, the selection of 

prescriber or pharmacy under the DMP 

and information to be shared for 

subsequent plan enrollment. 

Comment: A commenter that 

expressed support for automatically 

escalating redeterminations associated 

with DMP appeals to the Part D 

independent review entity (IRE) noted 

that automatically escalating an appeal 

for an at-risk determination to an IRE 

without having to wait for the enrollee 

or prescriber on their behalf to request 

a review will serve to reduce the lag 

time in final determinations being 

issued and enable patients to access 

needed care sooner. This commenter 

also noted support for proposed changes 

to the required initial and second notice 

in addition to adjudication timeframes 

and redetermination responsibilities. 

This commenter encouraged us to 

reiterate the need for the prescribing 

physician to provide all requested 

information associated with the adverse 

decision to the IRE within a timely 

manner. Further, the commenter urged 

us to consider requiring the IRE to make 

a good faith effort to obtain relevant 

information from the prescribing 

physician in instances in which there is 

not an automatic escalation as well to 

ensure consistency in the resolution of 

all cases involving Part D appeals. 

Response: We appreciate the support 

for these proposals and agree that it is 

important for the prescriber to submit 

the clinical information necessary for a 

thorough adjudication of the case. In 

this final rule, we are finalizing our 

proposal to modify the existing 

regulations at § 423.600(b) such that the 

requirement that the IRE solicit the 

views of the prescribing physician or 

other prescriber and include a written 

account of the prescriber’s views in the 

IRE’s record will apply to adverse DMP 

redeterminations that will be autoforwarded to the IRE. 

Comment: A commenter expressed 

the belief that automatic escalation to 

the IRE weakens the authority of Part D 

plans as partners to CMS in the fight 

against the opioid epidemic. An ARB 

appealing a decision to lock them into 

a specific pharmacy for opioid 

prescriptions would essentially ‘‘skip 

the line’’ if a plan denies their appeal 

and then upholds the denial upon 

review. The commenter stated the belief 

that this is unfair to non-ARBs, who 

must then wait behind ARBs for an IRE 

decision. The commenter also believes 

that this diminishes the ability of the 

plan to impact the behavior of providers 

and that rather than making changes to 

prescribed therapies, providers will wait 

for the result of the redetermination. 

Further, commenter believes that 

automatic escalation removes the ability 

of the plan to reconsider its decision 

when more information is submitted to 

it. The commenter also believes that 

automatic escalation will increase 

denials because the turnaround time 

clock will expire prior to the IRE having 

full information, and the beneficiary’s 

denial is likely to be upheld. The 

commenter recommends, to the extent 

that CMS cannot relax the requirements 

in this final rule, that CMS provide the 

IRE with opioid-specific training prior 

to receiving these automatically 

escalated cases, to minimize processrelated denials. The commenter 

recommends that CMS broadly consider 

a creative approach to meeting the 

statutory intent behind this provision 

and delay its implementation, or at least 

enforcement, until it can implement a 

policy that does not punish Part D plans 

and does not punish beneficiaries (atrisk and otherwise) while appropriately 

administering the pharmacy lock-in 

program. 

Response: As previously stated, the 

SUPPORT Act requires plan sponsors to 

auto-forward adverse DMP 

redeterminations to the IRE for review 

and resolution. We do not believe we 

have the discretion to interpret the 

statutory language in a manner that 

results in a plan sponsor not being 

required to auto-forward a denied DMP 

redetermination to the IRE for review 

and resolution. We continue to believe 

that, given the extensive case 

management involved in these types of 

cases, there will be very few cases that 

will be subject to auto-forwarding. We 

note that the IRE is already performing 

reviews of DMP cases based on existing 

regulations and guidance. We believe 

the intent of the SUPPORT Act 

provision requiring automatic escalation 

to the IRE is to enhance protections for 

at-risk beneficiaries and not intended to 

‘‘punish’’ plans or beneficiaries. We 

disagree that this requirement weakens 

a plan sponsor’s authority to partner 

with CMS in the fight against the opioid 

epidemic. As we’ve previously noted, 

the extensive case management 

involved with DMPs affords plans 

ample opportunity to work with an ARB 

to ensure appropriate limitations and 

will likely result in a very low volume 

of appeals. 

Based on the comments we received, 

we are finalizing, with modification, our 

proposal to require a Part D plan 

sponsor to auto-forward to the IRE those 

redeterminations where a plan sponsor 

affirms, in whole or in part, its denial 

related to an at-risk determination under 

a DMP in accordance with § 423.153(f). 

Consistent with existing processes for 

untimely cases that are auto-forwarded 

to the IRE, we are modifying our 

proposal to state in this final rule that 

plans will be required to forward 

adverse DMP redetermination decisions 

to the IRE within 24 hours after 

expiration of the applicable 

adjudication timeframe. In addition, we 

are finalizing the proposed revision at 

§ 423.600(b) that will apply the 

requirements related to the IRE 

soliciting the views of the prescribing 

physician or other prescriber if a case is 

forwarded to the IRE by a Part D plan 

sponsor. We are also finalizing the 

proposed requirements for the content 

of the initial notice at 

§ 423.153(f)(5)(ii)(C)(3) and the 

requirements for the second notice at 

§ 423.153(f)(6)(ii)(C)(4)(iii) to require 

that these notices explain that if on 

redetermination a plan sponsor affirms 

its at-risk decision, in whole or in part, 

the enrollee’s case shall be 

automatically forwarded to the IRE for 

review and resolution. Finally, 

necessary modifications will be made to 

the Part D IRE’s contract consistent with 

these final rules and related operational 

issues will be addressed in the IRE’s 

reconsideration procedures manual. 

Pursuant to section 2007 of the 

SUPPORT Act, the automatic escalation 

provisions being finalized in this rule— 

at § 423.153(f)(5)(ii)(C)(3), 

§ 423.153(f)(6)(ii)(C)(4)(iii), § 423.590(i), 

and § 423.600(b)—apply 60 days 

following publication of this final rule. 

F. Suspension of Pharmacy Payments 

Pending Investigations of Credible 

Allegations of Fraud and Program 

Integrity Transparency Measures 

(§§ 405.370, 422.500, 422.503, 423.4, 

423.504, and 455.2) 

1. Medicare Parts C and D Anti-Fraud 

Efforts 

CMS’s role in overseeing the Medicare 

program includes ensuring that 

payments are made correctly and that 

fraud, waste, and abuse are prevented 

and detected. Failure to do so endangers 

the Trust Funds and may result in harm 


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21https://www.cdc.gov/drugoverdose/data/ 

index.html. 

22https://www.hhs.gov/about/news/2017/10/26/ 

hhs-acting-secretary-declares-public-healthemergency-address-national-opioid-crisis.html. 

23https://www.phe.gov/emergency/news/ 

healthehactions/phe/Pages/opioid-19apr2019.aspx. 

to beneficiaries. CMS has established 

various regulations over the years to 

address potentially fraudulent and 

abusive behavior in Medicare Parts C 

and D. For instance, 42 CFR 

424.535(a)(14)(i) addresses improper 

prescribing practices and permits CMS 

to revoke a physician’s or other eligible 

professional’s enrollment if he or she 

has a pattern or practice of prescribing 

Part B or D drugs that is abusive or 

represents a threat to the health and 

safety of Medicare beneficiaries, or both. 

2. SUPPORT Act—Sections 2008 and 

6063 

a. Background 

Opioid use disorder (OUD) and deaths 

from prescription and illegal opioid 

overdoses have reached alarming levels. 

The Centers for Disease Control and 

Prevention (CDC) estimated 47,000 

opioid overdose deaths in 2017, and 36 

percent of those deaths involved 

prescription opioids.21 On October 26, 

2017, the Acting Health and Human 

Services Secretary, Eric D. Hargan, 

declared a nationwide public health 

emergency on the opioid crisis as 

requested by President Donald Trump.22

This public health emergency has since 

been renewed several times by Secretary 

Alex M. Azar II.23

Section 2008 of the SUPPORT Act 

amends and adds several sections of the 

Act to address the concept of a ‘‘credible 

allegation of fraud.’’ Specifically: 

• Sections 2008(a) and (b) of the 

SUPPORT Act amends sections 1860D– 

12(b) and 1857(f)(3) of the Act, 

respectively, by adding new 

requirements for Medicare Part D plan 

sponsors and MA organizations offering 

MA–PD plans. Specifically, the 

provisions— 

++ Apply certain parts of section 

1862(o) of the Act, regarding payment 

suspensions based on credible 

allegations of fraud, to Medicare Part D 

plan sponsors and MA organizations 

offering MA–PD plans, allowing them to 

impose payment suspensions on 

pharmacies in the same manner as these 

provisions apply to CMS. 

++ Require these Part D plan 

sponsors and MA organizations offering 

MA–PD plans to notify the Secretary 

regarding the imposition of a payment 

suspension on a pharmacy pending an 

investigation of a credible allegation of 

fraud (but does not extend the 

requirement to report to the Secretary 

other payment suspensions for which 

plan sponsors already have authority). 

++ Require this notification to be 

made such as via a secure internet 

website portal (or other successor 

technology) established under section 

1859(i). 

• Section 2008(d) of the SUPPORT 

Act, which amended section 1862(o) of 

the Act, states that a fraud hotline tip (as 

defined by the Secretary) without 

further evidence shall not be treated as 

sufficient evidence for a credible 

allegation of fraud. 

Although the effective date for these 

provisions of section 2008 of the 

SUPPORT Act is for plan years 

beginning on or after January 1, 2020, 

we will be implementing these 

provisions with an applicability date 

that is for plan years beginning on or 

after January 1, 2022. This applicability 

date is necessary due to several factors. 

The first factor is the need to ensure that 

the web-based portal is complete and 

operational for plan sponsor’s use. 

While the development of the webbased portal began when the legislation 

was enacted, CMS was unable to 

complete the development of the portal 

in time for its full implementation in 

plan year 2021. In addition, the portal 

has required several key updates to 

reflect the requirements in this 

regulation. Additional factors include 

the need to ensure the web-based portal 

is complete and operational for plan 

sponsor’s use; the time needed for plan 

sponsors to determine internal 

procedures to meet the requirements 

outlined in this rule; the need for CMS 

to obtain feedback from plan sponsors to 

address any challenges encountered 

with the web-based portal; and the need 

to provide plan sponsors with the 

opportunity to address any other 

operational challenges with 

implementing these provisions, 

including potential changes that may be 

needed due to the COVID–19 public 

health emergency. Furthermore, the 

applicability date is later than the 

effective dates in the SUPPORT Act 

because the publication of this final rule 

is occurring after the bid deadline for 

plan year 2021. However, where the 

statute is self-implementing, the delay 

in applicability of these regulations is 

not a barrier to enforcement of the 

statutory provisions. 

Section 6063(a) of the SUPPORT Act, 

which added a new paragraph (i)(1) to 

section 1859 of the Act, requires the 

following: 

• The Secretary, after consultation 

with stakeholders, shall establish a 

secure web-based program integrity 

portal (or other successor technology) 

that would allow secure communication 

among the Secretary, MA plans, and 

prescription drug plans, as well as 

eligible entities with a contract under 

section 1893, such as Medicare program 

integrity contractors. The purpose is to 

enable, through the portal: 

++ The referral by such plans of 

substantiated or suspicious activities (as 

defined by the Secretary) of a provider 

of services (including a prescriber) or 

supplier related to fraud, waste, or 

abuse for the purpose of initiating or 

assisting investigations conducted by 

the eligible entity; and 

++ Data sharing among such MA 

plans, prescription drug plans, and the 

Secretary. 

• The Secretary shall disseminate the 

following information to MA plans and 

prescription drug plans via the portal: 

(1) Providers and suppliers referred for 

substantiated or suspicious activities 

during the previous 12-month period; 

(2) providers and suppliers who are 

currently either excluded under section 

1128 of the Act or subject to a payment 

suspension pursuant to section 1862(o) 

or otherwise; (3) providers and 

suppliers who are revoked from 

Medicare, and (4) in the case the plan 

makes a referral via the portal 

concerning substantiated or suspicious 

activities of fraud, waste, or abuse of a 

provider or supplier, the Secretary shall 

notify the plan if the related providers 

or suppliers were subject to 

administrative action under title XI or 

XVIII for similar activities. 

• The Secretary shall, through 

rulemaking, specify what constitutes 

substantiated or suspicious activities of 

fraud, waste, or abuse, using guidance 

such as that provided in the CMS Pub. 

100–08, Medicare Program Integrity 

Manual (PIM), chapter 4, section 4.8. In 

section 4.8 of the PIM, CMS provides 

guidance to its Medicare program 

integrity contractors on the disposition 

of cases referred to law enforcement. 

Similar to what is stated in section 

2008(d) of the SUPPORT Act, a fraud 

hotline tip without further evidence 

does not constitute sufficient evidence 

for substantiated fraud, waste, or abuse. 

• On at least a quarterly basis, the 

Secretary must make available to the 

plans information on fraud, waste, and 

abuse schemes and trends in identifying 

suspicious activity. The reports must 

include administrative actions, 

pertinent information related to opioid 

overprescribing, and other data 

determined appropriate by the Secretary 

in consultation with stakeholders. This 

information must be anonymized data 

submitted by plans without identifying 

the source of such information. 


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5904 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

Although the effective date for these 

provisions of section 6063(a) of the 

SUPPORT Act is beginning not later 

than 2 years after the date of enactment, 

or by October 24, 2020, we will be 

implementing these provisions with an 

applicability date that is for plan years 

beginning on or after January 1, 2022. 

This applicability date is necessary for 

the same reasons described previously 

in this section related to the provisions 

in section 2008 of the SUPPORT Act. 

Furthermore, section 6063(b) of the 

SUPPORT Act, which amended section 

1857(e) of the Act, requires MA 

organizations and Part D plan sponsors 

to submit to the Secretary, information 

on investigations, credible evidence of 

suspicious activities of a provider of 

services (including a prescriber) or 

supplier related to fraud, and other 

actions taken by such plans, related to 

inappropriate prescribing of opioids. 

The Secretary shall, in consultation 

with stakeholders, establish a process 

under which MA organizations and Part 

D plan sponsors must submit this 

information. In addition, the Secretary 

shall establish a definition of 

inappropriate prescribing, which will 

reflect the reporting of investigations 

and other corrective actions taken by 

MA organizations and Part D plan 

sponsors to address inappropriate 

prescribing of opioids and the types of 

information that must be submitted. 

Although the effective date for these 

provisions of section 6063(b) of the 

SUPPORT Act is for plan years 

beginning on or after January 1, 2021, 

we will be implementing these 

provisions with an applicability date 

that is for plan years beginning on or 

after January 1, 2022. This applicability 

date is necessary for the same reasons 

described previously in this section 

related to the provisions in section 2008 

of the SUPPORT Act. 

b. Need for Additional Measures 

Existing regulations for MA and Part 

D plan sponsors in 

§§ 422.503(b)(4)(vi)(G)(3) and 

423.504(b)(4)(vi)(G)(3) specify that plan 

sponsors should have procedures to 

voluntarily self-report potential fraud or 

misconduct related to the MA and Part 

D programs to CMS or its designee. (We 

note that § 422.503(b) generally outlines 

requirements that MA organizations 

must meet. Section 423.504(b) outlines 

conditions necessary to contract as a 

Part D plan sponsor.) Presently, MA 

organizations and Part D plan sponsors 

voluntarily report such data to CMS 

through either—(1) direct submissions 

to CMS, or (2) communication with the 

Investigations Medicare Drug Integrity 

Contractor (IMEDIC). Given the gravity 

of the nationwide opioid epidemic and 

the need for CMS and the plans to have 

as much information about potential 

and actual prescribing misbehavior as 

possible in order to halt such 

misbehavior, we are taking further 

regulatory action consistent with 

sections 2008 and 6063. Sections 2008 

and 6063 of the SUPPORT Act provide 

the authority to establish regulations to 

implement a requirement for plans to 

report certain related data. 

3. Proposed Provisions 

Consistent with the foregoing 

discussion, we proposed the following 

regulatory provisions to implement 

sections 2008 and 6063 of the SUPPORT 

Act. As explained, some of our 

proposals modify or supplement 

existing regulations, while others 

establish new regulatory paragraphs 

altogether. Regulations related to Part C 

are addressed in 42 CFR part 422; those 

pertaining to Part D are addressed in 42 

CFR part 423. Regulations pertaining to 

or contained in other areas of title 42 

will be noted as such. 

a. Definitions 

The definitions outlined in this 

section of this rule will be effective 

following the required statutory 

deadlines for each reporting piece 

described in the SUPPORT Act. In the 

proposed rule, we proposed the 

definitions of substantiated or 

suspicious activities of fraud, waste or 

abuse and fraud hotline tip would be 

effective beginning October 24, 2020, 

and the definitions of inappropriate 

prescribing of opioids and credible 

allegations of fraud would be effective 

beginning January 1, 2021. 

(1) Substantiated or Suspicious 

Activities of Fraud, Waste, or Abuse 

We indicated earlier that section 

6063(a) of the SUPPORT Act added a 

new section 1859(i)(1) to the Act 

requiring the establishment of a 

regulatory definition of ‘‘substantiated 

or suspicious activities of fraud, waste, 

or abuse,’’ using guidance such as that 

in CMS Pub. 100–08, PIM, chapter 4, 

section. 4.8. To this end, we proposed 

to add to §§ 422.500 and 423.4 a 

definition specifying that substantiated 

or suspicious activities of fraud, waste 

or abuse means and includes, but is not 

limited to allegations that a provider of 

services (including a prescriber) or 

supplier: Engaged in a pattern of 

improper billing; submitted improper 

claims with suspected knowledge of 

their falsity; submitted improper claims 

with reckless disregard or deliberate 

ignorance of their truth or falsity; or is 

the subject of a fraud hotline tip verified 

by further evidence. Consistent with the 

reference in section 6063(a) of the 

SUPPORT Act to chapter 4 of the PIM, 

our proposed definition largely mirrored 

that in section 4.8 of the PIM. We also 

believe that this definition is, 

importantly, broad enough to capture a 

wide variety of activities that could 

threaten Medicare beneficiaries and the 

Trust Funds. We solicited public 

comment on this definition. 

We received several comments on the 

definition of ‘‘substantiated or 

suspicious activities of fraud, waste or 

abuse’’ and our responses to those 

comments follow. 

Comment: A professional organization 

supported this definition and 

mentioned that it would ensure targeted 

streamlined fraud reporting. 

Response: We appreciate the 

comment and support of the definition 

and we are finalizing the definition as 

proposed. 

Comment: Several commenters raised 

concerns with the definition of 

substantiated and suspicious activity. 

Some commenters requested additional 

information regarding the scope of the 

definition. One commenter 

recommended that CMS provide 

additional guidance on the definition of 

‘‘pattern of improper billing.’’ Other 

commenters wanted to know what 

specific criteria will be used for 

substantiated and suspicious reporting. 

Another commenter was concerned 

with CMS’s use of language such as 

‘‘substantiated’’ and ‘‘suspicious.’’ 

Response: In defining what 

constitutes substantiated or suspicious 

activities of fraud, waste, and abuse, we 

looked to guidance currently in the 

Medicare Program Integrity Manual 4.8. 

Section 6063 of the SUPPORT Act 

further clarifies that a fraud hotline tip 

without further evidence shall not be 

treated as sufficient evidence for 

substantiated fraud, waste, or abuse. We 

believe the definition that we are 

finalizing will address the commenters’ 

concerns as it reflects the SUPPORT Act 

requirement to establish the definition 

using guidance such as that provided in 

the Medicare Program Integrity Manual 

4.8. In an effort to be consistent across 

our programs, we believe the definition 

as proposed provides a similar context 

for what is to be reported as the PIM 

outlines for fee-for-service. Based on the 

comments received and our responses 

we are finalizing the proposed 

definition without modification; 

however, the applicability date for this 

definition will be for plan years 

beginning on or after January 1, 2022 for 

reasons previously discussed in this 

section. 


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Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 5905 

24 ‘‘HHS Guide for Clinicians on the Appropriate 

Dosage Reduction or Discontinuation of Long-Term 

Opioid Analgesics’’ found at https://www.hhs.gov/ 

opioids/sites/default/files/2019-10/8-Page%20

version__HHS%20Guidance%20for%20Dosage%20

Reduction%20or%20Discontinuation%20of

%20Opioids.pdf. 

25https://www.hhs.gov/ash/advisory-committees/ 

pain/index.html. 

26https://www.justice.gov/opa/pr/secondappalachian-region-prescription-opioid-strikeforcetakedown-results-charges-against-13. 

(2) Inappropriate Prescribing of Opioids 

Section 6063(b) of the SUPPORT Act, 

as mentioned previously, states the 

Secretary is required to establish: (1) A 

definition of inappropriate prescribing; 

and (2) a method for determining if a 

provider of services meets that 

definition. MA organizations and Part D 

Plan Sponsors must report actions they 

take related to inappropriate prescribing 

of opioids. We accordingly proposed to 

add the following definition of 

inappropriate prescribing with respect 

to opioids to §§ 422.500 and 423.4. We 

proposed that inappropriate prescribing 

means that, after consideration of all the 

facts and circumstances of a particular 

situation identified through 

investigation or other information or 

actions taken by MA organizations and 

Part D Plan Sponsors, there is an 

established pattern of potential fraud, 

waste and abuse related to prescribing 

of opioids, as reported by the Plan 

Sponsors. 

In determining whether inappropriate 

prescribing of opioids has occurred we 

proposed that plan sponsors may 

consider any number of factors 

including, but not limited to the 

following: Documentation of a patient’s 

medical condition; identified instances 

of patient harm or death; medical 

records, including claims (if available); 

concurrent prescribing of opioids with 

an opioid potentiator in a manner that 

increases risk of serious patient harm; 

levels of Morphine Milligram 

Equivalent (MME) dosages prescribed; 

absent clinical indication or 

documentation in the care management 

plan, or in a manner that may indicate 

diversion; State level prescription drug 

monitoring program (PDMP) data; 

geography, time and distance between a 

prescriber and the patient; refill 

frequency and factors associated with 

increased risk of opioid overdose. 

We believe the many steps that CMS, 

the CDC, and HHS have taken in 

response to the nation’s opioid crisis 

have had an overall positive impact on 

clinician prescribing patterns, resulting 

in safer and more conscientious opioid 

prescribing across clinician types and 

across the settings where beneficiaries 

receive treatment for pain, and have also 

resulted in heightened public awareness 

of the risks associated with opioid 

medications. For example, recent HHS 

guidance 24 highlights the importance of 

judicious opioid prescribing that 

minimizes risk and; urges collaborative, 

measured approaches to opioid dose 

escalation, dose reduction, and 

discontinuation; furthermore, a 2019 

HHS Task Force report 25 outlines best 

practices for multimodal approaches to 

pain care. In this definition, we 

recognized that there are legitimate 

clinical scenarios that may necessitate a 

higher level of opioid prescribing based 

on the clinician’s professional 

judgement, including, the beneficiary’s 

clinical indications and characteristics, 

whether the prescription is for an initial 

versus a subsequent dose, clinical 

setting in which the beneficiary is being 

treated, and various other factors. We 

sought public comments on specific 

populations or diagnoses that could be 

excluded for purposes of this definition, 

such as cancer, hospice, and/or sickle 

cell patients. Based upon widely 

accepted principles of statistical 

analysis and taking into account clinical 

considerations mentioned previously, 

we noted that CMS may consider certain 

statistical deviations to be instances of 

inappropriate prescribing of opioids. We 

requested evidence from clinical experts 

regarding evidence based guidelines for 

opioid prescribing across clinical 

specialties and care settings that could 

be considered to develop meaningful 

and appropriate outlier methodologies. 

Therefore, we proposed that 

inappropriate prescribing of opioids 

should be based on an established 

pattern as previously described in this 

section utilizing many parameters. 

We solicited public comment on other 

reasonable measures of inappropriate 

prescribing of opioids. 

We received numerous comments 

regarding the definition of inappropriate 

prescribing and on other reasonable 

measures of inappropriate prescribing of 

opioids and our responses follow. 

Comment: Two professional 

associations supported the definition 

outlined in the rule. 

Response: We appreciate the 

comments from prescribing 

professionals that also support our 

proposed definition. We will be 

finalizing the definition, as described in 

this final rule. 

Comment: We received comments 

from one advocacy group which 

criticize the definition of ‘‘inappropriate 

prescribing’’. The comments made by 

the advocacy group were also referred to 

by several other individual commenters 

who endorsed their concerns. The 

advocacy group asserted that CMS’s 

proposal contains an inappropriate view 

of the ‘‘risks’’ of opioid prescribing for 

people in pain, which could be used for 

denial of pain treatment.’’ As an 

alternative, they recommend better 

training of physicians in the 

management of chronic pain. 

Furthermore, the commenters noted that 

HHS’ actions have focused on ‘‘what is 

likely to be a minor problem (physician 

overprescribing)’’ instead of illegal drug 

use and abuse. 

Response: Section 6063 of the 

SUPPORT ACT required us to adopt a 

definition of inappropriate prescribing 

of opioids. In response to the statement 

that overprescribing may be a minor 

problem, we disagree and cite a real 

example of how prescribing authority 

can be used inappropriately. In 

September 2019, federal law 

enforcement officials announced 

‘‘charges against 13 individuals across 

five Appalachian federal districts for 

alleged offenses relating to the over 

prescription of controlled substances 

through ‘pill mill’ clinics. Of those 

charged, 12 were charged for their role 

in unlawfully distributing opioids and 

other controlled substances and 11 were 

physicians. The alleged conduct 

resulted in the distribution of more than 

17 million pills.’’ 26 In relation to 

concerns raised about provider 

education and training, we would note 

that the subject is out of scope for this 

regulation. 

Comment: One commenter stated that 

CMS should consider certain statistical 

outliers and/or individual beneficiary 

cases of overutilization while another 

commenter stated that the definition of 

inappropriate prescribing must be 

limited to suspected fraud, not only 

outlier prescribing patterns. Another 

commenter noted that CMS should 

amend the proposed definition of 

inappropriate prescribing to ‘‘potential’’ 

with ‘‘material and repeated intentional 

acts of’’. Another commenter 

recommended that CMS add reasonable 

measures of inappropriate prescribing of 

opioids- for example, CMS should 

consider including any off-guideline 

use, including prescriptions for large 

quantities to opioid-naı ̈ve members. 

Another commenter believed that a peer 

physician from the same specialty, after 

considering specific patient needs, is 

most qualified to determine whether 

opioids have been prescribing 

appropriately. Another commenter was 

concerned that without specifically 

defining ‘‘inappropriate prescribing’’ a 

subjective approach may be taken in 

initiating actions involving suspicious 


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activities that may warrant 

investigation. 

Response: We believe the proposed 

rule was clear in that plan sponsors may 

consider a number of factors when 

determining what constitutes 

inappropriate prescribing of opioids. 

The list of factors is not meant to be 

exhaustive list of factors that would 

contribute to the identification of fraud 

waste and abuse related to inappropriate 

prescribing of opioids. The information 

provided in the definition is sufficient 

and will assist the agency in identifying 

providers with patterns of potential 

fraud, waste and abuse related to opioid 

prescribing. It is important to note that 

most Part D plan sponsors already have 

detection and prevention measures in 

place to address cases of inappropriate 

prescribing of opioids. 

Comment: A few commenters believe 

the insurance companies’ authority is 

too broad in determining inappropriate 

prescribing. 

Response: The Medicare prescription 

drug benefit is delivered through 

Medicare Part D plans and many of the 

plan sponsors are insurance companies. 

We have considered industry guidelines 

and policies in defining inappropriate 

prescribing. Most Part D plan sponsors 

already have Special Investigative Units 

which have detection and prevention 

procedures in place to address cases of 

inappropriate prescribing of opioids. 

Comment: A commenter stated that 

although the definition of inappropriate 

prescribing calls for a more 

comprehensive review, there are 

concerns that the focus will be on dose 

and quantity without consideration of 

other factors that affect patients and 

physicians. 

Response: As we have stated in our 

previous responses to comments, we 

believe the proposed rule was clear in 

that plan sponsors may consider a 

number of factors when determining 

what constitutes inappropriate 

prescribing of opioids. The list of factors 

is not meant to be an exhaustive list that 

would contribute to the identification of 

fraud waste and abuse related to 

inappropriate prescribing of opioids. In 

addition to the list of factors, we have 

also considered industry guidelines and 

policies in defining inappropriate 

prescribing. We believe the information 

provided is sufficient in assisting plans 

to identify established patterns of 

potential fraud, waste and abuse related 

to prescribing of opioids. As we stated 

previously in this section, most Part D 

plan sponsors already have detection 

and prevention measures in place to 

address cases of inappropriate 

prescribing of opioids. However, under 

section 6063 of the SUPPORT Act, plans 

will now be required to report any 

information related to the inappropriate 

prescribing of opioids and concerning 

investigations, credible evidence of 

suspicious activities of a provider of 

services (including a prescriber) or 

supplier, and other actions taken by the 

plan. 

Comment: There were numerous 

commenters who suggested that CMS 

consider exceptions such as Long Term 

Care, cancer survivors, high risk surgical 

patients, chronic pain, end stage chronic 

lung disease and rare genetic disorders, 

when reviewing for inappropriate 

prescribing. There were also comments 

that recommended that CMS consider 

prescriber specialties when defining 

inappropriate prescribing. One 

commenter suggested that CMS specify 

that the factors listed does not include 

an exhaustive list of patterns that would 

contribute to inappropriate opioid 

prescribing. A commenter also 

expressed concern that CMS creating 

blanket exclusions from the analysis has 

the potential for fraud and 

recommended that CMS not exclude 

any drug type, specific populations or 

diagnosis. 

Response: As mentioned in the 

preamble, we recognize that there are 

legitimate clinical scenarios that may 

necessitate a higher level of opioid 

prescribing. Cancer, hospice, and sickle 

cell patients have been identified as 

exclusions in other sections of the 

regulation, such as the updated drug 

management program provisions at 

§ 423.100. To ensure that vulnerable 

populations continue to have access to 

care, we are finalizing the proposed 

definition of inappropriate prescribing 

with a modification such that 

beneficiaries with cancer and sickle-cell 

disease, as well as those patients 

receiving hospice and long term care 

(LTC) services will be exempt from 

consideration for the inappropriate 

prescribing of opioids. We clarify that 

LTC, in this context, means a skilled 

nursing facility as defined in section 

1819(a) of the Act, or a medical 

institution or nursing facility for which 

payment is made for an institutionalized 

individual under section 1902(q)(1)(B) 

of the Act. These exemptions were 

added to be consistent with other areas 

of the proposed regulation as well as the 

current regulatory exemptions at 

§ 423.100. However, just as plan 

sponsors may consider a number of 

factors such as MME levels, concurrent 

prescribing of opioids with an opioid 

potentiator, and time and distance 

between the prescriber and the patient 

when determining inappropriate 

prescribing of opioids, plan sponsors 

may also apply the same judgment 

when considering other diseases or 

clinical factors or scenarios that have 

not been listed in the definition. Plan 

sponsors should use all information 

available to them in determining 

inappropriate opioid prescribing. These 

exclusions also do not preclude plan 

sponsors from reporting on a voluntary 

basis under §§ 422.503(b)(4)(vi)(G)(3) 

and 423.504(b)(4)(vi)(G)(3). 

Comment: Several comments were 

received in response to use of MME 

levels as a factor in determining opioid 

overprescribing. Commenters were 

concerned that CMS does not exempt 

opioid use disorder treatment from 

MME guidelines. Another commenter 

stated a consensus definition of MME 

dosages does not exist and expressed 

concern with a policy that allows Plan 

Sponsors to rely on MME dosages. 

Another commenter mentioned that the 

MME is not an appropriate factor in 

determining abuse. A commenter 

suggested excluding MME levels as a 

factor in any analysis of inappropriate 

prescribing. 

Response: We believe the proposed 

rule is clear in that plan sponsors may 

consider a number of factors when 

determining what constitutes 

inappropriate prescribing of opioids. 

Most Part D plan sponsors already have 

detection and prevention measures in 

place to address cases of inappropriate 

prescribing of opioids. It is our 

understanding that MME are already 

utilized as part of many plan sponsors 

measures to address FWA. As such, we 

believe MME is an important factor that 

might be considered when identifying 

inappropriate prescribing of opioids. 

The list of factors is not meant to be an 

exhaustive list of factors that would 

contribute to the identification of fraud 

waste and abuse related to inappropriate 

prescribing of opioids. The information 

provided in the definition is sufficient 

in assisting plans to identify established 

patterns of potential fraud, waste and 

abuse related to prescribing of opioids. 

Comment: There were comments 

seeking clarification regarding if a 

pharmacy would be considered a 

provider and could be identified as 

having ‘‘Inappropriate Prescribing of 

Opioids,’’ or if this proposed policy 

would only refer to actual medical 

professionals who can prescribe 

opioids. 

Response: Based on the comments, 

there may be some misunderstanding of 

the reporting requirements cited in 

section 2008 of the SUPPORT Act 

versus section 6063 of the SUPPORT 

Act. Section 2008 of the SUPPORT Act 

requires plan sponsors to notify the 

Secretary of the imposition of a 

pharmacy payment suspension that is 


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27https://www.justice.gov/opa/pr/secondappalachian-region-prescription-opioid-strikeforcetakedown-results-charges-against-13. 

based on a credible allegation of fraud. 

That reporting will be done using a 

secure website portal. Section 6063 of 

the SUPPORT Act requires reporting 

information on investigations, credible 

evidence of suspicious activities of 

providers or suppliers related to fraud, 

and other actions taken by the plans 

related to inappropriate opioid 

prescribing. For purposes of section 

6063(b), plan sponsors may consider a 

pharmacy a supplier. 

Comment: Commenters expressed 

concern with the use of geography, time 

and distance between the prescriber and 

the patient as a factor for opioid 

overprescribing. Specifically, one 

commenter stated that many people are 

forced to travel long distances not 

because of doctor shopping or pharmacy 

hopping, but because pain clinics have 

been shut down and primary doctors are 

refusing to see pain patients. Another 

commenter stated that for people with 

complex disabilities, geographically 

distant specialists may be the best (or 

only) care providers available. Another 

commenter stated that absent of fraud, 

high dosage and distance should not be 

considered indicators of inappropriate 

prescribing. 

Response: We realize that there may 

be some circumstances in which a 

beneficiary may travel a considerable 

distance for access to a pharmacy or 

provider, for legitimate reasons. Plan 

sponsors may consider any number of 

factors when determining what 

constitutes inappropriate prescribing of 

opioids, in addition to geography time 

and distance. The list included in the 

proposed rule is not meant to be an 

exhaustive list of factors that may be 

used in the identification of fraud waste 

and abuse related to inappropriate 

prescribing of opioids. 

Comment: We received several 

comments stating that illicit drugs, not 

prescription drugs, have contributed to 

the opioid crisis. Commenters also 

requested that CMS monitor to ensure 

that these actions do not encourage 

providers to be unnecessarily 

conservative when prescribing opioids 

which could limit access to older adults. 

Commenters also noted that CMS 

should encourage plan sponsors to align 

best practices, as published in the HHS 

Pain Management Best Practices InterAgency Task Force report. 

Response: In response to the 

statement that illicit drugs, not 

prescription drugs, have contributed to 

the opioid, we disagree and cite a real 

example of how prescribing of 

prescription opioids can be used 

inappropriately. In September 2019, 

federal law enforcement officials 

announced ‘‘charges against 13 

individuals across five Appalachian 

federal districts for alleged offenses 

relating to the over prescription of 

controlled substances through ‘pill mill’ 

clinics. Of those charged, 12 were 

charged for their role in unlawfully 

distributing opioids and other 

controlled substances and 11 were 

physicians. The alleged conduct 

resulted in the distribution of more than 

17 million pills.’’ 27 Our proposed 

provisions are to ensure that fraud, 

waste, and abuse are prevented and 

detected and our Medicare population is 

protected from harm from opioid 

prescriptions. We have established 

several regulations over the years to 

promote patient safety and address 

potentially fraudulent and abusive 

behavior in Medicare Parts C and D. We 

are considering ways to effectively 

monitor the impact of these provisions. 

The provisions in the SUPPORT Act 

that we proposed to implement will add 

additional ways to ensure effective 

monitoring and oversight of prescribing 

practices related to opioids. 

Based on the overwhelming feedback 

from health plans, professional 

societies, advocacy groups and 

individuals, we have determined there 

is a need to add exemptions when 

determining inappropriate prescribing 

of opioids. While there is no way to 

include every possible disease state that 

could be considered, we will add 

beneficiaries with cancer and sickle-cell 

disease, as well as those patients 

receiving hospice and long term care 

(LTC) services as exclusions. These 

disease states were selected not only 

because they are clinically applicable 

but they align with existing exemptions 

in other CMS policies, such as the 

updated drug management program 

provisions at § 423.100. In addition, the 

applicability date for this definition will 

be for plan years beginning on or after 

January 1, 2022 for reasons previously 

discussed in this section. 

(3) Credible Allegation of Fraud 

Somewhat similar to section 6063(a) 

of the SUPPORT Act, section 2008(d) of 

the SUPPORT Act states that a fraud 

hotline tip (as defined by the Secretary) 

without further evidence shall not be 

treated as sufficient evidence for a 

credible allegation of fraud. The term 

‘‘credible allegation of fraud’’ is 

currently defined at §§ 405.370 and 

455.2 (which, respectively, apply to 

Medicare and Medicaid) as an allegation 

from any source including, but not 

limited to the following: (1) Fraud 

hotline complaints; (2) claims data 

mining; and (3) patterns identified 

through provider audits, civil false 

claims cases, and law enforcement 

investigations. Allegations are 

considered to be credible when they 

have indicia of reliability, and, in the 

case of § 455.2, the State Medicaid 

agency has reviewed all allegations, 

facts, and evidence carefully and acts 

judiciously on a case-by-case basis. 

To address the requirements of 

section 2008(d) of the SUPPORT Act, 

we proposed to revise the term 

‘‘credible allegation of fraud’’ in 

§§ 405.370 and 455.2 as follows. We 

proposed that the existing version of 

paragraph (1) in both §§ 405.370 and 

455.2 would be amended to state ‘‘Fraud 

hotline tips verified by further 

evidence.’’ The existing version of 

paragraph (2) and (3) would remain 

unchanged. Similarly, we proposed to 

add in § 423.4 a definition of credible 

allegation of fraud stating that a credible 

allegation of fraud is an allegation from 

any source including, but not limited to: 

Fraud hotline tips verified by further 

evidence; claims data mining; patterns 

identified through provider audits, civil 

false claims cases, and law enforcement 

investigations. Allegations are 

considered to be credible when they 

have indicia of reliability. In the case of 

§ 423.4, we proposed that examples of 

claims data mining would include, but 

are not limited to, prescription drug 

events and encounter data mining. We 

solicited public comment on this 

definition. 

We received several comments on the 

definition of Credible Allegation of 

Fraud and our responses follow. 

Comment: A professional organization 

supported the proposed revised 

definition of credible allegation of fraud. 

Response: We appreciate the 

comments from prescribing 

professionals that also support our 

proposed definition. We are finalizing 

the definition, as proposed in this final 

rule. 

Comment: A commenter expressed 

concern that a credible allegation results 

in damage to the professional 

reputations of doctors and pharmacists. 

Response: We note that credible 

allegation of fraud in this context is 

used when plan sponsors are 

implementing payment suspensions of 

pharmacies. Plan sponsors already have 

the authority to implement a payment 

suspension at their discretion according 

to their contracts with the pharmacies. 

When they implement a payment 

suspension that is based on a credible 

allegation of fraud and meets the 

regulatory definition, now they must 

report it to CMS. We have defined 


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credible allegations of fraud under 

§ 405.370 in previous rulemaking. The 

regulations are being amended as 

specified in the SUPPORT Act section 

2008(d). The intent is to only apply 

definitions for MA and Part D plans that 

are consistent with regulatory standards 

that are applied to both traditional 

Medicare and Medicaid. Accordingly, 

plan sponsors currently impose 

payment suspensions based on credible 

allegations of fraud and we recognize 

that MA and Part D plans currently use 

multiple sources in determining what 

may be considered ‘‘credible allegation 

of fraud’’ as part of ensuring measures 

have been implemented to prevent, 

detect and correct fraud, waste and 

abuse. 

Comment: Some commenters 

requested that CMS provide examples of 

credible evidence and provide 

clarification on the standards, 

thresholds and responsible party for 

reporting. One commenter believes that 

examples will assist plans in 

determining credible allegations of 

fraud and address fraudulent opioid 

prescribing. Another commenter 

recommended that CMS proactively 

communicate with plans on fraud 

schemes to assist in enhancing the plans 

oversight efforts. 

Response: The regulations are being 

amended as specified in the SUPPORT 

Act section 2008(d) to extend a 

consistent regulatory definition for MA 

and Part D plans. We have defined 

credible allegations of fraud under 

405.370 in previous rulemaking. As 

noted previously, the Plans will be 

required to report payment suspensions 

of pharmacies to CMS based on credible 

allegations of fraud. Accordingly, we 

recognize that MA and Part D plans 

currently may use a variety of sources 

in determining what may be considered 

‘‘credible allegation of fraud’’ as part of 

ensuring measures have been 

implemented to prevent, detect and 

correct fraud, waste and abuse. We also 

conduct regular training and education 

for Plan Sponsors on fraud detection 

and prevention and provides 

opportunities for the Plans to share 

information on fraud schemes. 

Therefore, we will continue to allow 

plans the flexibility in determining 

credible allegations of fraud and will 

finalize this provision without 

additional examples other than what is 

currently defined. 

Comment: A commenter 

recommended amending the proposed 

definition of credible allegation to an 

allegation from a plan of a material and 

repeated pattern of intentional 

violations of law or regulations that has 

been confirmed beyond suspicion 

through independent evidence. 

Allegations by third parties, including 

False Claims Act cases, law enforcement 

investigations and provider audits shall 

not constitute credible allegations of 

fraud. 

Response: We have defined credible 

allegations of fraud under 405.370 in 

previous rulemaking. The regulations 

are being amended as specified in the 

SUPPORT Act section 2008(d). The 

intent of this provision is to implement 

the SUPPORT ACT which extends a 

consistent definition for MA and Part D 

plans. Accordingly, we recognize that 

MA and Part D plans currently use a 

variety of sources in determining what 

may be considered ‘‘credible allegation 

of fraud’’ as part of ensuring measures 

have been implemented to prevent, 

detect and correct fraud, waste and 

abuse. We will proceed as noted 

previously in this section with 

finalizing the proposed definition 

without modification. 

Comment: An association supported 

the proposed revision of the regulatory 

definition of credible allegation of fraud 

described in the proposed rule, 

changing ‘‘fraud hotline complaints’’ to 

‘‘fraud hotline tips verified by further 

evidence.’’ Another association also 

specifically supported our proposal that 

a fraud hotline top without further 

evidence shall be not be treated as 

credible allegation of fraud. 

Response: We appreciate the support 

for the proposal to further define 

credible allegation of fraud by 

expanding the definition of fraud 

hotline complaint to fraud hotline tips 

verified by further evidence. We believe 

this will further assist plans in 

determining cases of fraud. 

Comment: A commenter 

recommended that CMS provide 

training programs for health plan fraud 

units and guidance regarding the 

definition of credible allegation. 

Response: We have defined credible 

allegations of fraud under 405.370 in 

previous rulemaking. The regulations 

are being amended as specified in the 

SUPPORT Act section 2008(d). The 

intent is to only establish similar and 

consistent definitions for MA and Part 

D plans. We conduct regular training 

and education for Plan Sponsors on 

fraud detection and prevention and 

provides opportunities for the Plans to 

share information on fraud schemes. We 

recognize that MA and Part D plans 

currently use a variety of sources in 

determining what may be considered 

‘‘credible allegation of fraud’’ as part of 

ensuring measures have been 

implemented to prevent, detect and 

correct fraud, waste and abuse. 

Comment: A commenter specifically 

did not support the definition of 

credible allegation of fraud given that 

further evidence is not defined. 

Response: The definition uses plain 

language and is intended to allow 

flexibility since evidence to corroborate 

the fraud hotline complaint or tip would 

vary on a case by case basis. 

Additionally, Part D sponsors have 

systems in place and experience with 

the evaluation and verification of fraud 

hotline tips. 

Based on the comments received and 

our responses we are finalizing the 

provision as proposed without 

modification; however, the applicability 

date for this definition will be for plan 

years beginning on or after January 1, 

2022 for reasons previously discussed in 

this section. 

(4) Fraud Hotline Tip 

Sections 2008(d) and 6063(a) of the 

SUPPORT Act require the Secretary to 

define a fraud hotline tip. To this end, 

we proposed to add to §§ 405.370, 

422.500, 423.4, and 455.2 a plain 

language definition of this term. We 

proposed that a fraud hotline tip would 

be defined as a complaint or other 

communications that are submitted 

through a fraud reporting phone number 

or a website intended for the same 

purpose, such as the federal 

government’s HHS Office of the 

Inspector General (OIG) Hotline or a 

health plan’s fraud hotline. This 

definition is intended to be broad 

enough to describe mechanisms such as 

the federal government’s HHS OIG 

Hotline or a commercial health plan’s 

fraud hotline. Many private plans, 

which have their own fraud reporting 

hotlines, participate as plan sponsors in 

Medicare Part D and this definition 

would seek to reflect their processes for 

reporting information on potential 

fraud, waste and abuse. We solicited 

public comment on this definition. 

We received several comments on the 

definition of Fraud Hotline Tip. Our 

responses to those comments follow. 

Comment: Several commenters 

supported the proposed definition of a 

fraud hotline tip including a 

professional association. Commenters 

that were supportive agreed that this 

definition will assist plans on ensuring 

investigative measures are taken and 

focus on those that indicate fraud. 

Response: We appreciate the support 

and feedback on the proposal to further 

define a fraud hotline tip. As mentioned 

in the proposed rule we believe the 

definition is broad enough to describe 

mechanisms such as the federal 

government’s HHS OIG Hotline or a 

commercial health plan’s hotline. 


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Comment: A commenter also 

recommended that CMS provide 

examples of other communications that 

may be submitted through a fraud 

reporting phone number or website. 

Response: As mentioned in the 

proposed regulation, the definition is 

intended to be broad in an effort to 

allow flexibility. Part D sponsors are 

currently required to have systems 

established to receive and process fraud 

hotline tips. Therefore, we believe many 

Part D sponsors have the experience 

with using ‘‘other communications’’ 

which could include information such 

as supporting documentation submitted 

with the tip that may be used to support 

a complaint or document potential 

fraud. 

Comment: Another commenter urged 

that CMS ensure tips are verified before 

they are used to suspend a provider or 

prescriber. 

Response: The definition proposed 

does include language to state that a 

fraud hotline tip must be verified by 

further evidence. As mentioned in the 

proposed regulation the definition is 

intended to be broad in an effort to 

allow flexibility since many plan 

sponsors have a fraud hotline and 

systems established for receiving and 

verifying potential fraud. 

Based on the comments received and 

our responses we are finalizing the 

provision as proposed without 

modification; however, the applicability 

date for this definition will be for plan 

years beginning on or after January 1, 

2022 for reasons previously discussed in 

this section. 

b. Reporting 

(1) Vehicle for Reporting 

We stated that we planned to utilize 

a module within the HPMS as the 

program integrity portal for information 

collection and dissemination. We stated 

that the portal would serve as the core 

repository for the data addressed in 

sections 2008 and 6063 of the SUPPORT 

Act. We stated that the program 

integrity portal would not duplicate 

reporting requirements and is the only 

source that would be used to report and 

disseminate information as required in 

the final rule. Such data and the regular 

submission and dissemination of this 

important information would, in our 

view, strengthen CMS’ ability to oversee 

plan sponsors’ efforts to maintain an 

effective fraud, waste, and abuse 

program. We further believe that data 

sharing via use of a portal would, in 

conjunction with our proposals, help 

accomplish the following objectives in 

our efforts to alleviate the opioid 

epidemic: 

• Enable CMS to perform data 

analysis to identify fraud schemes. 

• Facilitate transparency among CMS 

and plan sponsors through the exchange 

of information. 

• Provide better information and 

education to plan sponsors on potential 

fraud, waste, and abuse issues, thus 

enabling plan sponsors to investigate 

and take action based on such data. 

• Improve fraud detection across the 

Medicare program, accordingly allowing 

for increased recovery of taxpayer funds 

and enrollee expenditures (for example, 

premiums, co-insurance, other plan cost 

sharing). 

• Provide more effective support, 

including leads, to plan sponsors and 

law enforcement. 

• Increase beneficiary safety through 

increased oversight measures. 

We received a few comments on our 

planned reporting vehicle and our 

responses follow. 

Comment: Several commenters noted 

reporting through a new HPMS module 

will create duplication of information 

and recommended that CMS institute 

one consistent reporting mechanism 

since plans can report directly to the 

MEDIC or into the HPMS, allow greater 

access to expedite reporting and provide 

further clarification where Part D 

sponsors should report. 

Response: The program integrity 

portal will not duplicate reporting 

requirements and is the only source that 

will be used to report and disseminate 

information as required in the final rule. 

Comment: A commenter inquired 

about the difference between the new 

portal and existing HPMS module and 

also questioned how plans will be 

assured that CMS will investigate the 

allegations submitted. 

Response: The current Analytics and 

Investigations Collaboration 

Environment for Fraud, Waste, and 

Abuse (AICE–FWA) module in HPMS 

will continue to serve as a repository for 

data projects that plan sponsors 

currently use as leads and a resource in 

conducting oversight of their fraud 

detection and prevention efforts. The 

new program integrity portal in HPMS 

will be the primary source for plan 

sponsors to submit information related 

to the inappropriate prescribing of 

opioids, payment suspensions of Part D 

pharmacies, and referral of 

substantiated or suspicious activities of 

a provider of services or supplier related 

to fraud, waste, and abuse. 

(2) Type of Data To Be Reported by 

Plans 

Sections 422.503(b)(4)(vi)(G)(3) and 

423.504(b)(4)(vi)(G)(3), as noted, state 

that plan sponsors should have 

procedures to voluntarily self-report 

potential fraud or misconduct related to 

the MA and Part D programs, 

respectively, to CMS or its designee. To 

conform to the aforementioned 

requirements of sections 2008(a) and (b) 

and section 6063(b) of the SUPPORT 

Act, we proposed to add new regulatory 

language, effective beginning in 2021, in 

parts 422 and 423 as stated throughout 

this section. 

First, we proposed new language at 

§§ 422.503(b)(4)(vi)(G)(4) and 

423.504(b)(4)(vi)(G)(4) to include the 

new provisions. The new 

§§ 422.503(b)(4)(vi)(G)(4) and 

423.504(b)(4)(vi)(G)(4) would state that 

the MA organization or Part D plan 

sponsor, respectively, must have 

procedures to identify, and must report 

to CMS or its designee either of the 

following, in the manner described in 

paragraphs (b)(4)(vi)(G)(4) through (6) of 

this section: 

• Any payment suspension 

implemented by a plan, pending 

investigation of credible allegations of 

fraud by a pharmacy, which must be 

implemented in the same manner as the 

Secretary does under section 1862(o)(1) 

of the Act; and 

• Any information concerning 

investigations, credible evidence of 

suspicious activities of a provider of 

services (including a prescriber) or 

supplier, and other actions taken by the 

plan related to the inappropriate 

prescribing of opioids. 

Second, the new 

§§ 422.503(b)(4)(vi)(G)(5) and 

423.504(b)(4)(vi)(G)(5) would require 

the data referenced in proposed 

§§ 422.503(b)(4)(vi)(G)(4) and 

423.504(b)(4)(vi)(G)(4) to be submitted 

via the program integrity portal. We 

proposed that MA organizations and 

Part D plan sponsors would have to 

submit the data elements, specified later 

in this section, in the program integrity 

portal when reporting payment 

suspensions pending investigations of 

credible allegations of fraud by 

pharmacies; information related to the 

inappropriate prescribing of opioids and 

concerning investigations and credible 

evidence of suspicious activities of a 

provider of services (including a 

prescriber) or supplier, and other 

actions taken by plan sponsors; or if the 

plan reports a referral, through the 

portal, of substantiated or suspicious 

activities of a provider of services 

(including a prescriber) or a supplier 

related to fraud, waste or abuse to 

initiate or assist with investigations 

conducted by CMS, or its designee, a 

Medicare program integrity contractor, 

or law enforcement partners. The data 

elements, as applicable, are as follows: 


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• Date of Referral 

• Part C or Part D Issue 

• Complainant Name. 

• Complainant Phone. 

• Complainant Fax. 

• Complainant Email. 

• Complainant Organization Name. 

• Complainant Address. 

• Complainant City. 

• Complainant State. 

• Complainant Zip. 

• Plan Name/Contract Number. 

• Plan Tracking Number. 

• Parent Organization. 

• Pharmacy Benefit Manager. 

• Beneficiary Name. 

• Beneficiary Phone. 

• Beneficiary Health Insurance Claim 

Number (HICN) 

• Beneficiary Medicare Beneficiary 

Identifier (MBI). 

• Beneficiary Address. 

• Beneficiary City. 

• Beneficiary State. 

• Beneficiary Zip. 

• Beneficiary Date of Birth (DOB). 

• Beneficiary Primary language. 

• Beneficiary requires Special 

Accommodations. If Yes, Describe. 

• Beneficiary Medicare Plan Name. 

• Beneficiary Member ID Number. 

• Whether the Beneficiary is a Subject. 

• Did the complainant contact the 

beneficiary? If Yes, is there a Report 

of the Contact? 

• Subject Name. 

• Subject Tax Identification Number 

(TIN). 

• Does the Subject have Multiple TIN’s? 

If Yes, provide. 

• Subject NPI. 

• Subject DEA Number. 

• Subject Medicare Provider Number. 

• Subject Business. 

• Subject Phone Number. 

• Subject Address. 

• Subject City. 

• Subject State. 

• Subject Zip. 

• Subject Business or Specialty 

Description. 

• Secondary Subject Name. 

• Secondary Subject Tax Identification 

Number (TIN) 

• Does the Secondary Subject have 

Multiple TIN’s? If Yes, provide. 

• Secondary Subject NPI. 

• Secondary Subject DEA Number. 

• Secondary Subject Medicare Provider 

Number. 

• Secondary Subject Business. 

• Secondary Subject Phone Number. 

• Secondary Subject Address. 

• Secondary Subject City. 

• Secondary Subject State. 

• Secondary Subject Zip. 

• Secondary Subject Business or 

Specialty Description. 

• Complaint Prior MEDIC Case Number. 

• Period of Review. 

• Complaint Potential Medicare 

Exposure. 

• Whether Medical Records are 

Available. 

• Whether Medical Records were 

Reviewed. 

• Whether the submission has been 

Referred to Law Enforcement. 

Submission Accepted? If so, provide 

Date Accepted. 

• What Law Enforcement Agency(ies) 

has it been Referred to. 

• Whether HPMS Analytics and 

Investigations Collaboration 

Environment for Fraud, Waste, and 

Abuse (AICE–FWA) was Used. 

• Whether the submission has indicated 

Patient Harm or Potential Patient 

Harm. 

• Whether the submission has been 

Referred. If so, provide Date 

Accepted. 

• What Agency was it Referred to. 

• Description of Allegations/Plan 

Sponsor Findings. 

We noted that the requirement for 

reporting payment suspensions pending 

investigations of credible allegations of 

fraud by pharmacies under new 

§ 422.503(b)(4)(vi)(G)(4) would only 

apply to Medicare Part C in the context 

of Medicare Advantage Prescription 

Drug Plans (MA–PD plans). We stated 

our belief that this information is 

necessary to enable CMS to fully and 

completely understand the identity of 

the applicable party, the specific 

behavior involved, and the status of the 

action. We solicited public comment on 

these requirements. 

We received several comments on the 

ability to impose payment suspensions 

on pharmacies and our responses to 

those comments follow. 

Comment: A commenter supported 

CMS’ implementation of the SUPPORT 

Act language that a fraud hotline tip, 

without further evidence, is not a 

credible fraud allegation for payment 

suspension purposes. However, the 

commenter was concerned that CMS did 

not include what guidelines should be 

taken into consideration for procedures 

and data collection. 

Response: We appreciate the 

commenter’s support. However, many 

plan sponsors currently implement 

payment suspensions based on credible 

allegations of fraud and other reasons 

that may be contractual in nature. We 

believe that plan sponsors have 

established procedures and data 

collection based on their existing 

internal policies and procedures and as 

part of their fraud, waste and abuse 

oversight and monitoring efforts. The 

data will be reported through a program 

integrity portal that is discussed further 

later in this regulation. 

Comment: Commenters requested that 

CMS further clarify the definition of a 

payment suspension, such as what 

entities are subject to payment 

suspensions, whether payment 

suspensions are applicable to 

physicians, and the applicable 

standards and responsible parties for 

making determinations. 

Response: We believe the proposed 

regulation is clear in defining that a Part 

D pharmacy payment suspension based 

on credible allegation of fraud is 

applicable to Part D pharmacies. 

Additionally, we believe the proposed 

regulation is clear in stating that Part D 

plan sponsors are responsible for 

determining if a payment suspension 

should be implemented. Part D plan 

sponsors currently impose payment 

suspensions for other reasons that may 

be contractual in nature. Part D plan 

sponsors are responsible for oversight of 

their contracted entities, such as 

pharmacy benefit managers (PBMs) and 

pharmacies, and have established 

policies and procedures in their 

contractual arrangements. 

Comment: A commenter 

recommended that CMS consider a 

targeted approach to payment 

suspensions, which would include 

pharmacy claim adjudications 

suspensions that would allow nonproblematic claims from suspected 

pharmacies to be processed and paid. 

Another commenter questioned if CMS 

will have a process to reverse or deny 

payments. 

Response: Part D plan sponsors and 

MA–PD plans have the authority to 

impose payment suspensions based on 

a credible allegation of fraud. However, 

Part D plan sponsors and MA–PD plans 

also may consider a targeted approach 

to payment suspensions pursuant to 

contractual agreements. Part D plan 

sponsors and MA–PD plans are 

responsible for oversight of their 

contracted entities, such as PBMs and 

pharmacies, and have established 

policies and procedures in their 

contractual arrangements. 

Comment: A commenter opposed 

CMS’ proposal to suspend payments to 

fee-for-service (FFS) providers and 

suppliers pending a credible allegation 

of fraud, given that patients and 

providers can be at risk for an uncertain 

amount of time. The commenter also 

opposed the definition for credible 

allegation of fraud based on the need to 

establish clear guidance on how long a 

payment suspension will last and the 

concern that LTC’s will be financially 

liable. 


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Response: We appreciate this 

feedback; however, although we 

proposed a modification to the reference 

to fraud hotline complains in 42 CFR 

405.370, our proposal did not discuss 

payment suspensions for fee-for-service 

providers generally. Instead, the scope 

of this rule is limited to payment 

suspensions imposed on pharmacies by 

Part D plan sponsors. Part D plan 

sponsors currently conduct pharmacy 

payment suspensions based on credible 

allegations of fraud. This final rule is 

requiring Part D plan sponsors to report 

to CMS any pharmacy payment 

suspensions based on credible 

allegations of fraud through a website 

portal. The length of a payment 

suspension may vary based on the 

situation and the plan sponsors own 

business agreements. 

Comment: We received a couple of 

comments regarding how the reporting 

of payment suspensions may interfere or 

preempt state-level requirements 

regarding payment to pharmacies. 

Response: We have contractual 

agreements with the Part D plan 

sponsors and do not oversee contractual 

relationships between a plan sponsor, 

PBM and participating pharmacies. Part 

D Plan sponsors already have the 

authority to implement payment 

suspensions for pharmacies based on 

credible allegations of fraud. However, 

Section 2008 of the SUPPORT Act 

requires Part D plan sponsors to report 

those payment suspensions to the 

Secretary. 

The requirement for Part D plan 

sponsors to report pharmacy payment 

suspensions based on credible 

allegations of fraud does not replace 

state law and this new federal 

requirement will not affect existing state 

statutes and regulations. We believe 

addressing specific state statutes and 

regulations are outside the scope of this 

regulation. 

Comment: We received several 

comments expressing concerns with 

ensuring pharmacies have due process 

rights, an appeals process and advance 

notice prior to implementing a payment 

suspension. One commenter opposed 

this proposed regulation because it lacks 

fundamental due process protections for 

pharmacies. Another commenter noted 

that pharmacies should not be subject to 

payment suspension without greater 

certainty of fraud. Additionally, the 

commenter noted that pharmacies 

should receive advance notice of 

potential allegations of fraud and 

afforded an expeditious appeals process 

prior to any payment suspension. 

Commenters also noted that payment 

suspensions should not occur until 

there is legal evidence and also 

requested that CMS provide guidance 

on ensuring that plan actions against 

pharmacies are fully grounded with 

evidence and provides pharmacies the 

ability to quickly address complaints 

and prevent suspension of payment. 

Response: Section 2008 authorizes 

Part D sponsors and MA–PD plans to 

suspend payments based on a credible 

allegation of fraud. Part D plan sponsors 

and MA–PD plans may currently 

impose payment suspensions for other 

reasons that may be contractual in 

nature. We have clarified the definition 

for credible allegation of fraud, fraud 

hotline tip, and substantiated and 

suspicious activities of fraud, waste and 

abuse. We decline to accept the 

recommendation because Part D plan 

sponsors and MA–PD plans are 

responsible for oversight of their 

contracted entities, such as PBMs and 

pharmacies and have established 

policies and procedures in their 

contractual arrangements. 

We received a few comments on the 

data elements to be submitted by plans 

and our responses follow. 

Comment: A commenter 

recommended that CMS allow 

flexibility in submitting data elements 

and allow Part D sponsors to enter 

‘‘blank’’ fields if certain information is 

not available and not restrict the 

number of users. Commenter also 

recommended that information 

provided to Part D sponsors from the 

website portal be used for informational 

purposes only. However, if action is 

required on behalf of the Part D 

sponsors, then CMS should clearly 

specify. 

Response: In response to the 

comment, we are clarifying that plan 

sponsors will be provided reporting 

flexibility within the portal when 

information is not available or not 

relevant to the referral being reported. 

The comment also allowed us the 

opportunity to re-evaluate the level of 

detail that we were requiring in the 

regulatory text for the data reported. We 

are modifying the regulatory text to 

reflect broad categories of information 

that will be collected rather than 

individual data elements. The data 

categories, as applicable, include 

referral information and actions taken 

by the plan sponsor on the referral. 

Examples of the types of data to be 

collected in these categories include, 

but are not limited to, identifying 

information on the complainant, 

beneficiary, and subject of the referral, 

description of the referral (that is, 

services not rendered, prescriptions 

billed but the beneficiary never 

received, and identity theft), and any 

actions taken (that is, conducted an 

audit of the provider, referred the 

provider to the IMEDIC or Law 

Enforcement, or removed a provider 

from their network). The categories of 

data that we are making final in the 

regulatory text will provide flexibility. 

The commenter also inquired if action 

is required on behalf of the Part D 

sponsors based on information provided 

from the website portal. The quarterly 

reports we are sharing will assist plan 

sponsors with their monitoring and 

oversight efforts. These reports 

themselves are not a sufficient basis for 

a Medicare Part D plan sponsor to take 

action without conducting its own 

supporting analysis of specific data. We 

urge plan sponsors to confirm potential 

fraud waste and abuse through a 

reliance upon their own established 

protocols. Any actions taken as a result 

of the reports and the Sponsors followup activities should be reported through 

the website portal. We also note, in 

response to the commenter, that plan 

sponsors will also have the ability to 

allow access to multiple users. 

Comment: Commenters also requested 

that CMS clarify why the required data 

elements list both the HICN and the 

MBI. Commenters also requested 

clarification who should the reporting 

be submitted to and the method that 

should be utilized. 

Response: In response to the 

comment, we are clarifying that only the 

MBI will be utilized, as part of the broad 

category of referral information, to 

ensure that the beneficiary’s information 

is captured appropriately. Plan sponsors 

will be required to report information 

through the program integrity portal in 

HPMS. 

Based on the comments received and 

our responses we are modifying the 

regulatory text regarding the data to be 

reported. The final regulation text 

reflects the broad categories of data that 

CMS will employ in the construction of 

the data that will be required for plans 

to submit to the program integrity 

portal. In addition, the applicability 

date for plan sponsor reporting will be 

for plan years beginning on or after 

January 1, 2022 for reasons previously 

discussed in this section. 

(3) Timing of Plan Sponsor’s reporting 

We proposed in new 

§§ 422.503(b)(4)(vi)(G)(6)(i) and 

423.504(b)(4)(vi)(G)(6)(i) MA 

organizations and Part D plan sponsors 

would be required to notify the 

Secretary, or its designee of a payment 

suspension described in 

§§ 422.503(b)(4)(vi)(G)(4)(i) and 

423.504(b)(4)(vi)(G)(4)(i) 14 days prior 

to implementation of the payment 

suspension. This timeframe will allow 


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28https://www.federalregister.gov/documents/ 

2019/04/16/2019-06822/medicare-and-medicaidprograms-policy-and-technical-changes-to-themedicare-advantage-medicare. 

us to provide our law enforcement 

partners sufficient notice of a payment 

suspension to be implemented that may 

impact an ongoing investigation into the 

subject. We proposed that 

§§ 422.503(b)(4)(vi)(G)(6)(ii) and 

423.504(b)(4)(vi)(G)(6)(ii) plans would 

be required to submit the information 

described in 

§§ 422.503(b)(4)(vi)(G)(4)(ii) and 

423.504(b)(4)(vi)(G)(4)(ii) no later than 

January 30, April 30, July 30, and 

October 30 of each year for the 

preceding periods, respectively, of 

October 1 through December 31, January 

1 through March 31, April 1 through 

June 30, and July 1 through September 

30. We proposed that plans would be 

required to submit information 

beginning in 2021. For the first 

reporting period (January 15, 2021), the 

reporting will reflect the data gathered 

and analyzed for the previous quarter in 

the calendar year (October 1–December 

31). We believe that quarterly updates 

would be frequent enough to ensure that 

the portal contains accurate and recent 

data while giving plans sufficient time 

to furnish questioned information. We 

solicited public comment on the timing 

of reporting by plans 

We received several comments on the 

timing of reporting by plans and our 

responses to those comments follow. 

Comment: We received numerous 

comments regarding the 14-day advance 

notice to CMS for payment suspensions. 

Most commenters are concerned that 

this gives the bad actors too much time 

to continue the fraudulent activity 

which could result in millions of dollars 

lost, prevent overutilization of services 

and more importantly, beneficiary harm. 

A commenter suggested a 72-hour wait 

period instead of 14 days. Another 

commenter recommended allowing 

plans 72 hours to notify CMS after the 

suspension rather than 14 days prior to 

the suspension. One commenter 

recommended immediate payment 

suspension of pharmacies and then 

provide referral within 14 days to CMS. 

Another commenter mentioned that 

allowing plans to submit payment 

suspension immediately and provide an 

update monthly will reduce burden for 

plans sponsors and PBMs. Another 

commenter recommended CMS provide 

a list of providers for plans to review 

prior to initiation of a payment 

suspension which would require plans 

to notify the agency within 14 days 

prior to implementing. Additionally, if 

providers are not included in the 

notification plans would notify the 

agency within 5–10 days of the payment 

suspension which would align with 

many Medicaid state guidelines. 

Commenters also expressed confusion 

regarding whether plans were being 

prohibited from suspending 

immediately. Another commenter 

recommended removal of a suspension 

if it is determined that there is no good 

cause. 

Response: Based on comments 

received requesting a reduced timeframe 

for advance notice of imposing payment 

suspensions and balancing that with 

concerns raised by our federal law 

enforcement partners to ensure 

deconfliction, we will finalize the 

provision with a 7-day advance notice 

requirement with a limited exception. 

The advance notice provides 

collaboration and necessary 

deconfliction with law enforcement but 

also allows an exception for instances 

where more immediate payment 

suspension is warranted. For example, 

the exception would allow for 

immediate suspension when a plan has 

concerns regarding a credible allegation 

of fraud which may involve potential 

patient harm. 

Comment: Commenters also 

recommended that CMS allow 

exceptions from the proposed quarterly 

reporting when disclosure may 

jeopardize an ongoing investigation. 

Commenters also requested that CMS 

extend reporting to 30 days of the close 

of the quarter versus the proposed 15 

days to allow data gathering and quality 

assurance before the report submission. 

Response: Based on the comments 

received we will modify the proposed 

provision to extend the reporting 

timeframe for plan sponsors to 30 days 

after the close of the quarter. We will 

not modify to allow exceptions to the 

reporting requirement. Based on the 

comments received and our responses 

in this section we are finalizing the 

following two policies with 

modification. 

• We will require a 7-day advance 

notice with exemptions in certain cases, 

such as potential for beneficiary harm. 

• We will adjust the timeline for 

submission to 30 days after the close of 

the quarter. The applicability date for 

plan sponsor reporting has been 

postponed until January 1, 2022. 

(4) Requirements and Timing of CMS’ 

Reports 

As mentioned earlier in this final rule, 

section 6063(a) of the SUPPORT Act 

requires the Secretary make available to 

the plans, not less frequently than 

quarterly, information on fraud, waste, 

and abuse schemes and trends in 

identifying suspicious activity. The 

reports must include administrative 

actions, pertinent information related to 

opioid overprescribing, and other data 

determined appropriate by the Secretary 

in consultation with stakeholders. 

Moreover, the information must be 

anonymized data submitted by plans 

without identifying the source of such 

information. 

Section 6063 of the SUPPORT Act 

requires the Secretary provide reports 

no less frequently than quarterly. 

Consistent with this requirement, we 

proposed in the new 

§§ 422.503(b)(4)(vi)(G)(7)(i) through (iv) 

and 423.504(b)(4)(vi)(G)(7)(i) through 

(iv) that we will provide MA 

organizations and Part D plan sponsors 

with data report(s) or links to data no 

later than April 15, July 15, October 15, 

and January 15 of each year based on 

the information in the portal, 

respectively, as of the preceding October 

1 through December 31, January 1 

through March 31, April 1 through June 

30, and July 1 through September 30. 

We proposed to provide this 

information beginning in 2021. For the 

first quarterly report (April 15, 2021), 

the report will reflect the data gathered 

and analyzed for the previous quarter 

submitted by the plan sponsors on 

January 15, 2021. Similar to the timing 

requirements related to new 

§§ 422.503(b)(4)(vi)(G)(6)(ii) and 

423.504(b)(4)(vi)(G)(6)(ii), we believe 

that quarterly updates would strike a 

suitable balance between the need for 

frequently updated information while 

giving us time to review and analyze 

this data in preparation for complying 

with new §§ 422.503(b)(4)(vi)(G)(4) 

through (7) and 423.504(b)(4)(vi)(G)(4) 

through (7). We solicited public 

comment on the timing of CMS 

dissemination of reports to plans. 

We received no comments on this 

proposal and therefore are finalizing 

this provision without modification; 

however, the applicability date for the 

quarterly reports will be for plan years 

beginning on or after January 1, 2022 for 

reasons previously discussed. 

IV. Enhancements to the Part C and D 

Programs 

A. Out-of-Network Telehealth at Plan 

Option 

On April 16, 2019, CMS finalized 

requirements for MA plans offering 

additional telehealth benefits (ATBs).28

Section 50323 of the BBA of 2018 

created a new subsection (m) of section 

1852 of the Act, authorizing MA plans 

to offer ATBs to enrollees starting in 

plan year 2020 and treat ATBs as basic 

benefits. In the April 2019 final rule, we 

finalized a new regulation at § 422.135 


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to implement that authority. As part of 

the parameters for the provision of 

ATBs, we finalized a requirement, at 

§ 422.135(d), that MA plans furnishing 

ATBs only do so using contracted 

providers, and § 422.135 specifically 

provides that benefits furnished by a 

non-contracted provider through 

electronic exchange (defined in the 

regulation) may only be covered by an 

MA plan as a supplemental benefit. 

In the February 2020 proposed rule, 

we solicited comment on whether 

§ 422.135(d) should be revised to allow 

all MA plan types, including PPOs, to 

offer ATBs through non-contracted 

providers and treat them as basic 

benefits under MA. 

We received many responses to this 

request for comment. We thank the 

commenters for the time and effort that 

went into developing these detailed 

responses and feedback for CMS. We 

will carefully review and consider all 

input received from stakeholders as we 

determine whether to revise 

§ 422.135(d) to allow MA plans to offer 

ATBs through non-contracted providers. 

At this time, we are not revising any 

requirements at § 422.135, and any 

revisions regarding ATBs will be 

proposed through future notice and 

comment rulemaking. 

B. Supplemental Benefits, Including 

Reductions in Cost Sharing (§ 422.102) 

In the Medicare Program; 

Establishment of the Medicare 

Advantage Program Final Rule, 

published in the Federal Register on 

January 28, 2005 (hereinafter referred to 

as the January 2005 MA final rule) (70 

FR 4588, 4617), CMS established that an 

MA plan could reduce cost sharing 

below the actuarial value specified in 

section 1854(e)(4)(B) of the Act only as 

a mandatory supplemental benefit and 

codified that policy at § 422.102(a)(4). In 

order to clarify the scope of section 

1854(e)(4)(A) of the Act, we proposed in 

the February 2020 proposed rule to 

amend § 422.102(a)(4) and add new 

rules at § 422.102(a)(5) and (a)(6)(i) and 

(ii) to further clarify the different 

circumstances in which an MA plan 

may reduce cost sharing for covered 

items and services as a mandatory 

supplemental benefit; we also proposed 

to specifically authorize certain 

flexibility in the mechanisms by which 

an MA plan may make reductions in 

cost sharing available. 

Currently, reductions in cost sharing 

are an allowable supplemental benefit 

in the MA program and may include: 

• Reductions in the cost-sharing for 

Parts A and B benefits compared to the 

actuarially equivalent package of Parts 

A and B benefits; and 

• Reductions in cost-sharing for Part 

C supplemental benefits, for example 

provided for specific services for 

enrollees that meet specific medical 

criteria, such that similarly situated 

enrollees (that is, all enrollees who meet 

the identified criteria) are treated the 

same and enjoy the same access to these 

targeted benefits. 

We proposed to codify regulation text 

to clarify that reductions in cost sharing 

for both (1) Part A and B benefits and 

(2) covered items and services that are 

not basic benefits are allowable 

supplemental benefits but may only be 

offered as mandatory supplemental 

benefits at § 422.102(a)(4) and (5). We 

proposed to revise the current language 

at § 422.102(a)(4) by inserting the phrase 

‘‘for Part A and B benefits’’ after the cite 

to section 1854(e)(4)(A) of the Act, and 

to add a new paragraph (a)(5) to specify 

that reduced cost sharing may be 

applied to items and services that are 

not basic benefits. Under our proposal, 

the reductions in cost sharing for both 

categories may only be provided as a 

mandatory supplemental benefit. 

We explained in the proposed rule 

that MA plans may currently choose to 

structure mandatory supplemental 

benefits that are in the form of cost 

sharing reductions in a few ways. For 

example, the current rules permit MA 

plans to offer, as a supplemental benefit, 

a manual reimbursement process or use 

of a debit card to reduce cost sharing 

towards plan covered services or to 

provide coverage of 100 percent of the 

cost of covered items. MA plans may 

also decide to offer, as a supplemental 

benefit, a reduction in enrollee’s costs 

through a maximum allowance. An MA 

plan may establish a dollar amount of 

coverage that may be used to reduce 

cost sharing towards plan covered 

services and subject to a planestablished annual limit; enrollees can 

‘‘spend’’ the allowance on cost sharing 

for whichever covered benefits the 

enrollee chooses. In both scenarios, MA 

plans are expected to administer the 

benefit in a manner that ensures the 

debit card and/or allowance can only be 

used towards plan-covered services. We 

proposed to codify these flexibilities in 

how reductions in cost sharing are 

offered at § 422.102(a)(6)(i) and (ii). We 

clarified in the proposed rule that these 

flexibilities are only for Part C 

supplemental benefits, as defined in 

§ 422.100(c) and discussed in section 

VI.F. of the proposed rule (and section 

V.E. of this final rule) and that cost 

sharing for Part D drugs is not included 

in these flexibilities. 

As proposed, the flexibilities 

identified would be permitted only as a 

mandatory supplemental benefit, which 

is why we proposed to codify them in 

§ 422.102(a). Further, we explained that 

the flexibility was only for items and 

services that are identified in the MA 

plan’s bid and marketing and 

communication materials as covered 

benefits and proposed the regulation 

text using the terms ‘‘covered benefits’’ 

and ‘‘coverage of items and services’’ to 

make that clear. Under our proposal and 

consistent with current guidance in 

Chapter 4 of the Medicare Managed Care 

Manual, § 40.3 (allowing debit cards to 

be used for plan-covered over-thecounter (OTC) items under the 

conditions that the card is exclusively 

linked to the OTC covered items and 

has a dollar limit tied to the benefit 

maximum), MA plans would not be able 

to offer use of a debit card for purchase 

of items or services that are not covered. 

We stated that a debit card could be 

utilized as a reimbursement mechanism 

or as a means for the MA plan to make 

its payment for an item or service; in 

either case, the use of the card would 

have to be tied to coverage of the 

benefit. Like all other MA coverage, the 

flexibilities we proposed would be 

limited to the specific plan year and we 

clarified that this authority to use debit 

cards or a basket of benefits up to a set 

value from which an enrollee can 

choose cannot be rolled over into 

subsequent years. We proposed specific 

text in paragraph (a)(6) limiting these 

forms of supplemental benefits to the 

specific plan year to emphasize that 

rolling over benefits to the following 

plan year is not permitted. 

We explained in the proposed rule 

that for both benefit options, MA plans 

would have the flexibility to establish a 

maximum plan benefit coverage amount 

for supplemental benefits or a combined 

amount that includes multiple 

supplemental benefits, such as a 

combined maximum plan benefit 

coverage amount that applies to dental 

and vision benefits. We reiterated that 

plans may not offer reimbursement, 

including through use of a debit card, to 

pay for items and services that are not 

covered by the plan and that reductions 

in cost sharing as a supplemental 

benefit are subject to an annual limit 

that the enrollee can ‘‘spend’’ on cost 

sharing for whichever covered benefits 

the enrollee chooses. Under our 

proposal, MA plans could use a receiptbased reimbursement system or provide 

the dollar amount on a debit card 

(linked to an appropriate merchant and 

item/service codes) so that the enrollee 

may pay the cost sharing at the point of 

service. Our proposal was to codify and 

clarify existing guidance and practices 

and we stated that it was not expected 


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to have additional impact above current 

operating expenses. We also stated that 

the proposal would not impose any new 

collection of information requirements. 

We thank commenters for helping 

inform CMS’ Reductions in Cost Sharing 

policy. We received 11 comments on 

this proposal; we summarize them and 

our responses follow: 

Comment: Many comments were 

supportive of this proposal. 

Response: We thank commenters for 

their feedback. 

Comment: A commenter suggested 

CMS confirm that plans may implement 

allowances as a multi-year benefit. 

Response: We cannot confirm this and 

it would not be permitted. As proposed 

and finalized, the changes adopted here 

are for benefits offered in each plan year 

and cannot be rolled over or spread 

across multiple plan years. This is 

necessary for a number of reasons. CMS 

only has one-year contracts with MAOs; 

as such, there is no guarantee that a 

particular plan will continue into the 

following year. Additionally, there is 

also no guarantee an enrollee will 

remain in a plan from year to year as an 

enrollee has the option to change plans 

each year. Further, and more 

importantly, bids must be submitted by 

MA organizations each year, showing 

the revenue requirements for furnishing 

benefits for the contract year; bids are 

compared to benchmarks that are set 

each year and used to determine the 

amount of beneficiary rebates under 

§ 422.266. Under § 422.266, these 

rebates may be used to pay the premium 

for the supplemental benefits described 

in § 422.102(a)(6) or to buy down Part B 

or Part D premiums; use of the 

beneficiary rebate for payment of a 

premium for supplemental benefits in a 

different plan year is not permitted and 

would be inconsistent with the statutory 

requirement in section 1854(b)(1)(C) of 

the Act that MA plans provide the 

rebate to enrollees for the applicable 

year. It is not consistent with our 

regulations on bidding (§§ 422.250 

through 422.266) for an MA plan to 

have a multi-year benefit. 

Comment: A commenter suggested 

CMS allow plans to offer reductions in 

cost sharing for items and services that 

are not covered. This commenter also 

suggested CMS not subject reductions to 

cost sharing or allowances to an annual 

limit. 

Response: In order to have a reduction 

in cost sharing, there has to be a covered 

benefit. We allow plans to have a debit 

card to cover cost sharing but they must 

identify the benefits as covered either in 

the plan benefit package (PBP) category 

or notes in the bid. Consistent with this, 

all the items and services for which 

payment may be made (in the form of 

a reduction in cost sharing that would 

otherwise apply for the item or service 

or in the form of the MA plan’s payment 

of its share of the amount owed to the 

provider) must meet the requirements to 

be a supplemental benefit. These 

requirements are discussed in section 

V.C. of this final rule regarding our 

proposal to amend § 422.100(c)(2) to 

codify the requirements for 

supplemental benefits. 

Comment: A commenter requested 

CMS provide additional guidance on 

how plans can make sure that 

supplemental benefits furnished in the 

form of an allowance meet the 

‘‘primarily health related’’ requirement 

as enrollees typically have discretion in 

how they use these allowance-based 

dollars. 

Response: The MA plan must ensure 

that its coverage, whether through 

reimbursement or direct payment, of 

items and services is consistent with the 

rules for supplemental benefits. The 

flexibility provided in this allowance 

benefit to permit the enrollee to choose 

among covered benefits does not change 

the rules for what may be covered. For 

an MA plan that uses a receipt-based 

reimbursement method of administering 

this allowance benefit, the MA plan 

must ensure that the receipts support a 

determination that reimbursement is 

being provided only for items and 

services that are covered supplemental 

benefits. We understand that debit and 

stored value cards can be programmed 

to permit their use only for purchase of 

specific items and services and at 

certain locations, such as cost sharing 

payments at a physician’s office or 

payment for primarily health-related 

items such as bandages at a pharmacy. 

If an MA organization is unable to limit 

use of a debit or stored value card to the 

appropriate providers and covered 

benefits (such as through programming 

limits to certain merchant codes or 

inventory information approval system 

codes) to ensure compliance with 

§§ 422.100(c)(2) and 422.102(a), use of a 

debit or stored value card as a means of 

reimbursing or providing reductions in 

cost sharing may not be appropriate by 

that MA organization. We note that the 

Internal Revenue Service has provided 

guidance on how debit and stored value 

cards are permitted in connection with 

health savings accounts and flexible 

spending accounts when the cards are 

capable of being limited to qualified 

expenses; see, for example: Revenue 

Ruling 2003–43, 2003–21 I.R.B. 935, 

available at IRS.gov/pub/irs-drop/rr-03- 

43.pdf. We also clarify here that use of 

a stored value or debit card is not the 

covered supplemental benefit; such 

cards are only a means by which the 

MA plan makes direct payment to the 

provider for or reimbursement to the 

enrollee for the covered items and 

services. 

The covered items and services that 

are paid or reimbursed this way must 

meet the requirements and standards to 

be supplemental benefits (or to be basic 

benefits in the case of reducing the cost 

sharing for a Part A or B covered 

benefit). Related to this, we reiterate that 

that payment of or reimbursement of 

cost sharing for Part D benefits by an 

MA plan is not a permissible 

supplemental benefit. To clarify this, we 

are finalizing § 422.102(a)(5) with 

additional text that Part D cost sharing 

may not be reduced or paid as a Part C 

supplemental benefit. MA plans may, 

under § 422.266, use rebates to pay the 

premiums for Part D benefits, including 

the premiums for supplemental drug 

coverage described at § 423.104(f)(1)(ii). 

For more information on the types of 

items and services that may be covered 

by an MA plan as a supplemental 

benefit, we direct readers to the April 

27, 2018 memo titled ‘‘Reinterpretation 

of ‘‘Primarily Health Related’’ for 

Supplemental Benefits’’ and section V.C 

of this rule, which codifies those 

requirements for details. 

Comment: A commenter expressed 

concern about potential limits on these 

benefits and the idea that financial need 

must be proven in order to allow access. 

Response: Reduced cost sharing as a 

supplemental benefit must follow the 

requirements concerning supplemental 

benefits, which include uniformity 

requirements § 422.100(d) discussed in 

section V.C of this final rule. That is, if 

a plan chooses to offer reduced cost 

sharing as a supplemental benefit, it 

must be offered uniformly to plan 

enrollees. MA plans may not offer 

supplemental benefits based on 

financial need. Because of the unique 

nature of Special Supplemental Benefits 

for the Chronically Ill (SSBCI) and the 

statutory authority for those benefits to 

not be primarily health related, the 

recently adopted rule at 

§ 422.102(f)(2)(iii) permits an MA plan 

to consider social determinants of 

health as a factor to help identify 

chronically ill enrollees whose health 

could be improved or maintained with 

SSBCI. (85 FR 33801, 33804) However, 

MA plans may not use social 

determinants, such as financial need, as 

the sole basis for determining eligibility 

for SSBCI. 

Comment: A commenter mentioned 

that while stated in the preamble, CMS 

did not include specific regulation text 

stating that reduced cost sharing for 

basic benefits, specifically as it relates to 


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the value of Part A and B benefits, is 

permitted. 

Response: In the proposed rule, we 

included amendatory instructions to 

clarify that reductions in cost sharing 

for Part A and B benefits may only be 

offered as mandatory supplemental 

benefits at § 422.102(a)(4) and (5). 

Specifically, CMS proposed to revise the 

current language at § 422.102(a)(4) by 

inserting the phrase ‘‘for Part A and B 

benefits’’. (85 FR 9213) Thus, specific 

regulation text clarifying that reduced 

cost sharing for basic benefits, 

specifically for Part A and B benefits, is 

permitted as a supplemental benefit was 

included in the proposed language. We 

are finalizing this language. 

After consideration of the comments 

received and for the reasons outlined in 

the proposed rule and our responses to 

comments, we are finalizing the changes 

to § 422.102(a)(4) and (a)(6)(i) and (ii) as 

proposed and are adding language to 

§ 422.102(a)(5) further clarifying that 

cost sharing for Part D drugs is not 

included in these flexibilities. 

C. Referral/Finder’s Fees (§§ 422.2274 

and 423.2274) 

In the Medicare Program; Contract 

Year 2015 Policy and Technical 

Changes to the Medicare Advantage and 

the Medicare Prescription Drug Benefit 

Programs Final Rule, published in the 

Federal Register on May 23, 2014 (79 

FR 29960) (the May 2014 final rule), 

CMS codified rules in §§ 422.2274(h) 

and 423.2274(h) for MA organizations 

and Part D sponsors to pay agents and 

brokers for referrals of beneficiaries for 

enrollment in MA and Part D plans, also 

known as finder’s fees. Currently, under 

§§ 422.2274(h) and 423.2274(h), CMS 

sets a referral fee limit that reflects an 

amount CMS determined is reasonably 

expected to provide financial incentive 

for an agent or broker to refer a 

beneficiary for an enrollment into a plan 

that is not the most appropriate to meet 

his or her needs. This is consistent with 

sections 1851(j)(2) and 1860D–1(l) of the 

Act, which direct that the Secretary set 

limits on compensation to ensure that 

the use of compensation creates 

incentives for agents and brokers to 

enroll individuals in the Medicare 

Advantage plan that is intended to best 

meet their health care needs. In an 

HPMS memo dated May 29, 2020, CMS 

limited referral fees to $100 for MA 

plans and $25 for PDP plans. Since 

referral fees are part of the definition of 

the term compensation in §§ 422.2274 

and 423.2274, organizations may not 

pay independent agents more than the 

regulatory limits; CMS regulates referral 

fees as part of CMS’s regulations on the 

compensation paid by the plan to an 

agent/broker for an enrollment, even if 

referral fees are paid separately from 

commissions or compensation for 

completed enrollments. CMS explained 

in the February 2020 proposed rule that 

because referral fees are already 

incorporated into compensation, 

limiting the amount of a referral fee 

does not impact the statutory 

requirement that CMS guidelines for 

compensation to an agent or broke 

incentivize the agent or broker enrolling 

a beneficiary in the plan that best meets 

their health care needs. CMS also 

explained in the proposed rule that for 

captive and employed agents and 

brokers, who only sell coverage for one 

organization, referral fees would not 

have any impact on how much the 

captive or employed agent is himself or 

herself paid. 

Therefore, CMS proposed to remove 

§§ 422.2274(h) and 423.2274(h) and 

thereby eliminate the specific limitation 

on the amount a referral or finder fee 

paid by a plan to an agent or broker. 

CMS explained generally how the 

current regulation treats compensation 

as background for our proposal. As 

currently codified at §§ 422.2274(b) and 

423.2274(b), compensation for initial 

enrollments may not exceed the fair 

market value and compensation for 

renewal enrollments may not exceed 50 

percent of the fair market value. 

Compensation is defined in the same 

current regulation, at paragraph (a), as 

all monetary or non-monetary 

remuneration of any kind relating to the 

sale or renewal of a policy including, 

but not limited to, commissions, 

bonuses, gifts, prizes or awards, and 

referral or finder fees. By eliminating 

the individual referral fee limit, our 

proposal would restructure the 

regulation to only provide a limit on 

referral fees within the overall limit of 

Fair Market Value (FMV) that applies to 

all compensation. CMS proposed to 

clarify that MA organizations and Part D 

sponsors have the ability to compensate 

agents for referrals, provided that the 

total dollar amount does not exceed 

FMV. CMS explained that the primary 

value for this proposed additional 

flexibility would be in connection with 

independent agents, as CMS believes 

that for captive and employed agents, 

referral/finder fees do not play a factor 

in making sure the agent enrolls the 

beneficiary in the best plan, since 

captive and employed agents only sell 

for one organization. CMS therefore 

proposed to eliminate the current 

specific limit on finder or referral fees 

that is codified at paragraph (h). CMS 

also explained that because the 

definition of compensation already 

includes referral or finder fees (which 

CMS did not propose to change), the 

result of this specific proposal would be 

an overall limit on compensation for 

initial and renewal enrollments that 

would include finder or referral fees. In 

section VI.H. of the proposed rule, CMS 

proposed additional changes for 

§§ 422.2274(g) and 423.2274(g) 

regarding agent and broker 

compensation for Part C and Part D 

enrollments; and under those proposals, 

the definition of compensation would 

continue to include finder or referral 

fees. As a result, the limits on overall 

compensation continued to include 

finder or referral fees under the 

proposed rule. CMS solicited comment 

on whether removing the limit on 

referral/finder’s fees would generate 

concerns such as those discussed in the 

2010 Call Letter for MA organizations 

issued March 30, 2009; CMS’s October 

19, 2011, memo entitled ‘‘Excessive 

Referral Fees for Enrollments;’’ or the 

May 2014 final rule that codified the 

referral/finder’s fees limits in regulation. 

As background, these concerns included 

marketing practices designed to 

circumvent compensation limitations. 

The comments CMS received on this 

specific proposal regarding referral/ 

finders’ fees and our responses to them 

follow. 

Comment: Several commenters stated 

that referrals and enrollments are 

different activities and therefore, CMS 

should consider payment for these 

activities separately. The commenters 

pointed out that referrals are used to 

generate sales leads, that not all leads 

result in an enrollment, and when a lead 

does result in enrollment, referral and 

finder’s fees are typically not paid to the 

individual completing the sale. Some 

commenters pointed out that referral 

fees are not always provided to 

individuals as part of the compensation 

they are paid for an enrollment. The 

commenters suggested referral fees be 

removed from compensation and that a 

separate, reasonable limit be placed on 

referral fees. A commenter pointed out 

that the removal of the limit on referral 

fees would result in larger, wellfinanced health plans paying brokers 

more for referrals and that this would 

cause smaller health plans to lose out on 

broker referrals. 

Response: CMS agrees with the 

commenters that referral fees and 

compensation are different types of 

payments and that plans distinguish 

between referral fees for sales leads and 

compensation to agents and brokers for 

enrollments. We understand that 

referral fees are a distinct part of market 

practices which we have determined, 

based on comments, should not be 


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modified. We also realize that our 

proposal to remove specific limits on 

referral fees may put plans that can pay 

higher referral fees at an advantage over 

other plans. Based on the issues 

identified through comments we are 

maintaining the status quo. As such, 

CMS is finalizing a separate limit on 

referral fees in §§ 422.2274(f) and 

423.2274(f) and is codifying the dollar 

figures currently used as the limits for 

referral fees. The current sub-regulatory 

policy has in place a $25 referral fee 

limit for PDPs and a $100 referral fee 

limit for MA–PDs. The proposal was to 

remove the current limits since referral 

fees are part of compensation paid to an 

agent for an enrollment. However, 

commenters pointed out that referral 

fees are not always provided to 

individuals as part of the compensation 

they are paid for an enrollment. 

Therefore, we are finalizing a specific 

dollar limit on fees paid for a single 

referral, recommendation, provision (as 

in providing a lead), or other means of 

referring a beneficiary to an agent, 

broker or other entity for potential 

enrollment in a plan instead of 

finalizing our proposal. 

Section 1851(j)(2)(D) of the Social 

Security Act requires CMS to establish 

limitations to ensure that the use of 

compensation creates incentives for the 

agent/broker to enroll a beneficiary in a 

plan that best meets their needs. CMS 

does not require referral fees to be 

contingent on a beneficiary being 

enrolled in a plan because referral fees 

are essentially payments for sales leads. 

Plans may determine the circumstances 

as to when they pay referral fees (for 

example, based on whether the lead 

chooses to enroll in the plan), provided 

such payment is in accordance with the 

requirements in this final rule. 

Therefore, referral fees are a different 

type of payment than the payments that 

we regulate as compensation to an agent 

or broker for enrollment of a beneficiary 

in a plan. Based on this, CMS is 

finalizing changes to the definition of 

the term ‘‘compensation’’ (codified in 

§§ 422.2274(a) and 423.2274(a)) to 

remove referral or finder fees from the 

list of what compensation includes. As 

discussed in more detail in section V.E 

of this final rule, compensation as 

defined in paragraph (a) is regulated as 

payment that is based on enrollment in 

a plan. CMS is finalizing a new 

§§ 422.2274(f) and 423.2274(f) to 

provide that payments may be made to 

individuals for the referral, 

recommendation, provision, or other 

means of referring beneficiaries to an 

agent/broker or other entity for potential 

enrollment into a plan and that such 

payments may not exceed $100 for a 

referral into an MA or MA–PD plan and 

$25 for a referral into a standalone PDP. 

Comment: A commenter requested 

more transparency into payment of both 

referral fees and renewal fees. The 

commenter also suggested that CMS 

eliminate the renewal compensation for 

agents, stating that 98 percent of 

beneficiaries remain in the same plan or 

make a plan change to a ‘‘like’’ plan 

(that is, a plan that is similar enough to 

the previous plan that it does not result 

in a change of the renewal payment 

status to the agent/broker). The 

commenter stated that the renewal 

compensation created an un-level 

playing field between community-based 

non-profit plans and national 

competitors. 

Response: We believe that the 

commenter may be conflating referral 

fees and renewal compensation. Referral 

fees are paid by plans for sales leads 

while renewal compensation is paid by 

a plan to an agent or broker for 

enrollments. The dollar amount of the 

limit on referral fees under the current 

regulation was set by CMS in 

subregulatory guidance, applying the 

regulatory standard that referral fees not 

exceed an amount that could be 

reasonably expected to provide a 

financial incentive to enroll a 

beneficiary in a plan that is not 

appropriate to the beneficiary’s needs. 

Here, we are finalizing a specific dollar 

amount as the limit on referral fees: 

$100 for a referral into an MA or MA– 

PD plan and $25 for a referral into a PDP 

plan. Plans may pay an amount per 

referral that is less than this limit but 

must not pay more than this limit. By 

establishing a specific dollar limit for 

referral fees in regulation, CMS is 

creating a level playing field for all 

plans who pay referral fees according to 

this policy. CMS is not including any 

type of increase to the referral fees since 

referrals do not require the same type of 

effort or have the same requirements 

that are associated with compensation. 

The limit on renewal compensation is 

50 percent of the fair market value 

(FMV) set for initial enrollment year 

compensation, as provided in 

§§ 422.2274(b)(ii) and 423.2274(b)(ii) of 

the current regulations and in 

§§ 422.2274(d)(3) and 423.2274(d)(3) of 

this final rule. As defined in 

§§ 422.2274(a) and 423.2274(a) in this 

final rule, FMV is calculated each year 

by increasing the prior year’s FMV 

dollar amount by the MA Growth 

Percentage for aged and disabled 

beneficiaries, which is published for 

each year in the rate announcement 

issued pursuant to § 422.312. This 

provision permits a change each year in 

compensation to agents and brokers that 

aligns with the change in the growth of 

per capita costs. Agents provide 

valuable assistance to beneficiaries 

whether the beneficiary is enrolling into 

a plan for the first time or staying in 

their existing plan. Many beneficiaries 

depend on their agents to assist them in 

reviewing their choices each year and 

helping them make a determination on 

whether to remain in their existing plan 

or to move into a new plan. Renewal 

compensation provides an incentive to 

provide such assistance to enrollees and 

we believe such compensation is 

appropriate to limit under our statutory 

responsibility to regulate compensation 

for agents and brokers. In addition, 

permitting renewal compensation 

avoids providing an inadvertent and 

unintended incentive for agents and 

brokers to churn beneficiaries through 

new enrollments into different plans 

each year in order to generate stable 

income. 

After consideration of the comments 

and for the reasons outlined in the 

proposed rule, we are finalizing the 

definition of ‘‘compensation’’ 

(§§ 422.2274(a) and 423.2274(a)) 

without including referral and finder’s 

fees and are finalizing a new paragraph 

(f) in §§ 422.2274 and 423.2274 to 

impose specific limits on the payment 

amount for referral and finder’s fees for 

MA and Part D enrollments. 

D. Medicare Advantage (MA) and Part D 

Prescription Drug Program Quality 

Rating System (§§ 422.162, 422.164, 

422.166, 422.252, 423.182, 423.184, and 

423.186) 

1. Introduction 

In the April 2018 final rule, CMS 

codified at §§ 422.160, 422.162, 422.164, 

and 422.166 (83 FR 16725 through 83 

FR 16731) and §§ 423.180, 423.182, 

423.184, and 423.186 (83 FR 16743 

through 83 FR 16749) the methodology 

for the Star Ratings system for the MA 

and Part D programs, respectively. This 

was part of the Administration’s effort 

to increase transparency and give 

advance notice regarding enhancements 

to the Part C and D Star Ratings 

program. In the April 2019 final rule, 

CMS amended §§ 422.166(a)(2)(i) and 

423.186(a)(2)(i) to update the 

methodology for calculating cut points 

for non-Consumer Assessment of 

Healthcare Providers and Systems (nonCAHPS) measures by adding mean 

resampling and guardrails, codified a 

policy to adjust Star Ratings for 

disasters, and finalized some measure 

updates. In the June 2020 final rule, 

CMS finalized an increase in the weight 

of patient experience/complaints and 


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access measures from 2 to 4 for the 2023 

Star Ratings. To further increase the 

predictability and stability of the Star 

Ratings system, we also finalized our 

proposal to directly remove outliers 

through Tukey outlier deletion before 

applying the clustering methodology to 

calculate the cut points, but we delayed 

the application of Tukey outlier deletion 

until the 2022 measurement year which 

coincides with the 2024 Star Ratings. 

We also finalized the removal of the 

Rheumatoid Arthritis Management 

measure and updated the Part D Statin 

Use in Persons with Diabetes measure 

weighting category for the 2021 

measurement year and the 2023 Star 

Ratings. 

In the Medicare and Medicaid 

Programs; Policy and Regulatory 

Revisions in Response to the COVID–19 

Public Health Emergency Interim Final 

Rule placed on display at the Office of 

the Federal Register website on March 

31, 2020 (hereinafter referred to as the 

March 31st COVID–19 IFC), CMS 

adopted a series of changes to the 2021 

and 2022 Star Ratings to accommodate 

the disruption to data collection posed 

by the COVID–19 pandemic. The 

changes adopted in the March 31st 

COVID–19 IFC addressed the need of 

health and drug plans and their 

providers to adapt their current care 

practices in light of the public health 

emergency (PHE) for COVID–19 and the 

need to care for the most vulnerable 

patients, such as the elderly and those 

with chronic health conditions. In 

addition to needing to address data 

collections scheduled for 2020 during 

the initial part of the PHE, we believe 

that there will be changes in measurelevel scores because of increased 

healthcare utilization due to COVID–19, 

reduced or delayed non-COVID–19 care 

due to advice to patients to delay 

routine and/or elective care, and 

changes in non-COVID–19 inpatient 

utilization. We realize that this will 

impact the data collected during the 

2020 measurement year which will 

impact the 2022 Part C and D Star 

Ratings. Thus, as part of the March 31st 

COVID–19 IFC, we made some 

adjustments to account for the potential 

decreases in measure-level scores so 

health and drug plans can have some 

degree of certainty knowing how the 

Star Ratings will be adjusted and can 

continue their focus on patients who are 

most in need right now. 

Specifically, the March 31st COVID– 

19 IFC: 

• Eliminates the requirement to 

collect and submit Healthcare 

Effectiveness Data and Information Set 

(HEDIS) and Medicare Consumer 

Assessment of Healthcare Providers and 

Systems (CAHPS) data otherwise 

collected in 2020 and replaces the 2021 

Star Ratings measures calculated based 

on those HEDIS and CAHPS data 

collections with earlier values from the 

2020 Star Ratings (which are not 

affected by the PHE for COVID–19); 

• Establishes how we would calculate 

or assign Star Ratings for 2021 in the 

event that CMS’s functions had become 

focused on only continued performance 

of essential Agency functions and the 

Agency and/or its contractors did not 

have the ability to calculate the 2021 

Star Ratings; 

• Modifies the current rules for the 

2021 Star Ratings to replace any 

measure that had a systemic data quality 

issue for all plans due to the COVID–19 

outbreak with the measure-level Star 

Ratings and scores from the 2020 Star 

Ratings; 

• Replaces the measures calculated 

based on HOS data collections with 

earlier values that are not affected by the 

public health threats posed by COVID– 

19 for the 2022 Star Ratings in the event 

that we were unable to complete Health 

Outcomes Survey (HOS) data collection 

in 2020 (for the 2022 Star Ratings) due 

to the PHE for COVID–19; 

• Removes guardrails (i.e., measurespecific caps on cut point changes from 

one year to the next) for the 2022 Star 

Ratings by delaying their application to 

the 2023 Star Ratings; 

• Expands the existing hold harmless 

provision for the Part C and D 

Improvement measures to include all 

contracts for the 2022 Star Ratings; and 

• Revises the definition of ‘‘new MA 

plan’’ so that for purposes of 2022 QBPs 

based on 2021 Star Ratings only, new 

MA plan means an MA contract offered 

by a parent organization that has not 

had another MA contract in the 

previous 4 years, in order to address 

how the 2021 Star Ratings are based in 

part on data for the 2018 performance 

period. 

Please see the March 31st COVID–19 

IFC for further information on these 

changes for the 2021 and 2022 Star 

Ratings. In addition, the Medicare and 

Medicaid Programs, Clinical Laboratory 

Improvement Amendments (CLIA), and 

Patient Protection and Affordable Care 

Act; Additional Policy and Regulatory 

Revisions in Response to the COVID–19 

Public Health Emergency Interim Final 

Rule (CMS–3401–IFC) which appeared 

in the Federal Register on September 2, 

2020 (hereinafter referred to as the 

September 2nd IFC), modifies 

application of the extreme and 

uncontrollable circumstances policy for 

the calculation of the 2022 Part C and 

D Star Ratings to address the PHE for 

COVID–19 to: (1) Remove the 60 percent 

exclusion rule for cut point calculations 

for non-CAHPS measures; and (2) 

remove the 60 percent exclusion rule for 

the determination of the performance 

summary and variance thresholds for 

the Reward Factor. These changes were 

made by amending the regulations at 

§§ 422.166(i)(11) and 423.186(i)(9). 

In the February 2020 proposed rule, 

in addition to the policies addressed in 

the June 2020 final rule, we proposed to 

implement substantive updates to the 

specifications of the Health Outcomes 

Survey (HOS) outcome measures, add 

two new Part C measures to the Star 

Ratings program, clarify the rules 

around consolidations when data are 

missing due to data integrity concerns, 

and add several technical clarifications. 

We also proposed to codify additional 

existing rules for calculating MA 

Quality Bonus Payment (QBP) ratings. 

We proposed these changes to apply to 

the 2021 measurement period and the 

2023 Star Ratings, but as discussed in 

this final rule, we are finalizing these 

policies from the proposed rule (that is, 

data would be collected and 

performance measured) for the 2022 

measurement period and the 2024 Star 

Ratings. 

CMS appreciates the feedback we 

received on our proposals. In the 

sections that follow, which are arranged 

by topic area, we summarize the 

proposal and comments we received on 

each proposal and provide our 

responses. 

2. Definitions (§ 422.252) 

We proposed to amend the definition 

at § 422.252 for new MA plans by 

clarifying how we apply the definition. 

Under our proposed changes, New MA 

plan would mean a plan that: (1) Is 

offered under a new MA contract; and 

(2) is offered under an MA contract that 

is held by a parent organization defined 

at § 422.2 that has not had an MA 

contract in the prior 3 years. In addition, 

we proposed to add text to the 

definition to explicitly explain that the 

parent organization is identified as of 

April of the calendar year before the 

payment year to which the final QBP 

rating applies, and contracts associated 

with that parent organization are also 

evaluated using contracts in existence as 

of April of the 3 calendar years before 

the payment year to which the final 

QBP rating applies. 

Under our current policy, we identify 

the parent organization for each MA 

contract in April of each year and then 

whether any MA contracts have been 

held by that parent organization in the 

immediately preceding 3 years to 

determine if the parent organization 

meets the 3-year standard. For example, 


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29The following sentence is excluded from the 

regulatory text: Under our current policy, we 

identify the parent organization for each MA 

contract in April of each year and then whether any 

MA contracts have been held by that parent 

organization in the immediately preceding 3 years 

to determine if the parent organization meets the 3- 

year standard. 

if a parent organization is listed for an 

MA contract in April 2019, and that 

parent organization does not have any 

other MA contracts at any point during 

April 2017–April 2019, the plans under 

the MA contract would be considered 

new MA plans for 2020 QBP purposes. 

We received no comments on the 

proposed amended definition in 

§ 422.252 for a new MA plan and are 

finalizing the policy as proposed for the 

reasons outlined in the proposed rule 

and this final rule. However, we are not 

finalizing the last sentence included in 

the proposed regulation text because the 

proposed regulation text mistakenly 

included a sentence repeating how we 

would identify parent organizations in 

April of the calendar year before the 

payment year.29 Although we are 

finalizing this provision as applicable 

beginning January 1, 2022, we reiterate 

that it codifies current policies that have 

been in place since 2012 (76 FR 21486). 

In addition, we note that the regulation 

text finalized here includes the language 

adopted in the March 31st COVID–19 

IFC (CMS–1744–IFC) to govern how the 

definition is applied for 2021 Star 

Ratings (85 FR 19290). 

3. Contract Consolidations 

(§§ 422.162(b)(3)(iv), 

422.164(g)(1)(iii)(A), 423.182(b)(3)(ii), 

and 423.184(g)(1)(ii)(A)) 

The process for calculating the 

measure scores for contracts that 

consolidate is specified as a series of 

steps at §§ 422.162(b)(3) and 

423.182(b)(3). We proposed to add a 

rule to account for instances when the 

measure score is missing from the 

consumed or surviving contract(s) due 

to a data integrity issue as described at 

§§ 422.164(g)(1)(i) and (ii) and 

423.184(g)(1)(i) and (ii). CMS proposed 

to assign a score of zero for the missing 

measure score in the calculation of the 

enrollment-weighted measure score. We 

proposed that these rules would apply 

for contract consolidations approved on 

or after January 1, 2021. First, we 

proposed minor technical changes to the 

regulation text in §§ 422.162(b)(3)(iv)(A) 

and (B) and 423.182(b)(3)(ii)(A) and (B) 

to improve the clarity of the regulation 

text. Second, we proposed to 

redesignate the current regulation text 

(with the technical changes) as new 

paragraphs (b)(3)(iv)(A)(1) and 

(b)(3)(iv)(B)(1) and (b)(3)(ii)(A)(1) and 

(b)(3)(ii)(B)(1) of these regulations and 

to codify this new rule for contract 

consolidations approved on or after 

January 1, 2021 as 

§§ 422.162(b)(3)(iv)(A)(2) and 

(b)(3)(iv)(B)(2) and 

423.182(b)(3)(ii)(A)(2) and 

(b)(3)(ii)(B)(2). We also proposed an 

additional rule at §§ 422.164(g)(1)(iii)(A) 

and 423.184(g)(1)(iii)(A) to address how 

the Timeliness Monitoring Project 

(TMP) or audit data are handled when 

two or more contracts consolidate. We 

proposed that the TMP or audit data 

will be combined for the consumed and 

surviving contracts before carrying out 

the methodology as provided in 

paragraphs B through N (for Part C) and 

paragraphs B through L (for Part D). We 

proposed that these rules would apply 

for contract consolidations approved on 

or after January 1, 2021 and the 

proposed regulation text included 

language to that effect. We proposed to 

redesignate the current regulation text 

as new paragraphs (g)(1)(iii)(A)(1) and 

(g)(1)(ii)(A)(1) of these regulations and 

to codify this new rule for contract 

consolidations on or after January 1, 

2021 as paragraphs (g)(1)(iii)(A)(2) and 

(g)(1)(ii)(A)(2). 

In this section of this rule, we 

summarize the comments we received 

and provide our responses and final 

decisions. 

Comment: Commenters supported the 

proposals related to how to calculate 

scores when either the surviving or the 

consumed contract has a measure-level 

data integrity issue. A commenter 

recommended in these instances that 

the preview reports should include the 

combined TMP data for contracts that 

consolidate. 

Response: We appreciate these 

comments and will be combining the 

TMP data in preview reports for the 

surviving and consumed contracts. 

Summary of Regulatory Changes 

After consideration of the comments 

and for the reasons set forth in the 

proposed rule and our responses to the 

related comments, we are finalizing the 

changes as proposed to 

§§ 422.162(b)(3)(iv), 

422.164(g)(1)(iii)(A), 423.182(b)(3)(ii), 

and 423.184(g)(1)(ii)(A) with a revision 

to the applicable date. Given the timing 

of the finalization of this rule, we are 

finalizing the provisions as applying to 

contract consolidations that are 

approved on or after January 1, 2022. 

4. Adding and Updating Measures 

(§§ 422.164, 423.184) 

The regulations at §§ 422.164 and 

423.184 specify the criteria and 

procedures for adding, updating, and 

removing measures for the Star Ratings 

program. As discussed in the April 2018 

final rule, due to the regular updates 

and revisions made to measures, CMS 

does not codify a list in regulation text 

of the measures (and specifications) 

adopted for the MA and Part D Star 

Ratings Program (83 FR 16537). CMS 

lists the measures used for the Star 

Ratings each year in the Medicare Part 

C & D Star Ratings Technical Notes or 

similar guidance document with 

publication of the Star Ratings. In the 

February 2020 proposed rule, CMS 

proposed measure changes to the Star 

Ratings program for performance 

periods beginning on or after January 1, 

2021. 

a. Proposed Measure Updates—Updates 

to the Improving or Maintaining 

Physical Health Measure and Improving 

or Maintaining Mental Health Measure 

From the HOS (Part C). 

In accordance with § 422.164(d)(2), 

we proposed substantive updates to two 

measures from the Medicare Health 

Outcomes Survey (HOS): The Improving 

or Maintaining Physical Health measure 

and Improving or Maintaining Mental 

Health measure. 

First, we proposed to change the casemix adjustment (CMA) for these 

measures. Case-mix adjustment is 

critical to measuring and comparing 

longitudinal changes in the physical 

and mental health of beneficiaries 

across MA contracts. To ensure fair and 

comparable contract-level scores, it is 

important to account for differences in 

beneficiary characteristics across 

contracts for these two measures. CMS 

proposed to modify the current 

approach used for adjusting for 

differences in the case-mix of enrollees 

across contracts for these two measures. 

The proposed approach would improve 

the case-mix model performance and 

simplify the implementation and 

interpretation of case-mix results when 

particular case-mix variables, such as 

household income, are missing. The 

current method for handling missing 

case-mix variables results in a reduced 

number of case-mix variables used for a 

beneficiary because it does not use any 

of the case-mix variables in a group of 

adjusters if one is missing from the 

group (see 2021 Medicare Part C & D 

Star Ratings Technical Notes 

Attachment A for a full description of 

the current HOS case-mix 

methodology). CMS stated in the 

proposed rule that this ‘‘all-or-nothing’’ 

approach for each group of adjusters 

may not be as efficient as alternative 

approaches for handling missing casemix adjusters. Under the proposed 

change, when an adjuster is missing for 


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a beneficiary, it would be replaced with 

the mean value for that adjuster for 

other beneficiaries in the same contract 

who also supply data for the Improving 

or Maintaining Physical Health and 

Improving or Maintaining Mental 

Health measures. This proposed 

approach has been used for the 

Medicare Advantage and Prescription 

Drug Plan CAHPS surveys for many 

years (see 2021 Medicare Part C & D Star 

Ratings Technical Notes Attachment A 

for a description of the CAHPS case-mix 

methodology). In simulation models, 

this approach either outperformed the 

current approach for predicting 

outcomes or matched the current 

approach. The proposed rule also 

explained how the proposed approach 

is easier to implement than the current 

approach as replacing the missing 

adjuster values with the contract mean 

scores for those adjusters rather than 

deleting the grouping of adjusters is less 

burdensome because it involves fewer 

steps and is easier to replicate and 

understand. 

Second, we proposed to increase the 

minimum required denominator from 

30 to 100 for the two measures. The 

proposed increase to the minimum 

denominator would bring these 

measures into alignment with the 

denominator requirements for the 

HEDIS measures that come from the 

HOS survey and increase the reliability 

for these measures compared to the 

current reporting threshold of 30. 

In this section of this rule, we 

summarize the comments we received 

and provide our responses and final 

decisions. 

Comment: A majority of commenters 

expressed support for a simplified casemix methodology, increased minimum 

denominator, and CMS’s continued 

efforts to improve the quality and 

transparency of HOS measures. Some 

commenters stated that the new 

methodology for dealing with missing 

data will make the case-mix algorithm 

more accurate and help ensure fair and 

comparable contract level results by 

strengthening the measures’ ability to 

adjust for beneficiary level differences. 

A commenter suggested removing HOS 

measures from the Star Ratings entirely, 

but most who expressed concerns about 

the proposed changes recommended 

CMS move the two HOS outcome 

measures to the display page for 2 years 

to allow stakeholders sufficient time to 

review. Some commenters noted that 

these changes are substantive. 

Response: CMS appreciates the 

support for the proposed 

methodological changes. CMS agrees 

that the case-mix change is a substantive 

update as described at § 422.164(d)(2), 

so the provision there for placing an 

updated measure on the display page for 

at least 2 years prior to using the 

updated measure to calculate and assign 

Star Ratings applies. Thus, CMS will 

move these two HOS outcomes 

measures, Improving or Maintaining 

Physical Health and Improving or 

Maintaining Mental Health, as updated, 

to the display page for the 2024 and 

2025 Star Ratings. Though CMS has the 

option of retaining the current 

specifications of these outcome 

measures in Star Ratings while 

stakeholders review and study the 

updated measures, our regulations do 

not require their retention during this 

interim period. Given the importance of 

patient-reported outcome measures in 

the Star Ratings program, CMS is opting 

to let stakeholders review the updated 

measures on the display page without 

simultaneously considering an alternate 

specification in the Star Ratings. We 

explained in the April 2018 final rule 

that we may continue use of a legacy 

measure if the updated measure 

expands the population covered in the 

measure or the measure otherwise is 

critical to the Star Ratings (83 FR 

16537). 

Comment: A commenter stated that 

these two HOS measures reflect 

experiences, not outcomes, and 

therefore should not be weighted as 

outcome measures. Another commenter 

stated that it is inappropriate to assign 

self-reported measures the weight of 3. 

A few commenters suggested CMS 

reduce the weight of the two HOS 

outcome measures to 1.5 or 2. Several 

commenters requested CMS clarify the 

weight of the two updated measures 

once they are reintroduced to the Star 

Ratings. 

Response: The Improving or 

Maintaining Physical Health measure 

and Improving or Maintaining Mental 

Health measure both focus on key 

outcomes for a health plan: Improving 

or maintaining the physical health and 

mental health of its enrollees. These 

measures reflect the outcomes of the 

plan’s entire membership based on the 

members’ perceptions of their own 

health. Thus, these measures do not 

measure patient experiences or beliefs 

about the health plan but measure 

changes over 2 years in the physical and 

mental health status of the enrollees in 

an MA contract. The weights of 

measures are assigned by measure type 

as codified at § 422.166(e). These 

measures (Improving or Maintaining 

Physical Health and Improving or 

Maintaining Mental Health) are 

considered outcome measures; thus, as 

codified at § 422.166(e)(1)(i), they 

receive a weight of 3. Under CMS’s 

process to add, update, and remove 

measures used to calculate the Star 

Ratings codified at § 422.164, 

substantive updates to an existing 

measure result in the updated measure 

being on the display page for at least 2 

years prior to its reintroduction to the 

Star Ratings. For weighting purposes, a 

substantively updated measure is 

treated as a new measure, and as 

described at § 422.166(e)(2), will receive 

a weight of 1 for the first year in the Star 

Ratings. In subsequent years, an 

updated measure is assigned the weight 

associated with its category. Thus, the 

Improving or Maintaining Physical 

Health and Improving or Maintaining 

Mental Health measures will receive a 

weight of 1 in the 2026 Star Ratings and 

a weight of 3 in the 2027 Star Ratings 

and beyond. 

Comment: Several commenters 

expressed concern about the cultural 

relevance of the survey questions, the 

applicability of the two HOS outcome 

measures to the LIS/DE and disabled 

populations, and the robustness of the 

case-mix models to control for these 

differences. A commenter suggested the 

Improving or Maintaining Physical 

Health measure conflates functional 

status with health and pointed out that 

persons with functional limitations can 

still be in good health. Another 

commenter questioned the role of death 

in the statistical adjustment models that 

examine changes in expected physical 

health. 

Response: There continues to be 

additional work in the research 

community on both identifying the 

impact of social risk factors on health 

outcomes and how to best to control for 

their impact on clinical quality 

measurement such that comparisons 

across contracts yield accurate 

representations of true differences in 

quality as opposed to reflections of 

changes in the composition of 

beneficiaries within a contract or across 

contracts over time. CMS also continues 

to test and refine the HOS instrument 

with these issues in mind to ensure that 

survey questions are relevant to 

different populations. The current 

longitudinal measures, Improving or 

Maintaining Physical Health and 

Improving or Maintaining Mental 

Health, adjust for a wide variety of 

beneficiary demographic and 

socioeconomic characteristics to control 

for differences in these characteristics 

across contracts. MA organizations are 

held accountable for risk-adjusted 

changes in functioning, including 

mortality, because to ignore death as a 

physical health outcome would result in 

misleading results. We agree that people 

with functional limitations can be in 


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good health and this is accounted for in 

the Improving or Maintaining Physical 

Health measure since it examines 

person-level changes from a baseline 

period to a follow-up period 2 years 

later. The HOS methodology takes into 

account the case mix of enrollees within 

each plan and controls for pre-existing 

baseline differences, including age, 

sociodemographic characteristics, 

functional status, and chronic medical 

conditions as reported in the HOS 

survey, to statistically adjust each plan’s 

expected outcomes, including survival 

rate, based on national averages when 

calculating the results for Improving or 

Maintaining Physical Health. Mortality 

is not considered in the calculation of 

Improving or Maintaining Mental 

Health. 

Comment: Several commenters 

expressed concern about the HOS 

survey, including whether increasing 

the minimum denominator to 100 

would improve the stability of the 

specific measures. A few commenters 

urged CMS to consider an even larger 

increase. Another commenter 

recommended that CMS not implement 

the change until there is clear evidence 

it will enhance measure stability in the 

Star Ratings. Several commenters 

suggested involving stakeholders in 

future changes to the survey 

methodology, because of their 

implications for measures. Many 

commenters noted that these are 

significant changes to specifications, 

while additional changes may also be 

needed to improve the measures, such 

as to further increase reliability and 

stability of the measures. 

Response: We have considered 

stakeholder feedback in the 

development of measures of clinical 

outcomes in the Part C and Part D Star 

Ratings program. The HOS was 

developed over the course of 2 decades 

under the guidance of several Technical 

Expert Panels (TEPs) of industry experts 

and its survey questions are derived 

from well-established patient reported 

outcome measures (PROs) that reflect 

clinical standards. Patients are the 

ultimate source of information on 

patient outcomes and CMS is committed 

to developing meaningful measures for 

quality measurement and improvement 

that enhance outcomes for beneficiaries. 

CMS continues to solicit stakeholder 

feedback on PROs, most recently 

through the 2020 draft Call Letter dated 

January 30, 2019 and the Star Ratings 

TEP on April 30, 2019. Additionally, 

CMS routinely seeks broad stakeholder 

input regarding measure enhancements, 

while maintaining scientific objectivity 

and independence throughout the 

process. 

Our analyses do not show volatility of 

HOS measures in the Star Ratings, and 

in particular of the two outcome 

measures, which because of their weight 

in the Star Ratings calculation are of 

most concern to plans and sponsors. As 

an example, most plans maintained or 

gained stars on HOS measures between 

2019 and 2020, and while there is some 

movement in the Star Ratings, the 

change is generally not acute. Only one 

plan dropped from 5 stars to 1 star for 

Improving or Maintaining Physical 

Health, while 68 percent of plans had 

no change or an increase in stars for the 

measure, and 85 percent had no change 

or an increase in stars for Improving or 

Maintaining Mental Health. Analyses of 

movement in Star Ratings for these 

outcome measures do not raise concerns 

about stability, even over longer periods 

of time. 

While CMS does not have concerns 

about the stability of the two outcome 

measures derived from HOS, we 

understand how much plans have at 

stake in their HOS-derived Star Ratings. 

Out of an abundance of caution and to 

be responsive to stakeholder concerns, 

we are taking a number of steps. One is 

to increase the denominator size to 

further increase reliability. In addition, 

and as CMS stated in the 2021 Rate 

Announcement, we are exploring 

alternative PROs as potential 

replacements for the existing HOS 

outcome measures in the future; we are 

particularly interested in less complex 

replacements that would facilitate MA 

plans directing their quality 

improvement efforts on a health focus 

relevant to their enrollee population. 

Comment: A commenter suggested the 

HOS survey should not be fielded 

during the COVID–19 pandemic because 

of the burden the survey places on plan 

members and the impact of the 

pandemic on their health, and 

recommended that HOS baselines be 

considered unavailable through 2023. 

Response: As stated in the March 31st 

COVID–19 IFC (CMS–1744–IFC), CMS 

delayed the HOS survey for 2020 until 

the late summer so as not to risk the 

health and safety of survey vendor staff 

during the initial stages of the 

pandemic. Since survey vendors have 

put in place procedures to safely 

administer the surveys, consistent with 

the HPMS memo released on July 20, 

2020 titled ‘‘2020 Medicare Health 

Outcomes Survey (HOS) and HOSModified (HOS–M),’’ CMS fielded the 

HOS and HOS–M surveys in midAugust through mid-November of 2020. 

Longitudinal studies like the HOS are 

vital to understanding the immediate 

and long-term impacts of the COVID–19 

pandemic on beneficiaries and health 

care. The survey is voluntary for plan 

members so they are empowered to 

decide whether to respond. 

Comment: A commenter requested 

help identifying their members who 

complete the survey so that they can do 

a root-cause analysis of any issues 

reported or found. The commenter 

mentioned a long lag time of 

approximately 3 years between baseline 

survey administration and when plans 

receive results and requested real-time 

data on patient outcomes. 

Response: It is by design that CMS 

does not provide the identity of 

respondents until both baseline and 

follow-up surveying are complete in 

order to preserve the integrity of the 

sample and reliability of the results. 

Patient outcomes cannot be calculated 

using only baseline data, since the 

outcomes measured through this survey 

are the changes in physical and mental 

health status over time. It is important 

to protect the confidentiality of the 

survey respondents to limit the 

possibility of plans focusing solely on 

baseline survey respondents for quality 

improvement (in order to achieve higher 

scores) rather than a broad segment of 

the plan enrollment (which would 

improve the quality of care provided to 

the plan’s overall population). HOS is a 

cohort study, and each year, the survey 

is administered to a new cohort, or 

group, from each contract both at the 

beginning and end of a 2-year period. 

The analysis of longitudinal data is 

complex, but CMS is actively striving to 

decrease the timeframe between 

completion of follow-up survey data 

collection and distribution of 

performance measurement data while 

maintaining the usefulness, reliability, 

and accuracy of the measures. In 

addition, CMS is working toward 

improved presentation of HOS 

performance measurement results that 

will include updates to the annual 

baseline and performance measurement 

reports and enhancements to the HPMS 

HOS module, beginning in CY 2021. 

Comment: A few commenters 

requested as much detail be made 

public about the statistics for HOS as 

CMS publishes for CAHPS. 

Response: While the timing and 

presentation of HOS and CAHPS results 

differ, both surveys provide 

comprehensive information and reports 

to each contract describing contractspecific findings and also publish 

information about the methodology and 

case-mix adjustments. As HOS is a 

longitudinal survey and CAHPS is an 

annual, cross-sectional survey, there are 

differences in methodology and 

statistics. CMS provides stakeholders 

and the public with similar levels of 


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transparency and detail on both surveys. 

HOS case-mix variables are published in 

each contract’s Performance 

Measurement Report and coefficients 

are published on the HOS website and 

in Attachment A of the Star Ratings 

Technical Notes each year. Contractspecific baseline reports are currently 

distributed to plans in the spring of the 

year following baseline data collection. 

Performance Measurement reports are 

distributed in the summer of the year 

following follow-up data collection. Star 

Ratings data and aggregate score 

analysis reports are available in the HOS 

module in HPMS to allow easier data 

validation and score comparisons at the 

contract, state, region, and national 

levels for the core HOS physical and 

mental health outcome measures. 

Additional information about HOS and 

its methodology can be found at 

www.HOSonline.org. While there are 

differences, we believe that the extent 

and scope of HOS data provided to 

organizations is more than sufficient 

and comparable to the CAHPS data 

furnished to plans. 

Comment: A commenter expressed 

some concern about the overlap of 

existing measures with the measure 

proposed in the 2021 Advanced Notice. 

Response: In the 2021 Advance 

Notice, we stated that we planned to 

post the longitudinal Physical 

Functioning Activities of Daily Living 

(PFADL) change measure on the 2021 

and 2022 display pages and that we may 

consider that PFADL measure for the 

Star Ratings in the future, pending 

rulemaking. Prior to potentially 

proposing this measure through future 

rulemaking, CMS would submit this 

measure through the Measures Under 

Consideration process to be reviewed by 

the Measure Applications Partnership 

which is a multi-stakeholder 

partnership that provides 

recommendations to HHS on the 

selection of quality and efficiency 

measures for CMS programs, as required 

by Section 3014 of the Affordable Care 

Act. The 2021 Advance Notice also 

stated that given the complexities of the 

existing HOS measures, CMS is 

committed to exploring alternative 

PROs to replace the existing HOS 

outcome measures. We are particularly 

interested in replacements that would 

be simpler and more direct for plans to 

use and to focus their quality 

improvement efforts. If we propose to 

add the PFADL measure to the Star 

Ratings in future rulemaking, we will 

consider using it to replace existing 

measures. 

Summary of Regulatory Changes 

After consideration of the comments 

and for the reasons set forth in the 

proposed rule and our responses to the 

related comments summarized in this 

final rule, we are finalizing the 

proposed specification changes for the 

Improving or Maintaining Physical 

Health measure and Improving or 

Maintaining Mental Health measure but 

for measurement year 2022 instead of 

2021. These measures would be moved 

to display for the 2024 and 2025 Star 

Ratings as the case-mix specification 

change is substantive as described at 

§ 422.164(d)(2) and returned to the Star 

Ratings program for the 2026 Star 

Ratings. 

b. Proposed Measure Additions 

As discussed in the April 2018 final 

rule (83 FR 16440), new measures may 

be added to the Star Ratings through 

rulemaking and §§ 422.164(c)(3) and (4) 

and 423.184(c)(3) and (4) provide for 

reporting new measures on the display 

page for a minimum of 2 years before 

they are added to the Star Ratings 

program. In advance of adopting new 

measures through rulemaking, CMS also 

solicits feedback using the Advance 

Notice and Rate Announcement process. 

CMS is working with the National 

Committee for Quality Assurance 

(NCQA) to expand efforts to better 

evaluate a plan’s success at effectively 

transitioning care from a clinical setting 

to home. In the 2019 Call Letter, CMS 

discussed these two potential new Part 

C measures and finalized them in the 

2020 Call Letter for the 2020 display 

page, which used 2018 measurement 

year data. In the February 2020 NPRM, 

CMS proposed to add the HEDIS 

Transitions of Care and the HEDIS 

Follow-up after Emergency Department 

Visit for People with Multiple High-Risk 

Chronic Conditions measures to the 

2023 Star Ratings covering the contract 

year 2021 performance period. We 

stated that we would have these new 

Part C measures on the display page for 

3 years, starting with the 2020 display 

page, prior to adding them to the Star 

Ratings program. In addition, we also 

discussed in the proposed rule how we 

would follow the pre-rulemaking 

process that is used in other CMS 

programs under section 1890A of the 

Social Security Act. Both of these 

proposed measures were submitted and 

reviewed through that process. 

(1) Transitions of Care (Part C) 

The HEDIS Transitions of Care (TRC) 

measure is the percent of discharges for 

members 18 years or older who have 

each of the four indicators during the 

measurement year: (1) Notification of 

inpatient admission and discharge; (2) 

receipt of discharge information; (3) 

patient engagement after inpatient 

discharge; and (4) medication 

reconciliation post-discharge. The TRC 

measure was first placed on the 2020 

display page. 

We explained in the proposed rule 

how NCQA, based on stakeholder input, 

was exploring a few non-substantive 

measure specification changes. The first 

change, for all measure indicators, is to 

broaden the forms of communications 

from one outpatient medical record to 

other forms of communication such as 

admission, discharge, and transfer 

record feeds, health information 

exchanges, and shared electronic 

medical records. The second is to 

change the notifications and receipts 

from ‘on the day of admission or 

discharge or the following day’ to ‘on 

the day of admission or discharge or 

within the following two calendar days.’ 

A third is to change one of the six 

criteria of the Receipt of Discharge 

Information indicator from ‘instructions 

to the primary care providers or ongoing 

care provider for patient care’ to 

‘instructions for patient care postdischarge.’ We stated how these three 

changes are considered non-substantive 

since they include additional tests that 

would meet the numerator requirements 

as described at § 422.164(d)(1)(iv)(A), 

add alternative data sources as 

described at § 422.164(d)(1)(v), and do 

not change the population covered by 

the measure. Our proposal therefore was 

to adopt the TRC measure with or 

without the updates NCQA was 

considering at the time the proposed 

rule was issued. After publication of the 

NPRM, we also discussed this measure 

in the CY 2021 Advance Notice and 

Rate Announcement, reiterating how 

NCQA was considering these three nonsubstantive updates to the measure that 

we currently have on display. The 

comments CMS received to the CY 2021 

Advance Notice and Rate 

Announcement were similar to those 

being addressed here. These include 

requests for clarifications and additional 

time to implement the measure, as well 

as concerns about the coordination of 

information especially with out-ofnetwork providers. 

The intent of this measure is to 

improve the quality of care transitions 

from an inpatient setting to home, as 

effective transitioning will help reduce 

hospital readmissions, costs, and 

adverse events. The TRC measure 

excludes members in hospice and is 

based on the number of discharges, not 

members. Currently the TRC measure is 

on the display page and we proposed to 


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30http://store.ncqa.org/index.php/performancemeasurement.html#vol2). 

add this measure to the 2023 Star 

Ratings covering the contract year 2021 

measurement period. On July 1, 2020, 

NCQA published the HEDIS®

Measurement Year 2020 & Measurement 

Year 2021 Volume 2: Technical 

Specifications for Health Plans 30 which 

included the listed measure 

specification changes to be 

implemented for data collected in 2021 

covering the 2020 measurement period. 

Therefore, all three non-substantive 

updates have been adopted by the 

measure steward. 

In this section of this rule, we 

summarize the comments we received 

and provide our responses and final 

decisions. 

Comment: Many commenters fully 

support the intent of this measure 

which is to improve continuity of care 

for MA members as they transition from 

inpatient to outpatient settings. 

Response: CMS thanks commenters 

for the support of this measure. The 

TRC measure has been on the display 

page since 2020 covering the 2018 

measurement period and we believe it 

provides important information about 

MA plan quality. Under this final rule, 

CMS will keep this measure, with the 

updates NCQA finalized following the 

publication of the proposed rule, which 

included these measure specification 

changes to be implemented for data 

collected in 2021 covering the 2020 

measurement period. The TRC measure 

will remain on the 2023 display page 

(for the 2021 measurement year) in light 

of the timing of this final rule, and will 

move off the display page for the 2022 

measurement period for use in 

calculating the 2024 Star Ratings. 

Comment: Several commenters 

recommended that the measure 

indicators should include all providers 

who can appropriately support a 

beneficiary during a care transition, 

including providers other than PCPs. A 

commenter suggested that 

pharmaceutical outreach activities be 

included in the ‘patient engagement 

after discharge’ category. 

Response: The measure does allow for 

a variety of provider types and care 

providers to take action to meet the 

intent of the TRC indicators. However, 

the information that is used to meet the 

numerator of each indicator must be 

documented in the outpatient record 

that is accessible by the PCP or ongoing 

care provider. An ongoing care provider 

is defined as ‘‘the practitioner who 

assumes responsibility for the member’s 

care.’’ This definition is provided in the 

measure specifications and is 

intentionally broad because NCQA 

recognizes there are a variety of 

provider types who might be 

coordinating patient care. As proposed 

and adopted, the specifications for this 

measure do include a variety of 

providers that may be taking over the 

responsibility of managing the patient’s 

care. The TRC measure is for the most 

part focused on getting information into 

any outpatient record that is accessible 

to the PCP or ongoing care provider. 

Pharmaceutical outreach activities 

would be included in the ‘patient 

engagement after discharge’ category if 

they are included in the patient’s 

outpatient records. The Medication 

Reconciliation indicator is the only 

indicator where a provider type is 

specified for who can take action since 

it specifies that medications must be 

reconciled by a prescribing practitioner, 

clinical pharmacist, or registered nurse. 

Comment: A commenter argued that 

not only a patient’s PCP but their plan 

should be notified of an admission and 

a discharge. Another commenter 

suggested that notifications of inpatient 

admissions and discharges should 

prioritize alignment for dually eligible 

members (that is, both the patient’s 

Medicare and Medicaid providers 

should be notified). 

Response: CMS appreciates these 

comments and shared them with NCQA, 

the measure steward. Currently, the 

measure only focuses on notifications 

that go to the PCP or ongoing care 

provider. The measure is specified for 

Medicare plans, so plans will determine 

the provider that meets the intent of the 

measure (which may include Medicaid 

providers treating dually eligible 

enrollees). Although the measure only 

focuses on notifications that go to the 

PCP or ongoing care provider, there is 

nothing in this measure that would 

prevent notifications also going to the 

health plan, subject to otherwise 

applicable laws on privacy and 

disclosure of health information. 

Further, we still believe it is important 

to implement this measure since 

transitions from the inpatient setting 

often result in poor care coordination, 

including communication gaps between 

inpatient providers and the PCP or 

ongoing care provider; unplanned 

medication changes; incomplete 

diagnostic work-ups; and inadequate 

patient, caregiver, and provider 

understanding of diagnoses, medication, 

and follow-up needs. This measure will 

put more emphasis on these issues for 

both providers and health plans. 

Comment: Some commenters 

suggested that the original timeframe for 

notifications is too short, especially for 

out-of-network facilities. 

Response: In the proposed rule and in 

the 2021 Rate Announcement, we stated 

how NCQA is considering a revision to 

the timeframe for the Notification of 

Inpatient Admission and Receipt of 

Discharge Information indicators for this 

measure to ‘‘the day of admission or 

discharge, or within the following two 

calendar days.’’ This change clarifies 

expectations for documentation related 

to admissions or discharges that take 

place over the weekend. This change 

was approved by NCQA’s Committee on 

Performance Measurement following the 

release of the proposed rule and is 

included in the HEDIS® Measurement 

Year 2020 & Measurement Year 2021 

Volume 2: Technical Specifications for 

Health Plans released on July 1, 2020, to 

be implemented for data collected in 

2021 covering the 2020 measurement 

period. Starting with the 2022 Display 

measure, the TRC measure will include 

the expanded timeframe for the receipt 

of discharge information. 

Comment: Several commenters stated 

that the composite nature of the 

measure may not appropriately account 

for variation of performance on the 

different elements and may not allow 

for understanding of the individual 

components. A number of commenters 

suggested that the four components of 

the composite measure be reported as 

separate Star Ratings measures. 

Response: To minimize the number of 

new Star Rating measures to lessen 

complexity in the Star Ratings program, 

CMS is planning to average the four 

components into one composite 

measure for reporting in the Star Ratings 

program. Currently, the four 

components and the composite measure 

that combines the four components are 

reported on the display page. The four 

components of this composite measure 

will continue to be reported as separate 

measures on the display page so as to be 

available to plans for use in their quality 

improvement projects and to other 

stakeholders who want an additional 

breakdown of the data even though only 

the composite measure will be used in 

the Star Ratings. The composite measure 

will be displayed on Medicare Plan 

Finder as one measure focused on TRC 

to simplify the information publicly 

available on the website for consumers 

and so as not to overwhelm them with 

too many measures. This approach 

allows CMS to publicly report all 

included data, while directing 

audiences to the most helpful level of 

complexity for the reported results. 

Comment: Some commenters 

suggested the current Medication 

Reconciliation Post-Discharge measure 

should remain as a separate Star Ratings 

measure since they believe it drives 


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improved outcomes, while others 

recommended retiring the current 

Medication Reconciliation measure after 

implementation of the TRC measure. 

Ultimately, commenters requested to 

know what impact the introduction of 

the TRC measure will have on the 

current Medication Reconciliation 

measure. A commenter suggested that if 

the Medication Reconciliation measure 

is to be incorporated into the TRC 

measure, NCQA should continue to 

permit organizations to use the hybrid 

data collection method. 

Response: As noted in the proposed 

rule and the 2021 Rate Announcement, 

NCQA was considering revisions to the 

TRC measure to the requirement of 

using one medical record from a specific 

provider to, instead, allow numerator 

information to be captured from ‘‘the 

outpatient medical record as well as 

other information accessible to the 

primary care provider or ongoing care 

provider’’. This change, which is 

included in the HEDIS® Measurement 

Year 2020 & Measurement Year 2021 

Volume 2: Technical Specifications for 

Health Plans released on July 1, 2020, 

will be implemented for the 2020 

measurement year and enables the 

specification to capture additional 

communication forms (for example, 

admissions, discharges, and transfers 

feeds, shared electronic medical 

records) that occur regularly in the field 

and meet the intent of the TRC measure. 

This change also ensures that scores for 

the Medication Reconciliation PostDischarge component of the TRC 

measure and the scores for the 

standalone Medication Reconciliation 

Post-Discharge measure currently in the 

Star Ratings match exactly. As such, the 

additional stand-alone Medication 

Reconciliation Post-Discharge measure 

would no longer need to be separately 

reported by health plans. The hybrid 

option for reporting the Medication 

Reconciliation component of the TRC 

measure will remain for the foreseeable 

future. 

Comment: Some commenters stated 

that the recent changes to the TRC 

measure described in the proposed rule 

are substantive and so the measure 

should remain on the display page. 

Response: CMS believes that the 

updates to this measure are nonsubstantive since they add additional 

tests that would meet the numerator 

requirements as described at 

§ 422.164(d)(1)(iv)(A), include 

alternative data sources as described at 

§ 422.164(d)(1)(v), and do not change 

the population covered by the measure. 

As discussed in the April 2018 final 

rule, if additional codes are added that 

increase the number of numerator hits 

for a measure during or before the 

measurement period, such a change is 

not considered substantive because the 

sponsoring organization generally 

benefits from that change. In addition, 

the type of administrative change made 

here has no impact on the current 

clinical practices of the plan or its 

providers. However, CMS has decided 

to delay the implementation of this 

measure to the 2022 measurement year 

for the 2024 Star Ratings year given the 

timing of this final rule and in 

recognition of the challenges of 

implementing new measures during the 

COVID–19 pandemic. This will provide 

an additional year for plans prior to 

implementation in the Star Ratings 

program. 

Comment: A few commenters 

recommended that the TRC measure not 

be included in the Star Ratings until it 

is further improved. Other commenters 

noted that processes are not always in 

place to provide notifications to PCPs in 

a consistent or timely manner, 

especially for out-of-network facilities. 

A commenter suggested that this 

measure is primarily a measure of data 

interoperability and exchange 

capabilities between providers, 

capabilities which are not under plans’ 

control. Several commenters mentioned 

the substantial amount of medical 

review work entailed for this measure, 

especially for the notification of 

admissions and discharges. Plans often 

require physicians to submit records for 

abstraction which places a considerable 

burden on physician practices. In other 

words, although this measure is a plan 

measure, commenters pointed out that 

data collection is often the 

responsibility of physician groups and 

plans do not have sufficient control or 

involvement to achieve consistent high 

performance. Further, a commenter 

expressed concern that the measure 

moves away from NCQA’s focus on 

moving towards more digital measures. 

Several commenters requested further 

clarity on measure specifications such 

as how plans should indicate the use of 

other acceptable communication forms 

for this measure. 

Response: The intent of the TRC 

measure is to ensure a seamless 

transition from inpatient to outpatient 

settings for MA enrollees to improve the 

delivery and coordination of care 

following an inpatient stay. When a 

beneficiary moves from an inpatient to 

outpatient setting, there is often poor 

coordination of care, communication 

lapses between the inpatient and 

outpatient providers, inadvertent 

medication changes, and a lack of 

understanding among patients, 

caregivers, and providers about the 

follow-up and ongoing care needs 

following the hospitalization. Given the 

critical importance of a seamless 

transition from the inpatient to 

outpatient setting, CMS believes it is 

important to adopt the current measure 

and for plans to make sure their 

providers are ensuring that there is a 

seamless transition between the 

inpatient to outpatient setting. 

This measure is intended to address 

the very gaps in communication and 

interoperability that are noted in the 

comments. Unfortunately, the current 

state of standards and coding do not 

support a fully administrative or digital 

specification at this time. NCQA is 

continuing to work with standards 

developers on addressing this issue and 

will assess the feasibility of converting 

this measure to a fully administrative 

specification when the standards for 

information sharing and coding are 

updated to support such an approach. 

The measure assesses if the notification 

of admission or receipt of discharge 

information was received and 

documented within the timeframe 

specified in the measure and is agnostic 

about the form of communication for the 

Notification of Admission and Receipt 

of Discharge Information indicators. 

CMS shared these comments with 

NCQA, the measure steward, for 

consideration as they make future 

updates to this measure. 

Comment: Some commenters stated 

this measure focuses on documentation 

of events rather than the substance of 

the transition experience. 

Response: CMS believes this measure 

does focus on the substance and 

purpose of the transition experience, 

which is to improve health outcomes. 

The measure is not simply about 

documentation but about whether 

notification was made, discharge 

information was received, patients were 

engaged, and medication was 

reconciled. Poor hospital transitions are 

not only associated with poor health 

outcomes but also increased health care 

utilization and cost, duplicative medical 

services, medication errors, and 

increased emergency department visits 

and readmissions. Incentivizing better 

transition experiences, where these 

activities take place and are 

documented for a treating provider who 

furnishes post-discharge care, is an 

important goal served by this measure. 

Comment: A commenter suggested 

that I–SNP members should be excluded 

from the measure. 

Response: I–SNP members should be 

receiving the same care coordination as 

enrollees of other plan types so CMS 

believes it is appropriate to use this 

measure for such plans as well. NCQA 


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5924 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

31AHRQ. 2010. Multiple Chronic Conditions 

Chartbook. ‘‘2010 Medical Expenditure Panel 

Survey Data.’’ https://www.ahrq.gov/sites/default/ 

files/wysiwyg/professionals/prevention-chroniccare/decision/mcc/mccchartbook.pdf (Accessed 

January 11, 2017). 

32Agency for Healthcare Quality and Research 

(AHRQ). 2012. ‘‘Coordinating Care for Adults with 

Complex Care Needs in the Patient-Centered 

Medical Home: Challenges and Solutions.’’ https:// 

pcmh.ahrq.gov/sites/default/files/attachments/ 

coordinating-care-for-adults-with-complex-careneeds-white-paper.pdf. 

33Altman, R., J.S. Shapiro, T. Moore and G.J. 

Kuperman. 2012. ‘‘Notifications of hospital events 

to outpatient clinicians using health information 

exchange: A post-implementation survey.’’ Journal 

of Innovation in Health Informatics 20(4). 

34Coleman, E.A., R.A. Berenson. 2004. ‘‘Lost in 

transition: Challenges and opportunities for 

improving the quality of transitional care.’’ Annals 

of Internal Medicine 141(7). 

35 Dunnion, M.E., and B. Kelly. 2005. ‘‘From the 

emergency department to home.’’ Journal of Clinical 

Nursing 14(6), 776–85. 

36Rowland, K., A.K. Maitra, D.A. Richardson, K. 

Hudson and K.W. Woodhouse. 1990. ‘‘The 

discharge of elderly patients from an accident and 

emergency department: Functional changes and risk 

of readmission.’’ Age Ageing 19(6), 415–18. 

37Hastings, S.N., E.Z. Oddone, G. Fillenbaum, 

R.J. Sloane and K.E. Schmader. 2008. ‘‘Frequency 

and predictors of adverse health outcomes in older 

Medicare beneficiaries discharged from the 

emergency department.’’ Medical Care 46(8), 771– 

7. 

38Niedzwiecki, M., K. Baicker, M. Wilson, D.M. 

Cutler and Z. Obermeyer. 2016. ‘‘Short-term 

outcomes for Medicare beneficiaries after lowacuity visits to emergency departments and 

clinics.’’ Medical Care 54(5), 498–503. 

39Lehnert, T., D. Heider, H. Leicht, S. Heinrich, 

S. Corrieri, M. Luppa, S. Riedel-Heller and H.H. 

Konig. 2011. ‘‘Review: health care utilization and 

costs of elderly persons with multiple chronic 

conditions.’’ Medical Care Research & Review 68(4), 

387–420. 

has examined an exclusion for I–SNP 

members in the past and discussed this 

exclusion with its advisory panels. The 

panels agreed that I–SNP members 

should be included in the measure 

because this is a vulnerable population 

that requires care coordination. We 

agree with that conclusion and will use 

this measure for I–SNPs as well as other 

MA plans. 

Summary of Regulatory Changes 

After consideration of the comments 

and for the reasons set forth in the 

proposed rule and our responses to the 

related comments, we are finalizing the 

addition of the Transitions of Care (Part 

C) measure in the Star Ratings program 

with a delay of 1 year in light of the 

timing of this final rule. That is, CMS 

will implement this measure using data 

from the 2022 measurement year for the 

2024 Star Ratings year. This measure is 

currently on the display page with the 

current specifications. The Transitions 

of Care measure with the updates 

recently finalized by NCQA for the 2020 

measurement year will be on the display 

page for 2022 and 2023 before being 

used in the 2024 Star Ratings. By 

delaying the addition of this measure to 

the Star Ratings program until 2024 Star 

Ratings, this also allows plans more 

time in recognition of the challenges of 

implementing new measures in the 

program during the COVID–19 

pandemic. 

(2) Follow-Up After Emergency 

Department Visit for People With 

Multiple High-Risk Chronic Conditions 

(Part C) 

CMS proposed to add a new HEDIS 

measure assessing follow-up care 

provided after an emergency department 

(ED) visit for people with multiple highrisk chronic conditions. This measure is 

the percentage of ED visits for members 

18 years and older who have high-risk 

multiple chronic conditions who had a 

follow-up service within 7 days of the 

ED visit between January 1 and 

December 24 of the measurement year. 

The measure is based on ED visits, not 

members. Eligible members whose ED 

visits are used in the measure must have 

two or more of the following chronic 

conditions: Chronic obstructive 

pulmonary disease (COPD) and asthma; 

Alzheimer’s disease and related 

disorders; chronic kidney disease; 

depression; heart failure; acute 

myocardial infarction; atrial fibrillation; 

and stroke and transient ischemic 

attack. The following meet the criteria to 

qualify as a follow-up service for 

purposes of the measure: An outpatient 

visit (with or without telehealth 

modifier); a behavioral health visit; a 

telephone visit; transitional care 

management services; case management 

visits; and complex care management. 

Patients with multiple chronic 

conditions are more likely to have 

complex care needs, and follow-up after 

an acute event, like an ED visit, can help 

prevent the development of more severe 

complications. We proposed to add this 

measure to the 2023 Star Ratings 

covering the contract year 2021 

measurement period. 

In this section of this rule, we 

summarize the comments we received 

and provide our responses and final 

decisions. 

Comment: Many commenters fully 

support the intent of this measure 

which is to provide continuity and 

coordination of care to persons with 

multiple chronic conditions. 

Response: CMS thanks commenters 

for the support of this measure. 

Comment: Several commenters did 

not support the measure. Some 

suggested that the 7-day time period for 

receipt of a follow-up service is too 

short. Commenters argued that it can 

take more than 7 days for an ED claim 

to be processed and submitted to a plan, 

actions which must occur before a PCP 

is aware of a patient’s ED visit. They 

stated this situation is compounded by 

the fact that ED visits require no 

preauthorization, so a PCP has no 

forewarning of a potential ED visit. They 

stated that though there are many 

actions which define a follow-up 

service—such as outpatient or telehealth 

physical or behavioral health visits, 

phone visits, or care management 

services—the average time to schedule a 

follow-up meeting with a PCP is 

typically longer than 7 days. 

Response: CMS continues to believe 

that the measure is appropriate for use 

in the Star Ratings. This measure is 

focused on a very vulnerable population 

that should have prompt follow-up after 

a visit to the ED. The 7-day timeframe 

was recommended by NCQA’s advisory 

panels and chosen for its potential to 

improve quality of care, especially 

because patients with multiple chronic 

conditions who do not receive followup after visiting the ED show increased 

rates of hospital admissions and 30-day 

readmissions. In addition, the lack of 

real-time data exchange is a critical 

system issue that the NCQA advisory 

panels cited should be addressed by this 

measure. 

The Medicare population includes a 

large number of individuals and older 

adults with high-risk multiple chronic 

conditions who often receive care from 

multiple providers and settings and, as 

a result, are more likely to experience 

fragmented care and adverse healthcare 

outcomes, including an increased 

likelihood of ED visits.31 32 Medicare 

beneficiaries with multiple chronic 

conditions require high levels of care 

coordination, particularly as they 

transition from the ED to the 

community. During these transitions, 

they often face communication lapses 

between ED and outpatient providers 

and inadequate patient, caregiver and 

provider understanding of diagnoses, 

medication and follow-up 

needs.33 34 35 36 This poor care 

coordination results in an increased risk 

for medication errors, repeat ED visits, 

hospitalizations, nursing home 

admissions, and death.37 38 Medicare 

beneficiaries with multiple chronic 

conditions not only experience poorer 

health outcomes, but also greater health 

care utilization (for example, physician 

use, hospitalizations, ED use, and 

medication use) and costs (for example, 

medication, out-of-pocket, and total 

health care).39 Medicare beneficiaries 

with multiple chronic conditions are 

some of the heaviest users of high-cost, 

preventable services such as those 


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40CMS. 2012. Chronic Conditions among 

Medicare Beneficiaries, Chartbook, 2012 Edition. 

Baltimore, MD. https://www.cms.gov/researchstatistics-data-and-systems/statistics-trends-andreports/chronic-conditions/downloads/ 

2012chartbook.pdf (Accessed July 19, 2016). 

41Lochner, K.A., and C.S. Cox. 2013. Prevalence 

of multiple chronic conditions among Medicare 

beneficiaries, United States, 2010. https://

www.cdc.gov/pcd/issues/2013/12_0137.htm 

(Accessed January 11, 2017). 

42CDC. 2009. The power of prevention: Chronic 

disease . . . the public health challenge of the 21st 

century. http://www.cdc.gov/chronicdisease/pdf/ 

2009-power-of-prevention.pdf (Accessed January 

24, 2017). 

43Care Innovations. 2013. ‘‘Cost Control for 

Chronic Conditions: An Imperative for MA Plans.’’ 

The Business Case for Remote Care Management 

(RCM). https://www.rmhpcommunity.org/sites/ 

default/files/resource/The%20Business%20

Case%20for%20RCM.pdf (Accessed January 24, 

2017). 

offered by the ED.40 41 An estimated 75 

percent of health care spending is on 

people with multiple chronic 

conditions.42 43 Improving the timeliness 

of communications about ED care, as 

required to perform well on these 

measures, should not only improve care, 

but reduce costs as well. Because of this 

context, we believe that collection and 

use of this measure in the Star Ratings 

is important in order to incent contracts 

to provide the best care possible for 

vulnerable enrollees. 

Comment: Some commenters noted 

that the measure judges plans for 

actions that facilities must take. Plans 

stated they are not always informed by 

facility providers of ED visits, especially 

by out-of-network or out-of-area 

facilities. Plans claimed sending 

notifications of an ED visit is under the 

sole influence of the facility. On the 

other hand, facility providers argued the 

measure puts burden on them to 

provide information to the plans on a 

very quick basis. Both plans and facility 

providers stated that data sharing 

between plans and facilities is difficult. 

A commenter suggested this measure 

might be more suited as a facility 

quality measure. 

Response: CMS recognizes the 

challenges inherent in quickly and 

successfully communicating patient 

information among different types of 

providers. CMS believes, however, that 

plans are in a critical position to help 

coordinate the care of their members 

and help improve the timeliness and 

quality of the communications that 

occur among EDs, inpatient facilities, 

and outpatient providers. This is 

important because the Medicare 

population includes a large number of 

individuals and older adults with highrisk multiple chronic conditions (MCC) 

who often receive care from multiple 

providers and settings and, as a result, 

are more likely to experience 

fragmented care and adverse healthcare 

outcomes, including an increased 

likelihood of ED visits. NCQA’s first 

year analysis results for this measure 

indicated that most MA contracts 

(approximately 92 percent) were able to 

report a valid rate for the measure the 

first year that the measure was 

implemented. 

Comment: Some commenters wanted 

CMS to delay the inclusion of the 

measure in the Star Ratings program and 

suggested that it will take time to 

establish data sharing protocols among 

providers and facilities, especially with 

out-of-network facilities. They stated 

data sharing protocols are challenging. 

Response: The Follow-up after 

Emergency Department Visit for People 

with Multiple High-Risk Chronic 

Conditions measure was placed on the 

2020 display page covering the 2018 

measurement year. This measure was 

slated to remain on the display page 

through 2022. This measure, however, 

will remain an additional year on the 

display page since CMS is now delaying 

the implementation of this measure to 

the 2022 measurement or performance 

year and the 2024 Star Ratings year 

given the timing of this final rule. This 

gives plans more time to establish data 

sharing protocols that allow them to 

facilitate timely follow-up after ED 

visits. 

Comment: Some commenters 

requested modifications of the measure 

specifications. For example, some 

commenters wanted the list of services 

categorized as follow-up services 

expanded to include community 

resources, medication reconciliation, 

and services from long-term care 

facilities. Also, commenters suggested 

excluding patients released from the ED 

to skilled nursing facilities; not 

including managed long-term services 

and supports plans since they already 

have follow-up services in place; 

excluding inappropriate ED visits; 

excluding observations stays as a 

follow-up service; and including 

metabolic acidosis, cancer, and diabetes 

as chronic conditions. 

Response: The purpose of this 

measure is to focus on the care provided 

by MA plans. CMS is working to expand 

efforts to better evaluate health plans’ 

successes at effective care coordination, 

and we believe the addition of this 

measure will both add to our 

understanding of plan efforts to 

effectively coordinate care as well as 

encourage all plans to further focus on 

improving care coordination for their 

vulnerable enrollees. We have shared 

these comments with NCQA, the 

measure developer, and they will 

consider additional exclusions and 

inclusions for future updates to the 

measure, but we believe the measure as 

currently specified gets at the direct 

efforts of MA plans coordinating the 

care of Medicare enrollees with multiple 

high-risk chronic conditions following 

an ED visit. Therefore, we are adopting 

the measure for use in the Star Ratings 

program. 

Comment: A few commenters 

mentioned that since psychiatric 

diagnoses are always coded secondary 

to any physical diagnosis, there are 

HIPAA and confidentiality concerns 

about disclosing information on patients 

with secondary substance abuse or 

psychiatric diagnoses. Such disclosures 

require patient consent. In addition, 

some commenters stated that it can be 

difficult to accurately capture data to 

track appropriate follow-up psychiatric 

care given confidentiality concerns. 

Response: MA plans and providers 

must comply with applicable privacy 

and information protection laws and 

CMS is not providing guidance in this 

final rule on the specific assertions 

about restrictions under applicable 

privacy and information protection 

laws, such as HIPAA or 45 CFR part 2. 

However, the measure does not require 

a plan or facility to violate applicable 

law. CMS and NCQA will continue to 

monitor any issues that might arise due 

to patient confidentiality or consent 

with regard to information sharing. 

NCQA, in its testing protocols, has not 

observed this issue to cause any major 

barriers to reporting this measure to 

date. 

Comment: A couple of commenters 

recommended risk adjustment to 

account for plans with large low socioeconomic status, dual eligible and 

homeless populations. 

Response: We will include this 

measure as one of the candidate 

measures for the calculation of the 

Categorical Adjustment Index (CAI). As 

stated at §§ 422.166(f)(2)(iii) and 

423.186(f)(2)(iii), CAI values are 

determined using all measures in the 

candidate measure set after applying the 

following exclusions: The measure is 

already adjusted for socio-economic 

status, the measure focuses on a plan or 

provider-level issue, the measure is 

scheduled for retirement in the Star 

Ratings year that the CAI is being 

applied, or the measure is a SNP-only 

measure. It is also important to note that 

this measure focuses on prompt followup for beneficiaries with multiple 

chronic conditions which is a very 

vulnerable population. If additional risk 

factors such as low socio-economic 

status further increase these patients’ 

levels of vulnerability, it is even more 

critical for this population to have 


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prompt follow-up after visiting the ED. 

Further, this measure takes into account 

a wide variety of follow-up services to 

count, including telephone calls and 

telehealth visits, making it easier for the 

plan to tailor the follow-up to the 

enrollee or to specific enrollee 

populations. For example, if a 

beneficiary does not have transportation 

to get to an appointment with a 

provider, the follow-up can happen 

through a phone call with the provider. 

Comment: A couple of comments 

stated that no new measures should be 

introduced into the Star Ratings 

program this year given the COVID–19 

pandemic. 

Response: Under our proposal this 

measure was slated to remain on the 

display page through 2022 Star Ratings 

and be used for the 2023 Star Ratings. 

This measure, however, will remain on 

the display page through 2023 since 

CMS is now delaying the 

implementation of this measure to the 

2022 measurement year and the 2024 

Star Ratings as a result of the timing of 

this final rule. Additionally, this will 

give plans an additional year to adjust 

to this new measure given any 

challenges from the COVID–19 

pandemic. 

Summary of Regulatory Changes 

After consideration of the comments 

and for the reasons set forth in the 

proposed rule and our responses to the 

related comments summarized earlier in 

this final rule, we are finalizing the 

addition of the Follow-up after 

Emergency Department Visit for People 

with Multiple High-Risk Chronic 

Conditions (Part C) measure in the Star 

Ratings program beginning with the 

2022 measurement year and the 2024 

Star Ratings. This delay compared to 

our proposal addresses both the timing 

of this final rule and the recognition that 

it is more challenging to adapt to new 

measures during the COVID–19 

pandemic. 

The changes to the Star Ratings 

measures we are adopting in this final 

rule are summarized in Table D1. 

TABLE D1—NEW AND REVISED INDIVIDUAL STAR RATING MEASURES FOR PERFORMANCE PERIODS BEGINNING ON OR

AFTER JANUARY 1, 2022 

[The measure descriptions listed in this table are high-level descriptions. The Star Ratings measure specifications supporting document, Medicare Part C & D Star Ratings Technical Notes, provides detailed specifications for each measure. Detailed specifications include, where appropriate, more specific identification of a measure’s: (1) Numerator, (2) denominator, (3) calculation, (4) timeframe, (5) case-mix adjustment, 

and (6) exclusions. The Technical Notes document is updated annually, consistent with the applicable final rules adopting changes to the 

Star Ratings system. In addition, where appropriate, the Data Source descriptions listed in this table reference the technical manuals of the 

measure stewards. The annual Star Ratings are produced in the fall of the prior year. For example, Star Ratings for the year 2020 are produced in the fall of 2019. If a measurement period is listed as ‘the calendar year 2 years prior to the Star Ratings year’ and the Star Ratings 

year is 2020, the measurement period is referencing the 1/1/2018–12/31/2018 period.] 

Measure Measure description Domain 

Measure 

category 

and weight 

Data source Measurement period NQF endorsement 

Statistical 

method for 

assigning star 

ratings 

Reporting 

requirements 

by contract type 

Part C Measure 

Transitions of 

Care (TRC).

Percentage of discharges for members 18 years of age and older 

who had each of the following: 

(1) Notification of admission and 

post-discharge: (2) receipt of discharge information, (3) patient 

engagement, and (4) medication 

reconciliation.

Managing Chronic 

(Long Term) 

Conditions.

Process Measure: 

Weight of 1.

HEDIS * ....... The calendar year 

2 years prior to 

the Star Ratings year.

Not Available ....... Clustering ...... MA-PD and MAonly. 

Follow-up after ED 

Visit for People 

with Multiple 

High-Risk 

Chronic Conditions (FMC).

Percentage of emergency department (ED) visits for members 18 

years and older who have multiple high-risk chronic conditions 

who had a follow-up service within 7 days of the ED visit. Eligible 

members must have two or more 

of the following chronic conditions: COPD and asthma; Alzheimer’s disease and related disorders; chronic kidney disease; 

depression; heart failure; acute 

myocardial infarction; atrial fibrillation; and stroke and transient 

ischemic attack.

Managing Chronic 

(Long Term) 

Conditions.

Process Measure: 

Weight of 1.

HEDIS * ....... The calendar year 

2 years prior to 

the Star Ratings year.

Not Available ....... Clustering ...... MA-PD and MAonly. 

* NCQA HEDIS Measurement Year 2020 & Measurement Year 2021, Volume 2. 

5. Extreme and Uncontrollable 

Circumstances (§§ 422.166(i), 

423.186(i)) 

We proposed to modify 

§§ 422.166(i)(8) and 423.186(i)(6) to 

clarify the rules for how the adjustment 

for extreme and uncontrollable 

circumstances would apply where there 

are missing data, including data missing 

because of a data integrity issue as 

defined at §§ 422.164(g)(1) and 

423.184(g)(1). In addition, we solicited 

comment in the proposed rule on a 

previously adopted policy regarding 

application of the adjustment for 

extreme and uncontrollable 

circumstances where a contract’s service 

area was affected by disaster(s) in 

successive years, including whether 

additional changes were necessary. 

We explained in the February 2020 

proposed rule how we adopted the 

current policy for treating contracts 

impacted by separate disasters that 

occur in successive years taking into 

account concerns about looking back too 

many years for contracts affected by 

disasters multiple years in a row; we are 

also concerned about including too 

many measurement periods in 1 year of 

Star Ratings. We explained that the 

adjustment for extreme and 

uncontrollable circumstances also must 

consider operational feasibility, because 

using different thresholds for contracts 

affected by disasters in different ways 

would be very complicated for 

administration and for providing the 

necessary transparency to MA 

organizations, Part D plan sponsors, and 

beneficiaries who use and rely on the 

Star Ratings. We reiterated that we must 

balance concerns about using older data 

with concerns about using data based on 

performance that has been impacted by 


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consecutive disasters. We explained as 

well how we believe that the current 

regulation achieves an appropriate 

balance. 

We finalized in the April 2019 final 

rule a policy effective for the 2022 Star 

Ratings for contracts with at least 25 

percent of enrollees in FEMAdesignated Individual Assistance areas 

that were affected by different disasters 

for 2 consecutive years. Such multiple 

year-affected contracts will receive the 

higher of the current year’s Star Rating 

or what the previous year’s Star Rating 

would have been in the absence of any 

adjustments that took into account the 

effects of the previous year’s disaster for 

each measure. For example, if a 

multiple year-affected contract reverts to 

their 2021 Star Rating on a given 

measure for the 2022 Star Ratings, the 

2021 Star Rating is not used in 

determining the 2023 Star Rating; 

rather, the 2023 Star Rating is compared 

to what the contract’s 2022 Star Rating 

would have been, absent any disaster 

adjustments. 

The rule for treatment of multiple 

year-affected contracts was established 

to limit the age of data that will be 

carried forward into the Star Ratings. 

We use the measure score associated 

with the year with the higher measure 

Star Rating regardless of whether the 

score is higher or lower that year. We 

finalized this policy to address when 

contracts are affected by separate 

extreme and uncontrollable 

circumstances that occur in successive 

years for the adjustments to CAHPS, 

HOS, HEDIS, and other measures. The 

provisions at §§ 422.166(i)(2)(v), 

(i)(3)(v), (i)(4)(vi), and (i)(6)(iv) and 

423.186(i)(2)(v) and (i)(4)(iv) include 

this rule for how ratings for these 

measures are adjusted in these 

circumstances. We solicited comment 

on this policy and whether further 

adjustments are necessary. 

In this section of this rule, we 

summarize the comments we received 

and provide our responses and final 

decisions. 

Comment: A commenter appreciated 

CMS’s proposed amendment to add to 

§§ 422.166(i)(8) and 423.186(i)(6) to 

clarify that missing data include 

situations where there is a data integrity 

issue as defined at §§ 422.164(g)(1) and 

423.184(g)(1). 

Response: We appreciate the support 

for the data integrity policy. Sections 

422.166(i)(8) and 423.186(i)(6) currently 

provide that for an affected contract that 

has missing data in the current or 

previous year, the final measure rating 

comes from the current year unless an 

exemption described elsewhere in the 

regulation applies. We proposed a 

clarification and are finalizing changes 

to state that the term ‘‘missing data’’ 

under the rule includes data where 

there is a data integrity issue as defined 

in §§ 422.164(g)(1) and 423.184(g)(1). 

Under the rules as finalized, when there 

is a data integrity issue in the current or 

previous year, the final measure rating 

comes from the current year. 

Comment: A few commenters 

supported CMS’s policy to adjust Star 

Ratings for FEMA-designated Individual 

Assistance area disasters for contracts 

that have been affected by consecutive 

year disasters and had at least 25 

percent of enrollees residing in those 

areas. A commenter suggested CMS 

consider lowering this percentage if the 

situation warrants, and another 

requested that CMS drop the threshold 

for relief below the current 25 percent 

to determine the contracts impacted and 

the current 60 percent to exclude 

contracts from the cut point calculations 

for doubly-affected contracts or provide 

relief based on the proportion of 

members likely impacted. 

Response: We appreciate the support 

for the methodology for multiple yearaffected contracts codified at 

§§ 422.166(i)(2)(v), (i)(3)(v), (i)(4)(vi), 

and (i)(6)(iv) and 423.186(i)(2)(v) and 

(i)(4)(iv). We continue to believe that the 

25 percent threshold is appropriate in 

the vast majority of situations where the 

adjustment for extreme and 

uncontrollable circumstances would 

apply. The 25 percent threshold for 

measure star adjustments was codified 

in the April 2019 final rule to ensure 

that disaster adjustments are limited to 

contracts that we believe may have 

experienced a real impact from extreme 

and uncontrollable circumstance in 

terms of operations or ability to serve 

enrollees. We believe using the same 25 

percent threshold for multiple yearaffected disaster adjustments as for 

single year disaster adjustments is 

appropriate for the same reasons and to 

ensure administrative efficiency and 

transparency for applying this 

adjustment. We addressed similar 

concerns about the 25 percent threshold 

being too high in the April 2019 final 

rule (84 FR 15773 through 15774). The 

60 percent threshold for excluding 

numeric values for affected contracts 

from cut points and Reward Factor 

calculations was also codified in the 

April 2019 final rule; that threshold is 

not relevant to the adjustment for 

multiple year-affected contracts and we 

do not believe that it is necessary or 

appropriate to change that threshold 

here. We explained that threshold in the 

April 2019 final rule (84 FR 15771 

through 15774). 

Comment: A few commenters 

requested that CMS reconsider the 

current policy for adjusting Star Ratings 

calculations in consecutive years of 

extreme and uncontrollable 

circumstances and instead consider a 

multi-year lookback period, which 

would include the most recent period 

not impacted by extreme and 

uncontrollable circumstances. A 

commenter suggested CMS could use 

the parent organization average or the 

industry average instead. 

Response: As we stated in the April 

2019 final rule, we are concerned about 

looking back too many years for 

contracts affected by disasters multiple 

years in a row, as well as about 

including too many measurement 

periods in 1 year of Star Ratings. This 

could result in looking back different 

years for different contracts since we 

would need to look back to the latest 

year with no disasters for each contract. 

Carrying forward very old data into the 

Star Ratings for many years, especially 

in situations where large numbers of 

contracts are impacted by disasters in a 

given year or in areas that are more 

prone to disasters, could erode 

incentives for plans to provide high 

quality care for their beneficiaries even 

in the face of a disaster. 

Further, using a multi-year lookback 

for contracts affected by disasters would 

be operationally very complex since for 

each contract we could be comparing to 

a different year of data that is 

unaffected, in particular in areas that are 

prone to disasters, and could put CMS 

at risk of not producing Star Ratings in 

time for open enrollment. It would also 

make it difficult to provide transparency 

to plans and could be misleading to 

consumers. CMS has an obligation to 

ensure that Star Ratings data are useful 

for providing comparative plan 

information to beneficiaries because 

part of the purpose and authority for the 

Star Ratings is to provide comparative 

information to beneficiaries under 

sections 1851(d) and 1869D–1(c) of the 

Act. We strive to provide as up-to-date 

and accurate information on plan 

quality and performance as possible to 

beneficiaries. For areas that are prone to 

disasters in particular, beneficiaries 

deserve to have some indication if that 

means that the plan they are considering 

does not perform well when a disaster 

strikes or maintains high quality ratings 

despite those challenges. We finalized 

the existing policy for contracts that are 

affected by disasters in successive years 

in order to balance concerns about 

either using older data or using data 

based on performance impacted by 

consecutive disasters. 


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As to the suggestion to assign the 

parent organization average or industry 

average for contracts that have been 

impacted by disasters for multiple years, 

we do not believe this appropriately 

holds contracts accountable for their 

performance or allows them to 

distinguish themselves in disaster 

situations. We remind contracts that 

§§ 422.504(o) and 423.505(p) require 

MA organizations and Part D sponsors 

to develop, maintain, and implement a 

business continuity plan that ensures 

restoration of operations following 

disruptions such as disasters. Contracts 

are still responsible for providing care to 

their beneficiaries during disasters, so it 

would not be fair or appropriate to 

simply award them a rating that is based 

on the performance of other plans. 

Further, the Star Ratings are used for 

payment purposes and using the 

performance of other plans as the basis 

to award a quality bonus increase or 

increased rebate percentage to a contract 

is inconsistent with the purpose of those 

payment policies to reward MA 

organizations that excel. 

Comment: A commenter suggested 

CMS could consider a hold harmless 

provision for plans with significant 

losses in Star Ratings across the multiyear lookback period. 

Response: The disaster policies 

already address how extreme and 

uncontrollable circumstances may have 

a negative impact on the Star Ratings of 

an MA or Part D plan. We do not believe 

additional hold harmless provisions are 

needed for multiple year-affected 

contracts as it could weaken plan 

accountability and incentives to provide 

high quality care in disaster situations. 

Comment: Several commenters 

suggested CMS expand the current rule 

for contracts impacted by two different 

disasters in consecutive years to include 

contracts impacted by a single disaster 

spanning multiple years. 

Response: The introductory language 

of paragraph (i) of both §§ 422.166 and 

423.186 states that we use the incident 

start date to determine which year of 

Star Ratings can be adjusted for a 

particular disaster, regardless of 

whether the incident period lasts until 

another calendar year. As we explained 

in the April 2019 final rule (84 FR 

15774), in some cases the incident 

period end date changes, which would 

make it difficult operationally to 

determine which Star Ratings year is 

impacted. We believe limiting 

adjustments for a single disaster to 1 

year is appropriate to avoid adversely 

impacting CMS’s operational timelines 

for analyzing data and calculating Star 

Ratings. For example, if a disaster is 

extended into the next measurement 

year we would potentially need to 

recalculate and reissue ratings. We also 

want to limit the impact and effects on 

contracts that do meet the definition of 

‘‘affected contract.’’ We are concerned, 

for example, about the integrity of the 

ratings and reliability of the 

comparisons if cut points do not take 

into account the performance of an 

increasing number of affected contracts 

or if cut points have to be recalculated 

after they are released. We also want to 

preserve transparency of the Star 

Ratings for consumers by not using data 

from many different measurement years. 

Comment: A couple commenters 

requested clarification about how CMS 

handles situations where a contract is 

affected by multiple disasters in the 

same year. 

Response: We use the percent of 

enrollment impacted by qualifying 

disasters to determine eligibility for 

disaster adjustments. That is, contracts 

impacted by multiple qualifying 

disasters in the same year are eligible for 

the disaster relief as long as a total of 25 

percent or more of their enrollees reside 

in Individual Assistance areas. CMS 

rolls up the enrollment for each contract 

at the state/county level; when more 

than one enrollment period applies (that 

is, because the contract was affected by 

more than one disaster), an average of 

the enrollments from each of 

corresponding enrollment periods 

where the contract was affected is used 

to calculate the total percent of a 

contract’s enrollees in a FEMAdesignated Individual Assistance area 

during extreme and uncontrollable 

circumstances. This is described in 

detail in the Medicare Part C & D Star 

Ratings Technical Notes Attachment Q: 

Identification of Contracts Affected by 

Disasters (https://www.cms.gov/ 

Medicare/Prescription-Drug-Coverage/ 

PrescriptionDrugCovGenIn/ 

PerformanceData, page 143 of 2020 Star 

Ratings Technical Notes). 

Comment: We received a number of 

comments about the impact of COVID– 

19 on Star Ratings, for example asking 

whether and how CMS would adjust for 

the impact of COVID–19 for 2021 Star 

Ratings and beyond. 

Response: The public health 

emergency incident start date for 

COVID–19 was in 2020, so adjustments 

under the extreme and uncontrollable 

events policy at §§ 422.166(i) and 

423.186(i) will apply to the 2022 Star 

Ratings. The March 31st COVID–19 IFC 

addressed the immediate impact of the 

pandemic on the Part C and D Star 

Ratings program and made additional 

modifications for the 2022 Star Ratings, 

in recognition that the COVID–19 

pandemic may impact performance on 

the Star Ratings measures during the 

2020 measurement period. CMS will 

continue to monitor the impact of 

COVID–19 on the healthcare system and 

Part C and D plans. The September 2nd 

COVID–19 IFC modifies the calculation 

of the 2022 Part C and D Star Ratings to 

address the application of the extreme 

and uncontrollable circumstances 

policy. We direct readers to our 

summary of those two interim final 

rules with comment in section IV.D.1 of 

this final rule. 

Comment: Several commenters 

requested that CMS expand the current 

extreme and uncontrollable 

circumstance policy for single year 

disasters, for example to include HHSdeclared public health emergencies, Fire 

Management Assistance Grant (FMAG) 

declarations, governor declarations of a 

state of emergency, or state-level public 

health emergencies that extend beyond 

a national emergency period. A few 

stated if a contract gets the same Star 

Rating in both years, CMS should take 

the higher of the 2 years’ measure scores 

in order to ensure that plans and 

beneficiaries are truly held harmless in 

the event of a disaster. Several 

commenters suggested modifications to 

how the improvement measures are 

handled when there are disasters. For 

example, we received suggestions to 

hold contracts harmless in improvement 

when there are disasters. 

Response: The changes suggested by 

commenters for expanding the 

adjustments for single year disasters are 

significant in scope and of the type that 

would require analysis and 

consideration by CMS before proposing 

changes to the current regulations. As 

we noted in the April 2019 final rule (84 

FR 15773), we use the Star Rating for 

the measure-level comparison because 

the measure stars are used to calculate 

the overall Star Rating and the measurelevel cut points can change each year. 

We use the corresponding measure 

scores for improvement calculations in 

order to maintain consistency in the 

years being compared. We only revert to 

the previous year’s measure Star Rating 

if it is higher (§§ 422.166(i)(2)(iv), 

422.166(i)(3)(iv), 422.166(i)(4)(v), 

422.166(i)(6)(i), 423.186(i)(2)(iv), and 

423.186(i)(4)(i)). 

Summary of Regulatory Changes 

After consideration of the comments 

received and for the reasons outlined in 

the proposed rule and our responses to 

comments, we are finalizing the 

addition of §§ 422.166(i)(8) and 

423.186(i)(6) as proposed. These 

changes are applicable to the 2022 

measurement year and the 2024 Star 

Ratings. We do not believe additional 


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revisions to the rules for multiple yearaffected contracts described at 

§§ 422.166(i)(2)(v), (i)(3)(v), (i)(4)(vi), 

and (i)(6)(iv) and 423.186(i)(2)(v) and 

(i)(4)(iv) are necessary to address the 

impacts of the PHE for the COVID–19 

pandemic in light of the September 2nd 

COVID–19 IFC. 

6. Quality Bonus Payment Rules 

(§§ 422.162(b)(4) and 422.166(d)(2)(vi)) 

We proposed several amendments to 

§§ 422.162(b)(4) and 422.166(d)(2)(vi) to 

codify our current policies for using the 

Star Ratings to calculate quality bonus 

payment percentage increases (QBPs) 

and determine beneficiary rebates for 

MA organizations. 

The Affordable Care Act amended 

sections 1853(n) and 1853(o) of the Act 

to require CMS to make QBPs to MA 

organizations that achieve at least 4 

stars in a 5-star Quality Rating system. 

The Affordable Care Act also amended 

section 1854(b)(1)(C) of the Act to 

change the share of savings available to 

MA organizations and that they must 

provide to enrollees as the beneficiary 

rebate, mandating that the level of 

rebate is tied to the level of an MA 

organization’s QBP rating. As a result, 

beginning in 2012, quality as measured 

by the 5-star Quality Rating System 

directly affected the monthly payment 

amount MA organizations receive from 

CMS. At the time the QBPs were 

implemented, CMS codified at § 422.260 

an administrative review process 

available to MA organizations for 

payment determinations based on the 

quality bonuses. Historically, every 

November CMS has released the 

preliminary QBP ratings for MA 

contracts to review their ratings and to 

submit an appeal request under 

§ 422.260(c) if they believe there is a 

calculation error or incorrect data are 

used. 

In the April 2018 final rule, we 

codified at § 422.160(b)(2) that the 

ratings calculated and assigned under 

this subpart are used to provide quality 

ratings on a 5-star rating system used in 

determining QBPs and rebate retention 

allowances. Historically, the QBP rating 

rules have been announced through the 

Advance Notice and Rate 

Announcement since section 1853(b) of 

the Act authorizes an advance notice 

and rate announcement to solicit 

comment for proposed changes and 

announce changes to the MA payment 

methodology. The QBPs are used as part 

of setting the MA benchmarks and 

capitation rates for counties (and thus, 

MA service areas) each year. As we have 

codified in regulation the methodology 

for the Star Ratings over the last couple 

of years, we proposed in the February 

2020 proposed rule to clarify the rules 

around assigning QBP ratings, codify 

the rules around assigning QBP ratings 

for new contracts under existing parent 

organizations, and amend the definition 

of new MA plan that is codified at 

§ 422.252 by clarifying how we apply 

the definition. Our proposal was to 

codify current policy (for how we have 

historically assigned QBP ratings) as 

generally adopted and implemented 

through the section 1853(b) process, 

without substantive changes. 

Historically, for contracts that receive 

a numeric Star Rating, the final QBP 

rating released in April for the following 

contract year would be the contract’s 

highest rating as defined at § 422.162(a) 

(that is, overall or summary rating). 

Section 422.260(a) states that the QBP 

determinations are made based on the 

overall rating for MA–PDs and the Part 

C summary rating for MA-only 

contracts. We proposed to add language 

at § 422.162(b)(4) stating that for 

contracts that receive a numeric Star 

Rating, the final QBP rating is released 

in April of each year for the following 

contract year and that the QBP rating is 

the contract’s highest rating, as that term 

is defined at § 422.162(a). We also 

proposed to clarify in the regulation text 

that the QBP rating is the contract’s 

highest rating from the Star Ratings 

published by CMS in October of the 

calendar year that is 2 years before the 

contract year to which the QBP rating 

applies. For example, the 2020 QBPs 

were released in April 2019 and based 

on the Star Ratings published in October 

2018. For MA contracts that offer Part D, 

the QBP rating would be the numeric 

overall Star Rating. For MA contracts 

that do not offer Part D (MA-only, MSA, 

and some PFFS contracts), the QBP 

rating would be the numeric Part C 

summary rating. We also proposed 

adding language at § 422.162(b)(4)(ii) 

clarifying that the contract QBP rating is 

applied to each plan benefit package 

under the contract. 

We explained in the February 2020 

proposed rule that if a contract does not 

have sufficient data to calculate and 

assign Star Ratings for a given year 

because it is a new MA plan or low 

enrollment contract, § 422.166(d)(2)(v) 

provides the rules for assigning a QBP 

rating. That regulation references the 

definitions at § 422.252. We proposed to 

amend the definition at § 422.252 for 

new MA plans by clarifying how we 

apply the definition. We address that 

proposal in section IV.D.2 of this rule. 

We also proposed to add rules at 

§ 422.166(d)(2)(vi) for contracts that do 

not have sufficient data to calculate and 

assign ratings and do not meet the 

definition of either low enrollment 

contracts or new MA plans at § 422.252. 

Our proposal was to codify the policy 

that has been in place since the 2012 

Rate Announcement: Any new contract 

under an existing parent organization 

that has had MA contract(s) with CMS 

in the previous 3 years receives an 

enrollment-weighted average of the Star 

Ratings earned by the parent 

organization’s existing MA contracts. 

We also addressed that policy in a 

proposed rule for CY 2012 that appeared 

in the Federal Register on November 22, 

2010 (‘‘Medicare Program; Proposed 

Changes to the Medicare Advantage and 

the Medicare Prescription Drug Benefit 

Programs for Contract Year 2012 and 

Other Proposed Changes’’) (75 FR 

71190, 71219) and the related final rule 

that appeared in the Federal Register on 

April 15, 2011 (76 FR 21432, 21486 

through 21490). We explained in the 

February 2020 proposed rule that we 

intended for this policy to continue 

uninterrupted so that the calculation of 

QBPs remains stable and transparent to 

stakeholders. Codifying the policy 

explicitly, as well as how it is applied, 

would serve this purpose. 

We proposed to add at 

§ 422.166(d)(2)(vi)(A) that any new 

contract under an existing parent 

organization that has other MA 

contracts with numeric Star Ratings in 

November (when the preliminary QBP 

ratings are calculated for the contract 

year that begins 14 months later) would 

be assigned the enrollment-weighted 

average of the highest Star Rating of all 

other MA contracts under the parent 

organization that will be active as of 

April the following year. The Star 

Ratings used in this calculation would 

be the whole or half Star Ratings that are 

publicly displayed. For the 2021 QBPs, 

for any new contracts under an existing 

parent organization, we explained how 

the policy would be applied as follows: 

(i) We identify the parent organization 

of the new contract in November 2019. 

(ii) We identify the MA contracts held 

by that parent organization in November 

2019, when the preliminary 2021 QBP 

ratings are posted for review. For 

preliminary QBP ratings, we use the 

numeric Star Ratings for those MA 

contracts that were held by the parent 

organization in November 2019 that we 

anticipated to still be in existence and 

held by that parent organization in April 

2020. 

(iii) Using the enrollment in those 

other MA contracts as of November 

2019, we calculated the enrollmentweighted average of the highest Star 

Rating(s) of those MA contracts. 

(iv) In April 2020, we update the 

enrollment-weighted average rating 

based on any changes to the parent 


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organization of existing contracts, using 

the November 2019 enrollment in the 

contracts. The enrollment-weighted 

average rating includes the ratings of 

any contract(s) that the parent 

organization has acquired since 

November 2019. This enrollmentweighted average is used as the 2021 

QBP rating for the new MA contract 

under the parent organization for 

payment in 2021. We release these QBP 

ratings in April of the year before the 

payment year (for 2021 QBPs, in April 

of 2020). 

Because our proposal was to codify 

existing and current policy without 

change, we followed these steps to 

identify the QBP ratings for new 

contracts of existing MA parent 

organizations for 2021 QBPs. 

We proposed to add at 

§ 422.166(d)(2)(vi)(B) that if a new 

contract is under a parent organization 

that does not have any other MA 

contracts with numeric Star Ratings in 

November, CMS would look at the MA 

Star Ratings for the previous 3 years. 

The QBP rating would be the 

enrollment-weighted average of the MA 

contracts’ highest-level Star Ratings 

from the most recent year that had been 

rated for that parent organization. We 

explained using an example: If in 

November 2019 there were no other MA 

contracts under the parent organization 

with numeric 2020 Star Ratings, we 

would go back first to the 2019 Star 

Ratings and then the 2018 Star Ratings. 

Under our existing policy, and thus 

under the proposal, if there were MA 

contract(s) in the parent organization 

with Star Ratings in any of the previous 

3 years, the QBP rating was the 

enrollment-weighted average of the MA 

contracts’ highest Star Ratings from the 

most recent year rated. Under our 

existing policy, and thus under the 

proposal, the Star Ratings used in this 

calculation would be the rounded Star 

Ratings (whole or half star) that are 

publicly displayed on 

www.medicare.gov. 

We explained in the February 2020 

proposed rule how the policy works by 

using another illustration for the 2021 

QBPs. For a new contract(s) under a 

parent organization that did not have 

any MA contracts in November 2019: 

(i) We identify the MA contracts held 

by that parent organization in November 

2018. If the parent organization had 

other MA contracts in November 2018, 

we use the numeric Star Ratings issued 

in October 2018 for those MA contracts 

that were held by the parent 

organization in November 2018. 

(ii) Using the enrollment in those 

other MA contracts as of November 

2018, we calculate the enrollmentweighted average of the highest Star 

Rating(s) of those MA contracts. 

(iii) This enrollment-weighted average 

is used as the 2021 QBP rating for the 

new MA contract for that parent 

organization, for payment in 2021 and is 

released to the MA organization for the 

new contract in April of 2020. 

Because our proposal was to codify 

existing and current policy without 

change, we followed these steps for the 

2021 QBPs where applicable. And for 

any new contract(s) under a parent 

organization that did not have any MA 

contracts in November 2018 and 2019, 

we provided an illustration (again for 

the 2021 QBPs) as follows: 

(i) We identified the MA contracts 

held by that parent organization in 

November 2017. If the parent 

organization had other MA contracts in 

November 2017, we used the numeric 

Star Ratings for those MA contracts that 

were held by the parent organization in 

November 2017. 

(ii) Using the enrollment in those 

other MA contracts as of November 

2017, we calculated the enrollmentweighted average of the highest Star 

Rating(s) of those MA contracts. 

(iii) This is used as the 2021 QBP 

rating for the new MA contract for 

payment in 2021 and is released to the 

MA organization for the new contract in 

April 2020. 

We explicitly explained how if there 

were no MA contract(s) in the parent 

organization with numeric Star Ratings 

in the previous 3 years, the contract is 

rated as a new MA plan in accordance 

with § 422.258 (for QBP purposes) and 

§ 422.166(d)(2)(v) (for other purposes). 

Our proposal was to codify existing and 

current policy without change, and we 

followed these steps for the 2021 QBPs 

where applicable. Under this final rule, 

we will follow the same steps for the 

2022 QBPs. 

We proposed the rules for calculating 

the enrollment-weighted average and 

addressing changes in parent 

organizations in new paragraphs 

(d)(2)(iv)(C) through (E) at § 422.166. We 

proposed to add at § 422.166(d)(2)(vi)(C) 

that the enrollment used in the 

enrollment-weighted calculations is the 

November enrollment in the year the 

Star Ratings are released. The 

enrollment data are currently posted 

publicly at: http://www.cms.gov/ 

Research-Statistics-Data-and-Systems/ 

Statistics-Trends-and-Reports/ 

MCRAdvPartDEnrolData/index.html. 

We also proposed at 

§ 422.166(d)(2)(vi)(D) that the QBP 

ratings would be updated for any 

changes in a contract’s parent 

organization prior to the release of the 

final QBP ratings in April of each year. 

We explained that under our proposal, 

the same rules described at 

§ 422.166(d)(2)(vi)(A), (B), and (C) 

would be applied to the new contract 

using the new parent organization 

information. We provided an example, 

again using the 2021 QBPs: In April 

2020 when the final QBP ratings were 

released, the enrollment-weighted 

average rating would include the ratings 

of any MA contract(s) that the parent 

organization had acquired since 

November 2019. Thus, if a parent 

organization buys an existing contract it 

would be included in the enrollmentweighted average. We also proposed at 

§ 422.166(d)(2)(vi)(E) to codify our 

current practice that once the QBP 

ratings are finalized in April of each 

year for the following contract year, no 

additional parent organization changes 

are possible for QBP purposes. 

In this section of this rule, we 

summarize the comments we received 

and provide our responses and final 

decisions. 

Comment: Several commenters 

expressed support for codifying the QBP 

rating policies in regulation and 

provided support for the existing 

policies. 

Response: CMS appreciates the 

support. 

Comment: A commenter expressed 

concern that the QBP rating is based on 

too many measures and should be based 

on a small set of measures related to 

patient experience and outcomes at the 

geographic level. 

Response: The regulation at 

§ 422.260(b), revised in the April 2018 

final rule, provides that the QBP 

determination methodology is the 

quality ratings system specified in 

subpart 166 of part 422 for assigning 

quality ratings to provide comparative 

information about MA plans and 

evaluating whether MA organizations 

qualify for a QBP. The methodology for 

the quality ratings system was codified 

for the 2019 measurement year and 2021 

Star Ratings in the April 2018 final rule. 

Further, that amendment to § 422.260(b) 

was merely codification of a 

longstanding policy, discussed in the 

CY 2012 proposed rule (75 FR 71219, 

71221) and the CY 2012 final rule (76 

FR 21486 through 21490). We did not 

propose to change that rule and do not 

believe it is necessary or appropriate at 

this time. 

In the April 2018 final rule, we stated 

that the Star Rating system provides 

information in a summary fashion that 

is a true reflection of the plan’s quality 

and encompasses multiple dimensions 

of high quality care and is based on a 

delicate balance of measuring numerous 

aspects of quality and the need for a 


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44For 2007, we established the specialty-tier cost 

threshold at a negotiated price of $500 per month. 

Please see Medicare Modernization Act 2007 Final 

Guidelines—Formularies. https://www.cms.gov/ 

Medicare/Prescription-Drug-Coverage/ 

PrescriptionDrugCovContra/downloads/ 

cy07formularyguidance.pdf. 

45The specialty-tier cost threshold was increased 

to $600 per month in 2008, and remained at $600 

Continued 

small data set that minimizes reporting 

burden on the industry (83 FR 16520). 

Most commenters supported the 

principles underlying the Star Ratings 

program as described in the April 2018 

final rule and made various suggestions 

for additional measure concepts to 

include. We do not believe that a change 

to the ratings used for QBP purposes is 

appropriate at this time and, even if we 

did, we believe that such a significant 

change from current practice as 

suggested in the comment should be 

subject to additional analysis and the 

opportunity for public comment via the 

rulemaking process. Our current Part C 

and D Star Ratings contractor, RAND 

Corporation, is currently soliciting input 

from their Technical Expert Panel on 

suggested potential changes to the mix 

and number of measures included in the 

Star Ratings program for consideration 

in the future. For more information 

about the Technical Expert Panels, 

please see https://www.rand.org/healthcare/projects/star-ratings-analyses.html. 

Comment: A couple of commenters 

suggested that all new contracts be 

treated as qualifying contracts and 

received the 3.5 percentage increase in 

the benchmark, regardless of whether 

the parent organization has other MA 

contracts. A commenter focused on this 

being fairer to new entrants, while 

another commenter focused on the 

statutory provision at 1857(c)(4) of the 

Social Security Act that guards against 

contracts leaving and then immediately 

re-entering the MA program. 

Response: Historically, we have 

followed the rules to assign QBP ratings 

for a new contract under an existing 

parent organization that were first 

adopted in the 2012 Advance Notice 

and Rate Announcement and the April 

2011 final rule that codified the 

definition of a new MA plan. New 

contracts under existing parent 

organizations have traditionally 

received the weighted average of the 

ratings of the contracts under the parent 

organization to minimize the incentive 

to create new contracts to qualify for a 

QBP. If the overall performance of an 

organization is poor, that organization 

otherwise would have incentives to 

game the system to be treated as a 

qualifying plan for QBP purposes for 3 

years. This would ignore information 

that CMS has about the overall 

performance of the contracts under the 

parent organization given at least some 

of the administrative systems are shared 

across contracts within a parent 

organization. If there were no MA 

contract(s) in the parent organization 

with numeric Star Ratings in the 

previous 3 years, the contract is rated as 

a new MA plan in accordance with 

§ 422.258 since CMS does not have 

recent experience with the organization. 

New contracts under existing parent 

organizations do not necessarily qualify 

for a QBP; thus, this policy is not unfair 

to new entrants. Additionally, new 

entrants where the parent organization 

does not have recent experience as an 

MA contract are treated as qualifying 

plans for 3 years until they have enough 

data to assess their performance. For the 

2021 QBP ratings, 47 percent of the new 

contracts under existing parent 

organizations received 3.5 stars or less; 

thus, these new contracts did not 

qualify for QBPs. We understand that 

1857(c)(4) guards against contracts 

leaving and immediately entering the 

MA program, but we believe it is still 

important to guard against existing 

contracts opening up new contracts 

primarily to be treated as qualifying 

contracts for QBP purposes. 

Summary of Regulatory Changes 

After consideration of the comments 

and for the reasons set forth in the 

proposed rule and our responses to the 

related comments summarized earlier in 

this final rule, we are finalizing the 

methodology to calculate the QBP 

ratings as proposed at §§ 422.162(b)(4) 

and 422.166(d)(2)(vi) with a slight 

revision of the text to further clarify that 

the enrollment figures used in the 

enrollment-weighted QBP rating 

calculations are the November 

enrollment in the year the Star Ratings 

are released. Our proposal was to codify 

existing and current policy without 

change, and under this final rule, we 

will follow the same steps as prior years 

for calculating the 2022 QBPs. 

E. Permitting a Second, ‘‘Preferred,’’ 

Specialty Tier in Part D (§§ 423.104, 

423.560, and 423.578) 

1. Overview and Summary 

Section 1860D–2(b)(2) of the Act, 

which establishes the parameters of the 

Part D program’s Defined Standard 

benefit, allows for alternative benefit 

designs that are actuarially equivalent to 

the Defined Standard benefit, including 

the use of tiered formularies. Although 

not required, Part D sponsors are 

permitted to include a specialty tier in 

their plan designs. Use of a specialty tier 

provides the opportunity for Part D 

sponsors to manage high-cost drugs 

apart from tiers that have less expensive 

drugs. Our policy for the specialty tier 

has aimed to strike the appropriate 

balance between plan flexibility and 

Part D enrollee access to drugs, 

consistent with our statutory authority. 

Section 1860D–4(g)(2) of the Act 

requires Part D sponsors to have an 

exceptions process under which a 

beneficiary who is enrolled in a Part D 

plan offering a prescription drug benefit 

for Part D drugs through the use of a 

tiered formulary may request an 

exception to the plan’s tiered costsharing structure. The statute provides 

that under the exception, a nonpreferred drug could be covered under 

the terms applicable for preferred drugs 

if certain conditions are met. The statute 

grants CMS authority to establish 

guidelines under which Part D enrollees 

may request exceptions to tiered costsharing structures and under which a 

determination with respect to such a 

request is made. Under § 423.578(a), we 

require each Part D sponsor that 

manages its benefit through the use of 

a tiered formulary to establish and 

maintain reasonable and complete 

exceptions procedures subject to our 

approval. The Part D sponsor must grant 

an exception when it determines that 

the requested non-preferred drug for 

treatment of the enrollee’s condition is 

medically necessary, consistent with the 

physician’s or other prescriber’s 

statement that the preferred drug: (i) 

Would not be as effective for the 

enrollee as the requested drug; (ii) 

would have adverse effects for the 

enrollee; or (iii) both. 

However, if Part D sponsors were to 

permit tiering exceptions to allow Part 

D enrollees to obtain drugs on specialty 

tiers at a lower cost sharing applicable 

to non-specialty tiers, they would also 

likely increase Part D premiums as well 

as cost sharing for non-specialty tiers. In 

other words, the ability to get lower cost 

sharing on specialty-tier Part D drugs 

through tiering exceptions means that 

costs would likely go up elsewhere— 

such as by increasing the cost sharing 

on generic drug tiers—in order to keep 

the benefit design actuarially equivalent 

to the Defined Standard. Consequently, 

in permitting Part D sponsors to 

maintain a specialty tier, we also 

implemented a regulation (most recently 

§ 423.578(a)(6)(iii)) that permits (but 

does not require) Part D sponsors to 

exempt Part D drugs placed on the 

specialty tier from their tiering 

exceptions processes. 

Accordingly, to restrict the specialty 

tier to only the highest-cost Part D 

drugs, beginning in 2007,44 45 we 


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per month from contract years 2008 through 2016. 

See https://www.cms.gov/Medicare/Health-Plans/ 

MedicareAdvtgSpecRateStats/Downloads/ 

Advance2017.pdf and https://www.cms.gov/ 

Medicare/Health-Plans/MedicareAdvtg

SpecRateStats/Downloads/Announcement2017.pdf. 

46See, for instance, Draft 2020 Call Letter, pages 

178–179 (available at https://www.cms.gov/ 

Medicare/Health-Plans/MedicareAdvtg

SpecRateStats/Downloads/Advance2020Part2.pdf), 

and Final 2020 Call Letter, page 208 (available at 

https://www.cms.gov/Medicare/Health-Plans/ 

MedicareAdvtgSpecRateStats/Downloads/ 

Announcement2020.pdf). 

47See section 30.2.4 of Chapter 6 of the Medicare 

Prescription Drug Benefit Manual, available at 

https://www.cms.gov/Medicare/Prescription-DrugCoverage/PrescriptionDrugCovContra/Downloads/ 

Part-D-Benefits-Manual-Chapter-6.pdf and page 21 

of the 2020 Bid Submission User Manual, Chapter 

7: Plan Benefit Package Rx Drugs Section. The Bid 

Submission User Manual for 2020 is available at the 

following pathway after logging into the Health 

Plan Management System (HPMS): Plan Bids > Bid 

Submission > Contract Year 2020 > View 

Documentation > Bid Submission User Manual. 

48See the April 2018 final rule for more 

background on biosimilar biological products (83 

FR 16610). 

49Unless our policy specifically distinguishes 

biosimilar biological products from interchangeable 

biological products, we use the term ‘‘biosimilar 

biological product(s)’’ in this preamble to reference 

biosimilar or interchangeable (when such products 

become available) biological products. 

developed a minimum dollar-per-month 

threshold amount to determine which 

Part D drugs are eligible, based on 

relative high cost, for inclusion on the 

specialty tier.46 Additionally, to prevent 

discriminatory formulary structures, in 

particular to protect Part D enrollees 

with certain disease types that are 

treated only by specialty-tier eligible 

drugs, our guidance 47 has set the 

maximum allowable cost sharing for 

specialty-tier Part D drugs between 25 

and 33 percent coinsurance (25/33 

percent). 

We have not previously permitted 

Part D sponsors to structure their plans 

with more than one specialty tier. 

Pointing to factors such as the 

introduction of biosimilar biological 

products to the market 48 and recent 

higher pricing of some generic drugs 

relative to brand drug costs, some 

stakeholders requested that we 

reconsider this policy. They posited, for 

instance, that creating an additional 

specialty tier could improve the ability 

of Part D sponsors to negotiate with 

pharmaceutical manufacturers to help 

lower the prices of high-cost Part D 

drugs. Moreover, in its June 2016 Report 

to Congress (available at http://

www.medpac.gov/docs/default-source/ 

reports/june-2016-report-to-thecongress-medicare-and-the-health-caredelivery-system.pdf), the Medicare 

Payment Advisory Commission 

(MedPAC) suggested that allowing plans 

to maintain two specialty tiers with 

differential cost sharing could 

potentially encourage the use of lowercost biosimilar 49 biological products 

and encourage competition among 

existing specialty Part D drugs. More 

recently, some commenters on our Draft 

2020 Call Letter (available at https://

www.cms.gov/Medicare/Health-Plans/ 

MedicareAdvtgSpecRateStats/ 

Downloads/Advance2020Part2.pdf) 

took the opportunity to advocate for a 

second specialty tier. 

Improving Part D enrollee access to 

needed drugs and lowering drug costs 

are central goals for CMS. Accordingly, 

in the hopes of providing flexibility that 

will promote these goals, we proposed 

to allow (but not require) Part D 

sponsors to establish up to two specialty 

tiers and design an exceptions process 

that exempts Part D drugs on these tiers 

from tiering exceptions to non-specialty 

tiers. Under this policy, Part D sponsors 

would have the flexibility to determine 

which Part D drugs are placed on either 

specialty tier, subject to the specialtytier cost threshold that would be 

established according to the 

methodology we proposed and the 

requirements of our formulary review 

and approval process under 

§ 423.120(b)(2). To maintain Part D 

enrollee protections, we proposed to 

codify a maximum allowable cost 

sharing that would apply to a single 

specialty tier, or, if a Part D sponsor has 

a plan with two specialty tiers, to the 

higher cost-sharing, specialty tier. 

Further, we proposed to require that if 

a Part D sponsor has a plan with two 

specialty tiers, one must be a 

‘‘preferred’’ tier that offers lower cost 

sharing than the higher cost-sharing, 

specialty tier. 

We note that we did not propose any 

revisions to § 423.578(c)(3)(ii), which 

requires Part D sponsors to provide 

coverage for a Part D drug for which a 

tiering exception was approved at the 

cost sharing that applies to the preferred 

alternative. The exemption from tiering 

exceptions for specialty-tier Part D 

drugs, at § 423.578(a)(6)(iii), would 

apply only to tiering exceptions to nonspecialty tiers (meaning, when the 

tiering exception request is for the 

specialty-tier Part D drug to be covered 

at a cost-sharing level that applies to a 

non-specialty tier). Under our proposal, 

we would require Part D sponsors to 

permit tiering exception requests for 

drugs on the higher cost-sharing, 

specialty tier to the lower cost-sharing, 

specialty tier. 

To improve transparency, we 

proposed to codify current 

methodologies for cost sharing and 

calculations relative to the specialty tier, 

with some modifications. First, we 

proposed to codify a maximum 

allowable cost sharing permitted for the 

specialty tiers of between 25 percent 

and 33 percent, inclusive (that is, 25 

percent ≤ maximum allowable cost 

sharing ≤ 33 percent), depending on 

whether the plan includes a deductible, 

as described further in section IV.E.4. of 

this final rule. 

We also proposed to determine the 

specialty-tier cost threshold—meaning 

whether the drug has costs high enough 

to qualify for specialty-tier placement— 

based on a 30-day equivalent supply. 

Additionally, we proposed to base the 

determination of the specialty-tier cost 

threshold on the ingredient cost 

reported on the PDE. This would be a 

change from our current policy, which 

uses the negotiated price reflected on 

the PDE. Under our proposal, the 

specialty-tier cost threshold would 

apply to both specialty tiers. 

To respond to comments on our Draft 

2020 Call Letter requesting that the 

specialty-tier cost threshold be 

increased regularly, we also proposed to 

maintain a specialty-tier cost threshold 

that is set at a level that, in general, 

reflects Part D drugs with monthly 

ingredient costs that are in the top 1 

percent of all monthly ingredient costs, 

as described further in section IV.E.6. of 

this final rule. We proposed to adjust 

the threshold, in an increment of not 

less than ten percent, rounded to the 

nearest $10, when an annual analysis of 

PDEs shows that recalibration of the 

specialty-tier cost threshold is necessary 

to continue to reflect only Part D drugs 

with the top 1 percent of monthly 

ingredient costs. We proposed to 

annually: (1) Determine whether the 

adjustment would be triggered, and (2) 

announce the specialty-tier cost 

threshold. 

2. A Second, ‘‘Preferred,’’ Specialty Tier 

Placement on the specialty tier can 

play an important role in maintaining 

lower cost sharing on non-specialty 

tiers. The non-specialty, non-preferred 

brand/drug tiers frequently have cost 

sharing equal to as much as 50 percent 

coinsurance. This means that Part D 

enrollees would pay considerably more 

after application of coinsurance for a 

high-cost drug if it appeared on a nonspecialty, non-preferred brand/drug tier 

with, for instance, 50 percent cost 

sharing as opposed to placement on the 

specialty tier, which has been subject to 

lower cost-sharing requirements. For 

this reason, we reject the 

recommendation of some commenters 

on our Draft 2020 Call Letter that we 

eliminate the specialty tier altogether. 

To the opposite effect, as discussed in 

section IV.E.1 of this final rule, other 


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Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 5933 

50 In this section of this final rule, by ‘‘rebates,’’ 

we are broadly referring to either retrospective or 

point-of-sale (POS) rebates or discounts. 

51The following link provides access to the 

Kaiser Family Foundation’s archives of the annual 

Employer Health Benefits Survey. https://

www.kff.org/health-costs/report/employer-healthbenefits-annual-survey-archives/. 

52 Kaiser Family Foundation 2014 Employer 

Health Benefits Annual Survey, Pages 164 and 166, 

http://files.kff.org/attachment/2014-employerhealth-benefits-survey-full-report. 

53 Kaiser Family Foundation 2015 Employer 

Health Benefits Annual Survey, Pages 160–162, 

http://files.kff.org/attachment/report-2015- 

employer-health-benefits-survey. 

54 Kaiser Family Foundation 2016 Employer 

Health Benefits Annual Survey, Pages 172–174, 

http://files.kff.org/attachment/Report-EmployerHealth-Benefits-2016-Annual-Survey. 

55 Kaiser Family Foundation 2017 Employer 

Health Benefits Annual Survey, Page 156, http://

files.kff.org/attachment/Report-Employer-HealthBenefits-Annual-Survey-2017. 

56 Kaiser Family Foundation 2018 Employer 

Health Benefits Annual Survey, Page 161, http://

files.kff.org/attachment/Report-Employer-HealthBenefits-Annual-Survey-2018. 

57 Kaiser Family Foundation 2019 Employer 

Health Benefits Annual Survey, Page 161, http://

files.kff.org/attachment/Report-Employer-HealthBenefits-Annual-Survey-2019. 

stakeholders, including MedPAC, have 

recommended that we permit Part D 

sponsors to maintain a second specialty 

tier. Stakeholders favoring this approach 

have posited that this change would: (1) 

Improve the ability of Part D sponsors 

and pharmacy benefit managers (PBMs) 

to negotiate better rebates 50 with 

manufacturers by enabling them to 

establish a preferred specialty tier that 

distinguishes between high-cost drugs 

and effectively encourages the use of 

preferred specialty-tier Part D drugs; (2) 

reduce costs for Part D enrollees, not 

only through direct cost-sharing savings 

associated with a lower cost-sharing, 

‘‘preferred’’ specialty tier, but also 

indirectly, through the lowered 

premiums for all Part D enrollees that 

could result from better rebates on 

specialty-tier Part D drugs; and (3) 

reduce our costs directly through lower 

drug costs because lower cost sharing 

would delay a Part D enrollee’s entry 

into the catastrophic phase of the 

benefit in which the government is 

responsible for 80 percent of the costs. 

Consistent with our ongoing efforts to 

implement new strategies that can help 

lower drug prices and increase 

competition, we proposed to permit Part 

D sponsors to have up to two specialty 

tiers by permitting a new preferred 

specialty tier. However, driven by 

ongoing concerns over actuarial 

equivalence and discriminatory benefit 

designs, in order to strike the 

appropriate balance between plan 

flexibility and Part D enrollee access, we 

also needed to carefully weigh the 

following factors: (1) Tiering exceptions 

between the two specialty tiers or to 

other, non-specialty tiers; (2) the 

maximum allowable cost sharing for 

each specialty tier; and (3) tier 

composition (that is, the selection of 

Part D drugs for each specialty tier). The 

regulatory text to allow up to two 

specialty tiers (which reflects our 

consideration of these factors) and other 

related proposals are discussed in the 

following sections of this preamble. 

We received 82 public comments 

concerning our proposal to permit Part 

D sponsors to maintain up to two 

specialty tiers. Although there was some 

overlap in stakeholder categories, 81 

comments were from groups 

representing Part D sponsors, 

beneficiary advocates, manufacturers, 

providers, pharmacists and pharmacies, 

wholesale distributors, policy institutes, 

and non-partisan Congressional 

agencies. The remaining comment was 

from an individual beneficiary. A 

summary of the comments and our 

responses follow. 

Comment: Many commenters 

supported CMS’s proposal. 

Response: We thank the commenters 

for their support. 

Comment: Some commenters 

advocated that CMS should abolish 

specialty tiers altogether, finding them 

to be outdated and discriminatory to the 

Part D enrollees whose conditions 

require they take Part D drugs placed on 

the specialty tiers. Similarly, these 

commenters suggested that specialty 

tiers are unique to prescription drug 

benefits with no equivalent in the 

medical benefit and run counter to the 

purpose of insurance altogether by 

effectively serving as what the 

commenter termed ‘‘reverse insurance,’’ 

reasoning that the sickest patients who 

need specialty-tier eligible drugs 

subsidize the benefit to keep premiums 

and cost sharing on non-specialty tiers 

lower for the rest of the benefit. 

Response: We thank the commenters 

for this perspective. However, the use of 

specialty tiers in the commercial market 

predates the Part D program by several 

years, and there is widespread use of 

two specialty tiers in employer-based 

plans, with some plans using two or 

more specialty tiers since at least 

2014.51 52 53 54 55 56 57 Additionally, Part D 

enrollee cost sharing for the specialty 

tier(s) in Part D, with a maximum 

allowable cost sharing of 25/33 percent 

coinsurance is equal to, or, in the case 

of the preferred, specialty tier that has 

cost sharing less than the 25/33 percent 

maximum, better than cost sharing 

under the Defined Standard benefit. 

Because cost sharing under the Defined 

Standard benefit is provided for by 

statute, neither cost sharing under the 

Defined Standard benefit nor specialtytier cost sharing, which is better than 

the Defined Standard benefit, is 

discriminatory. Moreover, a hallmark of 

Medicare Part D is that it relies on 

market forces to provide prescription 

drug benefits to Part D enrollees, and, as 

a public benefit that is administered by 

the private insurance market, it is 

incumbent upon us to keep abreast of 

industry standards for the provision of 

this benefit while also balancing Part D 

enrollee access to prescription drugs. 

While the use of a specialty tier may be 

counterintuitive, it is a tool widely used 

in the industry to address a highly 

volatile market for high-cost Part D 

drugs. Although there are distinctions 

between commercial plans and the 

Medicare Part D program, we believe 

this particular option is worth pursuing, 

not only because of the possibility that 

benefits could ensue, but most centrally 

because we do not anticipate that 

permitting a second, preferred specialty 

tier would lead to additional harms for 

Part D enrollees given our proposed Part 

D enrollee protections, such as retention 

of the 25/33 percent maximum 

allowable cost sharing. 

We also disagree with the assertion 

that the specialty tier(s) serve as a 

perverse, ‘‘reverse insurance’’ whereby 

the sickest patients who need specialtytier eligible drugs subsidize the benefit 

to keep premiums and cost sharing on 

non-specialty tiers lower for the rest of 

the benefit. We believe this reasoning is 

flawed because the specialty tier is 

aligned with the Defined Standard 

benefit, and the Part D plan bid 

requirements also necessitate that the 

benefit structure below the specialty tier 

also be actuarially equivalent to the 

Defined Standard benefit. Therefore, the 

use of specialty-tier eligible drugs has 

no differential impact on lowering the 

premiums and cost sharing on nonspecialty tiers for the rest of the benefit. 

Lastly, we believe that providing Part 

D sponsors the ability to make business 

decisions regarding the distribution of 

insurance risk, as permitted by the 

statute and while retaining central Part 

D enrollee protections, reflects the goals 

of the Part D program, which aim to 

provide flexibilities, when possible, that 

could enable Part D sponsors to offer 

robust formularies with lower costs. 

Comment: Some commenters 

expressed concern that, although CMS 

proposed to permit Part D sponsors to 

maintain up to two specialty tiers, CMS 

did not propose corresponding 

regulatory text to this effect. Some 

commenters urged CMS to clarify that a 

second specialty tier is voluntary, and 

other commenters urged CMS to clarify 


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that a second specialty tier would be in 

addition to the total number of allowed 

drug tiers, rather than in place of an 

existing tier. 

Response: We proposed to add a new 

paragraph at § 423.104(d)(2)(iv)(D) to 

specify that a Part D plan may maintain 

up to two specialty tiers; additionally, 

as discussed in section IV.E.3 of this 

final rule, we also proposed to amend 

§ 423.578(a)(6)(iii) to reflect the 

possibility of a second specialty tier. 

Maintaining one or two specialty tier(s) 

is voluntary. Similarly, we also clarify 

that a second specialty tier would be in 

addition to, not in lieu of, the six 

existing tiers for actuarially equivalent 

benefit designs. 

Comment: Some commenters 

suggested that this proposal would limit 

access to specialty-tier Part D drugs, 

complicate an already complicated 

benefit structure/process for Part D 

enrollees, and/or would involve 

additional, burdensome utilization 

management for prescribers. Some 

commenters urged CMS to do a 

demonstration or pilot before finalizing 

the proposals to permit a second 

specialty tier, while others urged CMS 

to monitor the uptake of the use of a 

second specialty tier. 

Response: We do not anticipate 

adverse effects to Part D enrollees’ 

access to specialty-tier Part D drugs by 

allowing Part D sponsors to structure 

their benefits with a second, ‘‘preferred’’ 

specialty tier, as we have proposed, 

either in terms of formulary access or 

Part D enrollee cost sharing. This is due 

in large part to the other Part D enrollee 

protections we proposed in conjunction 

with our proposal to permit Part D 

sponsors to maintain a second specialty 

tier (notably, tiering exceptions between 

the two specialty tiers and maximum 

allowable cost sharing, as discussed in 

sections IV.E.3., and IV.E.4., 

respectively, of this final rule). As we do 

not anticipate that permitting a second, 

preferred specialty tier would lead to 

harm for any Part D enrollees, it seems 

reasonable to provide the requested 

flexibility, as proposed, to Part D 

sponsors. We are mindful of the need to 

minimize complexity and make our 

rules as transparent as possible. 

However, we believe that the risk of 

confusion will be outweighed by the 

potential for Part D sponsors to provide 

their enrollees with improved access to 

specialty-tier Part D drugs because 

improved competition for preferred 

specialty tier formulary placement 

results in better negotiations for Part D 

sponsors, which could result in lower 

cost sharing for Part D enrollees. 

Many specialty-tier Part D drugs 

already require utilization management, 

including prior authorization and/or 

step therapy to access the drug, and 

then monitoring the enrollee once 

therapy has been initiated. Utilization 

management requirements are subject to 

the requirements of our annual 

formulary review and approval process 

under § 423.120(b)(2). (We detailed the 

components of our annual formulary 

review and approval process in our May 

2019 final rule (84 FR 23835).) As part 

of this review and approval process, we 

perform multiple reviews related to the 

clinical appropriateness of both tier 

composition and utilization 

management strategies. For additional 

information, please also see section 

30.2.7 of Chapter 6 of the Medicare 

Prescription Drug Benefit Manual, 

available at https://www.cms.gov/ 

Medicare/Prescription-Drug-Coverage/ 

PrescriptionDrugCovContra/Downloads/ 

Part-D-Benefits-Manual-Chapter-6.pdf.) 

Additionally, the same specialty-tier 

cost threshold would apply to both 

specialty tiers. In other words, there is 

no difference in eligibility for specialtytier placement between the two 

specialty tiers, and therefore, specialtytier eligible Part D drugs would be 

divided between the two specialty tiers. 

Consequently, we do not anticipate that 

allowing a second specialty tier would 

introduce significant utilization 

management beyond what is already 

required or increase the number of 

drugs placed on a specialty tier. 

In finalizing our proposals to permit 

Part D sponsors to maintain up to two 

specialty tiers, we intend to monitor the 

uptake of the use of a second specialty 

tier. We are unclear about, generally, 

what the commenters believe we would 

research in a demonstration or pilot, 

and do not believe one is necessary 

given the Part D enrollee protections we 

are finalizing as part of this final rule. 

Comment: Some commenters 

suggested that CMS should not finalize 

the proposals regarding permitting Part 

D to maintain up to two specialty tiers 

for 2021 and that CMS should clarify 

that the bids for coverage year 2021 will 

be based on existing rules. Some 

commenters mentioned that CMS needs 

to issue new guidance regarding the 

Plan Bid Package (PBP) Beta Software, 

which currently does not provide the 

functionality to file a preferred specialty 

tier, and that to maintain compliance, 

CMS needs to provide the specific filing 

requirements for the second tier. Some 

commenters suggested that with these 

changes, CMS must continue to improve 

written and online materials to provide 

clear, unbiased, user-friendly language 

and graphics, and engage in public 

campaigns to inform and educate Part D 

enrollees and their caregivers about 

benefit designs and cost sharing 

obligations. Some commenters 

suggested that if CMS finalizes our 

proposals to permit Part D sponsors to 

maintain up to two specialty tiers, that 

CMS will need to ‘‘recodify’’ guidance 

in the ‘‘Coverage Determination 

Manual.’’ Some commenters suggested 

that CMS should institute a generic/ 

biosimilar utilization Star ratings 

measure focused on specialty-tier drugs. 

Response: The proposals regarding 

permitting Part D sponsors to maintain 

up to two specialty tiers that are being 

finalized in this rulemaking will be in 

effect for coverage year 2022. 

Additionally, we intend to issue 

program instructions regarding the filing 

of two specialty tiers in the Contract 

Year (CY) 2022 Part D Bidding 

Instructions. In the May 22, 2020 HPMS 

memo titled, ‘‘Updated Contract Year 

(CY) 2021 Final Part D Bidding 

Instructions,’’ we instructed that bids 

for coverage year 2021 will be based on 

existing rules for the specialty tier. We 

continue to regularly review our 

policies regarding marketing and other 

communication materials and expect 

Part D sponsors to follow the 

requirements that are being finalized 

elsewhere in this final rule. Although 

we assume the commenters referring to 

the ‘‘Coverage Determination Manual’’ 

meant our Parts C&D Enrollee 

Grievances, Organization/Coverage 

Determinations, and Appeals Guidance, 

available at https://www.cms.gov/ 

Medicare/Appeals-and-Grievances/ 

MMCAG/Downloads/Parts-C-and-DEnrollee-Grievances-OrganizationCoverage-Determinations-and-AppealsGuidance.pdf, we are not clear on what 

the commenters believe needs to be 

‘‘re’’-codified, and welcome further 

input on this matter. In our 

Announcement of Calendar Year (CY) 

2021 Medicare Advantage (MA) 

Capitation Rates and Part C and Part D 

Payment Policies (available at https://

www.cms.gov/files/document/2021- 

announcement.pdf), we discussed the 

potential to develop measures to assess 

generic and biosimilar utilization in the 

Medicare Part D program, and we 

continue to review feedback for a 

potential future measure. 

We are finalizing without 

modification our proposals to add a new 

paragraph at § 423.104(d)(2)(iv)(D) to 

specify that a Part D plan may maintain 

up to two specialty tiers. The proposals 

regarding permitting Part D sponsors to 

maintain up to two specialty tiers that 

are being finalized in this rulemaking 

will apply for coverage year 2022. 

To retain the policies in effect before 

coverage year 2022, we are amending 

§ 423.578(a)(6)(iii) by adding paragraph 


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(A) to cross reference the definition of 

specialty tier which will be in effect 

before coverage year 2022, and 

paragraph (B) to cross reference 

placement of the definition of specialty 

tier at § 423.104(d)(2)(iv) which will 

apply beginning coverage year 2022. 

Additionally, paragraph (A) will remove 

the phrase ‘‘and biological products,’’ 

and paragraph (B) will (1) reflect the 

possibility of a second specialty tier, 

and (2) clarify that Part D sponsors may 

design their exception processes so that 

Part D drugs on the specialty tier(s) are 

not eligible for a tiering exception to 

non-specialty tiers. 

3. Two Specialty Tiers and Tiering 

Exceptions 

As discussed in section IV.E.1. of this 

final rule, section 1860D–4(g)(2) of the 

Act specifies that a beneficiary enrolled 

in a Part D plan offering a prescription 

drug benefit for Part D drugs through the 

use of a tiered formulary may request an 

exception to the Part D sponsor’s tiered 

cost-sharing structure. Additionally, 

Part D sponsors are required under this 

section of the statute to create an 

exceptions process to handle such 

requests, consistent with guidelines we 

established (see section 40.5.1 of Parts C 

& D Enrollee Grievances, Organization/ 

Coverage Determinations, and Appeals 

Guidance, available at https://

www.cms.gov/Medicare/Appeals-andGrievances/MMCAG/Downloads/PartsC-and-D-Enrollee-GrievancesOrganization-Coverage-Determinationsand-Appeals-Guidance.pdf). However, 

section 1860D–4(g)(2) of the Act does 

not require tiering exceptions in every 

case, and rather, indicates that tiering 

exceptions might not be covered in 

every instance, by recognizing that nonpreferred Part D drugs ‘‘could’’ be 

covered at the cost sharing applicable to 

preferred Part D drugs. 

As discussed in section IV.E.1. of this 

final rule, the requirement that Part D 

plans be actuarially equivalent to the 

Defined Standard benefit means that if 

Part D sponsors were required to permit 

Part D enrollees to obtain Part D drugs 

on specialty tiers at non-specialty-tier 

cost sharing, Part D sponsors might need 

to increase premiums, cost sharing for 

non-specialty tiers, or both. To avoid 

such increased costs, in the Medicare 

Program; Medicare Prescription Drug 

Benefit Final Rule (hereinafter referred 

to as the January 2005 Part D final rule, 

70 FR 4193), we finalized 

§ 423.578(a)(7), which provided that 

Part D sponsors with a tier for very high 

cost and unique items, such as genomic 

and biotech products (in other words, a 

specialty tier), could exempt such drugs 

from its tiering exception process (70 FR 

4353). In our April 2018 final rule, we 

revised and redesignated § 423.578(a)(7) 

as § 423.578(a)(6)(iii) to specify that if a 

Part D sponsor maintains a specialty 

tier, the Part D sponsor may design its 

exception process so that Part D drugs 

and biological products on the specialty 

tier are not eligible for tiering 

exceptions. While the current policy 

does not require that Part D sponsors 

use a specialty tier, or exempt the drugs 

on such tier from tiering exceptions, 

nearly all do use a specialty tier and 

also exempt the drugs on such tier from 

tiering exceptions. 

Section 1860D–4(g)(2) of the Act 

stipulates that under a tiering exception, 

a non-preferred Part D drug could be 

covered under the terms applicable for 

preferred Part D drugs if the prescriber 

determines that the preferred Part D 

drug for treatment of the same condition 

would not be as effective for the Part D 

enrollee, would have adverse effects for 

the Part D enrollee, or both. Thus, the 

statutory basis for approval of tiering 

exceptions requests is the presence of 

(a) clinically appropriate, 

therapeutically alternative Part D 

drug(s) on a lower cost-sharing tier of 

the plan’s formulary, and a statement 

from the prescriber indicating that the 

alternative drug(s) would not be as 

effective for that enrollee or would 

cause adverse effects for the enrollee, or 

both. Therefore, even if a Part D sponsor 

permitted tiering exceptions for Part D 

drugs on the specialty tier to nonspecialty tiers, tiering exceptions 

requests would not be approvable if the 

plan’s formulary did not include any 

clinically appropriate, therapeutically 

alternative Part D drugs on a lower costsharing tier. For example, suppose that 

a biological product, ‘‘Biologic A,’’ and 

another biological product that is 

indicated for the same condition, 

‘‘Biologic B,’’ are both on the specialty 

tier with no clinically appropriate, 

therapeutically alternative Part D drugs 

on a lower cost-sharing tier. If the Part 

D enrollee’s prescriber were to write a 

prescription for Biologic A, and the 

prescriber were to request a tiering 

exception, because Biologic B, the 

clinically appropriate therapeutic 

alternative, is on the same tier as 

Biologic A, and not a lower cost-sharing 

tier, the tiering exception request would 

be denied. For further explanation of 

tiering exceptions requirements, please 

see § 423.578(a)(6). 

Permitting Part D sponsors to exempt 

Part D drugs on a higher cost-sharing, 

specialty tier from any tiering 

exceptions, even to a lower cost-sharing, 

preferred specialty tier, could improve 

Part D sponsors’ ability to negotiate 

better rebates. Nevertheless, unlike our 

justification for allowing Part D plans to 

exempt a specialty tier from tiering 

exceptions to lower-cost, non-specialty 

tiers, granting tiering exceptions from 

the higher cost-sharing, specialty tier to 

the preferred specialty tier is less likely 

to lead to increased premiums or cost 

sharing to meet actuarial requirements 

(than granting tiering exceptions from a 

specialty tier to a non-specialty tier) 

because we would apply the same 

specialty-tier cost threshold to both 

specialty tiers. Our current belief is that 

improved negotiation alone is not 

sufficient to justify permitting Part D 

sponsors to exempt drugs on the higher 

cost-sharing, specialty tier from requests 

for tiering exceptions to the preferred, 

specialty-tier cost sharing. We note that 

we did not propose to require Part D 

sponsors to permit tiering exceptions 

from either specialty tier to lower, nonspecialty tiers, and our policy would not 

change current regulations at 

§ 423.578(c)(3)(ii) that require Part D 

sponsors to cover drugs for which a 

tiering exception was approved at the 

cost-sharing level that applies to the 

preferred alternative(s). This means that 

Part D sponsors would be required to 

grant tiering exceptions for Part D drugs 

from the higher cost-sharing, specialty 

tier to the preferred specialty tier if 

tiering exceptions requirements are met 

(for instance, when a Part D enrollee 

cannot take an applicable therapeutic 

alternative on the preferred specialty 

tier). Specifically, we proposed to 

amend § 423.578(a)(6)(iii) (1) to reflect 

the possibility of two specialty tiers and 

(2) by adding at the end the phrase ‘‘to 

non-specialty tiers’’ to clarify that a Part 

D sponsor may design its tiering 

exception process so that Part D drugs 

on the specialty tier(s) are not eligible 

for tiering exceptions to non-specialty 

tiers. Consequently, the existing policy 

at § 423.578(c)(3)(ii) would require Part 

D sponsors to permit tiering exceptions 

between their two specialty tiers to 

provide coverage for the approved Part 

D drug on the higher cost-sharing, 

specialty tier that applies to preferred 

alternative Part D drugs on the lower 

cost-sharing, preferred specialty tier. 

While we would not require Part D 

sponsors to permit tiering exceptions to 

non-specialty tiers for Part D drugs on 

a specialty tier, nothing precludes a Part 

D sponsor from doing so, insofar as their 

plan benefit design remains actuarially 

equivalent to the Defined Standard 

benefit. 

Alternatively, we considered 

permitting Part D sponsors to exempt 

drugs on either specialty tier from all 

tiering exceptions, even between the 

two specialty tiers, as is provided under 


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5936 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

the existing regulations at 

§ 423.578(a)(6)(iii). We do not believe 

maintaining the current exemption 

would be discriminatory in light of our 

proposal, discussed in section IV.E.4 of 

this final rule, to set the same maximum 

allowable cost sharing (that is, 25/33 

percent) currently applied for a single 

specialty to-the higher cost-sharing, 

specialty tier and to also require the 

preferred specialty tier to have cost 

sharing below that of the higher costsharing, specialty tier. With the 

proposed maximum allowable cost 

sharing, Part D enrollees would pay no 

more for a drug on either specialty tier 

than is the case under our current 

policy. And, as noted previously, 

maintaining the current exemption from 

all tiering exceptions for specialty-tier 

Part D drugs could allow Part D 

sponsors to negotiate better rebates. On 

the other hand, our proposal to require 

Part D sponsors with two specialty tiers 

to permit tiering exceptions from the 

higher cost-sharing, specialty tier to the 

lower-cost sharing, preferred specialty 

tier would provide an important Part D 

enrollee protection when there is a 

therapeutic alternative on the lower 

cost-sharing, preferred specialty tier that 

the Part D enrollee is unable to take. 

Accordingly, we invited comment on 

the benefits or drawbacks of 

maintaining the current policy under 

§ 423.578(a)(6)(iii) that, if we were to 

finalize our proposal to permit Part D 

sponsors to have up to two specialty 

tiers, would apply to permit Part D 

sponsors to exempt drugs on a specialty 

tier from the tiering exceptions process 

altogether. 

We note that, as part of our proposed 

change at § 423.578(a)(6)(iii), we also 

proposed a technical change to remove 

the phrase ‘‘and biological products.’’ 

While the specialty tier usually includes 

biological products, in the context of the 

Part D program, biological products 

already are included in the definition of 

a Part D drug at § 423.100. Therefore, 

the phrase ‘‘Part D drugs and biological 

products’’ is redundant and potentially 

misleading. Consequently, we proposed 

to remove the phrase ‘‘and biological 

products.’’ 

To summarize, we proposed to amend 

§ 423.578(a)(6)(iii) to: (1) Reflect the 

possibility of a second specialty tier, (2) 

clarify that Part D sponsors may design 

their exception processes so that Part D 

drugs on the specialty tier(s) are not 

eligible for a tiering exception to nonspecialty tiers, and (3) remove the 

phrase ‘‘and biological products.’’ 

Additionally, we proposed to maintain 

the existing policy at § 423.578(c)(3)(ii), 

thereby requiring Part D sponsors to 

permit tiering exceptions between their 

two specialty tiers to provide coverage 

for the approved Part D drug on the 

higher cost-sharing, specialty tier that 

applies to preferred alternative Part D 

drugs on the lower cost-sharing, 

preferred specialty tier. Additionally, 

although contingent on finalizing our 

proposal to permit Part D sponsors to 

maintain up to two specialty tiers, we 

solicited comment on maintaining the 

existing policy at § 423.578(a)(6)(iii), 

thereby permitting Part D sponsors to 

exempt drugs on either specialty tier 

from the tiering exceptions process 

altogether. 

We received 35 public comments 

concerning our proposal to require Part 

D sponsors to permit tiering exceptions 

between their two specialty tiers to 

provide coverage (for the approved Part 

D drug on the higher cost-sharing, 

specialty tier) at the cost-sharing level 

that applies to the preferred alternative 

Part D drug on the lower cost-sharing, 

preferred specialty tier, and 32 public 

comments concerning our proposal that 

Part D sponsors can extend to both 

specialty tiers their current ability to 

design their exceptions processes to 

exempt Part D drugs on the specialty 

tier from tiering exceptions to nonspecialty tiers (while requiring tiering 

exceptions between the two specialty 

tiers). We received 9 public comments 

concerning the alternative on which we 

solicited comment to permit Part D 

sponsors to design their exceptions 

processes to exempt drugs on either 

specialty tier from the tiering exceptions 

process altogether. 

We received no comments on our 

proposal to amend § 423.578(a)(6)(iii) by 

removing the phrase ‘‘and biological 

products’’ and therefore are finalizing 

this provision without modification. 

Although there was some overlap in 

stakeholder categories, all of the 

comments were from groups 

representing Part D sponsors, 

beneficiary advocates, manufacturers, 

providers, pharmacists and pharmacies, 

wholesale distributors, policy institutes, 

and non-partisan Congressional 

agencies. A summary of the comments 

and our responses follow. 

Comment: Many commenters 

supported CMS’s proposals. However, 

some commenters opposed CMS’s 

proposal that Part D sponsors be 

permitted to design their exceptions 

processes to exempt Part D drugs on the 

specialty tiers(s) from tiering exceptions 

to non-specialty tiers (while requiring 

tiering exceptions between the two 

specialty tiers) and also opposed the 

alternative on which CMS solicited 

comment to permit Part D sponsors to 

design their exceptions processes to 

exempt drugs on either specialty tier 

from the tiering exceptions process 

altogether. Some of these commenters, 

in advocating that CMS require tiering 

exceptions from the specialty tiers to the 

non-specialty tiers, found any 

exemption of the specialty tiers from 

tiering exceptions to be both 

discriminatory and a violation of Part D 

enrollees’ statutory rights. Some 

commenters believed that CMS’s 

proposals and the alternative on which 

CMS solicited comment prohibited Part 

D sponsors from offering tiering 

exceptions. 

Response: We thank the commenters 

who supported our proposals for their 

support. We disagree that permitting 

Part D sponsors to design their 

exceptions processes to exempt Part D 

drugs on the specialty tier(s) from 

tiering exceptions to the non-specialty 

tiers is discriminatory or a violation of 

Part D enrollees’ statutory rights. 

Since the beginning of the Part D 

program, as reflected in our January 

2005 Part D final rule, it has been our 

policy to permit Part D plans to exempt 

drugs on the specialty tier from tiering 

exceptions. We did not propose to 

change this exemption, but rather to 

adapt it to the possibility of a plan’s 

having two specialty tiers. Historically, 

the specialty tier has aligned with the 

Defined Standard benefit, which does 

not have tiers, and therefore no tiering 

exceptions. The alignment with the 

Defined Standard benefit meant that an 

enrollee’s cost sharing for a specialty 

tier drug would not exceed what would 

otherwise apply under the Defined 

Standard benefit, and that tiering 

exceptions similarly would not be 

available. We disagree with commenters 

that exempting the specialty tier(s) from 

tiering exceptions to non-specialty tiers 

is discriminatory precisely because of 

its alignment with the Defined Standard 

benefit, which, as previously noted, has 

no tiers, and therefore no tiering 

exceptions. Moreover, by the same 

rationale, we do not believe that 

permitting Part D sponsors to design 

their exceptions processes to exempt 

Part D drugs on the specialty tier(s) from 

tiering exceptions to non-specialty tiers 

violates a Part D enrollee’s rights. As 

noted earlier, we believe section 1860D– 

4(g)(2) of the Act does not require 

tiering exceptions in every case. The 

addition of a second, preferred specialty 

tier does not change this analysis, 

particularly in light of the parameters 

we are finalizing (described elsewhere 

in this rule) that cap specialty tier cost 

sharing at the level that remains aligned 

with the Defined Standard benefit. 

In response to comments regarding 

whether Part D sponsors should be 

required to permit tiering exceptions 


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request from the higher-cost specialty 

tier to the lower-cost specialty tier, we 

are finalizing our proposal, and not 

adopting the alternative we considered. 

We continue to believe that a Part D 

drug’s placement on a specialty tier can 

play an important role in maintaining 

lower cost sharing on non-specialty 

tiers, and we must balance the ability to 

get lower cost sharing on specialty-tier 

Part D drugs through tiering exceptions 

with the requirement that plans be 

actuarially equivalent to the Defined 

Standard benefit. Consequently, while 

we are not changing our policy that 

permits Part D sponsors to exempt drugs 

from tiering exceptions between the 

specialty and non-specialty tiers, as was 

originally envisioned by 

§ 423.578(a)(6)(iii), we believe that 

requiring Part D sponsors to design their 

tiering exceptions processes to permit 

tiering exceptions between the two 

specialty tiers, as provided at 

§ 423.578(c)(3)(ii), strikes the 

appropriate balance. 

Finally, we wish to clarify that Part D 

sponsors are not required to have a 

specialty tier at all, and under the 

provisions we are finalizing, can choose 

one, two, or no specialty tier(s). 

Similarly, Part D sponsors are not 

required to permit tiering exceptions 

from a specialty tier to a non-specialty 

tier. However, Part D sponsors also are 

permitted to design their tiering 

exceptions processes in such a way as 

to permit these tiering exceptions from 

a specialty tier to a non-specialty tier if 

they wish, so long as the plan’s benefit 

design remains actuarially equivalent to 

the Defined Standard benefit. 

We are finalizing without 

modification our proposals to amend 

§ 423.578(a)(6)(iii) to: (1) Reflect the 

possibility of a second specialty tier, 

and (2) clarify that Part D sponsors may 

design their exception processes so that 

Part D drugs on the specialty tier(s) are 

not eligible for a tiering exception to 

non-specialty tiers. Additionally, the 

existing policy at § 423.578(c)(3)(ii) 

applies as to the two specialty tiers, 

meaning that Part D sponsors must 

permit tiering exceptions between their 

two specialty tiers to provide coverage 

for the approved Part D drug on the 

higher cost-sharing, specialty tier at the 

cost sharing that applies to preferred 

alternative Part D drugs on the lower 

cost-sharing, preferred specialty tier. 

Additionally, we intend to monitor the 

uptake of the use of a second specialty 

tier, and may revisit our decision to 

require plans to allow tiering exceptions 

between the two specialty tiers in future 

rulemaking. 

Comment: Some commenters 

suggested that specialty tiers and tiering 

exceptions have no clinical basis. They 

reasoned that, because of this, CMS 

should define several terms (such as 

‘‘specialty drug.’’ and ‘‘specialty 

pharmacy’’) and provide additional 

clinical guidance for Part D sponsors 

when implementing a second specialty 

tier. Other commenters added that CMS 

should delay implementation of CMS’s 

proposals to permit two specialty tiers 

in order to undertake further rulemaking 

to refine CMS’s proposal with 

additional details regarding clinically 

based Part D enrollee protections. 

Response: We acknowledge that we 

have based a Part D drug’s eligibility for 

placement on the specialty tier on 

whether such Part D drug meets the 

dollar-per-month amount of the 

specialty-tier cost threshold. However, 

our application of the tiering exceptions 

policy has been, and remains, rooted in 

a clinical basis. To illustrate, while the 

specialty tier in Part D is limited to the 

highest-cost Part D drugs, these drugs 

are often relatively more structurally 

complicated, and apply to complex 

conditions, including, but not limited 

to, cancer, Hepatitis C, HIV/AIDS, 

Multiple Sclerosis, and Rheumatoid 

Arthritis. Section 1860D–4(g)(2) of the 

Act specifies that under a tiering 

exception, a non-preferred drug could 

be covered under the terms applicable 

for preferred drugs if the prescriber 

determines that the preferred drug (for 

treatment of the same condition) would 

not be as effective for the individual, 

would have adverse effects for the 

individual, or both. Therefore, tiering 

exceptions always have a clinical basis, 

and requiring tiering exceptions 

between the two specialty tiers 

reinforces the clinical deliberations Part 

D sponsors must undertake when 

considering formulary inclusion and tier 

composition with regard to specialtytier Part D drugs. Because the pharmacy 

practice landscape is changing so 

rapidly, and because the considerations 

are so varied, we continue to believe 

that any attempt by us to define 

‘‘specialty drug’’ or ‘‘specialty 

pharmacy’’ is not warranted at this time. 

Nonetheless, throughout this final rule, 

we have opted to use the term 

‘‘specialty-tier drug’’ instead of 

‘‘specialty drug’’ in order to clarify that 

our discussion is limited to drugs which 

meet specialty-tier cost threshold and 

are therefore eligible for inclusion on a 

specialty tier in Part D. 

Comment: Some commenters stated 

that the tiering exceptions process is 

confusing for Part D enrollees, and 

suggested that CMS should eliminate 

tiering exceptions altogether. Other 

commenters provided that permitting 

tiering exceptions between the specialty 

tiers but not to non-specialty tiers 

would be confusing to Part D enrollees. 

Some of these commenters suggested 

that CMS should allow tiering 

exceptions from the specialty to the 

non-specialty tiers, while others 

suggested that CMS should require 

tiering exceptions from the specialty to 

the non-specialty tiers. 

Response: We are mindful of the need 

to minimize complexity and make our 

rules as transparent as possible. We 

appreciate the commenters’ perspectives 

and welcome further detail on both the 

difficulties that Part D enrollees 

encounter during the exceptions and 

appeals process as well as any changes 

to our marketing and communications 

materials that could better address these 

difficulties. 

However, we believe that any 

additional complexity arising from 

permitting a second specialty tier will 

be outweighed by the potential to 

improve enrollee access to specialty-tier 

Part D drugs. We did not propose to 

change our policy that permits Part D 

sponsors to exempt a specialty tier from 

tier exceptions to a non-specialty tier. 

Section 1860D–4(g)(2) of the Act 

provides that Part D enrollees may 

request exceptions from tiered costsharing structures. For this reason, we 

decline to either eliminate tiering 

exceptions altogether or require Part D 

sponsors to permit tiering exceptions 

from the specialty tiers to the nonspecialty tiers. Regarding the request 

that we should allow tiering exceptions 

from the specialty to the non-specialty 

tiers, we note that this is already 

permitted under § 423.578(a)(6)(iii), and 

Part D sponsors will continue to have 

this option under the finalized version 

of this regulation. 

Comment: Some commenters 

suggested that Part D enrollees who 

have undergone step therapy, failed 

other therapies, won a coverage 

determination or appeal, or a 

combination of the above, should have 

non-specialty, preferred cost sharing. 

Response: While we appreciate the 

commenters’ perspectives, we did not 

propose, and decline to adopt, these 

changes. For further explanation of 

tiering exceptions requirements and the 

associated cost sharing, please see 

§ 423.578(a)(6) and section 40.5.1 of the 

Parts C & D Enrollee Grievances, 

Organization/Coverage Determinations, 

and Appeals Guidance (available at 

https://www.cms.gov/Medicare/andGrievances/MMCAG/Downloads/PartsC-and-D-Enrollee-GrievancesOrganization-Coverage-Determinationsand-Appeals-Guidance.pdf). 

Additionally, section 40.5.2 of the 

Parts C & D Enrollee Grievances, 


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5938 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

Organization/Coverage Determinations, 

and Appeals Guidance discusses the 

parameters for cost sharing under 

formulary exceptions. Unlike under the 

tiering exceptions regulations, the 

regulations do not specify what level of 

cost sharing applies when an exception 

is approved under the formulary 

exceptions process. Rather, the 

regulations at § 423.578(b)(2)(iii) require 

that the plan’s formulary exceptions 

process must address the cost-sharing 

scheme that will be applied when 

coverage is provided for a nonformulary drug. 

Comment: Some commenters 

suggested CMS could use CMS’s annual 

formulary review and approval process 

to prevent discriminatory plan benefit 

designs, although some commenters 

asserted CMS has not been transparent 

about how it conducts the 

discrimination review. Some 

commenters suggested that CMS should 

exempt the specialty tiers from the 

discrimination review altogether, and 

some suggested that CMS’s formulary 

review and approval process should 

evaluate both tiers as a whole instead of 

each tier independently. Finally, some 

commenters asserted that additional 

discrimination reviews on higher 

specialty tier will lead to more 

exception requests and thus additional 

administrative burden for plan 

sponsors. 

Response: As we discussed in our 

final rule, titled ‘‘Modernizing Part D 

and Medicare Advantage To Lower Drug 

Prices and Reduce Out-of-Pocket 

Expenses,’’ published in the Federal 

Register on May 23, 2019 (hereinafter 

referred to as our May 2019 final rule, 

84 FR 23835), our annual formulary 

review and approval process is designed 

to ensure that Part D formularies do not 

substantially discourage enrollment by 

certain beneficiaries and that the 

formularies include adequate 

representation of all necessary Part D 

drug categories or classes for the 

Medicare population. In other words, 

our annual formulary review and 

approval process is designed to prevent 

discriminatory plan benefit designs. As 

part of that review and approval 

process, we assess all tiers both 

individually and together for the 

formulary as a whole, and that approach 

will continue with respect to plans that 

choose to establish two specialty tiers. 

Please see our May 2019 rule for 

additional detail on the components of 

the annual formulary review and 

approval process (84 FR 23835). Finally, 

although we do not understand the 

commenters’ assertion that additional 

discrimination reviews on the higher 

cost-sharing, specialty tier will lead to 

more exception requests and thus 

additional administrative burden, we 

welcome additional detail on this issue 

for consideration in future rulemaking. 

Comment: Some commenters 

suggested that CMS should review all 

tiering exceptions requests after 

implementation. Some commenters 

requested that CMS enforce the existing 

exceptions and appeals processes. 

Response: We monitor and enforce 

the requirements of our coverage 

determinations and appeals processes, 

including tiering exceptions, through 

the Complaints Tracking Module (CTM), 

regional CMS account managers, Part D 

reporting requirements, and program 

audits. (See https://www.cms.gov/files/ 

document/cy2020part-d-reportingrequirements.pdf for more detail about 

reporting requirements.) Additionally, 

in recent years, we have undertaken 

efforts to improve our exceptions and 

appeals processes, including improving 

clarity of the exceptions timeframes for 

Part D drugs. (See our final rule, titled 

‘‘Medicare and Medicaid Programs; 

Policy and Technical Changes to the 

Medicare Advantage, Medicare 

Prescription Drug Benefit, Programs of 

All-Inclusive Care for the Elderly 

(PACE), Medicaid Fee-For-Service, and 

Medicaid Managed Care Programs for 

years 2020 and 2021,’’ published in the 

Federal Register on April 16, 2019, 

hereinafter referred to as our April 2019 

rule, 84 FR 15777.) We appreciate the 

commenters’ perspectives and welcome 

further detail on both the difficulties 

that Part D enrollees encounter during 

the exceptions and appeals processes as 

well as any changes to our marketing 

and communications materials that 

could better address these difficulties. 

We are finalizing without 

modification our proposals to amend 

§ 423.578(a)(6)(iii) to: (1) Reflect the 

possibility of a second specialty tier, (2) 

clarify that Part D sponsors may design 

their exception processes so that Part D 

drugs on the specialty tier(s) are not 

eligible for a tiering exception to nonspecialty tiers, and (3) remove the 

phrase ‘‘and biological products.’’ 

Additionally, we will maintain the 

existing policy at § 423.578(c)(3)(ii), 

thereby requiring Part D sponsors to 

permit tiering exceptions between their 

two specialty tiers to provide coverage 

for the approved Part D drug on the 

higher cost-sharing, specialty tier that 

applies to preferred alternative Part D 

drugs on the lower cost-sharing, 

preferred specialty tier. 

4. Two Specialty Tiers and Maximum 

Allowable Cost Sharing 

At the start of the Part D program, 

although we provided Part D sponsors 

the option to exempt specialty tiers from 

the tiering exceptions process, we 

remained concerned that exempting the 

specialty tier from tiering exceptions 

could potentially be discriminatory for 

Part D enrollees with certain diseases 

only treated by specialty tier-eligible 

drugs, and thus in conflict with the 

statutory directive under section 

1860D–11(e)(2)(D) of the Act that we 

disapprove any ‘‘design of the plan and 

its benefits (including any formulary 

and tiered-formulary structure) that are 

likely to substantially discourage 

enrollment by certain part D eligible 

individuals under the plan.’’ Using this 

authority, we aligned the cost-sharing 

limit for Part D drugs on the specialty 

tier with the Defined Standard benefit at 

section 1860D–2(b)(2)(A) of the Act. 

Consequently, we established a ‘‘25/33 

percent’’ maximum allowable cost 

sharing for the specialty tier, meaning 

that we would approve cost sharing for 

the specialty tier of no more than 25 

percent coinsurance after the standard 

deductible and before the initial 

coverage limit (ICL), or up to 33 percent 

coinsurance for plans with decreased or 

no deductible under alternative 

prescription drug coverage designs and 

before the ICL (that is, 25 percent ≤ 

maximum allowable cost sharing ≤ 33 

percent). In other words, under 

actuarially equivalent alternative 

prescription drug coverage designs, we 

allow the maximum allowable cost 

sharing for the specialty tier to be 

between 25 and 33 percent coinsurance, 

inclusive, if the Part D plan has a 

decreased deductible, such that the 

maximum allowable cost sharing 

equates to 25 percent coinsurance plus 

the standard deductible. We derived the 

maximum allowable cost sharing of 33 

percent coinsurance for plans with no 

deductible under alternative 

prescription drug coverage by adding 

the allowable deductible to the 25 

percent maximum allowable cost 

sharing between the deductible and 

initial coverage limit (ICL) and dividing 

the resultant value by the ICL. The 

following calculations illustrate how we 

derived the maximum allowable cost 

sharing for the specialty tier. 

a. Derivation of 33 percent maximum 

allowable cost sharing for plans with no 

deductible. 

In 2006, under the Defined Standard 

benefit, the maximum deductible was 

$250, and the ICL was $2,250. The 

maximum allowable cost sharing 

between the deductible and the ICL was, 

as it is today, 25 percent coinsurance. 

(This example uses contract year 2006 

numbers for simplicity, but the concepts 

presented still apply to current 

guidance.) 


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$2,250 ICL¥$250 deductible = $2,000 

difference × 0.25 = $500 maximum 

allowable cost sharing after the 

deductible and before the ICL for 

specialty-tier Part D drugs in plans with 

the standard deductible. 

$500 maximum (previous calculation) 

+ $250 deductible = $750 maximum for 

plans with no deductible. 

Therefore, the maximum allowable 

coinsurance before the ICL for specialtytier Part D drugs in plans with no 

deductible is $750 divided by the 

$2,250 ICL ≈ 0.33, or 33 percent 

coinsurance. 

b. Derivation of maximum allowable 

cost sharing for plans with deductible 

between $0 and the maximum 

deductible. 

Plans with deductibles between $0 

and $250 are permitted to have 

maximum allowable cost sharing for 

specialty-tier Part D drugs between the 

deductible and the ICL of between $500 

and $750 (that is, coinsurance between 

25 and 33 percent, inclusive) provided 

that such cost sharing added to the 

deductible is $750. 

For example, using contract year 2006 

numbers, if the deductible was $100, the 

maximum coinsurance that the plan 

could charge for specialty-tier Part D 

drugs between the deductible and the 

ICL would have been approximately 30 

percent: 

$750¥$100 deductible = $650 

maximum allowable cost sharing (that 

is, $650 + $100 = $750). 

$2,250 ICL¥$100 deductible = $2,150 

difference 

$650 divided by $2,150 ≈ 0.30, or 30 

percent 

Therefore, the maximum allowable 

coinsurance between the $100 

deductible and the $2,250 ICL ≈ 0.30, or 

30 percent coinsurance. (This 30 

percent represents mathematical 

rounding from the actual calculated 

value.) 

Because section 1860D–2(b)(2) of the 

Act requires that plan benefit designs be 

actuarially equivalent to the Defined 

Standard benefit, the cost sharing for 

high-cost drugs would likely increase 

without the use of a specialty tier. This 

is because often the specialty tier has 

lower cost sharing than the nonspecialty, non-preferred brand/drug 

tiers, which frequently have cost sharing 

as much as 50 percent coinsurance. 

Additionally, many specialty tiereligible Part D drugs, particularly 

biological products, often do not have 

alternatives on lower-cost tiers. Our 

proposal to codify a maximum 

allowable cost sharing for the specialty 

tier equal to the cost sharing for the 

Defined Standard benefit plus the cost 

of any deductible would ensure Part D 

enrollees still pay no more than the 

Defined Standard cost sharing for highcost drugs placed on a specialty tier. Although we proposed to allow Part 

D sponsors to have up to two specialty 

tiers, we note that the currently 

available tier-model structures already 

allow Part D sponsors to negotiate 

rebates and distinguish their preferred, 

high-cost Part D drugs by placing them 

on the preferred brand tier as opposed 

to the specialty tier, and placing less 

preferred agents on the specialty tier. 

Such distinction could potentially drive 

the same rebates as two specialty tiers; 

however, Part D sponsors have told us 

they are reluctant to take such an 

approach because of the availability of 

tiering exceptions for the non-specialty 

tiers, which could increase costs in 

lower, non-specialty tiers in order to 

achieve actuarial equivalence. We 

believe this concern is addressed by our 

proposal (discussed in section IV.E.3. of 

this final rule) to permit Part D sponsors 

to exempt Part D drugs on either or both 

specialty tiers from tiering exceptions to 

non-specialty tiers. Additionally, while we are sensitive 

to and trying to be responsive to the 

volatility of the specialty-tier drug 

market by proposing to allow Part D 

sponsors to have up to two specialty 

tiers, we remain concerned about 

whether our proposal will actually 

achieve the potential benefits to the Part 

D program and Part D enrollees asserted 

by stakeholders in support of two 

specialty tiers. As discussed in section 

IV.E.2 of this final rule, those 

stakeholders posit that permitting two 

specialty tiers will reduce Part D 

enrollee cost sharing for specialty Part D 

drugs. However, this would be true only 

for Part D drugs on the lower costsharing, preferred specialty tier, and 

only if the lower cost-sharing, preferred, 

specialty-tier cost sharing were set 

lower than 25/33 percent. When requesting a second specialty 

tier, some Part D sponsors and PBMs 

have told us they would need to charge 

more than 25/33 percent for the higher 

cost-sharing, specialty tier. However, if 

we were to permit Part D sponsors to 

charge more than 25/33 percent for the 

higher cost-sharing, specialty tier, the 

cost sharing for drugs in the higher costsharing, specialty tier would likely be 

higher than if there were only one 

specialty tier. We appreciate that 

permitting Part D sponsors to increase 

cost sharing over current limits might 

lead to negotiations for better rebates, 

which could result in savings to Part D 

enrollees offered through, for instance, 

lower costs on some Part D drugs in the 

preferred specialty tier or lower 

premiums. However, in the absence of 

evidence to the contrary, it appears to us 

that if we were to permit Part D 

sponsors to charge higher percentages 

than is currently the case, Part D 

enrollees who need Part D drugs on the 

higher cost-sharing, specialty tier will 

pay more, and possibly significantly 

more, than they currently do for those 

drugs given that specialty tiers, by 

definition, consist of high-cost drugs. In 

other words, we remain concerned 

about Part D enrollee protections and do 

not want improved rebates on some Part 

D drugs to come at the expense of those 

Part D enrollees who could already be 

paying, as proposed, as much as a 33 

percent coinsurance on the highestcosting drugs. Moreover, because Part D 

enrollees who use high-cost Part D 

drugs progress quickly through the 

benefit, some Part D enrollees’ entry 

into the catastrophic phase of the 

benefit may be advanced faster if the 

higher cost-sharing, specialty tier were 

to have a maximum allowable cost 

sharing that is higher than 25/33 

percent. Therefore, it is unclear to us, in 

the aggregate, how much a second 

specialty tier would save the 

government if the second specialty tier 

was allowed to have a higher cost 

sharing than the current 25/33 percent. 

In addition, while a second specialty 

tier might improve Part D sponsors’ 

ability to negotiate better rebates, we 

also have concerns regarding 

discriminatory plan designs with a 

second, higher cost-sharing, specialty 

tier with cost sharing higher than the 

25/33 percent that is currently 

permitted. If we were to allow a 

maximum allowable cost sharing for the 

higher cost-sharing, specialty tier above 

the 25/33 percent that is currently 

permitted, some Part D enrollees whose 

Part D drugs are placed on the higher 

cost-sharing, specialty tier could see 

their out-of-pocket (OOP) costs increase 

above the Defined Standard cost-sharing 

amount. We are concerned that the 

disproportionate impact on Part D 

enrollees who take Part D drugs on the 

higher cost-sharing, specialty tier runs a 

greater risk of discriminatory plan 

design. Additionally, while it is 

generally allowable for plans to use tier 

placement to steer Part D enrollees 

toward preferred agents, we would have 

to develop additional formulary checks 

to prevent discrimination against those 

Part D enrollees who require Part D 

drugs on the higher cost-sharing, 

specialty tier, and those additional 

formulary checks would limit the ability 

of plans to negotiate for tier placement 

between the two specialty tiers. 

We proposed to set a maximum 

allowable cost sharing for a single 

specialty tier or, in the case of a plan 


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58See page 212 of the Final 2020 Call Letter, 

available at https://www.cms.gov/Medicare/HealthPlans/MedicareAdvtgSpecRateStats/Downloads/ 

Announcement2020.pdf. 

with two specialty tiers, the higher costsharing, specialty tier as follows: (1) For 

plans with the full deductible provided 

for in the Defined Standard benefit, 25 

percent coinsurance; (2) for plans with 

no deductible, 33 percent coinsurance; 

and (3) for plans with a deductible that 

is greater than $0 and less than the 

deductible provided for in the Defined 

Standard benefit, a coinsurance 

percentage that is determined by 

subtracting the plan’s deductible from 

33 percent of the initial coverage limit 

(ICL) under section 1860D–2(b)(3) of the 

Act, dividing that difference by the 

difference between the ICL and the 

plan’s deductible, and rounding to the 

nearest 1 percent. Shown 

mathematically, that is: 

((ICL × 0.33)¥deductible)/ 

(ICL¥deductible) 

We proposed to require that a plan’s 

second specialty tier, if any, must have 

a maximum allowable cost sharing that 

is less than the maximum allowable cost 

sharing of the higher cost-sharing, 

specialty tier. For example, if a Part D 

sponsor establishes a cost sharing of 25 

percent on its higher cost-sharing, 

specialty tier, the Part D sponsor would 

need to set the cost sharing for the 

preferred specialty tier at any amount 

lower than 25 percent. Similarly, if a 

Part D sponsor establishes a cost sharing 

of 33 percent on its higher specialty tier 

(permitted if the plan has no deductible, 

as discussed earlier in this section of 

this final rule), the Part D sponsor 

would need to set the cost sharing for 

the preferred specialty tier at any 

amount lower than 33 percent. To 

encourage flexibility, and with the belief 

that we might not be able to anticipate 

every variation Part D sponsors might 

plan, we did not propose to require a 

minimum difference between the costsharing levels of the higher cost-sharing, 

specialty tier and a lower cost-sharing, 

preferred specialty tier that would apply 

to Part D sponsors choosing to provide 

two specialty tiers. As we have 

generally seen, for example, in relation 

to our policy recommending a threshold 

of $20 for the generic tier and ‘‘less than 

$20’’ for the preferred generic tier,58 we 

believe it would be unlikely that Part D 

sponsors would take the trouble to 

create two different tiers and then 

establish an inconsequential 

differential. With that, we would, of 

course, reexamine this policy if we find 

after finalizing this provision that not 

requiring a minimum difference 

between the cost-sharing levels of the 

two specialty tiers has created problems. 

Additionally, we solicited comment as 

to whether to set a numeric or other 

differential in cost sharing between a 

specialty tier and any preferred 

specialty tier, including suggestions on 

requiring a minimum difference 

between the cost-sharing levels of the 

two specialty tiers that can provide 

maximum flexibility and anticipate 

varied approaches that Part D sponsors 

might take. Lastly, nothing in our 

proposal would prohibit Part D sponsors 

from offering less than the maximum 

allowable cost sharing on either tier as 

long as the preferred specialty tier has 

lower cost sharing than the higher costsharing, specialty tier. 

As mentioned in section IV.E.3 of this 

final rule, we have ongoing concerns 

that offering a lower cost-sharing, 

preferred specialty tier below the 

current 25/33 percent maximum could, 

in theory, lead to increased costs in 

lower, non-specialty tiers in order to 

achieve actuarial equivalence. However, 

because these increases in costs would 

be spread across the overall plan design, 

we believe the overall impact on Part D 

enrollees, would be less than the 

increase on individual Part D enrollee 

cost sharing were we to permit a 

maximum allowable cost sharing for the 

specialty tier above what is currently 

permitted (25/33 percent). Although we 

are concerned about offsetting increases 

to lower, non-specialty tiers, the 25/33 

percent maximum allowable cost 

sharing is based upon the Defined 

Standard benefit cost sharing and 

therefore would provide an important 

Part D enrollee protection to prevent 

discriminatory benefit structures. 

Consequently, we believe this approach 

strikes the appropriate balance between 

Part D sponsor flexibility and Part D 

enrollee access. 

In summary, we proposed to add a 

new paragraph at § 423.104(d)(2)(iv)(D) 

to specify that a Part D sponsor may 

maintain up to two specialty tiers. 

Further, we proposed to set a maximum 

allowable cost sharing for a single 

specialty tier, or, in the case of a plan 

with two specialty tiers, the higher costsharing, specialty tier by adding 

paragraphs (d)(2)(iv)(D)(1), (2), and (3) 

which provide: (1) 25 percent 

coinsurance for plans with the full 

deductible provided under the Defined 

Standard benefit; (2) 33 percent 

coinsurance for plans with no 

deductible; and (3) for plans with a 

deductible that is greater than $0 and 

less than the deductible provided under 

the Defined Standard benefit, a 

coinsurance percentage that is between 

25 and 33 percent, determined by 

subtracting the plan’s deductible from 

33 percent of the initial coverage limit 

(ICL), dividing this difference by the 

difference between the ICL and the 

plan’s deductible, then rounding to the 

nearest 1 percent. 

We solicited comment on this 

approach. We were also interested in 

and solicited comments on plan benefit 

designs with two specialty tiers if we 

were to permit the higher cost-sharing, 

specialty tier to have a higher 

coinsurance than what we have 

proposed. Specifically, we were 

interested in comments that discuss 

whether permitting a coinsurance 

higher than 25/33 percent would be 

discriminatory. 

Additionally, we note that the 

deductible applies to all tiers, and is not 

limited to, nor borne solely by, Part D 

enrollees taking Part D drugs on the 

specialty tier. Therefore, it is unclear 

that we should continue to differentiate 

the specialty tier from the other tiers on 

the basis of the deductible. Accordingly, 

we also considered adopting a 

maximum allowable cost sharing of 25 

percent for any specialty tier, regardless 

of whether the plan has a deductible. 

We solicited comment on alternative 

approaches of using a maximum 

allowable cost sharing of 25 percent 

coinsurance regardless of whether there 

is a deductible. 

To summarize, we proposed to add a 

new paragraph at § 423.104(d)(2)(iv)(D) 

to: (1) Specify that a Part D plan may 

maintain up to two specialty tiers; and 

(2) set a maximum allowable cost 

sharing of 25/33 percent for a single 

specialty tier, or, in the case of a plan 

with two specialty tiers, the higher costsharing, specialty tier. We also proposed 

to permit Part D sponsors to set the cost 

sharing for the preferred specialty tier at 

any amount lower than that of the 

higher cost-sharing, specialty tier. 

Additionally, we solicited comment on 

actuarial equivalence and the potential 

for discriminatory effects plan designs 

with two specialty tiers if we were to 

permit: (1) The higher cost-sharing, 

specialty tier to have a higher 

coinsurance than the 25/33 percent 

maximum allowable cost sharing we 

have proposed; or (2) a maximum 

allowable cost sharing of 25 percent 

without regard to deductible. Finally, 

we also solicited comment as to whether 

to set a numeric or other differential in 

cost sharing between a specialty tier and 

any preferred specialty tier. 

We received 22 public comments 

concerning our proposal to set a 

maximum allowable cost sharing of 25/ 

33 percent for a single specialty tier, or, 

in the case of a plan with two specialty 

tiers, the higher cost-sharing, specialty 

tier. We received 23 public comments 


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concerning the alternative on which we 

solicited comment to permit the higher 

cost-sharing, specialty tier to have a 

higher coinsurance than the 25/33 

percent maximum allowable cost 

sharing we have proposed. We received 

10 public comments concerning the 

alternative on which we solicited 

comment to permit a maximum 

allowable cost sharing of 25 percent 

without regard to deductible. We 

received 18 public comments 

concerning our proposal to permit Part 

D sponsors to set the cost sharing for the 

preferred specialty tier at any amount 

lower than that of the higher costsharing, specialty tier; and 18 public 

comments concerning the alternative on 

which we solicited comment as to 

whether to set a numeric or other 

differential in cost sharing between a 

specialty tier and any preferred 

specialty tier. 

Although there was some overlap in 

stakeholder categories, all of the 

comments were from groups 

representing Part D sponsors, 

beneficiary advocates, manufacturers, 

providers, pharmacists and pharmacies, 

wholesale distributors, policy institutes, 

and non-partisan Congressional 

agencies. A summary of the comments 

and our responses follow. 

Comment: Most commenters 

supported CMS’s proposals to set a 

maximum allowable cost sharing of 25/ 

33 percent for a single specialty tier, or, 

in the case of a plan with two specialty 

tiers, the higher cost-sharing, specialty 

tier. A commenter asserted that under 

current policy, coinsurance for specialty 

tiers can be as high as 50 percent. 

Response: We thank the commenters 

for their support. We are not clear on 

the commenters’ assertion that 

coinsurance for the specialty tiers can 

be as high as 50 percent; it has been our 

longstanding policy—which we are 

codifying in this rule—that Part D 

sponsors may not charge more than 25/ 

33 percent coinsurance, depending on 

the plan’s deductible. We thank the 

commenter, and if the commenter has 

evidence to the contrary, we welcome 

further input on this matter. 

Comment: Some commenters opposed 

CMS’s proposal and supported the 

alternative on which CMS solicited 

comment to permit the higher costsharing, specialty tier to have a higher 

coinsurance than the 25/33 percent 

maximum allowable cost sharing CMS 

proposed. Some commenters suggested 

that CMS should keep the existing 

maximum allowable cost sharing for the 

lower cost-sharing, preferred specialty 

tier at 25/33 percent and establish the 

maximum allowable cost sharing for the 

higher cost-sharing, specialty tier with a 

range between 30 and 40 percent, 

inclusive, depending on the deductible. 

Other commenters suggested something 

of a hybrid approach between our 

proposal and the previous approach in 

which CMS would permit Part D 

sponsors to set the cost sharing for (1) 

the lower cost-sharing, preferred 

specialty tier at any amount lower than 

that of the other specialty tier and (2) 

the higher cost-sharing, specialty tier 

higher than the 25/33 percent maximum 

allowable cost sharing as long as the 

cost sharing between the two tiers 

averages, or is actuarially equivalent to, 

25/33 percent. These latter commenters 

further suggested that CMS could set a 

maximum allowable cost sharing for the 

higher cost-sharing, specialty tier at 50 

percent; however, they did not specify 

whether this 50 percent would be 

applied with regard to the deductible. 

Response: We are not persuaded by 

commenters recommending that we 

permit Part D sponsors offering two 

specialty tiers to have coinsurance for 

the higher-cost sharing specialty tier 

that exceeds the 25/33 percent 

maximum we proposed. We continue to 

have significant concerns that allowing 

specialty-tier cost sharing to exceed 25/ 

33 percent, especially when an enrollee 

may not be able to receive a tiering 

exception, could result in 

discriminatory plan designs, 

particularly for enrollees who take highcost drugs that meet the specialty-tier 

cost threshold we are finalizing in this 

final rule. We remain concerned that, 

given the high cost of drugs that meet 

such specialty-tier cost threshold, 

increased cost-sharing could leave more 

Part D enrollees unable to afford what 

could be life-saving drugs. Moreover, as 

noted in section IV.E.2 of this final rule, 

our specialty-tier cost sharing maximum 

has historically been based on the 

Defined Standard benefit as a Part D 

enrollee protection, and the maximum 

allowable cost sharing of 25/33 percent 

that we proposed is dependent upon the 

plan’s deductible. Commenters 

recommending higher cost sharing for 

the higher cost-sharing specialty tier 

offered no analysis or approach that 

would allow us to determine how the 

higher cost-sharing level would align 

with the Defined Standard benefit. For 

this reason, we similarly believe it is 

inappropriate to finalize a hybrid 

approach as some commenters 

suggested, as we would need more 

information and analysis before we 

could determine how such a hybrid 

approach would be structured. We can 

consider such a policy for future 

rulemaking, if warranted. We welcome 

further input from stakeholders, and we 

thank the commenters. 

Comment: Most commenters preferred 

that the maximum allowable cost 

sharing for the specialty tiers continue 

to be expressed as a range, with a 

specific value for each plan that is 

dependent upon the plan’s deductible. 

However, some commenters supported 

the alternative on which CMS solicited 

comment to permit a maximum 

allowable cost sharing of 25 percent 

without regard to deductible. A 

commenter agreed with this, in 

principle, but suggested that CMS 

should permit a maximum allowable 

cost sharing of 33 percent without 

regard to the deductible, and, some 

commenters suggested that plans should 

be permitted to establish the cost 

sharing for the specialty tier(s) at 

coinsurance greater than 25 percent if 

there is no deductible. 

Response: Although we also solicited 

comment on alternative approaches of 

using a maximum allowable cost 

sharing of 25 percent coinsurance 

regardless of whether there is a 

deductible, we did not receive any 

examples of this. We thank the 

commenters who expressed support or 

opposition to this alternative, but we 

were not persuaded to adopt a 

maximum allowable cost sharing of 25 

percent for any specialty tier, regardless 

of whether the plan has a deductible. 

None of the comments persuaded us 

that the current policy, which we 

proposed to codify and are now 

adopting, is insufficient. 

We note that under the current and 

proposed policies, Part D plans are 

permitted to establish the cost sharing 

for the specialty tier greater than 25 

percent, up to and including 33 percent, 

if there is no deductible. As detailed 

earlier in this section of this final rule, 

we are concerned that, unlike our 

current maximum allowable cost 

sharing of 25/33 percent, establishing a 

maximum allowable cost sharing of 33 

percent without regard to the deductible 

could be discriminatory. 

Comment: Some commenters 

suggested that CMS should contemplate 

other changes to the non-preferred 

brand/drug tiers to address high Part D 

enrollee cost sharing. For example, 

some commenters suggested that a 

preliminary analysis indicates that, for 

plan benefit designs with coinsurance 

for the non-preferred brand/drug tiers, 

75 percent of Part D enrollees receiving 

drugs on this tier pay more than, and 

some significantly more than, the 

corresponding amount for such tier 

when the plan uses copayments (for 

example, $100 for contract year 2021). 

These commenters suggested that CMS 


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should monitor this, particularly if 

enacting any changes to the specialty 

tiers. 

Response: We thank the commenters 

for their comments, and welcome 

additional detail on this to consider it 

for future rulemaking. 

Comment: Some commenters 

supported CMS’s proposal to permit 

Part D sponsors to set the cost sharing 

for the preferred specialty tier at any 

amount lower than that of the higher 

cost-sharing, specialty tier, encouraging 

CMS to allow plans to innovate in this 

area. However, other commenters 

preferred the alternative on which CMS 

solicited comment to set a numeric or 

other differential in cost sharing 

between a specialty tier and any 

preferred specialty tier. Some 

commenters suggested that CMS 

establish a difference of 5 or 8 percent 

in cost sharing between the two 

specialty tiers; some commenters 

suggested that CMS establish the 

maximum allowable cost sharing for the 

lower cost-sharing, specialty tier at 15, 

17, or 20 percent while maintaining the 

maximum allowable cost sharing of 25/ 

33 percent for the higher cost-sharing, 

specialty tier. Some commenters 

encouraged CMS to give Part D sponsors 

the option set the cost sharing for their 

specialty tier(s) lower than the 

maximum allowable cost sharing CMS 

has specified. 

Finally, a commenter suggested that 

CMS should provide by regulation that 

CMS will annually specify a minimum 

percentage differential that CMS 

determines will be likely to 

substantially incent utilization of the 

products on the preferred specialty tier 

over utilization of the products on the 

higher cost-sharing, specialty tier, and 

that minimum differential would be 

subtracted from the coinsurance for the 

plan’s higher cost-sharing, specialty tier 

(in other words, between 25 and 33 

percent, inclusive, depending on the 

plan’s deductible) to result in the 

maximum allowable cost sharing for the 

lower cost-sharing, preferred specialty 

tier. 

Response: While we appreciate the 

specific suggestions provided by 

commenters, we decline to adopt these 

suggestions. None of the commenters 

suggesting specific differentials 

provided any analysis to support those 

thresholds or reasonable extrapolation 

from the Defined Standard benefit (for 

example, the 25/33 percent). 

Finally, while we are intrigued by the 

commenters’ suggestion that we specify 

a minimum percentage differential that 

we determine will be likely to 

substantially incent utilization of the 

products on the preferred specialty tier 

versus those on the higher cost-sharing, 

specialty tier, we decline to adopt this 

approach. Because a Part D sponsor’s 

decision to place a Part D drug on one 

tier versus another is multifactorial, it is 

unclear how we could determine a 

percentage that is ‘‘likely to 

substantially incent utilization’’ of the 

products on the preferred specialty tier 

versus those on the higher cost-sharing, 

specialty tier. However, we welcome 

additional information on this 

suggestion, and we thank the 

commenter. 

After considering the comments, we 

are finalizing without modification our 

proposals to: (1) Add new paragraphs 

§ 423.104(d)(2)(iv)(D)(1) through (3) to 

establish a maximum allowable cost 

sharing of 25/33 percent for a single 

specialty tier, or, for plans with two 

specialty tiers, the higher cost-sharing, 

specialty tier and (2) permit Part D 

sponsors to set the cost sharing for the 

preferred specialty tier at any amount 

lower than that of the other specialty 

tier. 

5. Two Specialty Tiers and Tier 

Composition 

A few commenters on the Draft 2020 

Call Letter suggested that we should 

create a lower cost specialty tier for 

generic drugs and biosimilar biological 

products, and that such a tier should be 

limited to only such products. We 

declined to propose such a policy for 

this rule. First, we wish to provide 

maximum flexibility to Part D sponsors 

that might find, for instance, that a 

brand-name Part D drug costs less with 

a rebate than a generic equivalent or 

corresponding biosimilar biological 

product. Moreover, generic drugs and 

biosimilar biological products that meet 

the specialty-tier cost threshold may not 

always be the lowest-priced product. 

Second, nothing in our proposal would 

prohibit Part D sponsors from setting up 

such parameters should they choose 

(provided they meet all other 

requirements, including the proposed 

maximum allowable cost sharing). 

Therefore, in order to provide more 

flexibility for plans to generate potential 

savings through benefit design and 

manufacturer negotiations, we did not 

propose to prescribe which Part D drugs 

may go on either specialty tier. 

However, such placement will be 

subject to the requirements of our 

formulary review and approval process 

under § 423.120(b)(2). Additionally, 

consistent with our current policy, we 

will continue to evaluate formulary 

change requests involving biosimilar 

biological products on the specialty tiers 

on a case-by-case basis to ensure they 

continue to meet the requirements of 

our formulary review and approval 

process. (See § 423.120(b)(5).) 

We solicited comment on whether 

Part D sponsors should restrict the 

lower cost-sharing, preferred specialty 

tier to only generic drugs and biosimilar 

biological products while also placing 

them along with any other Part D drugs 

meeting the specialty-tier cost threshold 

on the higher cost-sharing, specialty 

tier. In other words, either brand or 

generic drugs and biosimilar biological 

products would be placed on the higher 

cost-sharing, specialty tier, but only 

generic drugs and biosimilar biological 

products would be placed on the 

preferred specialty tier. We stated that 

we were particularly interested in 

comments that discuss what impact 

such a policy would have on nonspecialty tiers. 

We received 30 public comments 

concerning our proposal to give Part D 

sponsors the flexibility to determine 

which Part D drugs are placed on either 

specialty tier, subject to the thresholds 

we proposed and the requirements of 

the CMS formulary review and approval 

process under § 423.120(b)(2); and 30 

public comments concerning the 

alternative on which we solicited 

comment to require Part D sponsors to 

restrict the preferred specialty tier to 

only generic drugs and biosimilar 

biological products, while permitting 

Part D sponsors to have generic drugs, 

biosimilar biological products, and 

reference/originator drugs and 

biological products on the higher costsharing, specialty tier. 

Although there was some overlap in 

stakeholder categories, all of the 

comments were from groups 

representing Part D sponsors, 

beneficiary advocates, manufacturers, 

providers, pharmacists and pharmacies, 

wholesale distributors, think tanks, and 

non-partisan Congressional agencies. A 

summary of the comments and our 

responses follow. 

Comment: Most commenters 

supported CMS’s proposal to give Part 

D sponsors the flexibility to determine 

which Part D drugs are placed on either 

specialty tier, subject to the thresholds 

CMS proposed and the requirements of 

the CMS formulary review and approval 

process under § 423.120(b)(2) and 

opposed the alternative on which CMS 

solicited comment to require Part D 

sponsors to restrict the preferred 

specialty tier to only generic drugs and 

biosimilar biological products, while 

permitting Part D sponsors to have 

generic drugs, biosimilar biological 

products, and reference/originator drugs 

and biological products on the higher 

cost-sharing, specialty tier. 


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Response: We thank the commenters 

for their support. 

Comment: Several commenters 

opposed CMS’s proposal. Some 

commenters asserted that CMS should 

require Part D sponsors to use their 

second specialty tier to encourage 

greater use of less-expensive biosimilar 

biological products and greater price 

competition for specialty-tier drugs, but 

did not provide suggestions on how to 

do so. Some commenters suggested that 

current formulary and tiering practices 

discourage utilization of generic 

specialty-tier drugs. Some commenters 

asserted that CMS should only allow 

brand products on the higher costsharing, specialty tier, and some 

commenters asserted that generic drugs 

and biosimilar biological products 

should be exempt from specialty tier 

placement altogether. Some commenters 

suggested permitting generic drugs and 

biosimilar biological products on the 

higher cost-sharing, non-specialty tier 

and/or the same tier as brand specialtytier drugs and biological products 

would discourage the use of generic 

drugs and biosimilar biological products 

and hamper the research and 

development pipeline of such products. 

Conversely, some commenters asserted 

that current market incentives for 

generic drugs and biosimilar biological 

products are sufficient. 

Response: We continue to strive to 

encourage the use of generic drugs and 

biosimilar biological products. 

However, we believe that our proposal 

to give Part D sponsors the flexibility to 

determine which Part D drugs are 

placed on either specialty tier, subject to 

the thresholds we are proposing and the 

requirements of the CMS formulary 

review and approval process under 

§ 423.120(b)(2) is appropriate because 

restricting which types of products may 

be included on a particular specialty tier 

may result in fewer generic and 

biosimilar products being included on 

the formulary. Part D plans can 

frequently negotiate lower net prices for 

brand drugs than generic drugs and 

biosimilar biological products, and if we 

were to require preferred placement of 

a product that has the potential to be 

more expensive, Part D sponsors may 

elect not to include the generic drug or 

biosimilar biological product on their 

formulary at all. (We note that there 

currently are no interchangeable 

biological products on the market.) 

Comment: Some commenters asserted 

that tier placement should have a 

clinical basis. Additionally, some 

commenters asked CMS to ensure that 

utilization management and prior 

authorization are not inappropriately 

imposed to prefer brand products over 

generic drugs and biosimilar biological 

products. 

Response: We detailed the 

components of our annual formulary 

review and approval process in our May 

2019 final rule (84 FR 23835). As part 

of this review and approval process, we 

perform multiple reviews related to the 

clinical appropriateness of both tier 

composition and utilization 

management strategies. For additional 

information, please also see section 

30.2.7 of Chapter 6 of the Medicare 

Prescription Drug Benefit Manual, 

available at https://www.cms.gov/ 

Medicare/Prescription-Drug-Coverage/ 

PrescriptionDrugCovContra/Downloads/ 

Part-D-Benefits-Manual-Chapter-6.pdf. 

Comment: Some commenters, in 

expressing their opposition to CMS’s 

proposal to permit Part D sponsors to 

maintain up to two specialty tiers: (1) 

Agreed with CMS’s assertion that the 

currently available tier-model structures 

(which already allow Part D sponsors to 

negotiate rebates and distinguish their 

preferred, high-cost Part D drugs by 

placing them on the preferred brand tier 

as opposed to the specialty tier, and 

placing less preferred agents on the 

specialty tier) could potentially drive 

the same rebates as two specialty tiers; 

(2) suggested that Part D sponsors could 

place preferred, high-cost Part D drugs 

on the specialty tier and place less 

preferred agents on the non-preferred 

brand/drug tiers; and (3) suggested that, 

before implementing further changes to 

the specialty tiers, CMS needs to 

provide more detail on why the use of 

either of the aforementioned options 

(that is, (1) placing preferred, high-cost 

Part D drugs on the preferred brand tier 

while placing less preferred agents on 

the specialty tier, or, (2) placing 

preferred, high-cost Part D drugs on the 

specialty tier while placing less 

preferred agents on the non-preferred 

brand/drug tiers) is insufficient to 

achieve our stated policy goals for 

permitting Part D sponsors to maintain 

up two specialty tiers. 

Response: While these options 

certainly are available, we do not 

foresee harm in finalizing our proposal 

to permit Part D sponsors to maintain 

up to two specialty tiers under the 

parameters we have established in this 

final rule while monitoring the uptake 

and outcomes associated with the use of 

a second specialty tier as Part D 

sponsors implement it. Conversely, as 

specialty-tier drugs play an increasingly 

important role in the prescription drug 

marketplace, limiting Part D sponsors to 

either of the aforementioned options 

could adversely impact the Medicare 

Part D marketplace. Currently, only 8 

percent of Part D plans offer preferred 

brand tiers with coinsurance. 

Limiting Part D sponsors to the option 

of placing preferred specialty-tier drugs 

on the preferred brand tier could lead to 

more plans adopting coinsurance for the 

preferred brand tier, which could 

significantly decrease competition 

among plans in the Part D marketplace 

as plan benefit designs become less 

varied and more like the Defined 

Standard benefit. Conversely, if Part D 

sponsors were limited to placing nonpreferred, specialty-tier eligible drugs 

on the non-preferred brand/drug tiers, 

Part D enrollees whose specialty-tier 

eligible drugs are on this tier could face 

cost sharing of up to 50 percent 

coinsurance, which, given the high cost 

of specialty-tier eligible drugs, is 

substantially more than they would pay 

if the drug were on a specialty tier, with 

the maximum allowable cost sharing of 

25/33 percent that we are finalizing in 

this final rule. 

Comment: Some commenters believed 

that CMS’s combined proposals (which 

would (1) permit Part D sponsors to 

maintain up to two specialty tiers and 

(2) give Part D sponsors the flexibility to 

determine which Part D drugs are 

placed on either specialty tier, subject to 

the thresholds CMS proposed and the 

requirements of the CMS formulary 

review and approval process under 

§ 423.120(b)(2)) are inextricably linked 

to problems concerning the role rebates 

play within Part D and, due to the high 

cost of specialty-tier drugs, will 

exacerbate the effect these problems 

have on costs incurred by Part D 

enrollees and the government. 

Response: Because we are setting a 

maximum cost sharing for the higher 

cost-sharing, specialty tier at 25/33 

percent, we do not believe that any Part 

D enrollee or the government will be 

worse off than today. Nonetheless, we 

intend to monitor the uptake of and 

outcomes associated with the use of a 

second specialty tier. Finally, we 

decline to adopt the recommendation 

that we require the preferred tier to 

reflect clinically appropriate therapeutic 

alternatives with the lower list price. 

Section 1860D–11(i) of the Act, 

otherwise known as the noninterference clause, prohibits us from (1) 

interfering with the negotiations 

between drug manufacturers and 

pharmacies and Part D sponsors, and (2) 

requiring a particular formulary or 

instituting a price structure for the 

reimbursement of covered Part D drugs. 

For additional information regarding 

noninterference, please see our rule 

titled, ‘‘Medicare Program; Contract 

Year 2015 Policy and Technical 

Changes to the Medicare Advantage and 


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59https://www.cms.gov/Medicare/PrescriptionDrug-Coverage/PrescriptionDrugCovContra/ 

downloads/CY07FormularyGuidance.pdf. 

60https://www.cms.gov/Medicare/Health-Plans/ 

MedicareAdvtgSpecRateStats/Downloads/ 

Advance2017.pdf. 

61https://www.cms.gov/Medicare/Health-Plans/ 

MedicareAdvtgSpecRateStats/Downloads/ 

Announcement2017.pdf. 

the Medicare Prescription Drug Benefit 

Programs’’ (79 FR 29843) at 79 FR 

29844, and 79 FR 29874–5. 

Comment: Some commenters asserted 

that transitioning between biosimilar 

biological products, reference biological 

products, or both can jeopardize patient 

safety due to immunogenicity. 

Response: We would refer 

commenters to the FDA regarding the 

safety and efficacy of biological 

products, including biosimilar 

biological products. 

After considering the comments, we 

are finalizing without modification our 

proposal to give Part D sponsors the 

flexibility to determine which Part D 

drugs are placed on either specialty tier, 

subject to the cost threshold we are 

finalizing and the requirements of the 

CMS formulary review and approval 

process under § 423.120(b)(2). 

6. Establishing and Increasing the 

Specialty-Tier Cost Threshold 

To effectuate the specialty tier, it was 

necessary to determine which Part D 

drugs could be placed on a specialty 

tier. Consequently, we developed a 

minimum dollar-per-month threshold 

amount to determine which Part D 

drugs are eligible, based on relative high 

cost, for inclusion on the specialty tier. 

We have sought comment on both this 

methodology used to establish the 

specialty-tier cost threshold and the 

resultant value of the specialty-tier cost 

threshold when publishing the annual 

Draft Call Letter. Most recently, 

commenters on the Draft 2020 Call 

Letter were largely supportive of having 

a methodology in place to annually 

evaluate and adjust the specialty-tier 

cost threshold, as appropriate. While 

some commenters wanted to maintain 

the current level (and others wanted to 

eliminate the specialty tier or reduce its 

cost sharing), there was broad support to 

regularly increase the specialty-tier cost 

threshold. Some comments requested 

annual increases, while others wanted 

us to tie increases to the specialty-tier 

cost threshold to drug inflation, or 

benefit parameters. As we detail later in 

this discussion, we proposed to codify, 

with some modifications, the same 

outlier PDE analysis we have 

historically used. Our proposed annual 

methodology would account for rising 

drug costs, as well as any potential 

changes in utilization. By identifying 

the top 1 percent of 30-day equivalent 

PDEs, our proposal aims to create a 

specialty-tier cost threshold that is 

representative of outlier claims for the 

highest-cost drugs. By using PDEs, the 

proposed analysis would also reflect the 

fact that the numbers of Part D enrollees 

filling prescriptions for high-cost drugs 

as a percentage of all drug claims may 

vary from year to year. Given the general 

support for regular increases in the 

specialty-tier cost threshold, we 

proposed to make adjustments to the 

specialty-tier cost threshold based on a 

specific methodology, as discussed later 

in this section. 

Beginning in 2007, we established the 

specialty-tier cost threshold at $500 per 

month 59 based on identifying outlier 

claims (that is, the top 1 percent of 

claims having the highest negotiated 

prices as reported on the PDE, adjusted, 

as described in this section of this final 

rule, for 30-day equivalent supplies) and 

increased the threshold to $600 

beginning in contract year 2008. The 

specialty-tier cost threshold remained at 

$600 per month from contract years 

2008 through 2016.60 61 In the 2016 

analysis for contract year 2017 (using 

contract year 2015 PDE data), the 

number of claims for 30 day-equivalent 

supplies with negotiated prices meeting 

the existing $600 per-month cost 

threshold exceeded 1 percent. This, 

coupled with the significant increase in 

the cost of Part D drugs since the last 

adjustment (in 2008), supported an 

increase in the specialty-tier cost 

threshold for contract year 2017. To 

adjust the specialty-tier cost threshold, 

we applied the annual percentage 

increase used in the Part D benefit 

parameter updates (that is, 11.75 

percent for contract year 2017) to the 

$600 threshold. This increase in the 

specialty-tier cost threshold (that is, 

$70.50), rounded to the nearest $10 

increment (that is, $70), was sufficient 

to reestablish the 1 percent outlier 

threshold for PDEs having negotiated 

prices for 30-day equivalent supplies 

greater than the threshold. Since 

contract year 2017, the specialty-tier 

cost threshold has been $670 per month. 

In our April 2018 final rule, we 

defined specialty tier in regulation at 

§ 423.560 to mean a formulary costsharing tier dedicated to very high-cost 

Part D drugs and biological products 

that exceed a cost threshold established 

by the Secretary (83 FR 16509). To 

improve transparency, we proposed to 

codify current methodologies for 

calculations relative to the specialty tier, 

with some changes. As noted in sections 

IV.E.3 and IV.E.4. of this final rule, it 

was necessary to establish the 

composition of a specialty tier in order 

to effectuate specialty tier exceptions 

and anti-discrimination policies. Under 

§ 423.560, only very high-cost drugs and 

biological products that meet or exceed 

a cost threshold established by the 

Secretary may be placed on a plan’s 

specialty tier (for example, a negotiated 

price of or exceeding $670 per month 

for coverage year 2020). Current 

guidance at section 30.2.4 of Chapter 6 

of the Medicare Prescription Drug 

Benefit Manual describes these highcost drugs and biological products as 

those having Part D sponsor-negotiated 

prices that exceed a dollar-per-month 

amount we established in the annual 

Call Letter, which has noted the 

historical use of a threshold under 

which approximately 99 percent of 

monthly PDEs adjusted for 30-day 

equivalent supplies have been below the 

specialty-tier cost threshold. 

In setting the specialty-tier cost 

threshold, we have historically analyzed 

PDE data for the plan year that ended 12 

months before the applicable plan year 

(for example, we used contract year 

2017 PDE data to determine the cost 

threshold for contract year 2019). First, 

we have calculated the number of 30- 

day equivalent supplies reported on 

each PDE. We have considered a 30-day 

equivalent supply to be any days’ 

supply, as reported on each PDE, of less 

than or equal to 34 days. Thus, a PDE 

with a 34-days’ supply has been 

considered one 30-day equivalent 

supply. (This reflects the fact that a full 

supply of medication for a Part D 

enrollee could equal less than a month’s 

supply, or reflect manufacturer 

packaging. For instance, we did not 

want to triple the cost of a 10-day course 

of antibiotics to determine the 30-day 

equivalent supply because that would 

overstate the Part D enrollee’s cost for 

the full prescription). If the days’ supply 

on the PDE is greater than 34, the 30- 

day equivalent supply is equal to the 

PDE’s days’ supply divided by 30. Thus, 

for example, a PDE with a 90-day 

supply has been considered as three 30- 

day equivalent supplies. Similarly, a 

PDE with a drug that has been 

dispensed in a package containing a 45- 

days’ supply has been considered as 1.5 

30-day equivalent supplies. This 

includes long-acting drugs, including, 

but not limited to long-acting injections. 

For example, a single injection that is 

considered to be a 90-days’ supply has 

been considered as three 30-day 

equivalent supplies. 

After determining the number of 30- 

day equivalent supplies for each PDE, 

we have calculated the 30-day 

equivalent negotiated price for the PDE 

by dividing the PDE’s negotiated price 


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by the number of 30-day equivalent 

supplies reflected on the PDE. Thus, for 

example, if the PDE is for a 90-days’ 

supply and has a negotiated price of 

$810, that PDE contains three 30-day 

equivalent supplies, and the 30-day 

equivalent negotiated price is $270. 

Next, taking into consideration the 30- 

day equivalent negotiated prices for all 

Part D drugs for which PDE data are 

available, we have identified the PDEs 

with 30-day equivalent negotiated 

prices that reflect the top 1 percent of 

30 day-equivalent negotiated prices, and 

have maintained the specialty-tier cost 

threshold at an amount that corresponds 

to the lowest 30-day equivalent 

negotiated price that is within the top 1 

percent of all 30-day equivalent 

negotiated prices. 

We note that this process may result 

in dose specificity of eligibility for 

placement on the specialty tier, such 

that one strength of a Part D drug may 

be eligible but another strength may not. 

For example, suppose that Part D drug 

X is available as tablets in strengths of 

10mg, 20mg, and 30mg taken once daily 

with 30-day equivalent negotiated 

prices of $300, $600, and $900, 

respectively. The 30mg tablets, because 

their 30-day equivalent negotiated price 

exceeds the specialty-tier cost threshold, 

are eligible for placement on the 

specialty tier, but the 10mg and 20mg 

tablets are not, because their 30-day 

equivalent negotiated prices do not 

exceed the specialty-tier cost threshold. 

We believe our existing policy to set 

the specialty-tier cost threshold such 

that only the top 1 percent of 30-day 

equivalent negotiated prices would 

exceed it is consistent with the purpose 

of the specialty tier—that is, that only 

the highest-cost Part D drugs are eligible 

for placement on the specialty tier. For 

this reason, we proposed to codify a 

similar process to adjust and rank PDE 

data as the basis for determining the 

specialty-tier cost threshold, as 

described in this section of this final 

rule. Specifically, instead of 30-day 

equivalent negotiated prices, we 

proposed to determine the 30-day 

equivalent ingredient cost to set the 

specialty tier-cost threshold in the same 

manner as we have historically done, as 

described previously in this section. 

In addition, to maintain stability in 

the specialty-tier cost threshold, we 

proposed to set the specialty-tier cost 

threshold for contract year 2021 to 

reflect the top 1 percent of 30-day 

equivalent ingredient costs, at an 

amount that corresponds to the lowest 

30-day equivalent ingredient cost that is 

within the top 1 percent of all 30-day 

equivalent ingredient costs. We also 

proposed to undertake an analysis of 30- 

day equivalent ingredient costs 

annually, and to increase the specialtytier cost threshold for a plan year only 

if we determine that no less than a ten 

percent increase in the specialty-tier 

cost threshold, before rounding to the 

nearest $10 increment, is needed to 

reestablish the specialty-tier cost 

threshold that reflects the top 1 percent 

of 30-day equivalent ingredient costs. 

As a hypothetical example, suppose 

that, in 2020, when analyzing contract 

year 2019 PDE data for contract year 

2021, we find that more than 1 percent 

of PDEs have 30-day equivalent 

ingredient costs that exceed the contract 

year 2020 specialty-tier cost threshold of 

$670. Further, suppose that we find that 

1 percent of the PDEs have 30-day 

equivalent ingredient costs that exceed 

$685. This $15 difference represents a 

2.24 percent increase over the $670 

specialty-tier cost threshold. Under our 

proposed methodology, we would not 

increase the specialty-tier cost threshold 

for contract year 2021. 

However, if we suppose that, instead 

of $685, we find that 1 percent of the 

PDEs have 30-day equivalent ingredient 

costs that exceed $753, then in this 

scenario, the $83 change represents a 

12.39 percent increase over the $670 

specialty-tier cost threshold. Under our 

proposed methodology, because this 

would be a change of more than 10 

percent, we would set the specialty-tier 

cost threshold for contract year 2021 at 

$750 which is the nearest $10 increment 

to $753. 

We solicited comment on this 

proposal. Because rounding down, as in 

the previous example, would 

technically cause the new specialty-tier 

cost threshold to account for very 

slightly more than 1 percent of 30 dayequivalent ingredient costs, we also 

considered the alternative that we 

would always round up to the next $10 

increment. Using the previous example, 

we would have set the threshold for 

contract year 2021 at $760 instead of 

$750. This alternative would: (a) Better 

ensure that the new specialty-tier cost 

threshold actually reflects the top 1 

percent of claims adjusted for 30-day 

equivalent supplies, and (b) provide 

more stability to the specialty-tier cost 

threshold, that is to say, it will 

theoretically not need to be changed as 

frequently, because rounding down will 

always result in a specialty-tier cost 

threshold that would include more than 

the top 1 percent of 30-day equivalent 

ingredient costs. We do not expect that 

this alternative would significantly 

impact the number of Part D drugs that 

would meet our proposed specialty-tier 

cost threshold. We solicited comment 

on this alternative approach to rounding 

and stated that we could finalize an 

amended version of our proposed 

language at § 423.104(d)(2)(B) to reflect 

such alternative. We proposed to 

annually determine whether the 

adjustment would be triggered using the 

proposed methodology, and if it is, we 

would apply the proposed methodology 

to determine the new specialty-tier cost 

threshold, which we would announce 

via an HPMS memorandum or a 

comparable guidance document. 

Finally, we proposed for contract year 

2021 that we would apply our proposed 

methodology to the contract year 2020 

specialty-tier cost threshold of $670, 

and if a change to the methodology 

based on comments received on this 

final rule would result in a change to 

that threshold, we stated that we will 

announce the new specialty-tier cost 

threshold in this final rule. 

We have concerns regarding the use of 

negotiated prices of drugs, as the term 

is currently defined in § 423.100, in the 

determination of the specialty-tier cost 

threshold, because the negotiated prices 

include all pharmacy payment 

adjustments except those contingent 

amounts that cannot reasonably be 

determined at the point of sale. For this 

reason, negotiated prices typically do 

not reflect any performance-based 

pharmacy price concessions that lower 

the price a Part D sponsor ultimately 

pays for a drug. Negotiated prices in the 

PDE record are composed of ingredient 

cost, administration fee (when 

applicable), dispensing fee, and sales 

tax (when applicable). Administration 

fees, dispensing fees, and sales tax are 

highly variable. Therefore, because the 

ingredient cost has fewer variables than 

the negotiated price, the ingredient cost 

represents the most transparent, least 

complex, and most predictable of all the 

components of negotiated price upon 

which to base the determination of the 

specialty-tier cost threshold. 

Consequently, as noted previously, we 

proposed to use the ingredient costs 

associated with 30-day equivalent 

supplies when we determine the 

specialty-tier cost threshold according 

to the methodology proposed earlier in 

this preamble. We do not expect that 

this change would significantly affect 

the number of Part D drugs meeting the 

specialty-tier cost threshold because the 

ingredient cost generally accounts for 

most of the negotiated price; however, 

this change to use the ingredient cost 

ensures that we are using the most 

predictable of all the components of the 

negotiated price upon which to base the 

specialty-tier cost threshold. 

Using the methodology in this final 

rule and contract year 2019 PDE data 

that we have to date, the specialty-tier 


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cost threshold for contract year 2021 

would be $780 as a 30-day equivalent 

ingredient cost. To determine this 

threshold, we analyzed 2.2 billion PDEs, 

and determined the lowest 30-day 

equivalent ingredient cost that is within 

the top 1 percent of all 30-day 

equivalent ingredient costs to be $780, 

which did not require rounding. 

Therefore, we would increase the 

specialty-tier cost threshold to $780 (as 

a 30-day equivalent ingredient cost) for 

contract year 2021 from the previous 

$670 (as a 30-day equivalent negotiated 

price). While this change will impact 

the specific dollar-threshold amount for 

specialty-tier eligibility, the specialtytier cost threshold still accounts for the 

top 1 percent of all claims, as adjusted 

for 30-day equivalent supplies. Due to 

the increased costs of prescription drugs 

since the previous $670 specialty-tier 

cost threshold was set several years ago, 

the top 1 percent of all claims, as 

adjusted for 30-day equivalent supplies, 

cost more, on average. Moreover, we 

estimate that the change from using 

negotiated price to using ingredient cost 

only will result in fewer than 20 drugs 

not meeting the $780 30-day equivalent 

ingredient cost specialty-tier cost 

threshold that would have if we 

continued to use the 30-day equivalent 

negotiated price. 

Additionally, consistent with current 

guidance in section 30.2.4 in Chapter 6 

of the Medicare Prescription Drug 

Benefit Manual, we consider claims 

history in reviewing the placement of 

Part D drugs on Part D sponsors’ 

specialty tiers. Consequently, we 

proposed to codify current guidance 

that a Part D drug will be eligible for 

placement on a specialty tier if the 

majority of a Part D sponsor’s claims for 

that Part D drug, when adjusted for 30- 

day equivalent supplies, exceed the 

specialty-tier cost threshold. However, 

for Part D drugs newly approved by the 

FDA for which Part D sponsors would 

have little or no claims data because 

such drugs have only recently become 

available on the market, we proposed to 

permit Part D sponsors to estimate the 

30-day equivalent ingredient cost 

portion of their negotiated prices based 

on the maximum dose specified in the 

FDA-approved labeling and taking into 

account dose optimization, when 

applicable for products that are 

available in multiple strengths. If, based 

on their estimated 30-day equivalent 

ingredient cost, the newly FDAapproved Part D drug is anticipated to 

exceed the specialty-tier cost threshold 

most of the time (that is, more than 50 

percent of the time), we would allow 

Part D sponsors to place such drug on 

a specialty tier. Finally, such placement 

would be subject to our review and 

approval as part of our annual formulary 

review and approval process. 

We proposed to add paragraphs 

(d)(2)(iv)(A), (B), and (C) to § 423.104 

and to cross reference this section in our 

revised definition of specialty tiers, 

which we proposed to move to 

§ 423.104, as described later in this 

section. Specifically, we proposed in 

paragraph (d)(2)(iv)(A) to described in 

paragraphs (d)(2)(iv)(A)(1) through (4) 

the manner by which we set the 

specialty-tier cost threshold, and 

further, to describe in paragraph 

(d)(2)(iv)(A)(5) a Part D drug’s eligibility 

for placement on the specialty tier. In 

paragraph (d)(2)(iv)(A)(1) we proposed 

to specify that we use PDE data, and 

further, use the ingredient cost reflected 

on the PDE to determine the ingredient 

costs in dollars for 30-day equivalent 

supplies of drugs. In paragraph 

(d)(2)(iv)(A)(2) we proposed to specify 

how we determine 30-day equivalent 

supplies from PDE data, such that if the 

days’ supply reported on a PDE is less 

than or equal to 34, the number of 30- 

day equivalent supplies equals one, and 

if the days’ supply reported on a PDE is 

greater than 34, the number of 30-day 

equivalent supplies is equal to the 

number of days’ supply reported on the 

PDE divided by 30. We proposed that 

paragraph (d)(2)(iv)(A)(3) would specify 

that we then determine the amount that 

equals the lowest 30-day equivalent 

ingredient cost that is within the top 1 

percent of all 30-day equivalent 

ingredient costs reflected in the PDE 

data. We proposed that paragraph 

(d)(2)(iv)(A)(4) would specify that, 

except as provided in paragraph (B), the 

amount determined in paragraph 

(d)(2)(iv)(A)(3) is the specialty-tier cost 

threshold for the plan year. Further, we 

proposed that paragraph (d)(2)(iv)(A)(5) 

would specify that, except for newly 

FDA-approved Part D drugs only 

recently available on the market for 

which Part D sponsors would have little 

or no claims data, we will approve the 

placement of a Part D drug on a 

specialty tiers when that Part D 

sponsor’s claims data from the plan year 

that ended 12 months prior to the 

applicable plan year demonstrate that 

greater than 50 percent of the Part D 

sponsor’s PDEs for a given Part D drug, 

when adjusted for 30-day equivalent 

supplies, have ingredient costs for 30- 

day equivalent supplies that exceed the 

specialty-tier cost threshold. 

We proposed in paragraph 

(d)(2)(iv)(B) to describe the methodology 

we will use to increase the specialty-tier 

cost threshold. Specifically, we 

proposed to increase the specialty-tier 

cost threshold for a plan year only if the 

amount determined by paragraph 

(d)(2)(iv)(A)(3) for a plan year is at least 

ten percent above the specialty-tier cost 

threshold for the prior plan year. We 

proposed that if an increase is made, we 

would round the amount determined in 

proposed paragraph (d)(2)(iv)(A)(3) to 

the nearest $10. That amount would be 

the specialty-tier cost threshold for the 

applicable plan year. 

Finally, we proposed paragraph 

(d)(2)(iv)(C) to specify that the 

determination of the specialty-tier cost 

threshold for a plan year is based on 

PDE data from the plan year that ended 

12 months prior to the beginning of the 

applicable plan year. 

As mentioned in this section of this 

final rule, to align the definition of 

specialty tier with our proposal to allow 

Part D sponsors to have up to two 

specialty tiers, we first proposed to 

move the definition of specialty tier 

from § 423.560 to appear in 

§ 423.104(d)(2)(iv) as part of a proposed 

new section on specialty tiers that also 

includes the methodology for 

determining the specialty-tier cost 

thresholds and maximum allowable cost 

sharing. (We also proposed to revise 

§ 423.560 and § 423.578(a)(6)(iii) to 

cross reference the placement of that 

definition in § 423.104(d)(2)(iv).) 

Additionally, we proposed to amend the 

definition of specialty tier to reflect our 

proposal to allow Part D sponsors to 

have up to two specialty tiers. With 

respect to the phrase ‘‘and biological 

products,’’ for the reasons discussed in 

the section IV.E.3 of this final rule, 

(specifically, that biological products 

are already are included in the 

definition of a Part D drug at § 423.100), 

we also proposed a technical change to 

the definition of specialty tier to remove 

the phrase ‘‘and biological products.’’ 

Therefore, we proposed to define 

specialty tier at § 423.104(d)(2)(iv) to 

mean a formulary cost-sharing tier 

dedicated to high-cost Part D drugs with 

ingredient costs for a 30-day equivalent 

supply (as described in 

§ 423.104(d)(2)(iv)(A)(2)) that are greater 

than the specialty-tier cost threshold 

specified in § 423.104(d)(2)(iv)(A). 

To summarize, we proposed to: (1) 

Amend the definition of specialty tier at 

§ 423.560 and move it to 

§ 423.104(d)(2)(iv); (2) amend 

§ 423.578(a)(6)(iii) to cross reference 

placement of the definition of specialty 

tier at § 423.104(d)(2)(iv); (3) add new 

paragraph (d)(2)(iv)(A) which describes, 

in (d)(2)(iv)(A)(1) through (4), the 

methodology by which we set the 

specialty-tier cost threshold, and in 

(d)(2)(iv)(A)(5), a Part D drug’s 

eligibility for placement on the specialty 


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tier; (4) add new paragraph (d)(2)(iv)(B), 

which describes the methodology we 

will use to increase the specialty-tier 

cost threshold; and (5) add new 

paragraph (d)(2)(iv)(C), which specifies 

that the determination of the specialtytier cost threshold for a plan year is 

based on PDE data from the plan year 

that ended 12 months prior to the 

beginning of the applicable plan year. 

We solicited comment on specifying at 

the new § 423.104(d)(2)(iv)(B) that we 

would round up to the nearest $10 

increment. 

We received 8 public comments 

concerning our proposal to amend the 

definition of specialty tier at § 423.560 

and move it to § 423.104(d)(2)(iv); and 8 

public comments concerning our 

proposal to amend § 423.578(a)(6)(iii) to 

cross reference placement of the 

definition of specialty tier at 

§ 423.104(d)(2)(iv). We received 10 

public comments concerning our 

proposal to add new paragraph 

(d)(2)(iv)(A) which describes, in 

(d)(2)(iv)(A)(1) through (4), the 

methodology by which we set the 

specialty-tier cost threshold, and in 

(d)(2)(iv)(A)(5), a Part D drug’s 

eligibility for placement on the specialty 

tier. We received 12 public comments 

concerning our proposal to add new 

paragraph (d)(2)(iv)(B), which describes 

the methodology we will use to increase 

the specialty-tier cost threshold; and 6 

public comments concerning our 

proposal to add new paragraph 

(d)(2)(iv)(C), which specifies that the 

determination of the specialty-tier cost 

threshold for a plan year is based on 

PDE data from the plan year that ended 

12 months prior to the beginning of the 

applicable plan year. We received 7 

public comments concerning our 

proposal to increase the specialty-tier 

cost threshold to $780 (as a 30-day 

equivalent ingredient cost) for contract 

year 2021 from the previous $670 (as a 

30-day equivalent negotiated price). 

Although there was some overlap in 

stakeholder categories, all of the 

comments were from groups 

representing Part D sponsors, 

beneficiary advocates, manufacturers, 

providers, pharmacists and pharmacies, 

wholesale distributors, think tanks, and 

non-partisan Congressional agencies. 

A summary of the comments on 

amending, moving, and crossreferencing the definition of specialty 

tier and data used to determine the 

specialty-tier cost threshold and our 

responses follow. 

Comment: Most commenters 

supported CMS’s proposals. We did not 

receive any comments on the alternative 

on which we solicited comment to 

specify at the new § 423.104(d)(2)(iv)(B) 

that we would round up to the nearest 

$10 increment. We received unanimous 

support of our proposals to (1) amend 

the definition of specialty tier at 

§ 423.560 and move it to 

§ 423.104(d)(2)(iv); (2) amend 

§ 423.578(a)(6)(iii) to cross reference 

placement of the definition of specialty 

tier at § 423.104(d)(2)(iv); and (3) add 

new paragraph (d)(2)(iv)(C), which 

specifies that the determination of the 

specialty-tier cost threshold for a plan 

year is based on PDE data from the plan 

year that ended 12 months prior to the 

beginning of the applicable plan year. 

Response: We thank the commenters 

for their support. We will not finalize 

the alternative on which we solicited 

comment to specify that we would 

round up to the nearest $10 increment 

at this time, but may consider it for 

future rulemaking. We will finalize 

without modification our proposal to 

add new paragraph (d)(2)(iv)(C), which 

specifies that the determination of the 

specialty-tier cost threshold for a plan 

year is based on PDE data from the plan 

year that ended 12 months prior to the 

beginning of the applicable plan year. 

This provision will apply for coverage 

year 2022. We therefore are not 

finalizing our proposal to specify a 

specialty-tier cost threshold of $780 for 

2021. 

To retain the policies in effect before 

coverage year 2022, we are amending 

the definition of specialty tier at 

§ 423.560 by adding paragraph (i) to 

clarify that the existing definition will 

apply before coverage year 2022, and 

paragraph (ii) to cross reference the 

definition which appears in 

§ 423.104(d)(2)(iv), which will apply 

beginning coverage year 2022. 

Additionally, as discussed in section 

IV.E.2. of this final rule, we are 

amending § 423.578(a)(6)(iii) by adding 

paragraph (A) to cross reference the 

definition of specialty tier which will 

apply before coverage year 2022, and 

paragraph (B) to cross reference 

placement of the definition of specialty 

tier at § 423.104(d)(2)(iv) which will 

apply beginning coverage year 2022. 

Additionally, paragraph (A) will remove 

the phrase ‘‘and biological products.’’ 

Additionally, paragraph (B) will (1) 

reflect the possibility of a second 

specialty tier, and (2) clarify that Part D 

sponsors may design their exception 

processes so that Part D drugs on the 

specialty tier(s) are not eligible for a 

tiering exception to non-specialty tiers. 

A summary of the comments on the 

methodology to determine the specialtytier cost threshold and a Part D drug’s 

eligibility for placement on the specialty 

tier and our responses follow. 

Comment: Some commenters 

supported CMS’s methodology to 

establish the specialty-tier cost 

threshold, but were opposed to the 

maximum dose being used to determine 

the specialty-tier eligibility for newlyFDA-approved drugs. Some commenters 

believed that: (1) The maximum dose 

should not be used to evaluate newlyapproved drugs for specialty-tier 

eligibility; (2) for newly-FDA approved 

drugs, CMS should require Part D plans 

to estimate the 30-day equivalent 

ingredient cost for each drug product 

strength, package size, and formulation 

level, similar to how it is already done 

for already FDA-approved Part D drugs; 

and (3) CMS should also codify 

language at § 423.104 regarding dose 

specificity and dose optimization for all 

drugs. 

Response: We thank the commenters 

for their perspective on the process for 

newly FDA-approved drugs. We agree 

that we need to provide more detail on 

what we meant in our preamble when 

we stated that we proposed to permit 

Part D sponsors to estimate the 30-day 

equivalent ingredient cost portion of 

newly-FDA-approved drugs ‘‘based on 

the maximum dose specified in the 

FDA-approved labeling and taking into 

account dose optimization, when 

applicable for products that are 

available in multiple strengths.’’ 

We did not mean to suggest that only 

maximum doses would qualify for the 

specialty tier. Rather, we would expect 

Part D sponsors to estimate the 30-day 

equivalent ingredient cost of a drug, 

taking into account dose optimization— 

which, based on the maximum FDAapproved dose of a medication, 

consolidates the Part D enrollee’s dose 

into the fewest number of dose units (for 

example, tablets)—and dose 

specificity—which is based on the price 

applied to the particular strength and 

dosage form of the drug. 

To illustrate that the process for 

determining a Part D drug’s specialtytier eligibility should take into account 

dose optimization and dose specificity 

for both already-FDA approved drugs 

(for which Part D sponsors would have 

claims history) and newly-FDA 

approved drugs (for which Part D 

sponsors would have little to no claims 

history), we clarify the example earlier 

in this section (section IV.E.6) of this 

final rule. We gave the example of ‘‘Part 

D drug X’’ that is available as tablets in 

strengths of 10mg, 20mg, and 30mg 

taken once daily with 30-day equivalent 

negotiated prices of $300, $600, and 

$900, respectively. Regarding dose 

specificity, the 30mg tablets, because 

their 30-day equivalent negotiated price 

exceeds the specialty-tier cost threshold, 


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are eligible for placement on the 

specialty tier, but the 10mg and 20mg 

tablets are not, because their 30-day 

equivalent negotiated prices do not 

exceed the specialty-tier cost threshold. 

Regarding dose optimization, using 

the previous example, suppose ‘‘Part D 

drug X’’ is administered once daily, and 

the maximum dose is 30mg once daily. 

Suppose a Part D enrollee takes the 

maximum dose of 30mg once daily. The 

Part D enrollee could accomplish that 

by taking three 10mg tablets, one and a 

half 20mg tablets, or one 30mg tablet. 

However, because the 30mg tablets yield 

the fewest number of dose units for the 

Part D enrollee to achieve the required 

dose, dispensing 30, 30mg tablets for a 

30-day supply is indicated to be ‘‘dose 

optimized’’ relative to the other options. 

Although prescriptions for 30 30mg 

tablets or 90 10mg tablets each cost 

$900, because the prescription for 90 

10mg tablets is not dose optimized, it 

(still) does not qualify for the specialtytier cost threshold. 

Because our proposed language at 

(d)(2)(iv)(A)(6) applied to Part D drugs 

except those newly-approved by the 

FDA, in response to the comments, we 

wish to clarify the process for newlyFDA approved drugs. Therefore, we are 

also finalizing new paragraph 

(d)(2)(iv)(A)(6), which describes the 

eligibility for placement on the specialty 

tier of newly-FDA-approved Part D drug 

such that we will approve placement of 

a newly-FDA-approved Part D drug on 

a specialty tier when that Part D sponsor 

estimates that ingredient cost portion of 

their negotiated price for a 30-day 

equivalent supply is anticipated to 

exceed the specialty-tier cost threshold 

more than 50 percent of the time, 

subject to our review and approval as 

part of our annual formulary review and 

approval process. 

While we appreciate the commenters’ 

suggestion that we codify language at 

§ 423.104 concerning dose specificity 

and dose optimization, we do not 

believe that we could effectively do so, 

given the myriad drugs, conditions, 

different doses for such conditions, 

dosage forms, package sizes, etc., that 

factor into these determinations, which 

can sometimes be quite complicated. 

We do not want to inadvertently 

exclude nuanced, but clinically relevant 

dose optimization strategies. 

Consequently, we will consider 

potential language for future notice and 

comment rulemaking. 

Comment: Some commenters 

suggested that moving from negotiated 

price to ingredient cost may increase the 

number of drugs eligible for the 

specialty tier since negotiated prices 

may be lower than average wholesale 

price (AWP) and that CMS should 

ensure that the switch from negotiated 

price to ingredient cost tracks the 

medications captured by the current 

threshold. Some commenters suggested 

that if CMS finalizes this provision with 

30-day equivalent negotiated price 

(instead of 30-day equivalent ingredient 

cost), CMS needs to clarify which 

definition of negotiated price. 

Response: We estimate that the 

change from using negotiated price to 

using ingredient cost only would result 

in fewer than 20 drugs not meeting the 

$780 30-day equivalent ingredient cost 

specialty-tier cost threshold that would 

have met the threshold if we continued 

to use the 30-day equivalent negotiated 

price. In other words, in our preliminary 

analysis, moving from negotiated price 

to ingredient cost decreased the number 

of drugs eligible for the specialty tier. 

However, we will continue to monitor 

the uptake and outcomes associated 

with these proposals. We are finalizing 

the provision to establish a Part D drug’s 

eligibility for placement on the specialty 

tier using the ingredient cost. 

Comment: Some commenters 

requested clarity on why CMS is 

codifying the existing methodology 

while at the same time proposing a 

substantive change, and inquired why 

CMS does not simply propose the 

change. The commenters added that in 

proposing to move away from the 

negotiated price and use the ingredient 

cost that CMS has, in essence, removed 

the dispensing fee from the 

determination of a Part D drug’s 

eligibility for specialty-tier placement, 

but that CMS has not specified if there 

is a specific issue with dispensing fees 

that would warrant removing them 

altogether from the calculation of the 

specialty tier cost threshold. These 

commenters then inquired if CMS had 

another definition for ingredient cost, 

and suggested that if so, CMS needs to 

spell this out. 

Response: We proposed to codify our 

longstanding policy with certain 

changes to improve the transparency 

and consistency of the specialty tier cost 

threshold. 

We have concerns regarding the use of 

negotiated prices of drugs, as the term 

is currently defined in § 423.100, in the 

determination of the specialty-tier cost 

threshold, because the negotiated prices 

include all pharmacy payment 

adjustments except those contingent 

amounts that cannot reasonably be 

determined at the point of sale. For this 

reason, negotiated prices typically do 

not reflect any performance-based 

pharmacy price concessions that lower 

the price a Part D sponsor ultimately 

pays for a drug. Negotiated prices in the 

PDE record are composed of ingredient 

cost, administration fee (when 

applicable), dispensing fee, and sales 

tax (when applicable). Administration 

fees, dispensing fees, and sales tax are 

highly variable. Therefore, because the 

ingredient cost has fewer variables than 

the negotiated price, the ingredient cost 

represents the most transparent, least 

complex, and most predictable of all the 

components of negotiated price upon 

which to base the determination of the 

specialty-tier cost threshold. We do not 

expect that this change would 

significantly affect the number of Part D 

drugs meeting the specialty-tier cost 

threshold because the ingredient cost 

generally accounts for most of the 

negotiated price. 

Use of the ingredient cost in lieu of 

the negotiated price for purposes of 

determining the specialty-tier cost 

threshold does not remove the 

dispensing fee from the negotiated 

price. Rather, as previously noted, we 

are merely using the most stable portion 

of the negotiated price to determine the 

specialty tier cost threshold. Finally, by 

ingredient cost, we mean the ingredient 

cost that is reported on the PDE. 

We are finalizing our proposal 

describing the methodology by which 

we set the specialty-tier cost threshold, 

and a Part D drug’s eligibility for 

placement on the specialty tier with one 

modification. In response to comments, 

we are also finalizing new paragraph 

(d)(2)(iv)(A)(6), which describes the 

eligibility for placement on the specialty 

tier of newly-FDA-approved Part D 

drugs. 

A summary of the comments on the 

methodology to increase the specialtytier cost threshold and our responses 

follow. 

Comment: Most commenters 

supported CMS’s proposal describing 

the methodology CMS will use to 

increase the specialty-tier cost 

threshold. 

Response: We thank the commenters 

for their support. 

Comment: Some commenters opposed 

CMS’s proposed 10 percent threshold 

for change for updating the specialtytier cost threshold, and suggested that 

drugs that no longer meet the threshold 

should be removed from the specialty 

tier, regardless of the magnitude of the 

threshold’s change. Some commenters 

were concerned about products not 

meeting the specialty-tier cost threshold 

from one year to the next, and 

consequently moving in and out of the 

specialty tier from one year to the next, 

which could cause Part D enrollee 

confusion. Some commenters noted a 

tension between tiering exceptions, use 

of the ingredient cost in lieu of the 


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negotiated price for purposes of 

determining the specialty-tier cost 

threshold, and increases to the 

specialty-tier cost threshold, noting that, 

as drugs no longer qualify for the 

specialty tier and are moved to a nonspecialty, non-preferred brand/drug tier, 

Part D enrollees could potentially pay 

more for a preferred specialty tier drug 

than a non-specialty, non-preferred 

drug, even though the non-specialty, 

non-preferred drug is the less expensive 

product. Additionally, some 

commenters suggested that CMS should 

clarify how our proposal to revise the 

specialty-tier cost threshold could 

impact the distribution of generic drugs 

and biosimilar biological products that 

are able to be placed on the specialty 

tier. Finally, some commenters 

suggested that CMS should address 

sudden increases, perhaps due to a 

sudden increase in the utilization of 

specialty-tier drugs. 

Response: We agree that the specialty 

tier should consist of only the highestcost drugs. However, as the commenters 

noted, to decrease Part D enrollee 

confusion arising from year-to-year 

changes in the specialty-tier cost 

threshold, we must balance the 

limitation of the specialty tier to the 

highest-drugs with the need for stability 

in the specialty-tier cost threshold. 

Nonetheless, we wish to clarify that, 

even absent any increase in the 

specialty-tier cost threshold, if the price 

of a drug changes, and it no longer 

meets the specialty-tier cost threshold, it 

must be removed from the specialty tier 

at the beginning of the next plan year. 

While we acknowledge the 

commenters’ concerns about the tension 

between tiering exceptions, the 

specialty-tier cost threshold, tier 

composition (that is, as Part D drugs no 

longer meet the specialty-tier cost 

threshold and are potentially placed on 

other, non-specialty tiers), and Part D 

enrollee cost sharing, this dynamic 

exists today and our policy would not 

change this. We also note that if Part D 

drugs, including generic drugs and 

biosimilar biological products, were no 

longer eligible for specialty-tier 

placement and subsequently placed on 

a non-specialty, non-preferred tier in the 

following plan year, an enrollee could 

then request a tiering exception for that 

drug. 

We also appreciate that the 

commenters’ suggestion of sudden 

increases comes at a time of 

unprecedented uncertainty regarding 

the specialty tiers in light of COVID–19. 

However, we decline to adopt any new 

policies to address sudden price 

changes. Consistent with our guidance 

at section 30.3.3 of Chapter 6 of the 

Medicare Prescription Drug Benefit 

Manual and subject to the requirements 

of § 423.120(b)(5), we permit Part D 

sponsors to add drugs to and remove 

drugs from the formulary during the 

plan year. 

Comment: Some commenters 

suggested that CMS should increase the 

specialty-tier cost threshold by the 

Annual Percentage Increase (API) or 

medical inflation with a periodic 

rebalancing when the specialty-tier cost 

threshold represents less than one 

percent of claims. 

Response: We thank the commenters, 

but we decline to adopt this 

recommendation because we proposed a 

methodology that would keep specialty 

tier drugs at the top 1 percent. 

We are finalizing without 

modification our proposed methodology 

to increase the specialty-tier cost 

threshold. 

A summary of the comments on 

increasing the specialty-tier cost 

threshold to $780 (as a 30-day 

equivalent ingredient cost) for contract 

year 2021 from the previous $670 (as a 

30-day equivalent negotiated price) and 

our responses follow. 

Comment: Most commenters 

supported CMS’s proposal to increase 

the specialty-tier cost threshold to $780 

(as a 30-day equivalent ingredient cost) 

for contract year 2021 from the previous 

$670 (as a 30-day equivalent negotiated 

price). A commenter asked what the cost 

threshold for higher cost-sharing, 

specialty tier would be, and if it will be 

set by the plan. 

Response: We thank the commenters 

for their support. We are not finalizing 

this proposal. The specialty-tier cost 

threshold will apply to both specialty 

tiers, and while Part D sponsors would 

not set the threshold, Part D sponsors 

may choose which specialty-tier drugs 

go on which tier, subject to our annual 

formulary review and approval process. 

However, as we noted in our May 22, 

2020 HPMS memorandum entitled, 

‘‘Updated Contract Year (CY) 2021 Final 

Part D Bidding Instructions,’’ for 

coverage year 2021, we will maintain 

the specialty-tier cost threshold at $670, 

as a 30-day equivalent negotiated price. 

The methodology that is being finalized 

in this rulemaking will be in effect for 

coverage year 2022. 

Comment: Some commenters asked 

whether CMS considered the effect of 

our proposal to increase the specialtytier cost threshold in combination with 

our proposal to permit Part D sponsors 

to maintain up to two specialty tiers, 

overall, asserting that CMS may be 

reducing the benefits that a second 

specialty tier could bring to plans and 

Part D enrollees because a brand drug 

may continue to qualify for the specialty 

tier(s) while its generic equivalent may 

not. 

Response: As discussed earlier in this 

section (section IV.E.6) of this final rule, 

we believe the specialty tier should 

consist of only the highest-cost drugs 

and therefore, that we should apply a 

methodology that takes into account 

rising drug costs and changes in 

utilization over time. There is a chance 

that a drug—including a generic drug— 

that no longer qualifies for placement on 

the specialty tier may be placed on a 

non-specialty, non-preferred brand/drug 

tier, which may have up to 50 percent 

coinsurance. We note however that this 

scenario exists today, where drugs are 

no longer eligible for specialty tier 

placement because they no longer meet 

the specialty-tier cost threshold, and 

Part D sponsors can choose to place 

them on formulary in a way that they 

deem best for their enrollees, provided 

they comply with the requirements of 

our formulary review and approval 

process under § 423.120(b). The 

dynamics around formulary placement 

of brand and generic drugs and the 

elements that drive those decisions are 

central to the core structure and 

function of the Part D benefit. We 

therefore do not believe this proposal 

exacerbates this issue. We also 

acknowledge in section IX.E.5. of this 

final rule that conflicting forces might 

limit the potential savings/benefits of 

this proposal. Moreover, it is important 

to note that drugs on a non-specialty, 

non-preferred brand/drug tier are 

subject to tiering exceptions. 

Under the requirements of 

§ 423.578(a)(6) and consistent with our 

guidance at section 40.5.1 of the Parts C 

& D Enrollee Grievances, Organization/ 

Coverage Determinations, and Appeals 

Guidance, non-preferred generic drugs 

are eligible for tiering exceptions to the 

lowest applicable cost sharing 

associated with alternatives that are 

either brand or generic drugs when the 

medical necessity criteria are met. This 

represents an important protection for 

Part D enrollees, particularly when 

paired with our benefit parameters that 

we establish on an annual basis. Under 

§ 423.104(d)(2)(iii), tiered cost sharing 

for non-defined standard benefit designs 

(meaning, actuarially equivalent 

standard, basic alternative, or enhanced 

alternative benefit designs) may not 

exceed levels (or cost sharing 

thresholds) that we annually determine 

to be discriminatory. 

We are not finalizing our proposal to 

increase the specialty-tier cost threshold 

to $780 (as a 30-day equivalent 

ingredient cost) for contract year 2021 

from the previous $670 (as a 30-day 


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5950 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

equivalent negotiated price). For CY 

2021, we will maintain the specialty tier 

threshold at $670, as a 30-day 

equivalent negotiated price. However, as 

previously described, we are finalizing 

our proposed methodology to determine 

the specialty tier threshold each year, 

beginning with CY 2022. 

In summary, we are finalizing without 

modification our proposals to: 

• Add a new paragraph at 

§ 423.104(d)(2)(iv)(D) to specify that a 

Part D plan may maintain up to two 

specialty tiers; 

• Maintain the existing policy at 

§ 423.578(c)(3)(ii), thereby requiring Part 

D sponsors to permit tiering exceptions 

between their two specialty tiers to 

provide coverage for the approved Part 

D drug on the higher cost-sharing, 

specialty tier that applies to preferred 

alternative Part D drugs on the lower 

cost-sharing, preferred specialty tier; 

• Add new paragraphs 

§ 423.104(d)(2)(iv)(D)(1) through (3) to 

establish a maximum allowable cost 

sharing of 25/33 percent for a single 

specialty tier, or, for plans with two 

specialty tiers, the higher cost-sharing, 

specialty tier; 

• Permit Part D sponsors to set the 

cost sharing for the preferred specialty 

tier at any amount lower than that of the 

other specialty tier; 

• Give Part D sponsors the flexibility 

to determine which Part D drugs are 

placed on either specialty tier, subject to 

the thresholds we are proposing and the 

requirements of the CMS formulary 

review and approval process under 

§ 423.120(b)(2); 

• Amend § 423.578(a)(6)(iii) to cross 

reference placement of the definition of 

specialty tier at § 423.104(d)(2)(iv); 

• Add new paragraph (d)(2)(iv)(C), 

which specifies that the determination 

of the specialty-tier cost threshold for a 

plan year is based on PDE data from the 

plan year that ended 12 months prior to 

the beginning of the applicable plan 

year; 

• Add new paragraph (d)(2)(iv)(A) 

which describes, in (d)(2)(iv)(A)(1) 

through (4), the methodology by which 

we set the specialty-tier cost threshold, 

and in (d)(2)(iv)(A)(5) a Part D drug’s 

eligibility for placement on the specialty 

tier; and 

• Add new paragraph (d)(2)(iv)(B), 

which describes the methodology we 

will use to increase the specialty-tier 

cost threshold. 

In response to comments, we are also 

finalizing new paragraph 

(d)(2)(iv)(A)(6), which describes the 

eligibility for placement on the specialty 

tier of newly-FDA-approved Part D 

drug. 

These final policies will apply for 

coverage year 2022, and we will 

announce the specialty-tier cost 

threshold for coverage year 2022 prior to 

the contract year 2022 bidding deadline. 

As discussed in section IV.E.2 and 

earlier in this section (section IV.E.6) of 

this final rule, to retain the policies in 

effect before coverage year 2022, we 

will: 

• Amend the definition of specialty 

tier at § 423.560 by adding paragraph (i) 

to clarify that the existing definition 

will apply before coverage year 2022, 

and paragraph (ii) to cross reference the 

definition which appears in 

§ 423.104(d)(2)(iv), which will apply 

beginning coverage year 2022; and 

• Amend § 423.578(a)(6)(iii) by 

adding paragraph (A) to cross reference 

the definition of specialty tier which 

will apply before coverage year 2022, 

and paragraph (B) to cross reference 

placement of the definition of specialty 

tier at § 423.104(d)(2)(iv), which will 

apply beginning coverage year 2022. 

Additionally, paragraph (A) will remove 

the phrase ‘‘and biological products.’’ 

Additionally, paragraph (B) will (1) 

reflect the possibility of a second 

specialty tier, and (2) clarify that Part D 

sponsors may design their exception 

processes so that Part D drugs on the 

specialty tier(s) are not eligible for a 

tiering exception to non-specialty tiers. 

F. Beneficiary Real Time Benefit Tool 

(RTBT) (§ 423.128) 

1. Overview and Summary 

Section 101 of the MMA requires the 

adoption of Part D e-prescribing (eRx) 

standards. Prescription Drug Plan (PDP) 

sponsors and Medicare Advantage (MA) 

organizations offering Medicare 

Advantage Prescription Drug Plans 

(MA–PD) are required to establish 

electronic prescription drug programs 

that comply with the e-prescribing 

standards that are adopted under this 

authority. Prescribers and dispensers 

who electronically transmit and receive 

prescription and certain other 

information for Part D-covered drugs 

prescribed for Medicare Part D-eligible 

individuals, directly or through an 

intermediary, are required to comply 

with any applicable standards that are 

in effect. 

Section 119 of the Consolidated 

Appropriations Act requires that Part D 

plan sponsors implement a prescriber 

RTBT capable of integrating with 

clinicians’ electronic prescribing and 

electronic health record systems for the 

real-time transmission of formulary, 

benefit, clinical alternative, cost sharing, 

and utilization management information 

specific to Part D plan enrollees. This 

requirement is to take effect once the 

Secretary names a prescriber RTBT 

standard, which has not yet occurred. 

For a further discussion of the 

statutory basis for this final rule and the 

statutory requirements at section 

1860D–4(e) of the Act, please refer to 

section I. of the February 4, 2005, 

Medicare Program; E-Prescribing and 

the Prescription Drug Program Proposed 

Rule (70 FR 6256). 

In accordance with our regulations at 

§ 423.160(b)(1), (2), and (5), CMS’ Part D 

eRx program requires that Part D 

sponsors support the use of the adopted 

standards when electronically 

conveying prescription and formulary 

and benefit information regarding Part 

D-covered drugs prescribed to Part Deligible individuals between plans, 

prescribers, and dispensers. 

CMS utilized several rounds of 

rulemaking to update the Part D eprescribing program. Most recently, in 

the May 2019 final rule Modernizing 

Part D and Medicare Advantage to 

Lower Drug Prices and Reduce Out-ofPocket Expenses Final Rule (84 FR 

23832) (hereinafter referred to as the 

May 2019 final rule), we required that 

Part D plans support a prescriber 

electronic real-time benefit tool capable 

of integrating with at least one eprescribing or electronic health record 

(EHR) system. The prescriber RTBT 

must provide its enrollees with 

complete, accurate, timely, and 

clinically appropriate patient-specific 

real-time formulary and benefit 

information (including enrollee cost 

sharing information formulary 

alternatives and utilization management 

requirements). This ‘‘prescriber RTBT’’ 

electronic transaction requirement will 

become effective January 1, 2021, and is 

expected to enhance medication 

adherence and lower overall drug costs 

by providing Part D prescribers 

information in real time when lowercost alternative drugs are available. 

The SCRIPT and the NCPDP 

Formulary and Benefits standards have 

already become critical components of 

the Part D program, and CMS believes 

that the recently finalized prescriber 

RTBT requirement at § 423.160(b)(7) 

will do the same by enhancing the 

electronic communication of 

prescription-related information 

between plans and prescribers under the 

Part D benefit program. In order to 

further enhance this communication, 

CMS has been monitoring the 

development of prescriber RTBT 

standards and will consider adoption of 

these standards in future rulemaking. 

While these requirements will empower 

prescribers, CMS also believes it is 

important to empower patients with 


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62 Impact of Type 2 Diabetes Medication Cost 

Sharing on Patient Outcomes and Health Plan Costs 

(2016), Julia Thornton Snider, Seth Seabury, et. Al.; 

The ‘‘Cost’’ of Medication NonAdherence: 

Consequences We Cannot Afford to Accept (2011), 

Marie A. Chisholm-Burns and Christina A. Spivey; 

Medication Non-adherence is Associated with 

Increased Medical Health Care Costs (2007), 

Sunanda Kane and Fadiya Shaya. 

63See https://www.ncbi.nlm.nih.gov/pmc/ 

articles/PMC1855272/. 

64See https://www.ncbi.nlm.nih.gov/pubmed/ 

11021677/. 

information like that which will be 

included in the prescriber RTBT and 

give them the ability to access this 

information either at their computer or 

using a mobile device. 

In the February 2020 proposed rule, 

CMS proposed to adopt at 

§ 423.128(d)(1)(vi), (d)(4) and (d)(5) a 

requirement that Part D sponsors 

implement a beneficiary RTBT that 

would allow enrollees to view accurate, 

timely, and clinically appropriate 

patient-specific real-time formulary and 

benefit information, effective January 1, 

2022, so as to allow both prescriber and 

patient to consider potential cost 

differences when choosing a medication 

that best meets the patient’s medical 

and financial needs. CMS proposed to 

require that each system response value 

would need to present real-time values 

for the patient’s cost-sharing 

information and clinically appropriate 

formulary alternatives, where 

appropriate. This requirement would 

include the formulary status of 

clinically appropriate formulary 

alternatives, including any utilization 

management requirements, such as step 

therapy, quantity limits, and prior 

authorization, applicable to each 

alternative medication. CMS also 

proposed to require that plans make this 

information available to enrollees via 

their customer service call center. 

CMS received the following 

comments related to our proposal, in 

general. Our responses follow. 

Comment: All commenters supported 

our proposal, citing the need to provide 

beneficiaries with actionable 

information about their prescription 

drug costs, so beneficiaries can make 

better informed decisions about 

treatment options. 

Response: CMS thanks commenters 

for their support. CMS agrees that 

providing beneficiaries with 

information about prescription drug 

costs is important and that the 

beneficiary RTBT will help provide this 

information to Part D enrollees. 

Comment: Some commenters 

requested that we delay the 

implementation date until January 1, 

2023 to allow more time for testing the 

tool. Some of these commenters 

requested that we exercise enforcement 

discretion, should we choose not to 

delay the implementation date. Other 

commenters requested that we change 

the implementation date to January 1, 

2021 so that beneficiaries can access the 

benefits of the tool more expeditiously. 

Response: CMS understands both the 

desire to ensure that the tool functions 

properly and that Part D enrollees have 

access to information about prescription 

drug costs. However, in order to help 

ensure that Part D sponsors have 

adequate time to implement the tool 

properly so that beneficiaries can access 

accurate information as seamlessly as 

possible, we have decided to delay the 

implementation date until January 1, 

2023. 

Comment: A few commenters 

requested that CMS provide training 

tools on beneficiary RTBTs to help 

ensure that Part D enrollees are able to 

use the RTBTs properly. Other 

commenters requested that we provide 

the Part D sponsors with standard 

language to use on their beneficiary 

RTBTs to help ensure that Part D 

enrollees are able to understand the 

information. 

Response: CMS believes that helping 

ensure that Part D enrollees can use the 

beneficiary RTBTs and understand the 

information within them is of utmost 

importance. However, CMS wants to 

help ensure that plans have sufficient 

flexibility when implementing this 

requirement, since most Part D sponsors 

have computer applications or portals in 

place and are more attuned to the needs 

of their enrollees. In addition, the 

RTBTs may differ slightly by plan, so 

we believe that Part D sponsors are 

better equipped to ensure that their 

enrollees understand how to use the 

tool and the language within it. 

In order to help ensure that 

beneficiaries understand how to use this 

tool, CMS considered requiring that Part 

D sponsors provide training to their 

enrollees. However, we believe this 

would limit our strategy of maximal 

flexibility for Part D sponsors in 

implementing this new requirement. 

Part D sponsors are in the best position 

to gauge whether or not their enrollees 

would benefit from training about how 

to use beneficiary RTBTs. Furthermore, 

we expect these RTBTs to be similar to 

the computer applications or portals 

that most Part D sponsors already have 

in place, so we do not believe that Part 

D enrollees will require a training to use 

the new tool. 

Comment: Commenters requested that 

we require Part D sponsors to include 

additional information unrelated to 

beneficiary drug costs in the beneficiary 

RTBT, such as beneficiary eligibility 

status, the notification that beneficiaries 

have the right to an appeal, an 

explanation of the difference between 

out of pocket costs and premiums, and 

a message letting beneficiaries know 

that assistance programs are available to 

beneficiaries to help them pay their out 

of pocket costs. 

Response: Although CMS understands 

the importance of keeping beneficiaries 

informed about these important topics, 

we decline to adopt this suggestion. 

Beneficiaries can access this 

information from several sources, 

including upon enrollment in Medicare 

Part D, through the Medicare & You 

publication, and Medicare.gov. The 

purpose of the beneficiary RTBT is to 

better inform beneficiaries about 

alternative medications, rather than 

serve as a repository of information for 

Part D enrollees. As previously stated, 

CMS seeks to allow Part D sponsors 

flexibility in implementing this 

requirement. As a result, CMS is not 

requiring sponsors to include 

information that is not directly 

connected to the purpose of the RTBT. 

However, Part D sponsors can include 

additional information, if they deem it 

helpful to their enrollees. 

2. Pricing Information for the 

Beneficiary RTBT 

As previously noted, CMS proposed 

to require that Part D sponsors include 

beneficiary-specific cost information in 

their beneficiary RTBTs. We proposed 

this requirement since we believe that 

sharing this information would yield 

greater medication adherence. In our 

proposed rule, we cited evidence 

suggesting that reducing medication 

cost yields benefits in increased patient 

medication adherence. Evidence 

supports that increased medication outof-pocket costs was associated with 

adverse non-medication related 

outcomes such as additional medical 

costs, office visits, hospitalizations, and 

other adverse events.62 Given that 

patient cost is such a determinant of 

adherence, including the patient in such 

discussions should improve medication 

adherence. Further, research shows that 

when patients play an active role in 

their health care decisions the result is 

increased patient knowledge, 

satisfaction, adherence with treatment 

and improved outcomes.63 Although not 

all patients will choose to actively 

participate in treatment decisions, 

interactive discussions between patients 

and physicians are correlated with 

improved patient satisfaction with their 

health care provider.64

We believe that bringing all of these 

benefits to Part D enrollees is especially 

important, in light of the fact that the 


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65Report is accessible at https://

www.pewinternet.org/2017/05/17/technology-useamong-seniors/. 

Medicare population is becoming 

increasingly comfortable with 

technology. According to a 2017 Pew 

Research Center study, some groups of 

seniors report ‘‘owning and using 

various technologies at rates similar to 

adults under the age of 65’’ 65 and also 

characterized ‘‘82% of 65- to 69-yearolds as internet users,’’ and found that 

40 percent of seniors now own 

smartphones, ‘‘more than double the 

share that did so in 2013.’’ As more 

seniors use computers and smart phones 

in their daily lives, it is likely that they 

will use electronic means to research 

information about their prescription 

medications. CMS believes that the Part 

D program must move to accommodate 

those enrollees by enhancing the way 

that digital technologies are currently 

used. 

We also stated that we would 

consider it a best practice for beneficiary 

RTBTs to include cost-sharing amounts 

for medications if purchased at a 

pharmacy selected by the beneficiary, 

provided the pharmacy is in the plan’s 

network. Sponsors would also be 

allowed to provide cost data for 

alternative pharmacies in the plan’s 

network. However, due to concerns with 

enrollees being steered to different 

pharmacies, we did not propose to 

require that beneficiary RTBTs include 

pharmacy-specific cost sharing 

information. 

In order to support maximum 

transparency, CMS also encouraged 

plans to show each drug’s negotiated 

price (as defined in § 423.100) in the 

beneficiary RTBTs in addition to the 

requirement to reflect the beneficiary’s 

out-of-pocket cost information at the 

beneficiary’s currently chosen 

pharmacy. Alternatively, if the 

beneficiary RTBT does not show the 

negotiated price, we would encourage 

plans to provide additional cost data 

comparing the beneficiary and plan cost 

comparisons for each drug and its 

alternatives. For example, if Drug A has 

beneficiary cost sharing of $10 and the 

plan pays $100, and Drug B also has a 

beneficiary cost sharing of $10 but the 

plan only pays $90, the beneficiary 

RTBT would reflect a difference of $0 

for cost sharing and ¥$10 in 

comparative plan cost for Drug B. 

Providing data such as negotiated price 

or comparative plan costs would 

provide beneficiaries with a better 

understanding of the price differences 

between alternative drugs and could 

help provide beneficiaries with 

information on potential clinically 

appropriate alternatives that could steer 

a discussion with their clinician and 

provide the biggest savings to the 

beneficiary and potentially lower Part D 

costs overall. 

Although we encouraged the 

inclusion of the negotiated price and 

other comparative information in the 

beneficiary RTBT, we did not propose to 

require the inclusion of such 

information. We did not propose to 

require this because we do not have 

research that shows learning the payer’s 

rate will affect beneficiary choice if 

there is no effect on their payment 

amount. However, we solicited 

comment on this issue. 

CMS appreciates the feedback we 

received on our proposals. In the 

sections that follow, which are arranged 

by topic area, we summarize the 

comments we received on each proposal 

and provide our responses. In the 

following pages, we summarize the 

comments received about the pricing 

data to be included in the beneficiary 

RTBT. 

Comment: Some commenters 

requested that CMS require the 

inclusion of the negotiated and net 

prices of medications, which is the cost 

of the medication after all rebates and 

fees are subtracted. Other commenters 

requested that we refrain from even 

encouraging the inclusion of the 

negotiated price, as we did in our 

proposed rule. 

Response: CMS understands that it 

may be helpful for some beneficiaries to 

see additional pricing information, 

including the negotiated and net prices. 

However, as stated in our November 

2020 Transparency in Coverage final 

rule (85 FR 72158), which implements 

requirements for group health plans and 

health insurance issuers in the 

individual and group market to share 

participant cost sharing information and 

the negotiated price with the participant 

in the form of machine readable files 

and paper (upon request by the 

participant), CMS should aim to strike 

a balance between illuminating some of 

the factors that drive drug costs and not 

overwhelming consumers with 

information that is not directly relevant 

to their cost-sharing liability. In the case 

of the beneficiary RTBT, we believe this 

balance is best struck through alignment 

with the information in the prescriber 

RTBT, which does not require inclusion 

of the negotiated or net prices. Having 

the same information in both tools will 

not only help facilitate conversations 

between enrollees and their providers 

about different medications for the 

enrollee, but will give the prescriber the 

opportunity to explain the information 

in the beneficiary RTBT to enrollees. 

Providing enrollees information about 

the negotiated drug prices could easily 

overwhelm consumers with 

information, since the pricing 

information is updated in real time 

using test claims transmitted to the 

pharmacy in order to adequately gauge 

what the drug price is at the time the 

request is made. 

By contrast, in our November 2020 

final rule, the requirement for group 

health plans and private issuers is to 

compile information for consumers in a 

file outside of the prescriber RTBT. As 

a result, group health plans and private 

issuers are only required to provide this 

information once—through a machinereadable file or via paper. However, if 

we were to require Part D sponsors to 

provide the negotiated and net prices in 

the beneficiary RTBT, Part D sponsors 

would be required to transmit two 

different claims in order to facilitate 

these tools—one for the prescriber RTBT 

and one for the beneficiary RTBT. We 

believe that the benefit these enrollees 

derive from seeing the net and 

negotiated prices is outweighed by the 

burden for plans to calculate this cost 

and program it into the beneficiary 

RTBT. 

Further, since most plans have similar 

beneficiary RTBTs in place, we believe 

that plans are in the best position to 

gauge what information is useful to their 

enrollees. We intend for our regulatory 

requirements to be a starting point for 

the beneficiary RTBTs and that plans 

will have the ability to add in additional 

information, if they believe it will 

helpful for their enrollees. The sole 

purpose of our regulatory requirements 

is to provide the minimum amount of 

information that must be included in 

the beneficiary RTBT, and we do not 

believe that including the net or 

negotiated prices is absolutely necessary 

in the beneficiary RTBTs. This approach 

differs from the approach in our 

November 2020 final rule, since Part D 

plans already have similar tools in 

place, whereas the group health plans 

and issuers in the private and group 

market do not. 

Comment: Some commenters 

requested that CMS require Part D plans 

to include pharmacy and providerspecific data, so that beneficiaries can 

find the lowest possible price for their 

medications. 

Response: CMS understands the 

importance of ensuring that 

beneficiaries have the appropriate tools 

to find the lowest price medications. 

However, CMS seeks to balance this 

desire with the desire to ensure that 

beneficiaries are not improperly steered 

away from their pharmacies and 

providers of choice. Since plans have 


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the most experience in working with 

enrollees, we seek to give plans 

flexibility in implementing the 

beneficiary RTBT. As a result, we will 

not prohibit plans from displaying 

pharmacy and provider-specific pricing. 

However, we will not require plans to 

show this information. Therefore, we 

decline to accept the suggestion that we 

mandate that plans include this 

information. Instead we are finalizing 

our proposal to require only that Part D 

sponsors include the enrollee cost 

sharing amount, rather than the 

negotiated or net price. 

3. Beneficiary RTBT Formulary Data 

In order to fully empower enrollees to 

select the most appropriate medications, 

we proposed to require Part D sponsors 

to review formulary medications to 

determine which alternatives exist and 

whether those alternatives may save 

their enrollees money through reduced 

cost sharing. The sponsors would then 

import that information into the 

beneficiary RTBT. 

However, since we understand that 

most enrollees may not have the clinical 

background required to accurately 

discern the clinical appropriateness of 

all alternatives, we proposed a narrow 

exception to this requirement, to 

include for example certain antibiotics 

which are ‘‘drugs of last resort’’ that are 

typically reserved for instances in 

which the patient is found to have 

certain drug-resistant infections, or 

instances in which side-effects are such 

that a given prescription would not 

typically be selected in the absence of 

countervailing risks that would justify 

risking such side-effects, or instances in 

which there would be interactions with 

other drugs already used by the 

beneficiary that would contra-indicate 

prescribing a given drug. In these and 

other clinically appropriate instances, 

we stated that it may be appropriate to 

omit certain drugs from what is 

presented to the user of a beneficiary 

RTBT. Thus, in order to address these 

and other clinically appropriate 

scenarios, we proposed that Part D 

sponsors would be permitted to have 

their Pharmacy and Therapeutics (P & 

T) committees evaluate whether certain 

medications should be excluded from 

the beneficiary RTBT. In order to help 

ensure that this exception is narrowly 

construed, we proposed to allow P & T 

committees to exclude medications from 

the beneficiary RTBT only in the 

following situations or instances: (1) 

The only formulary alternatives would 

have significant negative side effects for 

most enrollees and the drug would not 

typically be a practitioner’s first choice 

for treating a given condition due to 

those side effects, (2) for cases where 

medications are considered to be ‘‘drugs 

of last resort,’’ (3) instances in which 

there would be interactions with other 

drugs already used by the beneficiary 

that would contra-indicate prescribing a 

given drug, or (4) other clinicallyappropriate instances. 

We clarified that the data that we 

proposed to require be provided in the 

beneficiary RTBT must be patientspecific, clinically appropriate, timely, 

accurate, and devoid of commercial 

purposes that would adversely impact 

the intended functionality of promoting 

cost-effective beneficiary and prescriber 

selections of drugs. In the following 

pages, we summarize the comments and 

provide our responses and final 

decisions surrounding formulary data to 

be included in the beneficiary RTBT. 

Comment: A number of commenters 

recommended that CMS remove the 

requirement for any formulary 

alternatives to be included on the 

beneficiary RTBT. These commenters 

expressed concern that listing these 

alternatives for Part D enrollees would 

lead to confusion among their enrollees, 

since beneficiaries would not be able to 

appropriately discern whether the 

medications are appropriate for them. 

Another commenter suggested that CMS 

require Part D sponsors to include 

alternatives that are not on plan 

formularies, in addition to the formulary 

alternatives, so that enrollees have a 

greater array of options. 

Response: Part D sponsors are 

required to include medications on their 

formulary that provide beneficiaries 

with a broad range of medically 

appropriate drugs across an appropriate 

breadth of categories and classes that 

cover all disease states, and meet other 

classifications. CMS reviews these 

formularies annually to help ensure 

compliance. As a result, we believe that 

the medications listed on the Part D 

formularies should provide sufficient 

options for Part D enrollees without 

requiring alternative options for 

enrollees outside of the Part D 

formularies. 

Although CMS shares commenters’ 

concerns surrounding beneficiary 

confusion, we believe that limiting 

beneficiaries’ choices to medications 

within their plan’s formulary will help 

alleviate this concern. CMS believes that 

allowing beneficiaries the opportunity 

to choose from different medication 

alternatives within the plan’s formulary 

strikes the right balance between 

ensuring that beneficiaries have 

adequate options for medications while 

not overwhelming beneficiaries with too 

many choices that may not be available 

to them. Although some enrollees may 

find these options overwhelming, we 

believe that the benefit of giving 

beneficiaries different medication 

options outweighs the risk that some 

beneficiaries may be overwhelmed by 

all the medication choices. 

Comment: The majority of 

commenters disagreed with our 

proposal to allow plans to exclude 

formulary alternatives in clinically 

appropriate instances, citing the 

possibility that plans could use this 

exclusion as an opportunity to steer 

patients away from the most clinically 

appropriate medications, give rise to 

undue confusion in cases where the 

provider determines that an excluded 

drug is actually appropriate, or cause 

plans to erroneously omit certain 

medications from the RTBT. However, 

some commenters supported this 

exclusion, since they believed that Part 

D sponsors could benefit from the 

additional flexibility. 

Response: After considering the 

information provided by the 

commenters, we are persuaded that the 

potential for misuse and confusion 

emanating from this exclusion 

outweighs the benefit of additional plan 

flexibility. CMS continues to believe 

that Part D sponsors should be granted 

flexibility when implementing the 

beneficiary RTBT. However, the harm 

that could be caused by the potential 

exclusion of appropriate medications 

outweighs the limited benefit of 

granting Part D sponsors this additional 

flexibility in this case. Therefore, we are 

removing this exclusion and finalizing 

our proposed requirement to include all 

formulary alternatives in the beneficiary 

RTBT. 

4. Rewards and Incentives for 

Beneficiary RTBT 

In order to encourage enrollees to use 

the beneficiary RTBT, we proposed to 

allow plans to offer rewards and 

incentives (RI) to their enrollees who 

use the tool. We proposed to define use, 

for purposes of permitted RI, to mean 

logging onto either the portal or 

application or calling the plan’s call 

center to ask for this information, 

without regard to whether the enrollee 

engages in a discussion with his or her 

prescriber or obtains or switches to any 

medication in response to such use. In 

other words, we proposed that plans 

that choose to offer RI must offer it to 

all plan enrollees who use the tool or 

seek to access this information via 

phone and must not make RI contingent 

upon the medical diagnosis or the type 

of medication a beneficiary is taking, or 

upon the enrollee switching 

medications. 


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66Office of Inspector General Policy Statement 

Regarding Gifts of Nominal Value To Medicare and 

Medicaid Beneficiaries, Office of Inspector General 

(2016). 

We proposed to prohibit any enrollee 

remuneration under the guise of RI, 

which includes waivers of copayments 

and deductible amounts and transfers of 

items or services for free. We also 

proposed to prohibit plans from offering 

any cash or monetary donations, under 

the guise of RI. However, we did 

propose to allow for the use of gift 

cards, as long as they are not cash 

equivalents and do not encourage 

enrollees to further patronize the plan or 

any of the plan’s corporate affiliates. For 

purposes of this proposal, CMS 

proposed that gift cards that can be used 

like cash, for example, a VISA or 

Amazon gift card, to be a ‘‘cash 

equivalent.’’ Cash equivalents also may 

include, for example, instruments 

convertible to cash or widely accepted 

on the same basis as cash, such as 

checks and debit cards. This means that 

gas cards or restaurant gift cards would 

be permitted. However, a gift card that 

can be used for goods or services 

purchased from the plan would be 

prohibited, since that could incentivize 

enrollment in plans that could provide 

gift cards that enrollees could use at 

pharmacies or retail stores owned by 

their plan, rather than at a third-party 

establishment owned by a different 

company. 

We also proposed that the RI be of 

nominal value, which Office of 

Inspector General (OIG) guidance 

specifies as no more than $15 per login 

or $75 in the aggregate annually, in 

accordance with OIG guidance.66 We 

also proposed that the member can 

receive a RI for no more than one login 

per month. We also proposed that this 

expense would have to be included as 

an administrative expense in the bids of 

Part D sponsors, rather than it being 

considered a drug cost. We solicited 

comments on these limitations and on 

how we can ensure that these RIs will 

not be indirectly provided or funded by 

pharmaceutical manufacturers. We also 

solicited comments on safeguards to 

mitigate risks of fraud and abuse with 

respect to these incentives. 

MA–PDs are already permitted to 

offer rewards and incentives for Part C 

benefits under our regulation at 

§ 422.134, which permits plans to offer 

health-driven rewards and incentives 

that are designed to encourage enrollees 

to participate in activities that focus on 

promoting improved health, preventing 

injuries and illness, and promoting 

efficient use of health care resources. 

We propose to adopt Part C’s ban at 

§ 422.134(b) on discrimination for Part 

D RI that plans offer to encourage the 

use of the beneficiary RTBT. We 

therefore proposed to require that if a 

Part D plan sponsor offers RI, it must be 

available to all of the plan’s enrollees 

that log into the plan’s portal or call the 

plan’s call center, without 

discrimination based on a prohibited 

basis; under applicable law, prohibited 

bases of discrimination include the 

enrollee’s proficiency in English, race, 

color, national origin, sex, age, 

disability, chronic disease, health status, 

or other basis prohibited by law. 

We proposed to add this provision to 

our regulations at § 423.128 by 

amending paragraph (d) to add 

paragraphs (4) and (5). Paragraph (4) 

would address the beneficiary RTBT 

and paragraph (5) would address the 

rewards and incentives for use of the 

beneficiary RTBT. 

Because of the safeguards included in 

the aforementioned proposals, including 

requiring that the rewards and 

incentives be non-cash equivalents, we 

believe the RI presents a low risk of 

fraud and abuse and is unlikely to 

compromise the integrity of the 

program. 

We received the following comments 

related to our proposal, and our 

responses follow: 

Comment: The majority of 

commenters supported the use of 

rewards and incentives for this 

provision. However, some of these 

commenters requested that CMS allow 

use of Amazon gift cards for the 

beneficiary RTBT, since they are a 

popular incentive for beneficiaries. The 

commenters disagreed with our 

classification of Amazon gift cards as 

cash equivalents, since they can only be 

used when shopping on Amazon.com or 

in Whole Foods. 

Response: CMS continues to believe 

that Amazon gift cards fall under the 

definition of cash equivalents. In their 

final rule entitled ‘‘Medicare and State 

Health Care Programs: Fraud and Abuse; 

Revisions to the Safe Harbors Under the 

Anti-Kickback Statute and Civil 

Monetary Penalty Rules Regarding 

Beneficiary Inducements,’’ published on 

December 7, 2016, (81 FR 88393), the 

OIG states that items that can be used 

like cash (such as a general purpose 

debit card) constitute cash equivalents. 

In addition, we seek to help ensure 

consistency across CMS rulemaking, 

and CMS has previously defined cash 

equivalents to include Amazon gift 

cards. Please see final rule entitled 

‘‘Medicare Program; Medicare Shared 

Savings Program; Accountable Care 

Organizations—Pathways to Success 

and Extreme and Uncontrollable 

Circumstances Policies for Performance 

Year 2017’’ published on December 31, 

2019. 

Although we understand the desire to 

use incentives that enrich the lives of 

beneficiaries, CMS must balance this 

desire against the increased fraud and 

abuse risk that exists when cash 

equivalents, such as a general purpose 

debit card or Amazon gift card are 

offered. As a result, we prohibit the use 

of Amazon gift cards as an RI under the 

beneficiary RTBT. 

However, we seek to empower Part D 

sponsors to ensure that beneficiaries are 

motivated to use the RTBT, especially 

given the aforementioned potential 

benefits of the RTBT, including 

medication adherence and improved 

patient satisfaction. As a result, we are 

not finalizing our proposed requirement 

that the rewards and incentives be 

nominal in value and thus be limited to 

$15/login and $75/year. Rather, we 

defer to the judgment of Part D sponsors 

as to what they consider to be a 

reasonable amount to offer their 

enrollees. As previously mentioned, we 

seek to grant flexibility to Part D 

sponsors as they are in the best position 

to judge the needs of their enrollees. 

CMS understands that this standard 

differs from what is considered 

appropriate under the Part C rewards 

and incentives program. The goal of the 

Part C rewards and incentives program 

is to promote healthy behaviors. By 

contrast, the goal of the rewards and 

incentives program for the beneficiary 

RTBT is to promote use of the tool, 

which are intended to lead to the 

aforementioned potential benefits of the 

RTBT, including medication adherence 

and decreasing overall drug costs. 

Because these goals differ and the value 

of use of the tool cannot be easily 

quantified, the Part C limit on rewards 

and incentives, which requires that the 

value of the reward and incentive not 

exceed the value of the activity itself, is 

not appropriate in this context of the 

Part D beneficiary RTBT. As a result, 

CMS is finalizing the limit for the 

rewards and incentives to be the amount 

Part D sponsors believe to be reasonable, 

rather than the Part C limit on rewards 

and incentives or a nominal amount. 

The other aspects of the RTBT rewards 

and incentives program are being 

finalized as proposed. 

After considering the comments we 

received and for the reasons outlined in 

the proposed rule and our responses to 

comments, we are finalizing our 

proposed provisions at §§ 423.128(d)(4) 

and (5) with several modifications. First, 

we are adding a January 1, 2023 

applicability date to the regulation text 

at paragraph (d)(4) to reflect that this 


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provision will not apply until that date. 

Second, because we are requiring that 

plans include all formulary medication 

alternatives, rather than only the 

alternatives that are clinically 

appropriate, we are modifying the 

language at § 423.128(d)(4)(ii) to require 

all formulary medication alternatives to 

be included. Since we will be allowing 

plans to determine what they believe to 

be reasonable in determining the dollar 

value of the rewards and incentives, we 

are modifying the language at 

423.128(d)(5)(i) to replace the word 

‘‘nominal’’ with ‘‘reasonable’’ to clarify 

that the new limit for the value of the 

rewards and incentives is what plans 

consider to be a reasonable value, rather 

than an amount that OIG has interpreted 

to be nominal. Because plans will be 

determining what they deem to be 

reasonable, rather than an amount that 

OIG has interpreted to be nominal, we 

are removing the limitation at 

§ 423.128(d)(5)(ii) on offering rewards 

and incentives for only one login per 

month. 

G. Establishing Pharmacy Performance 

Measure Reporting Requirements 

(§ 423.514) 

Section 1860D–12(b)(3)(D) of the Act 

provides broad authority for the 

Secretary to add terms to the contracts 

CMS enters into with Part D sponsors, 

including terms that require the sponsor 

to provide the Secretary with 

information as the Secretary may find 

necessary and appropriate. Pursuant to 

our statutory authority, we codified 

these information collection 

requirements for Part D sponsors in 

regulation at § 423.514. We proposed to 

amend the regulatory language at 

§ 423.514(a) to establish a requirement 

for Part D sponsors to disclose to CMS 

the pharmacy performance measures 

they use to evaluate pharmacy 

performance, as established in their 

network pharmacy agreements. 

Collecting pharmacy performance 

measures used to determine whether a 

financial reward or penalty is incurred 

by a pharmacy after the point-of-sale 

(POS) will enable CMS at a minimum to 

better understand how the measures are 

applied, whether uniformly or specific 

to pharmacy type. This effort may also 

explain if there is a pharmacy 

performance problem, as pharmacy 

price concessions (financial penalties 

incurred) after the POS have continued 

to grow annually. Knowledge of the 

industry’s pharmacy performance 

measures would also provide 

transparency to the process and likely 

confirm or dispel the idea that many of 

the measures may not provide 

appropriate metrics across all types of 

pharmacies. Once collected, we stated 

that CMS would publish the list of 

pharmacy performance measures 

reported to increase public 

transparency. 

We encouraged the industry to 

continue to work together on developing 

a set of pharmacy performance measures 

through a consensus process and Part D 

sponsors to adopt such measures to 

ensure standardization, transparency 

and fairness. We also solicited comment 

on the principles that Part D pharmacy 

performance measures should adhere to, 

including potential burden or hardship 

of performance measures on small, 

independent, and/or rural pharmacies, 

and recommendations for instituting 

potential Part D Star Ratings metrics 

related to these measures. Finally, we 

solicited comment on the data elements, 

timeline, and method of submission for 

the reporting of pharmacy performance 

measures. 

We received the following comments 

and our response follows: 

Comment: The vast majority of 

comments were supportive of the 

proposal for CMS to establish a 

reporting requirement to collect 

pharmacy performance measures used 

by Part D sponsors in their network 

pharmacy contracts. Virtually all of the 

supportive comments shared the 

opinion that the current pharmacy 

performance measures and processes 

were either flawed, opaque or both. 

They believed the collection of this 

information would spur transparency 

and reveal the need for standardized 

measures via an industry driven 

consensus process facilitated by an 

experienced and neutral third-party. 

Response: We appreciate the support 

for the proposal to establish a 

requirement for Part D sponsors to 

disclose pharmacy performance 

measures to CMS. We agree that the 

information should provide 

transparency and help industry 

stakeholders come to a consensus on 

measures. 

Comment: A number of commenters 

believed that if CMS made the 

pharmacy performance measures used 

by Part D sponsors public it would 

result in a loss of leverage and flexibility 

for sponsors in their negotiations with 

network pharmacies. Other concerns 

were that it would stifle innovation and 

be harmful to market competition. A 

commenter requested that the measures 

only be shared with the involved 

parties. Another added that, if universal 

performance thresholds are applied, 

Part D sponsors would lose their ability 

to effectively negotiate performance 

programs with network pharmacies 

when true differences in performance 

may exist. Another believed the 

publication of performance measures 

without context could mislead patients 

about the performance of their 

pharmacies. A couple of commenters 

stated that the information was sensitive 

and that making it public would be 

harmful to market competition; 

believing it inappropriate to make 

sponsors’ performance measure 

thresholds public. 

Response: We remind commenters 

that in the proposed rule we did not 

propose universal performance 

thresholds, but rather proposed to 

collect plans’ pharmacy performance 

measures as an additional reporting 

section of our Part D reporting 

requirements. Given the growing 

magnitude of pharmacy price 

concessions based on performance 

measures in Part D, we believe it is 

important to provide transparency to the 

public regarding the measures in use. In 

addition, we believe that publishing a 

list of currently used pharmacy 

performance measures will promote the 

development of consensus-built 

standards by the industry that are 

transparent and equitable across various 

pharmacy types and patient 

populations, and support value-based 

care. Creating a ‘‘level playing field’’ to 

measure pharmacy network 

performance should not pose an 

obstacle to flexibility, innovation or 

competitiveness. Rather, a fair, more 

accurate and transparent system of 

measuring the strengths or weaknesses 

of a plan’s network pharmacies should 

encourage both plans and the 

pharmacies within their respective 

networks to be innovative, flexible and 

competitive in how they use the data 

collected. Accurately identifying poorly 

performing pharmacies and wellperforming pharmacies should 

encourage, when practical, a sharing of 

top pharmacy best practices’ throughout 

a plan’s network that would ideally 

enhance a plan’s competitiveness in the 

marketplace. 

Comment: The large majority of 

commenters agreed with the reporting 

requirement proposal, but noted 

concerns related to industry burden, 

need for more industry input, that any 

elements or criteria be subject to 

rulemaking, and that a reasonable 

timeline for implementation be given. 

Response: As stated in the proposed 

rule, we are dedicated to the 

involvement of the industry in the 

development of this requirement. After 

publication of this final rule to establish 

the requirement that sponsors disclose 

pharmacy performance measure 

information to CMS, any new elements 

added to the Part D reporting 


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requirements (OMB 0938–0992) to 

implement this requirement would 

result from industry feedback through 

60- and 30-day public comment periods 

in the Federal Register and approval 

through the Office of Management and 

Budget (OMB) Paper Reduction Act 

(PRA) process. As with any new 

elements added to the Part D reporting 

requirements, we believe the 

opportunity to provide comment 

through the PRA process will allow 

adequate input from the public and the 

industry. We also agree that to 

implement this provision we need to 

ensure the timeline and burden are 

reasonable for all parties involved. We 

will take into consideration the 

feedback received in response to the 

proposed rule when putting forth a 

timeline for implementation and 

potential elements for public comment. 

Comment: We received one comment 

that warned that implementing a 

standard set of performance measures 

held the potential of narrowing 

pharmacy networks, thereby impacting 

some pharmacies and the options 

available to beneficiaries. Other 

commenters, while expressing support 

for standardization of measures in 

principle, requested that sponsors not 

be locked into only specific measures. 

Response: We did not propose to 

implement a standard set of 

performance measures nor did we make 

any proposals with respect to requiring 

the use of any particular measures. 

Rather, in the proposed rule, we 

encouraged industry to come to a 

consensus on a standard set of 

pharmacy performance measures. 

Comment: A few commenters, while 

supportive of the industry standardizing 

pharmacy performance measures, 

cautioned against placing too many 

exacting limits on the performance 

measures, and stated that sponsors 

should retain the ability to use metrics 

beyond those decided by a third-party 

facilitator such as, but not limited to, 

the Pharmacy Quality Alliance (PQA), 

provided such measures are transparent 

to CMS and pharmacies. 

Response: We thank the commenters 

for their comments. We reiterate that we 

did not propose to standardize 

pharmacy performance measures in the 

proposed rule. We would expect that if 

through an industry consensus a 

standard set of pharmacy performance 

measures is established, it would be 

through a similar transparent and 

consensus process that additional 

measures would be added. We note, 

however, that transparency is of little 

consequence if the measures or the 

corresponding thresholds for that 

measure are ill-suited for the type of 

pharmacy or patient population that is 

being evaluated. 

Comment: We received a few 

comments regarding our request for 

feedback on recommendations on 

measures to consider for use in the Part 

D Star Ratings related to the uptake or 

evaluation of pharmacy performance 

measures. A commenter believed it 

premature to consider specific metrics 

for a Star Ratings program, and another 

opposed the idea, believing that the 

proposed use of Star Ratings for 

pharmacy performance would not be 

meaningful to Medicare beneficiaries 

who judge pharmacy performance on a 

highly personalized basis. Other 

commenters strongly supported our 

proposal with one asking the agency to 

follow its traditional approach when 

first introducing Star Ratings and report 

the results on the display page. We 

received a comment that requested that 

any future pharmacy performance 

measures be developed in a way that 

directly ties to the Part D Star Ratings 

program. 

Response: We appreciate the 

comments received and will consider 

them for any potential future 

development of measures based on 

pharmacy performance measure 

information. We note that we believe it 

is not premature to discuss potential 

Star Ratings as there would be a natural 

outgrowth to the development of 

standardized pharmacy measures. While 

we agree with the commenter that the 

selection of a pharmacy by a Medicare 

beneficiary is often a highly 

personalized choice, we believe that 

creating a rating system that leverages 

this plan-reported data could offer the 

beneficiaries additional information 

about the performance of pharmacies in 

the sponsors’ pharmacy network. 

We agree with the commenter that 

requested we follow the regulatory 

process for the introduction of new Star 

Ratings measures. CMS codified the 

methodology for the Part C and D Star 

Ratings program in the CY 2019 

Medicare Part C and D Final Rule (83 FR 

16725 through 83 FR 16731), published 

in April 2018, for performance periods 

beginning with 2019; that final rule lays 

out the methodology for the 2021 Star 

Ratings and beyond. CMS will continue 

to solicit feedback on new measure 

concepts as well as updated measures 

through the process described for 

changes in, and adoption of, payment 

and risk adjustment policies in section 

1853(b) of the Act. We will also 

continue to provide advance notice 

regarding measures considered for 

implementation as future Star Ratings 

measures. As specified at 

§ 422.164(c)(2)–(4), § 423.184(c)(2)–(4), 

§ 422.164(d)(2), and § 423.184(d)(2), 

new measures and measures with 

substantive specification changes must 

remain on the display page for at least 

2 years prior to becoming a Star Ratings 

measure. We appreciate the comment 

that we develop any future pharmacy 

performance measures in a way that can 

be directly tied to the Part D Star 

Ratings program. 

Comment: A few commenters 

responded to our solicitation for 

feedback regarding the principles that 

Part D pharmacy performance measures 

should adhere to, including potential 

burden or hardship of performance 

measures on small, independent and/or 

rural pharmacies. Most comments 

suggested that smaller pharmacies be 

exempt entirely from all performance 

measures or subject to a modified 

approach. A commenter indicated that a 

voluntary set of measures, or a custom 

measurement set that is more applicable 

and feasible for smaller pharmacies to 

report (for example, patient counseling, 

medication therapy management) be 

used. 

Response: We thank the commenters 

for their recommendations and will take 

them into consideration. 

Comment: A commenter stated that 

pharmacies should have the ability to 

appeal results of their performance 

measures. 

Response: We appreciate the 

comment regarding appeal rights; 

however, we did not propose to adopt 

any performance measures, and 

therefore did not propose an appeals 

procedure. 

Comment: In response to our 

solicitation for comments on the 

proposed list of potential data elements 

there were two primary objections made 

by commenters. Some commenters 

opposed the use of retrospective data 

that could include success/failure 

thresholds, and average scores or 

statistics that may reveal sensitive 

information regarding contractual 

arrangements. There were no comments 

supportive of the proposed rule 

specifically on the data elements. 

Response: We appreciate the 

comments. In the proposed rule, we 

recommend and encourage industry to 

continue, through a neutral third-party 

facilitator, creating and testing potential 

pharmacy performance measures based 

on industry consensus. If an industrywide consensus is reached on a set of 

standardized measures it follows that 

part of the process of reaching 

consensus will be determining what 

should and should not be reported 

retrospectively, and what would and 

would not be deemed sensitive 


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contractual information between a 

sponsor and its pharmacy network. 

Based on these comments, we are 

finalizing our proposal to amend the 

regulatory language at § 423.514(a) to 

establish a requirement for Part D 

sponsors to disclose to CMS the 

pharmacy performance measures they 

use to evaluate pharmacy performance, 

as established in their network 

pharmacy agreements, with one 

modification to make the provision 

applicable starting January 1, 2022. 

H. Dismissal and Withdrawal of 

Medicare Part C Organization 

Determination and Reconsideration and 

Part D Coverage Determination and 

Redetermination Requests (§§ 422.568, 

422.570, 422.582, 422.584, 422.590, 

422.592, 422.631, 422.633, 423.568, 

423.570, 423.582, 423.584, and 423.600) 

We proposed regulations for 

withdrawing or dismissing Part C 

organization determination and 

reconsideration requests and Part D 

coverage determination and 

redetermination requests. We also 

proposed regulations for withdrawing or 

dismissing Part C and Part D 

independent review entity (IRE) 

reconsiderations. We also proposed to 

apply these provisions to requests for 

integrated organization determinations 

and reconsiderations at §§ 422.631 and 

422.633. The proposals specifically 

addressed under what circumstances it 

would be appropriate to dismiss a 

coverage request or appeal at the plan or 

IRE level. We also proposed rules for 

how a party may request to withdraw 

their coverage request or appeal at the 

plan or IRE level. A withdrawal of a 

request is when the party that initiated 

the request voluntarily decides that a 

decision on their request is no longer 

needed, and the party communicates 

that desire to the plan to stop 

consideration of the request for 

determination (or reconsideration). A 

dismissal of a request is when a plan 

decides to stop consideration of a 

request before issuing a decision. The 

effect of both a withdrawal and a 

dismissal is that the plan does not 

proceed with making a substantive 

decision on the merits of the coverage 

request. 

Specifically, we proposed that: 

• In new §§ 422.568(g), 422.631(e), 

and 423.568(i), we proposed to permit a 

plan to dismiss a request for the initial 

plan level decision (that is, organization 

determination, integrated organization 

determination or coverage 

determination) when any of the 

following apply— 

++ The individual or entity making 

the request is not permitted to request 

an organization determination or 

coverage determination. 

++ The plan determines that the 

individual or entity making the request 

failed to make a valid request for an 

organization determination or coverage 

determination. 

++ The enrollee dies while the 

request is pending and the enrollee’s 

spouse or estate has no remaining 

financial interest in the case and no 

other individual or entity with a 

financial interest in the case wishes to 

pursue the organization determination 

or coverage determination; we 

explained in the proposed rule that we 

interpret having a financial interest in 

the case as having financial liability for 

the item(s) or service(s) underlying the 

coverage request. 

++ The individual or entity who 

requested the review submits a timely 

written request for withdrawal of their 

request for an organization 

determination or coverage 

determination with the plan. 

• In §§ 422.570(g) and 423.570(f), we 

proposed to permit a plan to dismiss an 

expedited organization determination or 

coverage determination, consistent with 

the proposed requirements at §§ 422.568 

and 423.568, respectively. Applicability 

of these procedures to expedited 

integrated coverage determinations was 

proposed at § 422.631(e). 

• In §§ 422.582(f), 422.633(h), and 

423.582(e), we proposed to permit a 

plan to dismiss (either entirely or as to 

any stated issue) a request for the 

second plan level decision (that is, 

reconsideration, integrated 

reconsideration or redetermination) 

when any of the following apply — 

++ The individual or entity making 

the request is not a proper party to the 

reconsideration, integrated 

reconsideration, or redetermination 

under the applicable regulation; we 

explained that this proposal would 

authorize dismissal when the individual 

or entity making the request is not 

permitted to request a reconsideration, 

integrated reconsideration, or 

redetermination. 

++ When the plan determines the 

party failed to make a valid request for 

a reconsideration, an integrated 

reconsideration, or a redetermination 

that substantially complies with the 

applicable regulation for making a valid 

request for reconsideration or 

redetermination. 

++ When the party fails to file the 

reconsideration, integrated 

reconsideration or redetermination 

request within the proper filing time 

frame in accordance with the applicable 

regulation. 

++ When the enrollee dies while the 

reconsideration or redetermination is 

pending and the enrollee’s spouse or 

estate has no remaining financial 

interest in the case and no other 

individual or entity with a financial 

interest in the case wishes to pursue the 

reconsideration or redetermination. We 

explained in the proposed rule that we 

interpret having a financial interest in 

the case as having financial liability for 

the item(s) or service(s) underlying the 

coverage request. 

++ When the individual or entity 

submits a timely written request to 

withdraw their request for a 

reconsideration or redetermination. 

• At new § 422.584(g), we proposed 

to permit a plan to dismiss an expedited 

reconsideration using virtually identical 

language as for the proposed 

requirements at § 422.582. At new 

§ 423.584(f), we proposed to permit a 

plan to dismiss an expedited 

redetermination by cross referencing 

§ 423.582. Applicability of these 

procedures to expedited integrated 

coverage determinations was described 

in proposed § 422.633(h). 

• At new §§ 422.592(d) and 

423.600(g), we proposed to permit the 

Part C and Part D IRE to dismiss a 

request when any of the following 

apply— 

++ The individual or entity is not a 

proper party under § 422.578 in the case 

of a Part C reconsideration or is not 

permitted to request a reconsideration 

by the IRE under § 423.600(a) in the case 

of a Part D reconsideration. 

++ The independent entity 

determines the party failed to make out 

a valid request for a reconsideration that 

substantially complies with the 

applicable regulation. 

++ When the enrollee dies while the 

reconsideration request is pending and 

the enrollee’s spouse or estate has no 

remaining financial interest in the case 

and no other individual or entity with 

a financial interest in the case wishes to 

pursue the reconsideration. We 

explained in the proposed rule that we 

interpret having a financial interest in 

the case as having financial liability for 

the item(s) or service(s) underlying the 

coverage. 

++ When the individual or entity 

submits with the independent review 

entity a timely written request for a 

withdrawal of the reconsideration. 

• In §§ 422.568(h), 422.582(g), 

422.592(e), 422.631(f), 422.633(i), 

423.568(j), 423.582(f), and 423.600(h) 

we proposed that a written notice of the 

dismissal must be delivered to the 

parties (either mailed or otherwise 

transmitted) to inform them of the 

action; this would include the 


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67We note that § 422.590 was extensively 

amended by the April 2019 final rule, effective 

January 1, 2020. 

individual or entity who made the 

request. The notice must include certain 

information, as appropriate, including 

applicable appeal rights (that is, request 

to vacate dismissal, review of the 

dismissal). 

• In §§ 422.568(i), 422.582(h), 

422.592(f), 422.631(g), 422.633(j), 

423.568(k), 423.582(g), and 423.600(i), 

we proposed that a dismissal may be 

vacated by the entity that issued the 

dismissal (that is, MA organizations, 

applicable integrated plans, Part D plan 

sponsors, and the IRE) if good cause for 

doing so is established within 6 months 

of the date of the dismissal. 

• In §§ 422.568(j), 422.631(h), and 

423.568(l), we proposed that the 

dismissal of the organization 

determination or coverage 

determination is binding unless it is 

modified or reversed by the MA 

organization, applicable integrated plan, 

or Part D plan sponsor, as applicable, 

upon reconsideration or vacated under 

the provisions we proposed for vacating 

dismissals. 

• At new §§ 422.582(i), 422.633(k), 

and 423.582(h), we proposed that the 

dismissal of the reconsideration or 

redetermination is binding unless the 

enrollee or other valid party requests 

review by the IRE or the dismissal is 

vacated under the applicable regulation. 

• At new §§ 422.592(g) and 

423.600(j), we proposed that a dismissal 

by the IRE is binding and not subject to 

further review unless a party meets the 

amount in controversy threshold 

requirements necessary for the right to 

a review by an administrative law judge 

or attorney adjudicator and the party 

files a proper request for review with 

the Office of Medicare Hearings and 

Appeals as outlined in §§ 422.600, 

422.602, and 423.600(j), as applicable. 

• At new §§ 422.568(k), 422.592(h), 

422.631(i), 422.633(g), 423.568(m), and 

423.600(f), we proposed that a party that 

makes a request may withdraw its 

request at any time before the decision 

is issued by filing a written request for 

withdrawal. Each proposed regulation 

paragraph identifies the entity (that is, 

the MA organization, the applicable 

integrated plan, or the Part D plan) with 

which the request for withdrawal must 

be filed. 

We also proposed a change that 

applies to Part C only, given that the 

current rules do not include a process 

for an enrollee or other party to request 

IRE review of an MA organization’s 

reconsideration (because review by the 

IRE of an adverse reconsidered 

determination is automatic). 

Specifically, we proposed to add a new 

paragraph (i) (mistakenly identified as a 

new paragraph (h) in the preamble of 

the February 2020 proposed rule) to 

§ 422.590 that would give the enrollee 

or another party to the reconsideration 

the right to request review by the 

independent entity of an MA 

organization’s dismissal of a request for 

a reconsideration in accordance with 

§§ 422.582(f) and 422.584(g). In new 

paragraph (i) of § 422.590 we proposed 

that a request for review of such a 

dismissal must be filed in writing with 

the independent entity within 60 

calendar days from the date of the MA 

organization’s dismissal notice. Under 

existing rules at § 422.590(a)(2), (b)(2), 

(c)(2), (d), (e)(5), and (g),67 if the MA 

organization makes a reconsidered 

determination that affirms, in whole or 

in part, its adverse organization 

determination or fails to meet the 

timeframe for making a reconsidered 

determination, it must prepare a written 

explanation and send the case file to the 

independent entity contracted by CMS 

as expeditiously as the enrollee’s health 

condition requires, but no later than 30 

calendar days from the date it receives 

the request for a reconsideration (or no 

later than the expiration of an 

applicable extension). These regulations 

that require a case to be automatically 

sent to the independent entity do not 

apply in the case of a dismissal of a 

request for a reconsideration because 

the MA organization is not making a 

substantive decision on the merits of the 

request. 

As a corollary to this proposal, we 

also proposed to revise paragraph (a) of 

§ 422.592 to add that, consistent with 

proposed § 422.590(i), the independent 

entity is responsible for reviewing MA 

organization dismissals of 

reconsideration requests. As noted 

earlier in this section of the preamble, 

this new paragraph (i) to § 422.590 was 

mistakenly identified as new paragraph 

(h) in the preamble of the February 2020 

proposed rule; this incorrect citation at 

§ 422.592(a) has been corrected in this 

final rule to correctly refer to 

§ 422.590(i). Further, we proposed to 

add a new paragraph (i) at § 422.592 to 

state that the independent entity’s 

decision regarding an MA organization’s 

dismissal, including a decision to deny 

a request for review of a dismissal, is 

binding and not subject to further 

review. In this final rule, we add a 

reference to § 422.590 at § 422.592(i) to 

state if the independent entity 

determines that the MA organization’s 

dismissal was in error, the independent 

entity vacates the dismissal and 

remands the case to the plan for 

reconsideration consistent with 

§ 422.590. 

We also proposed a change applying 

to Part D only, given that the current 

rules do not include a process for 

enrollees to request IRE review of plan 

sponsor dismissals of redetermination 

requests. We proposed to add a new 

paragraph (f) at § 423.582 to establish in 

regulation the right of enrollees and 

other parties to request review by the 

independent entity of the Part D plan 

sponsor’s dismissal of a request for a 

redetermination. As a corollary to this 

proposal, we also proposed to add 

paragraph (j) at § 423.590 to state that, 

consistent with proposed § 423.584(f), 

an enrollee can request review of a Part 

D plan sponsor’s dismissal of a 

redetermination request by the 

independent entity. Finally, we 

proposed to add a new paragraph (k) at 

§ 423.600 to state that if the 

independent entity determines that the 

Part D plan sponsor’s dismissal was in 

error, the independent entity would 

reverse the dismissal and remand the 

case to the plan for a redetermination on 

the merits of the case. 

We received the following comments 

on the proposals related to dismissal 

and withdrawal of Medicare Part C 

organization determination and 

reconsideration and Part D coverage 

determination and redetermination 

requests. 

Comment: Numerous commenters 

opposed the proposed language that 

required a party to submit a written 

request in order to withdraw requests 

for organization determinations, 

coverage determinations, 

reconsiderations, and redeterminations. 

Commenters noted that this language 

indicated that verbal withdrawal 

requests would not be accepted. 

Commenters referenced CMS guidance 

that states, in the ‘‘Parts C & D Enrollee 

Grievances, Organization/Coverage 

Determinations, and Appeals Guidance’’ 

(Effective January 2020), at section 

40.14, that a plan may accept verbal 

requests to withdraw a request for an 

organization or coverage determination. 

Additionally, commenters noted the 

same guidance states, in section 50.4, 

that a plan may also accept verbal 

requests to withdraw a request for a 

reconsideration, provided that the plan 

mails a written confirmation of the 

withdrawal to the party within 3 

calendar days from the date of the 

verbal request. Commenters 

recommended removing the 

requirement for a written request to 

withdraw appeal requests in order to 

maintain consistency with the subregulatory guidance and current 

industry practice, and to reduce burden 


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on enrollees and plans. Commenters 

supported the current practice of 

requiring a written confirmation be 

mailed to the party within three 

calendar days from the date of the 

verbal request. 

Response: CMS thanks the 

commenters for their perspective and 

feedback. The proposed provisions were 

intended to generally model the current 

provisions regarding dismissal and 

withdrawal of requests for appeal 

codified in 42 CFR part 405, subpart I 

(see §§ 405.952 and 405.972) because 

under § 422.562(d)(1), unless subpart M 

provides otherwise, and subject to 

specific exclusions set forth in 

paragraph (d)(2), the regulations in part 

405 (concerning the administrative 

review and hearing processes and 

representation of parties under titles II 

and XVIII of the Act) apply to MA cases 

to the extent they are appropriate. Part 

405, subpart I states that a party may 

withdraw a request by filing a written 

and signed request for withdrawal (see, 

§§ 405.952 and 405.972). Accordingly, 

we proposed that a request for 

withdrawal be made in writing. 

However, the primary goal of 

codifying dismissal and withdrawal 

processes in regulation is to codify what 

we believe to be the current practices 

related to dismissal and withdrawal of 

Part C organization determination and 

reconsideration requests and Part D 

coverage determination and 

reconsideration requests, including 

those applicable to the Part C and Part 

D IRE. As commenters pointed out, 

current guidance permits plans to 

accept a request for withdrawal that has 

been made verbally. Accordingly, in 

response to these comments, we are 

finalizing the regulation changes with 

revisions to permit verbal requests to 

withdraw requests for organization 

determinations, coverage 

determinations, reconsiderations, and 

redeterminations are permitted under 

this final rule. 

In response to the comments asking 

that verbal dismissal and withdrawal 

requests not be prohibited by regulation, 

we are finalizing the proposed changes, 

with modifications, to permit 

withdrawal requests to be made 

verbally. Specifically, the word 

‘‘written’’ is not being finalized in the 

following provisions in this final rule: 

§§ 422.568(g)(4), 422.568(k), 

422.582(f)(5), 422.592(d)(4), 422.592(h), 

422.631(e)(4), 422.631(i), 422.633(g), 

422.633(h)(5), 423.568(i)(4), 423.568(m), 

423.582(e)(5), 423.600(f), and 

423.600(g)(5). Additionally, in this final 

rule we are finalizing revisions to 

§§ 422.582(e) and 423.582(d) to remove 

the word ‘‘written’’ from the current 

regulation text describing a withdrawal 

of a request for a reconsideration. While 

this is a variance from the fee-for-service 

rules at 42 CFR part 405, subpart I (see 

§§ 405.952 and 405.972) upon which 

these final rules are generally modeled, 

this approach is consistent with existing 

Parts C and D guidance on these 

processes which allow for verbal 

withdrawal requests for organization 

determinations, coverage 

determinations, reconsiderations, and 

redeterminations. 

Comment: We received a number of 

comments on the proposals to require a 

plan to dismiss a request for 

organization determinations, coverage 

determinations, reconsiderations, and 

redeterminations when the individual 

or entity who requested the review 

submits a timely written request for 

withdrawal. Specifically, commenters 

were concerned about the requirements 

in §§ 422.568(h), 422.582(g), 422.592(e), 

422.631(f), 422.633(i), 423.568(j), 

423.582(f), and 423.600(h) that would 

require plans to provide written notice 

to the parties of a dismissal, including 

instances where a party asks to 

withdraw their request for an 

organization determination, coverage 

determination or appeal. Commenters 

also noted that by considering a timely 

request for withdrawal as a 

circumstance under which a plan may 

dismiss a request, CMS is causing 

confusion between and conflation of 

withdrawals and dismissals. 

Commenters noted that the withdrawal 

process is different from the dismissal 

process and recommended that CMS 

exclude references to withdrawals in the 

list of circumstances under which a 

plan or IRE may dismiss a request for an 

organization determination, coverage 

determination or appeal under proposed 

§§ 422.568(g), 422.582(f), 422.592(d), 

423.568(i), 423.582(e) and 423.600(g). 

Response: CMS thanks the 

commenters for their perspective and 

feedback. The proposed provisions were 

intended to generally model the current 

provisions regarding dismissal and 

withdrawal of requests for appeal 

codified in part 405, subpart I (see 

§§ 405.952 and 405.972) because under 

§ 422.562(d)(1), unless subpart M 

provides otherwise and subject to 

specific exclusions set forth in 

paragraph (d)(2), the regulations in part 

405 (concerning the administrative 

review and hearing processes and 

representation of parties under titles II 

and XVIII of the Act) apply to MA cases 

to the extent they are appropriate. 

The reasoning behind adopting the 

proposed provisions at §§ 422.568(h), 

422.582(g), 422.592(e), 422.631(f), 

422.633(i), 423.568(j), 423.582(f), and 

423.600(h) related to providing written 

notice to the parties of a dismissal, 

which are generally modeled on 

§§ 405.952 and 405.972, is to preserve 

the rights of other proper parties to the 

decision if one party submits a 

withdrawal request; other parties may 

wish to pursue the appeal. For example, 

a physician may file an organization 

determination request on behalf of the 

enrollee and then later decide to 

withdraw the request because the 

physician better understands the reason 

for denial after further research. The 

plan would then dismiss the physician’s 

request and issue a dismissal notice to 

the physician and enrollee. The enrollee 

is still a party to the request for an 

organization determination and may 

have an interest in having that 

organization determination process 

continue so that the plan issues a 

complete decision in accordance with 

§§ 422.566 and 422.568 despite the 

physician’s withdrawal of the 

physician’s request. Under our proposed 

provisions, the enrollee could then file 

a request to review the dismissal at the 

next level and explain that he or she 

wants a decision to be reached and 

issued. CMS regulations do not require 

all parties to file a request for a 

determination or reconsideration in 

order for them to remain parties to the 

appeal; issuing a notice of dismissal to 

all parties when the dismissal is based 

on the withdrawal request from the 

party that initially filed a request 

acknowledges that involvement. 

Commenters also stated that they 

believe the requirement to issue a notice 

of dismissal when a party requests a 

withdrawal may cause confusion from 

both a reporting standpoint and a 

notification standpoint. CMS does not 

believe this proposal will cause 

confusion. For reporting, purposes, 

withdrawals and dismissals will remain 

distinct categories. Further, a notice of 

dismissal must contain the reason for 

dismissal; accordingly, the reason for 

dismissal in such cases would be the 

withdrawal of the request for the 

organization determination, coverage 

determination, reconsideration, or 

redetermination by a proper party to the 

request. Further operational guidance 

will be issued by CMS, as necessary. 

Comment: Several commenters noted 

that the circumstances for dismissal of 

a request for an organization 

determination, coverage determination, 

reconsideration, or redetermination 

listed in §§ 422.568(g), 422.570(g), 

422.582(f), 422.584(g), 422.592(d), 

422.631(e), 422.633(h), 423.568(i), 

423.570(f), 423.582(e), 423.548(f), and 

423.600(g) are permissive rather than 

mandatory, in that the word ‘‘may’’ is 


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used. The commenters noted that all of 

the circumstances listed in the 

regulation imply the party requesting 

the reconsideration is either not a 

proper party or no longer has a financial 

interest in pursuing the reconsideration. 

The commenters recommend that CMS 

make the dismissal due to these 

circumstances mandatory and not 

permissive. 

Response: It was not CMS’ intent that 

the proposed regulatory language 

related to dismissals for these reasons be 

permissive. In this final rule, we are 

finalizing the provisions at 

§§ 422.568(g), 422.570(g), 422.582(f), 

422.584(g), 422.592(d), 422.631(e), 

422.633(h), 423.568(i), 423.570(f), 

423.582(e), 423.584(f), and 423.600(g) 

without the word ‘‘may’’ to be clear on 

this point and to better align these 

provisions with §§ 405.952(b) and 

405.972(b). 

Comment: Several commenters noted 

that, under the proposed provision, 

written notice of a dismissal must be 

delivered to the parties (either mailed or 

otherwise transmitted) to inform them 

of the action. The commenters requested 

further guidance from CMS regarding 

applicable timeframes that would apply 

to this notice as well as the template or 

information that must be included. 

Response: With respect to the 

commenter’s request for guidance 

regarding the timeframes applicable to a 

notice of dismissal, the existing 

regulatory timeframes for issuing a 

decision notice when a substantive 

decision is made on a request will also 

apply if a request is dismissed under 

these final rules. In other words, a 

decision to dismiss a request is a 

determination, albeit a procedural one, 

on the type of request that was made 

and is subject to the decision notice 

timeframes at §§ 422.568(b) and (c), 

422.572(a), 422.590(a), (b), (c), and (e), 

422.631(d)(2), 422.633(f), 423.568(b) and 

(c), 423.590(a), (b), and (d) and 

423.600(d). As an example, if an 

enrollee requests a standard 

reconsideration for a medical item or 

service pursuant to § 422.582 and the 

plan dismisses the request under the 

provisions at § 422.582(f) set forth in 

this final rule, the enrollee must be 

notified of the dismissal no later than 30 

calendar days from the date the plan 

receives the request for a standard 

reconsideration under the provisions at 

§ 422.590(a). A model Notice of 

Dismissal of Appeal Request can be 

found in section 50.9 of the Parts C & 

D Enrollee Grievances, Organization/ 

Coverage Determinations, and Appeals 

Guidance (effective January 1, 2020). As 

necessary, additional operational 

guidance related to dismissal 

procedures will be issued by CMS. We 

note that the regulatory provisions we 

are finalizing regarding dismissals 

include specific provisions addressing 

the content of the notice of the dismissal 

(for example, §§ 422.568(h), 422.582(g), 

422.592(e), 422.631(f), 422.633(i), 

423.568(j), 423.582(f), and 423.600(h)); 

therefore, the current regulations 

governing the content of notices of 

substantive decisions on organization 

determinations, reconsiderations, 

integrated organization determinations, 

integrated reconsiderations, coverage 

determinations, and redeterminations 

and reconsiderations do not apply to 

dismissal notices. We also note that the 

proposed provisions addressing the 

content of the notice of dismissal for 

integrated organization determinations 

at § 422.631(f) were inadvertently 

incomplete. In the final rule we have 

revised the proposed text of § 422.631(f) 

to align with the analogous provisions 

for non-integrated organization 

determinations at § 422.568(h). 

Comment: A commenter noted that 

CMS proposed that an MA plan may 

properly dismiss an organization 

determination if ‘‘the individual or 

entity making the request is not 

permitted to request an organization 

determination under § 422.566(c).’’ The 

commenter believes the referenced 

regulation, § 422.566(c), is too vague 

and this authority to dismiss a request 

on this basis will lead to beneficiaries 

being denied fair organization 

determinations. Specifically, the 

commenter noted that hospitals are 

often told by MA plans that a 

rehabilitation physician seeking to 

admit a patient to an inpatient 

rehabilitation hospital/unit cannot 

participate in organization 

determinations with MA plans. The 

commenter believes that the 

rehabilitation physicians that are 

precluded from participating are the 

same rehabilitation physicians required 

to perform the de facto prior 

authorization process required by 

Medicare. The commenter asked CMS to 

consider clarifying § 422.566(c) to allow 

any physician familiar with the patient’s 

care needs, like a rehabilitation 

physician, to request an organization 

determination. 

Response: CMS believes that the 

existing provisions at § 422.566(c) are 

sufficiently clear regarding who may 

request an organization determination, 

which include any provider that 

furnishes, or intends to furnish, services 

to the enrollee. As such, under the 

commenter’s example, if a rehabilitation 

physician furnished or intended to 

furnish a service to an enrollee, the 

physician is permitted to request an 

organization determination pursuant to 

this regulation under §§ 422.568 and 

422.570. Further, § 422.578 provides 

that a physician who is providing 

treatment to an enrollee may, upon 

providing notice to the enrollee, request 

a standard reconsideration of a preservice request for reconsideration on 

the enrollee’s behalf as described in 

§ 422.582; a physician acting on behalf 

of an enrollee may also request an 

expedited reconsideration as described 

in § 422.584. 

Comment: Several commenters 

requested that CMS structure the Part C 

and Part D regulatory text the same way 

where possible, for clarity. A 

commenter noted by example that in 

§ 422.584 (Expediting certain 

reconsiderations) CMS repeats the rules 

from a different section while § 423.584 

(Expediting certain redeterminations) 

cross refers to them. 

Response: CMS strives for clarity in 

the structure of the Part C and Part D 

regulatory text. We are finalizing the 

amendment to § 422.584 using a cross 

reference to rules in § 422.582 as 

opposed to repeating regulation text 

related to dismissals that is also 

applicable to the dismissal of expedited 

requests. With this change, the structure 

of the Part C and Part D regulation text 

will be in parity. 

Comment: Several commenters 

expressed concern that the proposed 

regulations allow dismissal or 

withdrawal of requests that are never 

valid in the first place. The commenters 

believe that requests that are invalid to 

begin with cannot be dismissed or 

withdrawn. The commenters believe 

CMS should not continue with the plan 

allowances to dismiss a case that should 

not have been started in the first place. 

Response: CMS recognizes that there 

may be invalid requests. However, 

whether a request is initially valid or 

not is a determination a plan makes 

upon receiving and reviewing a request 

for an organization determination. 

When a plan receives a request for an 

organization determination that it 

believes to be invalid, the plan refuses 

to approve, provide or pay for the 

requested services. Such refusal is an 

action that is considered an organization 

determination under § 422.566(b). 

Parties to an organization determination 

may request that the determination be 

reviewed under § 422.578 and 

§ 422.592. The scope of the 42 CFR part 

422, subpart M regulations is, in part, to 

set forth the appeal process for MA 

enrollees with respect to organization 

determinations. Removing appeal rights 

from enrollees who receive an 

organization determination is 

antithetical to the purpose and scope of 


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these regulations. The very purpose of 

these provisions is to provide a process 

and procedure (that is, dismissal) for the 

plan to dispense with invalid cases by 

issuing a procedural decision while also 

preserving an enrollee’s right of review 

to a plan decision. 

Comment: Two commenters 

responded to our request for comments 

regarding whether the proposed rules 

would create inconsistencies with any 

state-specific Medicaid procedures 

pertaining to dismissals or withdrawals. 

The commenter noted that Medicare 

determination and coverage processes 

may be different than Medicaid, and 

therefore, if medical care or services are 

not covered by Medicare, but are 

covered by Medicaid, withdrawing the 

appeal is an effective way to minimize 

the administrative burden of appeals in 

Medicare. 

Response: CMS thanks the 

commenters for their feedback. We agree 

that for non-integrated plans that 

operate separate Medicare and Medicaid 

appeals processes, if an appeal concerns 

an item or service that is only coverable 

by Medicaid, withdrawing a Medicare 

appeal can reduce administrative 

burden. However, for applicable 

integrated plans that will follow the 

unified process established in 

§§ 422.629–422.634, one single coverage 

determination and appeals process 

applies to all requests for Medicare and 

Medicaid items and services covered by 

the plan, making withdrawal or 

dismissal of an appeal of a coverage 

denial inappropriate when there may be 

Medicaid coverage available from the 

applicable integrated plan. Applicable 

integrated plans must take into account 

both Medicare and Medicaid coverage 

available under the plan when making 

an integrated organization 

determination or integrated 

reconsideration. 

Comment: Several commenters noted 

that proposed § 422.590(i) states ‘‘the 

enrollee or other party has the right to 

request review of the dismissal by the 

independent entity.’’ The commenters 

suggested the language be clarified to 

reflect it is the enrollee or other ‘‘proper 

party under § 422.578’’ so as to be 

consistent with § 422.592, which allows 

dismissals of requests for 

reconsideration if the individual 

requesting the reconsideration is not a 

proper party. 

Response: We are finalizing the 

amendment to § 422.590(i) and 

§ 423.590(j) with revised text to clarify 

that only proper parties under § 422.578 

and § 423.580, respectively, have the 

right to request review of the dismissal 

by the independent entity. 

Comment: Several commenters noted 

that CMS proposed to permit a plan to 

dismiss a request for a coverage 

determination in four specifically listed 

situations (that is, when any of the 

following apply: The individual or 

entity making the request is not 

permitted to request an organization 

determination or coverage 

determination, the plan determines that 

the individual or entity making the 

request failed to make a valid request for 

an organization determination or 

coverage determination, the enrollee 

dies while the request is pending and 

the enrollee’s spouse or estate has no 

remaining financial interest in the case 

and no other individual or entity with 

a financial interest in the case wishes to 

pursue the organization determination 

or coverage determination; or the 

individual or entity who requested the 

review submits a timely written request 

for withdrawal of their request for an 

organization determination or coverage 

determination with the plan). The 

commenters requested clarification if 

this list is exhaustive or if there may be 

other scenarios under which a plan may 

dismiss a case. 

Response: As noted above, we are 

clarifying in this final rule that a plan 

must dismiss a request for the reasons 

set forth at §§ 422.568(g), 422.582(f), 

422.592(d), 423.568(i), 423.582(e) and 

423.600(g). As explained in the 

proposed rule, we believe that 

codification of these procedures, 

including the scenarios in which a plan 

issues a dismissal, will reduce 

confusion and promote consistent and 

proper handling of withdrawals and 

dismissals. We do not believe there are 

other scenarios where it would be 

appropriate to require that a request be 

dismissed under these final rules. 

However, if program experience once 

these rules have been implemented 

reveals other appropriate scenarios for 

requiring that a request be dismissed, 

we will take that into consideration for 

future rulemaking. 

Comment: Several commenters noted 

these proposed regulations have 

highlighted the confusing differences in 

terminology between the initial levels of 

appeal for the Fee-For-Service Medicare 

Program, MA organizations, and Part D 

plans appeals. The commenters 

recommended that CMS align the 

appeal terminologies to avoid provider 

confusion and burden. For example, the 

initial level of appeal should have the 

same name for all programs, rather than 

redetermination for Fee-for-service and 

Part D and reconsideration for MA 

appeals. 

Response: CMS appreciates these 

comments. We note that the appeal 

terminologies mirror the terms set by 

statute, specifically Social Security Act 

section 1852(g)(2) for Part C appeals, 

Social Security Act section 1860D–4(g) 

for Part D, and Social Security Act 

section 1869(a)(3) for Parts A and B. It 

is beyond the scope of this final rule to 

revise terminology across the Fee-forService, Part C, and Part D program 

regulations. 

Comment: A commenter noted that 

under proposed § 422.592(i), if the IRE 

determines that the plan’s dismissal was 

in error, the dismissal would be vacated 

and remanded to the plan for 

reconsideration. The commenter further 

noted that there is no timeframe 

indicated by which the plan is required 

to issue a decision on the remanded 

appeal. To ensure consistent deadlines 

CMS should specify that the deadlines 

enumerated in § 422.590 apply to 

remanded appeals. 

Response: CMS appreciates the 

comment. We have modified the 

regulation text at § 422.592(i) to clarify 

that if the independent entity vacates 

the dismissal and remands the case to 

the plan for reconsideration, the 

reconsideration must be conducted by 

the plan consistent with § 422.590, 

which includes applicable adjudication 

timeframes. Similarly, we have 

modified the regulation text at 

§ 423.600(k) to clarify that if the 

independent entity vacates the 

dismissal and remands the case to the 

Part D plan sponsor, the reconsideration 

must be conducted by the plan sponsor 

consistent with § 423.590. 

Comment: A commenter noted that 

CMS proposed to permit a plan to 

dismiss a request for the initial plan 

level decision (that is, organization 

determination, integrated organization 

determination or coverage 

determination) when the plan 

determines that the individual or entity 

making the request failed to make a 

valid request for an organization 

determination or coverage 

determination. The commenter 

requested CMS clarify what is 

considered a ‘valid’ request. 

Response: The regulations define 

what constitutes a valid request. For 

example, with respect to a request for a 

standard organization determination, a 

valid request would be one that 

substantially complies with 

§ 422.568(a); the regulation we are 

finalizing at § 422.568(g)(2) cross 

references § 422.568(a) as establishing 

the standard for a request to be a valid 

one. Related guidance can be found in 

the Parts C & D Enrollee Grievances, 

Organization/Coverage Determinations, 

and Appeals Guidance (effective 

January 1, 2020). 


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Comment: A commenter noted that 

CMS proposed to permit a plan to 

dismiss a request for the initial plan 

level decision (that is, organization 

determination, integrated organization 

determination or coverage 

determination) when the enrollee dies 

while the request is pending and the 

enrollee’s spouse or estate has no 

remaining financial interest in the case 

and no other individual or entity with 

a financial interest in the case wishes to 

pursue the organization determination 

or coverage determination. The 

commenter believed this is stating that 

a plan would dismiss a pre-service 

request if the enrollee dies, as it would 

no longer be valid, and requested 

further clarification. 

Response: We clarify that these rules 

apply to a post-service request for 

payment as well as to pre-service 

requests for coverage. CMS proposed to 

permit a plan to dismiss a request for 

the initial plan level decision when the 

enrollee dies while the request is 

pending and the enrollee’s spouse or 

estate has no remaining financial 

interest in the case and no other 

individual or entity with a financial 

interest in the case wishes to pursue the 

organization determination or coverage 

determination. The death of the enrollee 

alone is not sufficient to dismiss a 

request. There must also be no 

remaining financial interest of the 

enrollee’s spouse or estate in the case 

and no other individual or entity with 

a financial interest in the case that 

wishes to pursue the organization 

determination or coverage 

determination. 

Comment: A commenter noted CMS 

proposed to permit the Part C and Part 

D IRE to dismiss a request when the 

independent entity determines the party 

failed to make out a valid request for a 

reconsideration that substantially 

complies with the applicable regulation. 

The commenter requested CMS clarify 

who would be responsible for 

notification requirements when the IRE 

makes this determination. 

Response: When the IRE makes a 

decision regarding a reconsideration, 

the IRE must comply with the notice 

requirements outlined in § 422.594 and 

§ 423.602. This includes notifying the 

parties to the reconsideration of a 

dismissal. 

Comment: A commenter noted that 

CMS proposed to add a new paragraph 

to § 422.590 to establish in regulation 

the right of enrollees and other parties 

to request review by the independent 

entity of the MA organization’s 

dismissal of a request for a 

reconsideration made under 

§§ 422.582(f) and 422.584(g). The 

commenter noted that the current 

process when a plan dismisses an 

appeal request is that the member has 

the right to go to the IRE to determine 

if the dismissal was correct. The 

commenter requested clarification on 

whether the proposed rule is stating the 

plan would send the case file to the IRE 

for all dismissals. 

Response: This final rule codifies the 

current practice regarding dismissals, 

that the enrollee or other party to the 

reconsideration may file a request for 

review by the IRE of the plan’s dismissal 

of a request for reconsideration. We 

believe that § 422.590(i), as proposed 

and finalized, is clear in establishing the 

regulatory authority for this request for 

IRE review in the MA context. We 

further clarify that this provision does 

not require MA plans to forward the 

case file to the IRE for all dismissals. 

MA plans and Part D plans must only 

forward the case file for a dismissal to 

the IRE when a proper party to the 

appeal requests IRE review of the 

dismissal under §§ 422.590(i) and 

423.590(j). This is somewhat different 

than the process for Part C appeals 

under §§ 422.590 and 422.592, where 

the MA organization must gather and 

forward the relevant information to the 

IRE for an automatic review by the IRE 

of reconsidered determinations 

(standard or expedited) that are not 

completely favorable to the enrollee. 

Comment: A commenter noted that in 

some sections of the proposal, CMS 

indicated that it intends these dismissal 

determinations to be binding, but also 

notes the plan must include information 

on available appeal rights in the written 

notice of the dismissal. The commenter 

questioned if this would prohibit the 

requesting party(s) from resubmitting a 

claim with additional or new 

information. The commenter would like 

CMS to ensure as part of the process 

that a request could be resubmitted 

should new information come to light or 

was inadvertently not included in the 

initial request. 

Response: CMS only intends that 

dismissals be binding to the extent 

outlined in these provisions. For 

example, § 422.568(j) provides for a 

dismissal of a request for an 

organization determination to be 

binding unless it is modified or reversed 

by the MA organization upon 

reconsideration or vacated under 

§ 422.568(i) of this section. So, as 

applied to this example, new or 

additional information could be 

submitted with a party’s request for 

reconsideration of a dismissal (which 

would be requested under §§ 422.582 or 

422.584) or considered as part of the 

MA organization finding good cause to 

vacate its dismissal of a request for an 

organization determination under the 

provisions at § 422.568(i). Note we have 

also added language to what we 

proposed at § 422.633(k) regarding 

vacating dismissals of integrated 

reconsiderations. The additional 

language aligns with the analogous 

provision for reconsiderations at 

§ 422.582(i). 

Comment: A commenter questioned if 

CMS will modify the regulations 

concerning the withdrawal or dismissal 

of Part C and Part D determination 

requests, redetermination requests and 

IRE reconsiderations to better align with 

the regulations concerning limited 

English proficiency (LEP) 

communications. 

Response: Entities that receive federal 

financial assistance, including Medicare 

Part C and D plans, must take 

reasonable steps to provide meaningful 

access to their programs by persons with 

limited English proficiency, in 

accordance with title VI of the Civil 

Rights Act of 1964 and section 1557 of 

the Affordable Care Act and 

implementing regulations (title VI and 

section 1557 respectively). Nothing in 

this final rule alters that requirement. 

After consideration of the comments 

we received and for the reasons outlined 

in our responses and in the proposed 

rule, we are finalizing with 

modifications our proposed revisions to 

§§ 422.568, 422.570, 422.582, 422.584, 

422.590, 422.592, 422.631, 422.633, 

423.568, 423.570, 423.582, 423.584, and 

423.600 to address withdrawals and 

dismissals by MA organizations, 

applicable integrated plans, and Part D 

plans. In addition to minor clarifications 

that are not substantive changes to our 

proposed regulations, we are also 

finalizing modifications compared to 

our proposals to clarify that plans are 

required to dismiss a request under the 

provisions of these final rules and to 

permit verbal withdrawal of requests for 

organization determinations, coverage 

determinations, reconsiderations, and 

redeterminations. 

I. Methodology for Increasing Civil 

Money Penalties (CMPs) (§§ 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 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 


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68Per 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 amount applicable to 42 CFR 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 

solely references per determination calculations for 

Medicare Cost Plans. Therefore, the maximum 

monetary penalty amount applicable is the same as 

§ 422.760(b)(1). 

69Per 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 ofliving adjustment multiplier for 2019 is 1.02522. 

covered under the organization’s 

contract. The current regulations mirror 

the statute with respect to the amount 

of the penalty that CMS may impose for 

a per determination (contract level) 

penalty. 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 68 for each affected 

enrollee or per determination, however 

CMS does not necessarily apply the 

maximum penalty amount authorized 

by the regulation. 

CMS proposed to codify the 

methodology we would use to calculate 

the minimum penalty amounts that 

CMS would impose for certain types of 

program non-compliance by adding a 

new paragraph (b)(3) to §§ 422.760 and 

423.760, and redesignating current 

paragraphs (b)(3) and (4) as paragraphs 

(b)(4) and (5). 

We proposed to update minimum 

penalty amounts no more often than 

every 3 years. CMS also proposed to 

increase the penalty amounts by 

including the increases that would have 

applied if CMS had multiplied the 

minimum penalty amounts by the costof-living multiplier released by the 

Office of Management and Budget 

(OMB) 69 each year during the preceding 

3-year period. In addition, CMS 

proposed to track the yearly accrual of 

the penalty amounts and announce 

them on an annual basis. 

Comment: We received one comment 

that supported our proposals. The 

commenter supported updating the 

minimum penalty amounts consistent 

with the three-year Part C and D 

organization audit cycle, and urged 

CMS to maintain the level of 

transparency afforded to the CMP 

methodology and updates. 

Response: We thank the commenter 

for the support. 

Comment: We also received one 

comment encouraging CMS to codify 

the process in which CMS notifies MA 

organizations and Part D sponsors of 

enforcement action referrals, including 

the opportunity to submit additional 

information before the final 

determination is made. 

Response: We appreciate the 

comment, but it is beyond the scope of 

the proposed changes. However, we will 

consider it for future rulemaking. After 

consideration of the public comments 

received, we are finalizing this 

provision as proposed. 

V. Codifying Existing Part C and D 

Program Policy 

A. Plan Crosswalks for Medicare 

Advantage (MA) Organizations and Cost 

Plans (§§ 417.496 and 422.530) 

We proposed to codify the current 

process and conditions under which 

MA organizations and 1876 cost plans 

can transfer their enrollees into the 

same plan from year to year when no 

other election has been made (this 

process is a ‘‘plan crosswalk’’), as well 

as when MA organizations and cost 

plans can transfer their enrollees to 

other plans offered by the same MA 

organization or cost plan (this is a 

‘‘crosswalk exception’’). Our proposal 

was to define plan crosswalks, codify 

rules that protect a beneficiary’s right to 

choose a plan, and specify the 

circumstances under which MA 

organizations and cost plans may 

transfer beneficiaries into another plan 

of the same type offered by the MA 

organization or, in the case of cost 

plans, transfer enrollees from that cost 

plan benefit package to another plan 

benefit package (PBP) under the same 

contract. In the proposed rule and this 

final rule, we generally use the terms 

‘‘plan’’ and ‘‘PBP’’ interchangeably to 

refer to a specific plan offered under a 

contract. Specifically, the term PBP is 

used to describe the individual benefits 

packages that may be offered under a 

singular contract. Section 1851(c)(3)(B) 

of the Act provides for evergreen 

elections which are when an individual 

who has made an election is considered 

to have continued to make the same 

election until the individual makes a 

change to the election, or the MA plan 

is discontinued or no longer serves the 

area in which the individual resides. In 

many cases, our crosswalk policy is a 

mechanism for operationalizing these 

evergreen elections. 

Section 1851 of the Act provides that 

Medicare beneficiaries who are entitled 

to Part A and enrolled in Part B may 

elect to receive benefits through 

enrollment in an MA plan of their 

choice and authorizes CMS to adopt the 

process, form and manner for making 

and changing enrollment elections. We 

proposed to codify existing policy 

regarding crosswalks and crosswalk 

exceptions using this authority and our 

authority under sections 1856(b)(1) and 

1857(e)(1) of the Act to adopt standards 

and contract terms for MA 

organizations. In furtherance of the 

beneficiary’s right to choose and 

implementing evergreen elections, we 

proposed to codify existing policy in 

new regulations at § 417.496 and 

§ 422.530 to define plan crosswalks, 

implement rules that protect a 

beneficiary’s right to choose a plan, and 

describe allowable circumstances under 

which MA organizations may transfer 

beneficiaries from one of its MA plans 

into another of its MA plans or a cost 

contract may transfer beneficiaries from 

one of its plans into another of its cost 

plans. With respect to cost plans, we 

proposed to codify existing enrollment 

policy related to the transfer of enrollees 

from one of an entity’s PBPs to another 

PBP, under the authority of section 

1876(i)(3)(D) of the Act, which requires 

that cost contracts shall contain such 

other terms and conditions, not 

inconsistent with the statute, as the 

Secretary may find necessary and 

appropriate. Our proposal and this final 

rule do not include rules for deeming 

enrollment from a cost plan to an MA 

plan under sections 1876(h)(5)(C) and 

1851(c)(4) of the Act because the statute 

does not permit deeming of enrollees 

from cost plans to MA plans beyond 

contract year 2018. 

We also proposed, at § 422.530(d), to 

codify the procedures that an MA 

organization must follow when 

submitting a crosswalk or a crosswalk 

exception request. An MA organization 

must submit all allowable crosswalks in 

writing through the bid submission 

process in HPMS by the bid submission 

deadline announced by CMS. Through 

the bid submission process, the MA 

organization may indicate if a crosswalk 

exception request is needed at that time, 

but the MA organization must request a 

crosswalk exception later through the 

crosswalk exception functionality in 

HPMS by the deadline announced by 

CMS. CMS verifies the exception 

request and notifies the requesting MA 

organization of the approval or denial of 

the request after the crosswalk 

exception deadline has expired. These 

exceptions must be submitted by the 


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70Chapter 16b of the Medicare Managed Care 

Manual and Process for Requesting an HPMS 

Crosswalk Exception for Contract Year (CY) 2020 

(released annually). 

MA organization to ensure that plan 

benefit package (PBP) enrollment is 

allocated appropriately. 

CMS has developed extensive 

guidance addressing the transfer of 

enrollees from one PBP offered by an 

organization to another PBP offered by 

that organization under the same 

contract.70 The guidance, applicable to 

MA organizations and cost plans, was 

developed in light of the ability of MA 

organizations and cost plans to revise 

their benefit offerings and PBPs from 

year to year. The transfer of enrollees 

from one PBP to another under these 

circumstances serves to facilitate 

evergreen elections. MA organizations 

frequently make business decisions 

resulting in changes to and in their MA 

plans offered for enrollment in the 

following contract year. Each year, 

through the bid process for plan design 

and an application process for service 

area changes, MA organizations submit 

changes in coverage and cost sharing 

design for their MA plans. In addition, 

MA organizations have the ability to 

terminate existing plans and apply to 

offer new plans. While cost plan 

organizations may not offer new cost 

plans, they also may make changes in 

their benefit and cost sharing design and 

seek service area changes through an 

annual process. CMS has issued annual 

sub-regulatory guidance related to 

changes of this type for MA and cost 

plans to address how MA organizations 

and cost plans may transition enrollees 

from a plan that is terminating or 

changing its service area to another plan 

offered by the same organization. These 

transitions are useful to preserve 

beneficiary enrollment and are subject 

to a number of beneficiary protections. 

We proposed to codify existing 

crosswalk policy to clearly identify the 

basic rules for plan crosswalks, 

including the parameters for allowable 

crosswalks, and formalize CMS’s 

crosswalk exception review process. 

Crosswalk exceptions are specific 

circumstances where a crosswalk is not 

automatically authorized under our 

policies but CMS may permit MA 

organizations and cost plans to transfer 

beneficiaries into another plan of the 

same type offered by the MA 

organization or cost plan after a review, 

provided that certain requirements are 

met. The crosswalk exceptions process, 

as currently conducted and as proposed, 

allows CMS to review and validate the 

existence of an exception and then 

manually effectuate the transaction in 

our system. Crosswalk exceptions are 

not part of the standard, annual PBP 

renewal process. We proposed to codify 

these new regulations at §§ 417.496 and 

422.530 to govern, respectively, cost 

plans and MA organizations. 

We proposed, at §§ 417.496(a)(1) and 

422.530(a)(1), to define a plan crosswalk 

as the movement of enrollees from one 

PBP to another PBP under the same 

contract between the MA or cost 

organization and CMS. MA and cost 

organizations complete these crosswalk 

transactions annually as part of the 

renewal process. Unlike MA plans, 

however, cost plans do not include 

different plan types such as PPOs, PFFS, 

and special needs plans, therefore 

proposed § 417.496(a)(2) did not specify 

that crosswalks from one plan type to 

another are prohibited while proposed 

§ 422.530(a)(2) did. 

In proposed § 422.530(a)(5), we 

defined the types of MA plans that are 

‘‘different plan types’’ for purposes of 

crosswalk policy: Health maintenance 

organizations, provider-sponsored 

organizations, and regional and local 

preferred provider organizations 

coordinated care plans are different plan 

types, even though they are all 

coordinated care plans. Additionally, 

we noted that the segmented plans are 

not a ‘‘type’’ of plan in MA and that 

crosswalks are permitted between 

segmented and non-segmented plans. 

We did not include in the proposed cost 

plan crosswalk regulation provisions 

about contract transactions related to 

plan types and policies such as 

segmentation and continuation because 

they are specific to MA contract 

transactions. The majority of crosswalks 

involve moving enrollees from one 

contract year plan to the corresponding 

plan for the following contract year. 

Therefore, under our current policy and 

the proposal, enrollees are not required 

to make an enrollment election to 

remain enrolled in their chosen plan. In 

§ 417.496(a)(2)(i), we proposed to codify 

the general rule that crosswalks are 

prohibited between different cost 

contracts, and in § 417.496(a)(2)(ii), we 

proposed to codify that crosswalks are 

prohibited between different cost plan 

IDs under a cost contract unless the 

crosswalk qualifies for an exception to 

this requirement. In § 417.496(c)(1)(i) 

and (ii) we proposed to codify the 

exception that cost contracts 

terminating PBPs with optional 

supplemental benefits may transfer 

enrollees to another PBP with or 

without optional benefits under the 

same cost contract as long as enrollees 

who have Part A and B benefits only are 

not transferred to a PBP that includes 

Part D. In § 417.496(c)(1)(iii)(A), (B), and 

(C), we proposed to codify the rule that 

an enrollee in a terminating PBP that 

includes Part D may only be moved to 

a PBP that does not include Part D if the 

enrollee is notified in writing that she/ 

he is losing Part D coverage, the options 

for obtaining Part D, and the 

implications of not getting Part D 

through some other means. In 

§ 422.530(a)(2), we proposed to codify 

the general rule that crosswalks are 

prohibited between different MA 

contracts or different plan types (for 

example, HMO to PPO), which means 

that crosswalks are only permitted 

between plans of the same type under 

the same contract. However, proposed 

§ 422.530(c) specified the limited 

circumstances in which CMS would 

allow a crosswalk transaction that does 

not comply with this general 

prohibition on crosswalks to different 

contracts. We included in proposed 

§ 422.530(a)(2) a reference to these 

‘‘exceptions’’ permitted under 

paragraph (c). We explained that these 

exceptions in § 422.530(c) apply to MA 

plans only because they pertain to MA 

policies; therefore, we did not propose 

similar regulation text in § 417.496. 

As most plan crosswalks are related to 

contract renewals and non-renewals, we 

proposed a general rule at 

§ 422.530(a)(3) that would require MA 

organizations to comply with renewal 

and nonrenewal rules in §§ 422.505 and 

422.506 in order to be eligible to 

complete plan crosswalks. In 

§ 417.496(a)(3), we proposed that cost 

plan entities must comply with the 

renewal and non-renewals rule per 

§§ 417.490 and 417.492, in order to be 

eligible to complete plan crosswalks. In 

§ 422.530(a)(4), we proposed that 

enrollees must be eligible for enrollment 

under §§ 422.50 through 422.54 in order 

to be moved from one PBP to another 

PBP as part of a crosswalk. 

In §§ 422.530(b) and 417.496(b), we 

proposed to codify the existing 

crosswalk policy by specifying the 

circumstances under which a crosswalk 

is permitted so that an MA organization 

or cost plan may move enrollees into, 

respectively, another MA plan or cost 

plan. For MA plans, in paragraph (b)(1), 

we proposed permissible crosswalks for 

all plan types and in paragraph (b)(2), 

we proposed crosswalks that are 

permissible only for MA special needs 

plans (SNPs). We reminded readers that 

the MA plan types are identified in 

§ 422.4; therefore, we specified in 

proposed § 422.530(a)(5) that the 

different types of coordinated care plans 

are considered different ‘‘plan types’’ for 

purposes of crosswalking policy. For 

cost plans, in proposed paragraph (b), 

we addressed permissible crosswalks for 


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cost plans. Each of these proposals was 

consistent with current policy. 

1. Cost Plans and All MA Plan Types 

a. Renewal Plan 

Under existing program rules, an MA 

or cost organization may continue to 

offer, that is renew, a current PBP that 

retains all of the same service area for 

the following year; the renewing plan 

must retain the same PBP ID number as 

in the previous contract year. We 

proposed to codify moving the enrollees 

in the existing PBP to the PBP with the 

same ID number for the following year 

as a permissible crosswalk in paragraph 

(b)(1)(i) for MA plans and 

§ 417.496(b)(1) for cost plans. Under the 

proposal, as with current policy, current 

enrollees are not required to make an 

enrollment election to remain enrolled 

in the renewal PBP, and the MA or cost 

organization will not submit enrollment 

transactions to CMS for current 

enrollees but will transition all enrollees 

from the current PBP to the new PBP 

with the same PBP ID number for the 

following year. New enrollees must 

complete enrollment requests, and the 

MA or cost organization will submit 

enrollment transactions to CMS for 

those new enrollees. Under §§ 422.111 

and 417.427 current MA and cost 

enrollees of a renewed PBP, 

respectively, must receive an Annual 

Notice of Change (ANOC) notifying 

them of any changes to the renewing 

plan. 

b. Consolidated Renewal Plan 

Under existing program rules, MA 

and cost organizations may combine 

two or more PBPs offered under the 

same contract in the current contract 

year into a single renewal plan, as a 

plan consolidation. We explained that 

when the consolidation includes two or 

more complete PBPs being combined 

and no PBP being split among more 

than one PBP in the next contract year, 

the MA or cost organization is permitted 

to transition all enrollees in the 

combined plans under one PBP under 

that contract, with the same benefits in 

the following contract year; the resulting 

PBP must have the plan ID of one of the 

consolidated plans. We proposed to 

codify this as a permissible crosswalk in 

§§ 417.496(b)(2) and 422.530(b)(1)(ii) 

and explained that under the proposal 

(as with current policy), current 

enrollees of a plan or plans being 

consolidated into a single renewal plan 

will not be required to take any 

enrollment action, and the MA or cost 

organization does not submit enrollment 

transactions to CMS for those current 

enrollees. The renewal PBP ID is used 

to transition current enrollees of the 

plans being consolidated into the 

designated renewal plan. In 

operationalizing this crosswalk, the MA 

or cost organization may need to submit 

updated data to CMS for the enrollees 

affected by the consolidation. New 

enrollees in the consolidated renewal 

plan must complete enrollment forms 

and the MA or cost organization must 

submit the enrollment transactions to 

CMS for those new enrollees. Under 

§§ 422.111 and 417.427 MA and cost 

plans, respectively, are required to 

provide an ANOC to all current 

enrollees in the consolidated renewal 

plan. 

c. Renewal Plan With a Service Area 

Expansion (SAE) 

Under existing program rules, an MA 

or cost organization may continue to 

offer the same cost plan or local MA 

plan but expand the service area to 

include one or more additional counties 

for the following contract year. We 

explained that to expand the service 

area of its plan(s), an MA or cost 

organization must submit a service area 

expansion (SAE) application to CMS for 

review and approval; CMS treats service 

area expansions as applications subject 

to the rules in part 422, subpart K, and 

§ 417.402. Under our current policy an 

MA or cost organization renewing a 

plan with a SAE must retain the 

renewed PBP’s ID number in order for 

all current enrollees to remain enrolled 

in that plan the following contract year; 

current enrollees of a PBP that is 

renewed with a SAE are not required to 

take any enrollment action, and the MA 

or cost organization does not submit 

enrollment transactions to CMS for 

those current enrollees but can 

transition all enrollees using a 

crosswalk from the current PBP to the 

new PBP with the same PBP ID number 

for the following year. We proposed to 

codify this as a permissible crosswalk in 

§ 422.530(b)(1)(iii) for MA plans and 

§ 417.496(b)(3) for cost plans. New 

enrollees must complete enrollment 

forms and the MA or cost organization 

must submit the enrollment transactions 

to CMS for those new enrollees. Under 

§§ 422.111 and 417.427 MA and cost 

plans, respectively, are required to 

provide an ANOC to all current 

enrollees of a renewed PBP with a SAE. 

d. Renewal Plan With a Service Area 

Reduction 

Under existing program rules, an MA 

organization offering a local MA plan 

may reduce the service area of a current 

contract year PBP; similarly, a cost 

organization may reduce the service 

area of a cost plan. We explained that 

this service area reduction (SAR) means 

that enrollees who were in the part of 

the service area being reduced will 

generally not be eligible to remain in the 

plan because of the residence 

requirement in §§ 417.422(b), 

422.50(a)(3), and 422.54. We addressed 

crosswalks that may occur in 

connection with a service area reduction 

in proposed §§ 422.530(b)(1)(iv) and 

417.496(b)(4). Under our proposal (as in 

current practice), when there is a service 

area reduction for a plan, the MA 

organization or cost plan may only 

crosswalk the enrollees who reside in 

the remaining service area to the plan in 

the following contract year that links to 

a current contract year plan but only 

retains a portion of the prior service 

area. The following contract year plan 

must retain the same plan ID as the 

current contract year plan. The 

crosswalk is limited to the enrollees in 

the remaining service area. MA 

organizations may have different 

options available to them in terms of 

notices and the ability to offer a 

continuation of enrollment under 

§ 422.74(b)(3)(ii) depending on the other 

MA plans in the service area at the time 

of the service area reduction. We 

included regulation text in proposed 

§ 422.530(b)(1)(iv)(A) and (B) to address 

the different scenarios. 

We proposed in § 422.530(b)(1)(iv)(C), 

that enrollees that are no longer in the 

service area of the MA or cost plan will 

be disenrolled at the end of the contract 

year and will need to elect another plan 

(or default to original Medicare). The 

MA or cost organization must submit 

disenrollment transactions to CMS for 

these enrollees. In addition, the MA or 

cost plan organization must send a 

Medigap guaranteed issue rights to the 

affected enrollees and a non-renewal 

notice to enrollees in the reduced 

portion of the service area that includes 

notification of special election period 

(SEP). We proposed to codify at 

§ 422.530(b)(1)(iv)(D) specific rules 

about what information may be 

provided by the MA organization about 

its other MA plan options in the area 

that will no longer be part of the service 

area of the continued plan. Per the 

marketing and communication 

regulations, at §§ 422.2263(a) and 

423.2263(a) and discussed elsewhere in 

this final rule, marketing information 

about other MA plan options offered by 

the MA organization for the prospective 

plan year can begin October 1 of each 

year for the following contract year. 

2. Special Needs Plans (SNPs) 

Under our current crosswalk policies, 

MA Special Needs Plans (SNPs) follow 

the general rules, which we proposed to 


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5966 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

codify in § 422.530(b)(1), and are 

permitted additional flexibility for 

crosswalks in specific situations. We 

proposed regulation text to identify the 

additional crosswalks permitted for 

SNPs in § 422.530(b)(2), which vary 

based on the type of SNP. In the 

proposed rule, we explained that MA 

organizations may not crosswalk 

enrollees from one SNP type to a 

different SNP type, as that would 

constitute crosswalking into a different 

type of plan, which is prohibited by 

§ 422.530(a)(2). We clarify here as well 

that the rules in paragraph (a) all apply 

to the crosswalk authority for SNPs 

described in paragraph (b)(2) just as the 

rules in paragraph (a) apply to the 

crosswalk authority in paragraph (b)(1). 

a. Chronic Condition SNPs (C–SNPs) 

We proposed to codify four 

permissible crosswalks specific to C– 

SNPs at § 422.530(b)(2)(i)(A) through 

(D). C–SNPs serve and are limited to 

enrolling special needs individuals who 

have a severe or disabling chronic 

condition(s) and would benefit from 

enrollment in a specialized MA plan. 

The MA organization offering the C– 

SNP may target one or more specific 

severe or disabling chronic conditions. 

When a C–SNP targets more than one 

severe or disabling chronic condition, 

we refer to that as a ‘‘grouping’’ and we 

have addressed groupings in guidance 

in Chapter 16b of the Medicare Managed 

Care Manual. We proposed that these 

permissible crosswalks reflect the 

limitations on eligibility for C–SNPs, as 

different C–SNPs serve different 

populations depending on the chronic 

condition(s) targeted for enrollment 

restriction. 

• Renewing C–SNP with one chronic 

condition that transitions eligible 

enrollees into another C–SNP with a 

grouping that contains that same 

chronic condition. 

• Non-renewing C–SNP with one 

chronic condition that transitions 

eligible enrollees into another C–SNP 

with a grouping that contains that same 

chronic condition. 

—Renewing C–SNP with a grouping 

that is transitioning eligible enrollees 

into another C–SNP with one of the 

chronic conditions from the grouping. 

• Non-renewing C–SNP in a grouping 

that is transitioning eligible enrollees 

into a different grouping C–SNP if the 

new grouping contains at least one 

condition that the prior plan contained. 

b. Institutional–SNPs 

We proposed to codify five 

permissible crosswalks specific to I– 

SNPs at § 422.530(b)(2)(iii)(A) through 

(E). I–SNPs are limited to enrolling 

individuals who are institutionalized or 

institutionalized-equivalent, as those 

terms are defined in§ 422.2. I–SNPs may 

limit their enrollment to either 

institutionalized or institutionalizedequivalent individuals or may enroll 

both categories of individuals. These 

permissible crosswalks reflect the 

enrollment limitations on I–SNPs. 

• Renewing Institutional SNP that 

transitions enrollees to an Institutional/ 

Institutional Equivalent SNP. 

• Renewing Institutional Equivalent 

SNP that transitions enrollees to an 

Institutional/Institutional Equivalent 

SNP. 

• Renewing Institutional/Institutional 

Equivalent SNP that transitions eligible 

enrollees to an Institutional SNP. 

• Renewing Institutional/Institutional 

Equivalent SNP that transitions eligible 

enrollees to an Institutional Equivalent 

SNP. 

• Non-renewing Institutional/ 

Institutional Equivalent SNP that 

transitions eligible enrollees to another 

Institutional/Institutional Equivalent 

SNP. 

c. Dual Eligible-SNPs (D–SNPs) 

We did not propose to codify any 

permissible crosswalks specific to D– 

SNPs, which is consistent with our 

current crosswalk policy (which does 

not authorize additional crosswalk 

scenarios for D–SNPs outside of the 

crosswalk exceptions). 

d. Exceptions 

In some instances, crosswalk actions 

must be manually reviewed and entered 

by CMS staff. We call these crosswalk 

exceptions. We proposed to codify at 

§ 422.530(c) when CMS will approve a 

request for a crosswalk exception and 

permit crosswalks in situations that are 

not specified in § 422.530(b). These 

exceptions address certain unusual 

circumstances involving specific types 

of plans or contract activities. Under our 

proposal, only an exception specified in 

§ 422.530(c) would be approved and 

recognized as an additional 

circumstance when a crosswalk is 

permitted. We proposed to allow the 

following exceptions to the limits on the 

crosswalk process: 

• When a non-network or partial 

network based private fee-for-service 

(PFFS) plan is transitioning to either a 

partial network or a full network PFFS 

plan, we would permit a crosswalk 

when CMS determines it is in the 

interest of beneficiaries. CMS will 

consider whether the risks to enrollees 

are such that they would be better 

served by remaining in the plan, 

whether there are other suitable 

managed care plans available, and 

whether the enrollees are particularly 

medically vulnerable, such as 

institutionalized enrollees. We 

anticipate that granting these exceptions 

would be extremely rare since in the 

great majority of instances enrollees 

have choices of multiple MA plans or 

Original Medicare and are able to 

exercise their choice. We specifically 

proposed to restrict crosswalks between 

these network and non-network PFFS 

plans because the way enrollees will 

access health care services is 

significantly different in each of these 

plans. Section 1852(d)(5) of the Act 

establishes that in areas that are 

determined to be ‘‘network areas’’ PFFS 

plans can only operate by having a 

network of providers that meets CMS 

current network adequacy standards. 

The network based PFFS plan functions 

very much like a MA PPO plan in that 

there is a network of contracted 

providers through which enrollees can 

obtain Medicare covered services. In 

addition, an enrollee in a network based 

PFFS plan has the option of also going 

out-of-network for plan covered services 

though their cost sharing may be higher. 

However, in areas of the country that 

have determined to be non-network 

areas with respect to PFFS plans, the 

PFFS plan can operate without a 

network and enrollees must seek care 

from any willing provider under the 

non-network PFFS plan’s terms and 

conditions of payment. Because these 

two types of PFFS plans function very 

differently for enrollees obtaining 

covered health care services, we do not 

believe crosswalks should be generally 

permitted between these two types of 

PFFS plans. 

• When MA plans offered by two 

different MA organizations that share 

the same parent organization are 

consolidated such that the MA plans 

under separate contracts consolidated 

under one surviving contract, the 

enrollees from the consolidating plans 

may be moved to an MA plan under the 

surviving plan. As a result of the 

consolidation of contracts, enrollees 

from at least one of the PBPs are 

transitioned to another contract; 

therefore, CMS limits approval of these 

crosswalks to an exception because of 

the movement across different contracts. 

As part of reviewing a request for this 

crosswalk exception, CMS reviews the 

contract consolidation to ensure 

compliance with the change of 

ownership regulations (§§ 422.550 

through 422.553). 

• When a renewing D–SNP in a 

multi-state service area is reducing its 

service area to accommodate a state 

contract in part of the service area, we 

would permit enrollees who are no 


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longer in the service area to be moved 

into one or more new or renewing D– 

SNPs for which they are eligible, when 

CMS determines it is necessary to 

accommodate changes to D–SNP state 

contracts. We proposed to codify this 

crosswalk exception at § 422.530(c)(3). 

• When an MA organization renews a 

D–SNP for the upcoming contract year 

with changes in the D–SNP eligibility 

criteria, has another available new or 

renewing D–SNP for the upcoming 

contract year, and the two D–SNPs are 

offered to different populations, we 

would permit a crosswalk exception if 

it is in the best interest to current 

enrollees who are no longer eligible for 

their non-renewing D–SNP. We 

proposed to codify this crosswalk 

exception at § 422.530(c)(4). An MA 

organization may change—or as part of 

state contracting, may be required to 

change—a D–SNP’s eligibility criteria 

for the upcoming contract year. As a 

result, some current enrollees may no 

longer be eligible for their current D– 

SNP. However, the MA organization 

may have a new or renewing D–SNP in 

the same service area with eligibility 

requirements that can accommodate the 

enrollees who are no longer eligible for 

their current D–SNP. 

• When a renewing C–SNP with a 

grouping of multiple conditions is 

transitioning eligible enrollees into 

another C–SNP with one of the chronic 

conditions from that grouping. This 

crosswalk exception, which we 

proposed to codify at § 422.530(c)(5), 

differs from the allowable crosswalk in 

proposed § 422.530(b)(2)(i)(B) because it 

is a renewing C–SNP and not a nonrenewing C–SNP. A crosswalk 

exception is required in order for CMS 

to identify which enrollees are moving 

from the renewing plan C–SNP to the 

other C–SNP. In a non-renewing C–SNP, 

all enrollees would be crosswalked to 

another plan or disenrolled. 

In the proposed rule, CMS explained 

that the crosswalk policies we proposed 

to codify are designed to protect the 

rights of enrollees to make a choice 

about the plan from which they wish to 

receive Medicare benefits while 

facilitating how section 1851(c)(3)(B) of 

the Act requires evergreen elections. We 

proposed to codify policies and 

standards that CMS has implemented 

that allow MA and Cost organizations 

the flexibility to make business 

decisions about the benefit and cost 

sharing design of a plan while 

preserving the rights of beneficiaries to 

make informed choices about their 

health care coverage. We summarize the 

comments we received on these 

crosswalk proposals and our responses. 

Comment: CMS received a comment 

specific to the crosswalk exceptions 

process for cost plans. The commenter 

expressed concern with CMS having an 

exception permitting cost organizations 

to move enrollees from one of its plans 

with Part D to a plan that does not have 

Part D. The commenter stated that 

enrollees might not be aware of the 

implications of losing Part D and, as a 

result, CMS should require that 

enrollees actively ‘‘opt out’’ of Part D 

before being enrolled by the cost 

organization into one of its non-Part D 

plans. The commenter acknowledged 

that we proposed that the cost 

organization be required to notify 

enrollees of the implications of losing 

Part D but expressed concern that this 

information could become lost in the 

barrage of advertising and other 

materials mailed during the annual 

enrollment period. 

Response: We believe that the notice 

requirements proposed and finalized at 

§ 417.496(c)(1)(iii) offer robust 

protections for enrollees. Cost enrollees 

with Part D may be crosswalked to a 

plan without Part D because, unlike MA 

plans, Part D can only be an optional 

supplemental benefit for cost enrollees. 

In addition to specific information on 

plan benefits and costs for the new plan, 

affected enrollees will receive 

information from the cost organization 

on the implications of losing creditable 

Part D coverage and options for 

acquiring Part D coverage. In addition, 

the enrollee will have the annual 

coordinated election period to choose 

another Part D plan or to elect coverage 

in another Medicare health plan that 

does offer Part D coverage. We also 

believe that the provision as proposed 

strikes the proper balance between 

protections for enrollees and flexibility 

for cost organizations. CMS is therefore 

finalizing § 417.496. 

Comment: CMS received comments 

asking for a waiver of the requirement 

to provide an Annual Notice of Change 

(ANOC) document to enrollees who are 

crosswalked between SNP plans under 

the same legal entity if there are no 

substantive changes in premiums, 

benefits, and cost-sharing as a result of 

the transition. 

Response: Under § 422.111, MA 

organizations are required to disclose 

key changes to coverage to all enrollees 

annually. This crosswalk regulation was 

not proposed to, and as finalized does 

not, supersede or circumvent those 

disclosure requirements. The ANOC 

requires any and all changes to 

premiums, benefits, and cost-sharing to 

be disclosed in the ANOC, not just 

substantive changes. In addition, the 

ANOC requires these plans to make it 

clear that if a beneficiary doesn’t make 

a different choice, they will be 

automatically enrolled in the new plan. 

This helps preserve the beneficiary’s 

right to make an informed choice about 

their health care coverage. 

Comment: Commenters are seeking 

additional options to comply with the 

D–SNP integration requirements set 

forth in the BBA of 2018 and the 

implementing regulations. Several 

commenters suggested allowing D–SNP 

crosswalk exceptions to permit a nonrenewing D–SNP plan benefit package 

(PBP) of one legal entity to crosswalk 

into a new or renewing D–SNP PBP of 

another legal entity within the same 

parent organization in cases where it 

would facilitate integration for dually 

eligible individuals in Medicare and 

Medicaid. 

Response: We thank commenters for 

their suggestion. In our recent 

experience, contracting processes 

between D–SNPs and states to comply 

with provisions of the BBA of 2018 are 

raising new questions and challenges. In 

some cases, the current way a parent 

organization structures its MA contracts 

using different subsidiaries (so that the 

MA organizations on various contracts 

are different legal entities) may raise an 

impediment to achieving higher levels 

of integration between Medicare and 

Medicaid. Moving enrollees from one 

PBP to another PBP operated by the 

same parent organization but under a 

different legal entity, in some cases, 

could result in better experiences and 

outcomes for enrollees but may not 

always be permitted as a crosswalk 

under our proposal. 

Under current rules, and without a 

crosswalk exception, there are two 

mechanisms for moving D–SNP 

members into another D–SNP operated 

by another MA organization under the 

same parent organization: (1) 

Consolidating contracts consistent with 

the change of ownership regulations 

(§§ 422.550 through 422.553), then 

crosswalking between plans in the next 

year; or (2) if approved by CMS, under 

the passive enrollment provisions at 

§ 422.60(g). These mechanisms may be 

appropriate in some instances, but they 

may be more burdensome than we 

believe necessary in some types of 

within-parent-organization scenarios 

posed by commenters. The passive 

enrollment provision is also more 

narrowly targeted to enrollees already in 

an integrated D–SNP who would move 

to a fully integrated or highly integrated 

D–SNP, circumstances that would be 

most applicable when state Medicaid 

managed care contracting results in 

disruption of a current integrated care 

arrangement. 


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We proposed to permit two crosswalk 

exceptions for D–SNPs specifically at 

§ 422.530(c)(3) and (c)(4). The first 

would allow an MA organization 

renewing a D–SNP in a multi-state 

service area that is reducing its service 

area to accommodate a state contract in 

part of the service area to crosswalk 

enrollees who are no longer in the 

service area to one or more new or 

renewing D–SNPs for which they are 

eligible, when CMS determines it is 

necessary to accommodate changes to 

D–SNP state contracts. The second 

would apply for an MA organization 

renewing a D–SNP for the upcoming 

contract year with changes in the D– 

SNP eligibility criteria, but which has 

another available new or renewing D– 

SNP for the upcoming contract year, 

where the two D–SNPs are offered to 

different populations. In this scenario, 

we proposed to permit a crosswalk 

exception if it is in the best interest to 

current enrollees who are no longer 

eligible for their D–SNP to allow such 

a crosswalk exception. 

We agree with commenters that— 

where necessary to accommodate 

changes to D–SNP state contracts—we 

should permit crosswalk exceptions in 

additional scenarios. We are finalizing 

§ 422.530(c)(3) in the final rule with two 

significant changes compared to the 

proposed rule. First, we are finalizing 

additional language applying this 

exception to multi-state regional PPOs 

(RPPOs). Our original proposal focused 

on service area reductions by multi-state 

D–SNPs. However, multi-state RPPOs 

cannot eliminate states from their 

service areas while remaining RPPOs. 

As finalized, § 422.530(c)(3) also allows 

a non-renewing D–SNP that is a MA 

regional plan (an RPPO) to crosswalk 

enrollees to D–SNPs in state-specific 

local PPOs. Second, we are finalizing 

additional language to allow 

crosswalking of members across D– 

SNPs within the same parent 

organization but across legal entities in 

these scenarios. This crosswalk 

exception in § 422.530(c)(3) only applies 

for D–SNPs with multi-state service 

areas, and we believe § 422.530(c)(3) as 

finalized with these changes will create 

additional opportunities to comply with 

state D–SNP contracting while 

promoting continuity of care for 

enrollees. We are declining, at this time, 

to extend this crosswalk exception to D– 

SNPs without multi-state service areas 

to allow us additional opportunity to 

assess the potential impacts of such a 

change. The D–SNP crosswalk 

exception we proposed and are 

finalizing at § 422.530(c)(4) does not 

require that the D–SNP service areas 

include multiple states and is not 

limited to accommodating changes to 

the contracts between the state(s) and 

the D–SNP under § 422.107; this other 

crosswalk exception addresses changes 

in the eligibility criteria for the current 

year D–SNP and permits moving 

enrollees to another D–SNP offered by 

the same MA organization where CMS 

determines it is the best interests of the 

enrollees to move to the other D–SNP 

for the new contract year in order to 

promote access to and continuity of care 

for the enrollees whose enrollment 

would be terminated from the D–SNP 

based on the change in eligibility 

criteria. We are declining, at this time, 

to extend this crosswalk exception at 

§ 422.530(c)(4) to D–SNPs offered by 

different MA organizations, even if the 

parent organization is the same, to allow 

us additional opportunity to assess the 

potential impacts of such a change. 

We will consider other potential 

crosswalk exceptions for future 

rulemaking. 

After consideration of the public 

comments we received and for the 

reasons outlined in the responses to 

comments and the proposed rule, we are 

finalizing our proposal with the 

following modifications: 

• Section 422.530(c)(1) is being 

finalized with additional text from the 

preamble of the proposed rule (85 FR 

9091) to identify the factors considered 

by CMS in making a determination that 

moving enrollees from a non-network or 

partial network PFFS plan to a partial or 

full-network PFFS plan is in the interest 

of beneficiaries. The factors CMS will 

take into consideration are whether 

enrollees would be better served by 

being crosswalked to the new PFFS 

plan. Another consideration is if there 

are no other MA plans available where 

the enrollee resides (including whether 

there are a number of potentially more 

suitable MA plans available for the 

enrollee to select) and whether the 

enrollees are particularly medically 

vulnerable, such as institutionalized 

enrollees. A PFFS plan requesting a 

crosswalk of enrollees from a nonnetwork PFFS plan to a partial or fullnetwork PFFS plan would need to 

include in their exception request an 

explanation of why the crosswalk would 

be in the best interest of the beneficiary 

(or beneficiaries) rather than the 

alternative of the enrollee(s) making an 

selection among available MA plans or 

Original Medicare during the Annual 

Election Period. This section also 

finalizes the requirement that CMS will 

not permit crosswalks from network 

based PFFS plans to non-network or 

partial network PFFS plans. As 

discussed in the proposed rule, CMS is 

finalizing this requirement because 

network based PFFS plans function very 

much like an MA PPO plan. In 

consequence, an enrollee in a network 

based PFFS plan crosswalked to a nonnetwork or partial network PFFS plan 

would no longer have assured access to 

a network of contracted providers. Such 

a change in how their plan functions 

would be significant and potentially 

problematic for the enrollee in accessing 

their health care services. 

• Section 422.530(c)(2) is being 

finalized with a slight revision to clarify 

that MA contracts, rather than MA 

plans, are consolidated. When MA 

contracts under two different MA 

organizations that share a parent 

organization are consolidated, the MA 

plans under the different contracts are 

then offered under the surviving MA 

contract. Some of the MA plans may 

also be consolidated under the surviving 

MA contract. The crosswalk exception 

permits the enrollees from the 

consolidated contracts to be 

crosswalked to an MA plan under the 

surviving contract. 

• Section 422.530(c)(3) is being 

finalized as proposed to address multistate D–SNPs and with additional text to 

address a crosswalk exception for nonrenewing D–SNPs in multi-state RPPOs. 

In situations involving both types of D– 

SNPs, a crosswalk exception may be 

permitted in cases CMS determines it is 

necessary to accommodate changes to 

state contracts, as discussed in more 

detail in the response to the public 

comment. Section 422.530(c)(3) is also 

being finalized with additional text to 

clarify that the crosswalk exception 

permits moving enrollees to a different 

contract, 

• Section 422.530(c)(4) is being 

finalized with additional text to clarify 

that the receiving D–SNP must be 

offered by the same MA organization 

and to specify that CMS would approve 

the crosswalk exception if the enrollees 

are eligible for the receiving D–SNP and 

CMS determines the crosswalk 

exception would be in the best interests 

of enrollees in order to promote access 

to and continuity of care for enrollees 

relative to the absence of a crosswalk 

exception. 

• The crosswalk proposed at 

§ 422.530(b)(2)(C) to permit a renewing 

C–SNP with a grouping that is 

transitioning eligible enrollees into 

another C–SNP with one of the chronic 

conditions from that grouping is not 

being finalized because it was 

duplicative of proposed § 422.530(c)(5), 

which is being finalized. Under our 

current policy, an exception is not 

automatically granted in this situation. 

We believe that codifying our current 


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policy on this point is appropriate. 

What was proposed at § 422.530(b)(2)(D) 

is being finalized as § 422.530(b)(2)(C) 

instead. 

• Finally, we are finalizing the 

regulation text at § 417.496(c)(1) and 

introductory text at § 422.530(c) using 

‘‘may permit’’ instead of ‘‘permits’’ to 

clarify that CMS approval is not 

automatic for the crosswalk exceptions. 

As finalized, § 422.530 also contains 

several non-substantive grammatical 

and technical changes to improve the 

clarity and readability of the regulation 

text. 

B. Medicare Advantage (MA) Change of 

Ownership Limited to the Medicare 

Book of Business (§§ 422.550 and 

423.551) 

Section 1857 of the Act requires each 

MA organization to have a contract with 

CMS in order to offer an MA plan. 

Section 1857(e)(1) of the Act authorizes 

the adoption of additional contract 

terms that are consistent with the statute 

and that the Secretary finds are 

necessary and appropriate. Consistent 

with this authority, at the beginning of 

the Part C program we implemented 

contracting regulations in § 422.550 

which provide for the novation of an 

MA contract in the event of a change of 

ownership involving an MA 

organization. (63 FR 35106) Under the 

regulations, codified at §§ 422.550 

through 422.553, the execution of a 

novation agreement is required when an 

MA organization is acquired or when it 

wants to transfer its ownership to a 

different entity. When an MA 

organization is no longer able or willing 

to participate in the MA program, a 

change of ownership can provide both 

the holder of the contract and CMS with 

an opportunity to transfer the 

ownership of the contract to a different 

entity with little or no disruption to 

enrolled beneficiaries. In this instance, 

CMS has an interest in agreeing to a 

novation of the existing MA contract 

because it promotes the efficient and 

effective administration of the MA 

program. 

We proposed to revise § 422.550 by 

adding a new paragraph at § 422.550(f) 

to restrict the situations in which CMS 

will agree to an MA contract novation 

to those transfers involving the selling 

of the organization’s entire line of MA 

business, which would include all MA 

contracts held by the legal entity that is 

identified as the MA organization. It has 

been long-standing policy in the MA 

program that CMS will only recognize 

the sale or transfer of a legal entity’s 

entire MA line, or book of business, 

consisting of all MA contracts held by 

the MA organization because we believe 

that allowing the sale of just one 

contract (when the MA organization has 

more than one MA contract) or pieces of 

a single contract can have a negative 

impact on beneficiary election rights. 

We explained that the change codifies 

existing policy and also create more 

consistency in regulations between the 

Part D program, which has an explicit 

regulation requiring the sale of the 

entire book of Part D business at 

§ 423.551(g), and the MA program. 

In the proposed rule, we explained 

that this policy has not been applied in 

cases where contracts are transferred 

among subsidiaries of the same parent 

organization and we do not wish to 

interfere with an MA organization’s (or 

parent organization’s) ability to decide 

its corporate structure or contractual 

arrangements with its subsidiaries. 

Therefore, we also proposed, at 

§ 422.550(f)(1), an exception to the 

proposed limit for changes of ownership 

to only when the entire MA book of 

business is being transferred; that 

exception would be when the sale or 

transfer is of a full contract between 

wholly owned subsidiaries of the same 

parent organization. 

We proposed to codify explicitly in 

§ 422.550(f)(2) that CMS will not 

recognize or allow a sale or transfer that 

consists solely of the sale or transfer of 

individual beneficiaries, groups of 

beneficiaries enrolled in a plan benefit 

package, or one MA contract if the 

organization holds more than one MA 

contract. We stated that allowing the 

sale of just one contract (when the MA 

organization has more than one MA 

contract) or pieces of a single contract 

can have a negative impact on 

beneficiary election rights as our 

primary rationale for this proposal. 

We thank commenters for their input 

to help inform our final rule on changes 

of ownership. We received the following 

comments on this proposal, and our 

responses follow: 

Comment: Some commenters were 

supportive of CMS’s proposal and 

agreed that allowing a sale or transfer 

that consists solely of the sale or transfer 

of a cohort of beneficiaries/contracts, if 

the organization holds more than one 

MA contract, can have a negative impact 

on beneficiary election rights. 

Additionally, we received support on 

the exception to allow the sale or 

transfer of a full contract between 

wholly owned subsidiaries of the same 

parent organization. 

Response: We thank commenters for 

their support of our proposal. 

Comment: A commenter suggested 

that CMS’s proposal would remove a 

viable option for an organization to 

transfer a contract with minimal 

disruption to enrollees because the 

enrollee would move with the contract 

and the move would be invisible to the 

enrollee. They explained that this 

limitation would require an 

organization to retain a contract that is 

not working and force them to exit the 

MA market entirely in order to close an 

underperforming contract. 

Response: Section 1851 of the Act 

provides that Medicare beneficiaries 

who are entitled to Part A and enrolled 

in Part B may elect to receive benefits 

through enrollment in an MA plan of 

their choice and authorizes CMS to 

adopt the process, form and manner for 

making and changing enrollment 

elections. Additionally, section 

1851(c)(3)(B)(ii) of the Act provides for 

evergreen elections, which are when an 

individual who has made an election is 

considered to have continued to make 

the same election until the individual 

makes a change to the election or the 

MA plan is discontinued or no longer 

serves the area in which the individual 

resides. Both of these statutes protect an 

enrollee’s right to choose and remain in 

an MA plan of their choosing. We 

believe that allowing the sale or transfer 

of contracts, without the entire line of 

business, does not support the enrollee’s 

right to choose their MA plan under the 

statute because a plan offered and 

administered by a specific MA 

organization is necessarily different 

than a plan, even with the same benefits 

coverage and cost sharing, offered and 

administered by a different 

organization. A different parent 

organization is likely to have different 

administrative policies and processes, 

such as appeals processing, medical 

necessity policies, or customer service 

functions, which an enrollee should be 

able to consider before electing to enroll 

in a plan. An individual that has elected 

coverage in a plan offered by one entity 

is necessarily choosing not to be in a 

plan offered by a different entity; the 

sale of a single contract frustrates those 

choices. We distinguish this from the 

sale or transfer of the entire line of 

business to another MA organization, 

where the seller/transferor is choosing 

to leave the market entirely and the 

buyer/transferee is taking on all 

responsibilities and obligations to 

continue providing benefits to all 

enrollees without interruption. Also, we 

disagree that this limitation would 

require a plan to retain a contract that 

is not working and force them to exit the 

MA market entirely in order to close an 

underperforming contract. MA 

organizations retain the right to nonrenew a contract for any reason, 

provided it meets the timeframes for 


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doing so at § 422.506, and may continue 

to operate other existing MA contracts 

without interruption. 

Comment: A commenter requested 

that CMS clarify whether the divestiture 

of an MA organization’s business would 

allow the blending of contracts by virtue 

of a novation. 

Response: By ‘‘blending’’ we 

understand the commenter to be 

referring to combination of transferring 

a contract to a new MA organization and 

consolidating the contracts at the same 

time. The divestiture of an MA 

organization’s entire line of business 

does not allow those transferred 

contracts to be consolidated with the 

acquiring MA organization’s existing 

contracts in the same year. In other 

words, the plans in the acquired 

contract must continue to operate under 

their given contract number. After the 

acquisition is complete and during the 

next bidding cycle, the MA organization 

may follow crosswalk rules finalized at 

§ 422.530 in order to consolidate 

contracts into a single contract. 

Comment: Two commenters 

recommended that CMS allow 

flexibilities to transfer or sell plans or 

contracts under certain, additional 

conditions through specific exceptions 

to the ‘‘entire line of business’’ rule. One 

commenter recommended that we create 

an exception based on certain 

geographies or markets. Another 

commenter recommended an exception 

based on special circumstances, such as 

one involving the sale of an I–SNP. The 

commenter suggested that the sale of an 

I–SNP would benefit the Medicare 

program and beneficiaries because the 

acquiring MA organization could better 

serve that population and would likely 

be a better solution to maintain 

appropriate coverage for the impacted 

beneficiaries over terminating the 

contract. 

Response: It has been long-standing 

policy in the MA program that CMS will 

only recognize the sale or transfer of a 

legal entity’s entire MA line of business, 

or book of business, consisting of all MA 

contracts held by the MA organization 

because we believe that allowing the 

sale of just one contract (when the MA 

organization has more than one MA 

contract) or pieces of a single contract 

can have a negative impact on 

beneficiary election rights, particularly 

where an exception is based on a 

decision that a specific plan or MA 

organization is ‘‘better for’’ enrollees. 

The same policy is in place in the Part 

D program, in § 423.551(g). We do not 

believe that allowing an exception based 

on ‘‘special circumstances’’, either 

because of a product type (for example, 

I–SNP) or characteristics of a region or 

marketplace, outweighs the importance 

of upholding an enrollee’s right to elect 

a plan of their choosing. Additionally, 

commenters did not provide specific 

information about which markets or 

geographic regions would benefit from 

this type of exception and why an 

exception for specific areas is necessary 

for us to evaluate in more detail. We 

may monitor issues like this and 

consider specific exceptions to this 

policy in future rulemaking. 

Comment: A commenter 

recommended that we consider special 

circumstances permitting an MA 

organization to transfer one PBP to 

another legal entity within the same 

parent organization in cases where it 

would facilitate D–SNP integration. The 

commenter explained that an MA 

organization may need to shift a D–SNP 

PBP to an H-contract affiliated with a 

different legal entity to meet federal 

requirements that FIDE plans be on the 

same legal entity as the corresponding 

Medicaid product. 

Response: We do not agree that 

adding explicit regulatory text to permit 

an organization to transfer one PBP in 

a contract to another legal entity (even 

if limited to transfers within the same 

parent organization) in cases where it 

would facilitate D–SNP integration is 

necessary. The regulatory text, as 

proposed and finalized, permits the sale 

or transfer of a single contract (that is 

not the full book of business) where 

both MA organizations (the seller and 

the buyer) are wholly owned 

subsidiaries of the same parent 

organization, regardless of the plan 

types under the contract. Additionally, 

MA organizations will be able to use 

crosswalk exceptions discussed in 

section V.A of this final rule to facilitate 

D–SNP integration with § 422.107. As 

we discuss in Section V.A of this final 

rule, we are permitting, at 

§ 422.530(c)(3), an MA organization to 

crosswalk enrollees from one PBP to a 

PBP of another legal entity within the 

same parent organization in certain 

cases where it is necessary to 

accommodate changes to the D–SNP 

state contracts required under § 422.107. 

We believe these crosswalk exceptions, 

as finalized, will provide MA 

organizations with any additional 

flexibility needed to accommodate D– 

SNP integration. 

Comment: One commenter 

recommended that we consider special 

circumstances allowing an MA 

organization to buy or sell a single PBP 

when the intent is to promote 

integration for dual eligible 

beneficiaries. The commenter explained 

that the ability to sell a D–SNP PBP to 

an existing, incoming, or re-procured 

Medicaid organization will prevent 

disruption that otherwise would occur 

when a D–SNP must exit a market 

(unless authority for Medicare passive 

enrollment is expanded). 

Response: We do not agree that 

adding explicit regulation text to permit 

an organization to buy or sell one PBP 

to another legal entity to facilitate D– 

SNP integration is necessary. The 

regulation text, as proposed and 

finalized, permits the sale or transfer of 

a single contract (that is not the full 

book of business) where both MA 

organizations (the seller and the buyer) 

are wholly owned subsidiaries of the 

same parent organization, regardless of 

the plan types under the contract. In 

accordance with § 422.552(a)(3)(iii), 

which has been in place for several 

years, the successor organization must 

meet the requirements to qualify as an 

MA organization under part 422, 

subpart K; this means that all of the 

requirements to offer a SNP must also be 

met if the contract includes PBPs that 

are SNPs. We do not believe carving out 

a specific PBP from a contract, even if 

that PBP is a D–SNP, to sell the PBP 

would serve MA program purposes and 

goals. In addition, we do not believe 

that an expansion of the passive 

enrollment authority for the MA 

program is within the scope of this 

rulemaking. 

Comment: One commenter 

recommended that the last part of the 

sentence in § 422.550(f)(2)—‘‘or one 

contract if the organization holds more 

than one MA contract’’—be removed 

because it contradicts § 422.550(f)(1) 

which explicitly allows an exception for 

one contract when it is owned within 

the same parent organization. They also 

recommended that the corresponding 

language in the Part D regulation at 

§ 423.551(g)(2)) be revised. 

Response: We agree with the 

commenter and believe the removal of 

‘‘or one contract if the organization 

holds more than one MA contract’’ 

would reduce potential confusion. We 

also agree that the same change should 

be made to the Part D regulation at 

§ 423.551(g)(2), since the proposed 

language at § 422.550(f)(2) was meant to 

mirror the language in § 423.551(g)(2). 

Therefore, we are modifying the 

regulation at § 422.550(f)(2) and 

§ 423.551(g)(2) to remove ‘‘or one 

contract if the organization holds more 

than one MA contract.’’ We emphasize 

that the prohibition on transfers or sales 

of single contracts, is prohibited under 

the first sentence of § 422.550(f)(1) and 

423.551(g)(1): CMS will not recognize 

the sale of anything less than an MA 

organization or PDP sponsor’s book of 

business except for the limited situation 


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where the sale or transfer of a full 

contract is between wholly owned 

subsidiaries of the same parent 

organization. Further, CMS will not 

recognize or allow a sale or transfer that 

consists solely of the sale or transfer of 

individual beneficiaries or groups of 

beneficiaries enrolled in a plan benefit 

package. 

After careful consideration of all 

comments received, and for the reasons 

set forth in the proposed rule and in our 

responses to the comments, we are 

finalizing the proposed changes to 

§ 422.550(f) without the phrase ‘‘or one 

contract if the organization holds more 

than one MA contract’’ in 

§ 422.522(f)(2). We are also finalizing a 

change to § 423.551(g)(2) to remove ‘‘or 

one contract if the organization holds 

more than one MA contract.’’ 

C. Supplemental Benefit Requirements 

(§§ 422.100) 

CMS has released guidance on 

supplemental benefits several times 

since April 2, 2018, including the 2019 

Call Letter 71 and a subsequent HPMS 

memo,72 concerning the definition of 

‘primarily health related’ with respect to 

supplemental benefits. Under a 

longstanding interpretation of the MA 

statute and regulations, CMS defines a 

mandatory or optional supplemental 

health care benefit as an item or service 

(1) not covered by original Medicare, (2) 

that is primarily health related, and (3) 

for which the plan must incur a nonzero direct medical cost. Only an item 

or service that meets all three conditions 

could be proposed and covered as a 

supplemental benefit in a plan’s PBP. 

We proposed to codify this policy at 

§ 422.100(c)(2)(ii) by setting forth these 

criteria as requirements that 

supplemental benefits must meet. 

The current regulation text at 

§ 422.100(c)(2) focuses on 

distinguishing between mandatory 

supplemental benefits and optional 

supplemental benefits. We proposed to 

re-designate the substance of that 

current regulation text as new 

paragraphs (c)(2)(i)(A) and (B). We 

proposed to codify our longstanding 

definition of supplemental benefits as 

three requirements that must be met by 

a supplemental benefit at paragraph 

(c)(2)(ii). In paragraph (c)(2)(ii)(A), we 

proposed to codify that a supplemental 

benefit must be primarily health related, 

using a standard discussed in more 

detail in this section of this final rule 

and with specific text to address SSBCI. 

In paragraph (c)(2)(ii)(B), we proposed 

to codify that a MA organization must 

incur a non-zero direct medical cost in 

furnishing or covering the supplemental 

benefit to verify that the benefit is 

medically related, with specific text to 

address special supplemental benefits 

for the chronically ill (SSBCI), discussed 

in more detail in section II.A of the 

proposed rule and section II.A of the 

final rule titled ‘‘Medicare Program; 

Contract Year 2021 Policy and 

Technical Changes to the Medicare 

Advantage Program, Medicare 

Prescription Drug Benefit Program, and 

Medicare Cost Plan Program,’’ which 

appeared in the Federal Register on 

June 2, 2020 (‘‘June 2020 Final Rule’’) 

(85 FR 33796, 33800 through 33805). 

Finally, in paragraph (c)(2)(ii)(C), we 

proposed to codify the requirement that 

the supplemental benefit is not covered 

by Medicare. The portion of a benefit 

where coverage is more generous or 

greater coverage of a Medicare Part A or 

Part B benefit—such as coverage of more 

inpatient days or coverage with lower 

cost sharing compared to Medicare—is 

a supplemental benefit. However, an 

MA plan may not cover a Part D drug 

or reduce Part D cost sharing as an MA 

supplemental benefit. Under § 422.500, 

an MA plan that covers any Part D 

benefit must comply with the Part D 

regulations in part 423 and, therefore, 

must be a Part D sponsor of a Part D 

plan. In addition, § 422.266(b)(1) 

provides that an MA plan may use its 

rebates to buy down a Part D premium, 

including the premium for 

supplemental drug coverage described 

at § 423.104(f)(1)(ii). 

1. Primarily Health Related 

We explained in the proposed rule 

that, as discussed in the 2019 Call Letter 

and an April 2018 HPMS memo, CMS 

currently interprets ‘‘primarily health 

related’’ as meaning that the item or 

service is used to diagnose, compensate 

for physical impairments, acts to 

ameliorate the functional/psychological 

impact of injuries or health conditions, 

or reduces avoidable emergency and 

healthcare utilization. We are clarifying 

in this final rule that the current 

interpretation is that in order for a 

service or item to be ‘‘primarily health 

related’’, it must diagnose, prevent, or 

treat an illness or injury, compensate for 

physical impairments, act to ameliorate 

the functional/psychological impact of 

injuries or health conditions, or reduce 

avoidable emergency and healthcare 

utilization; these key words (‘‘diagnose, 

prevent, or treat an illness or injury’’) 

were inadvertently left out of the 

proposed rule. Using this interpretation, 

CMS has provided MA plans with 

flexibility in designing and offering 

supplemental benefits that may enhance 

beneficiaries’ quality of life and improve 

health outcomes. We proposed to codify 

that supplemental benefits must be 

primarily health related, with this 

definition, at § 422.100(c)(2)(ii)(A). 

Examples of supplemental benefits 

include: Dental, vision, adult day health 

services, home-based palliative care, inhome support services, support for 

caregivers of enrollees, stand-alone 

memory fitness, expanded home and 

bathroom safety devices and 

modifications, wearable items such as 

compression garments and fitness 

trackers, over-the-counter items, and 

expanded transportation for medical 

purposes. A supplemental benefit is not 

primarily health related under this 

definition if it is an item or service that 

is solely, or primarily used for cosmetic, 

comfort, general use, or social 

determinant purposes. Also, to be 

primarily health related, the benefit 

must focus directly on an enrollee’s 

health care needs and should be 

recommended by a licensed medical 

professional as part of a care plan, if not 

directly provided by one. Enrollees are 

not currently required to get physician 

orders for supplemental benefits (for 

example, OTC items), and requiring it 

now would impose new restrictions on 

MA plans and potentially cause large 

administrative burden and interruptions 

in care. Therefore, our proposal 

included continued use of the 

‘‘recommended’’ standard as part of 

interpreting and applying this 

component of the definition of 

supplemental benefit. We note that 

supplemental benefits must also be 

medically appropriate to be primarily 

health related; if a service or item is not 

medically appropriate, it is not 

primarily health related. This is 

consistent as well with our longstanding 

guidance in Chapter 4, section 30.2, of 

the Medicare Managed Care Manual that 

supplemental benefits must be 

medically necessary. We will continue 

our current interpretations and guidance 

in codifying existing policy on this 

issue. 

We noted in the proposed rule that 

the BBA of 2018 amended section 

1852(a)(3) of the Act to permit MA plans 

to offer additional supplemental 

benefits that are not primarily health 

related for chronically ill enrollees, 

beginning January 1, 2020. In section 

II.A of the proposed rule, we proposed 

a regulation, to be codified at 

§ 422.102(f), to set standards for special 

supplemental benefits for chronically ill 

enrollees (SSBCI); we finalized that 


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regulation largely as proposed in the 

June 2020 Final Rule. We explained that 

the expansion of supplemental benefits 

for chronically ill enrollees would not 

affect our proposed definition of 

‘‘primarily health related’’ and how it 

applied to traditional supplemental 

benefits under our proposal at 

§ 422.100(c)(2)(ii), but we proposed to 

exclude SSBCI from compliance with 

the requirement that supplemental 

benefits be primarily health related at 

§ 422.100(c)(2)(ii)(A). We also explained 

that the standard that supplemental 

benefits be primarily health related was 

a higher standard than the requirement 

that have reasonable expectation of 

improving overall health. 

2. Uniformity Requirements 

We also proposed to codify an 

existing policy regarding the 

requirement that benefits covered by an 

MA plan be uniform for all enrollees in 

the plan. There are several MA 

regulations that address uniformity, 

including the definition of MA plan at 

§ 422.2, the requirement at § 422.100(d), 

and the bidding and premium 

requirements at §§ 422.254(b) and 

422.262(c). As explained in the final 

rule, published in April 2018, titled 

‘‘Medicare Program; Contract Year 2019 

Policy and Technical Changes to the 

Medicare Advantage, Medicare Cost 

Plan, Medicare Fee-for-Service, the 

Medicare Prescription Drug Benefit 

Programs, and the PACE Program, 

(‘‘April 2018 final rule’’) (83 FR 16440, 

16480–85), CMS has determined that 

providing access to supplemental 

benefits that are tied to health status or 

disease state in a manner that ensures 

that similarly situated individuals are 

treated uniformly is consistent with the 

uniformity requirement in the MA 

program. We solicited comments on this 

reinterpretation and finalized it in that 

prior rulemaking. In response to those 

comments and based on our further 

consideration of this issue, we provided 

guidance to MA organizations in both 

the April 2018 final rule and a 

subsequent HPMS memo 73 released 

April 27, 2018. We proposed to codify 

this reinterpretation specifically in 

regulation text at § 422.100(d)(2). 

The regulations on MA uniform 

benefits implement both section 1852(d) 

of the Act, which requires that benefits 

under the MA plan are available and 

accessible to each enrollee in the plan, 

and section 1854(c) of the Act, which 

requires uniform premiums for each 

enrollee in the plan. Previously, we 

required MA plans to offer all enrollees 

access to the same benefits at the same 

level of cost sharing. In 2018, in issuing 

a final rule and guidance for contract 

year 2019, we determined that these 

statutory provisions and the regulation 

at § 422.100(d) meant that we had the 

authority to permit MA organizations 

the ability to reduce cost sharing for 

certain covered benefits, including 

lower deductibles, and offer specific 

tailored supplemental benefits for 

enrollees that meet specific medical 

criteria, provided that similarly situated 

enrollees (that is, all enrollees who meet 

the medical criteria identified by the 

MA plan for the benefits) are treated the 

same. We explained this in the 

proposed rule and that our 

interpretation means that there must be 

some nexus between the health status or 

disease state and the specific benefit 

package designed for enrollees meeting 

that health status or disease state. We 

proposed to redesignate paragraph (d)(2) 

as (d)(2)(i) and add new paragraph 

(d)(2)(ii) to specifically state that MA 

organizations may reduce cost sharing 

for certain covered benefits, including 

lower deductibles, and offer specific 

tailored supplemental benefits for 

enrollees that meet specific medical 

criteria, provided that similarly situated 

enrollees are treated the same and that 

there is some nexus between the health 

status or disease state and the tailored 

benefits. We explained in the proposed 

rule that we review MA benefit designs 

to make sure that the overall impact is 

non-discriminatory and that higher 

acuity, higher cost enrollees are not 

being excluded in favor of healthier 

populations; this review applies various 

standards in addition to the uniformity 

requirements. 

We thank commenters for helping 

inform CMS’ policy on supplement 

benefit requirements. We received 

approximately 27 comments on this 

proposal; we summarize them and our 

responses follow: 

Comment: Many commenters 

supported this proposal. 

Response: We thank commenters for 

their feedback. 

Comment: A few commenters 

requested CMS provide greater detail on 

allowable supplemental benefits and 

confirm examples. Additionally, 

commenters requested that CMS update 

the Medicare Managed Care Manual to 

include these new policies. 

Response: We believe that our 

discussion in the proposed rule 

explaining the proposal we are 

finalizing provides sufficient guidance 

for MA organizations on this topic in 

this context. The proposal was to codify 

existing guidance. In addition to the 

CY2019 Call Letter (specifically about 

the expanded definition of ‘‘primarily 

health related’’) and the April 2018 

HPMS memo on the Reinterpretation of 

‘‘Primarily Health Related’’ for 

Supplemental Benefits, Chapter 4 of the 

Medicare Managed Care Manual 

provides extensive guidance about basic 

benefits and supplemental benefits 

offered by MA plans. Specifically, 

section 30 of Chapter 4 discusses a 

number of examples. Additionally, CMS 

will consider additional subregulatory 

guidance, including manual updates, as 

necessary in implementing and 

administering the legal standards for 

MA benefits. 

Comment: Some commenters stated 

concern that recent changes to the 

Medicare Communications and 

Marketing Guidelines (MCMG) could 

also increase confusion about 

supplemental benefits among enrollees. 

Response: As stated in the April 2018 

HPMS memo on primarily health 

related supplemental benefits, MA plans 

are responsible for clearly identifying 

what will and will not be covered in the 

plan’s Evidence of Coverage (EOC). Any 

limitations on coverage should be 

clearly noted in the EOC. Organizations 

are encouraged to provide explanations 

to establish how a supplemental benefit, 

particularly a new or novel benefit, is 

primarily health related or how 

coverage of an item or service will be 

limited to when it is primarily health 

related. Activities and materials that 

mention benefits are considered 

marketing (as defined under §§ 422.2260 

and 423.2260) and are subject to the 

requirements at §§ 422.2263 and 

423.2263 (General marketing 

requirements). Please refer to section 

V.E. of this final rule, where we address 

proposals to codify our current policies 

for marketing and communications by 

MA and Part D plans. We believe that 

our requirements for how MA plans 

market their benefits and how the scope 

and rules for coverage must be disclosed 

annually to enrollees ensure that 

confusion is minimized for enrollees. As 

we monitor the MA program and 

complaints (submitted to 1–800- 

Medicare and otherwise), we will 

consider if additional guidance or 

rulemaking is necessary to address 

unforeseen confusion among 

beneficiaries. 

Comment: Some commenters 

expressed concern that original 

Medicare beneficiaries do not have 

access to supplemental benefits. One 

commenter stated that MA plan 

premiums for supplemental benefits 

may pose a barrier to the receipt of 

supplemental benefits. One commenter 


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suggested CMS introduce models that 

allow original Medicare beneficiaries 

access to supplemental benefits. 

Response: Comments regarding 

Original Medicare beneficiaries’ access 

to MA plans supplemental benefits are 

out of scope for this regulation. As to 

the comment about MA premiums, 

sections 1853 and 1854 of the Act 

address how MA plan premiums are 

defined and charged. Further, section 

1852 of the Act explicitly authorizes 

MA organizations to offer supplemental 

benefits to their enrollees and section 

1854 of the Act addresses how MA 

plans that bid below the payment 

benchmark for their service area may 

use a portion of the amount by which 

the benchmark exceeds the bid to pay 

the premiums for supplemental benefits. 

Information about premiums and 

supplemental benefits is available 

during the annual coordinated election 

period for beneficiaries to use in making 

enrollment decisions. 

Comment: A commenter suggested 

CMS allow MA plans the ability to offer 

supplemental benefits at a county level 

within a multi-county service area plan. 

Response: Plans segments are countylevel portions of a plan’s overall service 

area. As discussed in the April 2018 

Final Rule (83 FR 16486), 

§ 422.262(c)(2) permits MA plans to 

vary supplemental benefits, in addition 

to premium and cost sharing, by 

segment so long as the supplemental 

benefits, premium, and cost sharing are 

uniform within each segment of an MA 

plan’s service area. MA plan segments 

currently may be composed of one or 

more counties within the service area. 

Comment: A few commenters 

expressed concern that supplemental 

benefits are not visible in the MPF. 

Response: We will take this 

recommendation under consideration as 

we continue to refine the MPF tool. 

Comment: A commenter expressed 

concern about the lack of communitybased providers available to provide 

supplemental benefits. 

Response: CMS is prohibited from 

requiring MA plans to contract with 

specific providers under section 

1854(a)(6)(B)(iii) of the Act and 

§ 422.256(a)(2)(i), but so long as they 

comply with the standards established 

for provider contracting in part 422, 

subpart E, MA organizations may 

contract with community-based 

providers. Further, § 422.112(b)(3) 

provides for coordinated care MA plans 

to include community-based services in 

their plans for coordination and 

continuity of care for enrollees. In 

addition, § 422.112(b)(3) specifically 

states that MA coordinated care plans 

are required to ‘‘coordinate MA benefits 

with community and social services 

generally available in the area served by 

the MA plan.’’ MA plans may contract 

with community-based organizations to 

provide supplemental benefits that are 

compliant with the statutory and 

regulatory requirements. For example, 

an MA plan could elect to offer a meals 

or food/produce supplemental benefit 

(so long as the benefit is primarily 

health related and the plan incurs a 

non-zero direct medical cost consistent 

with § 422.100(c)(2)) and pay a 

community-based organization for 

furnishing the covered benefit. We 

understand that in some areas there may 

be a limited number of communitybased providers and hope that the 

increased supplemental benefit 

flexibilities discussed in this rule 

encourage increased opportunities for 

community provider participation. 

Comment: A commenter requested 

CMS provide additional guidance on 

how plans can make sure that 

supplemental benefits meet the 

‘‘primarily health related’’ requirement. 

Response: We suggest plans review 

the April 27, 2018 memo titled 

‘‘Reinterpretation of ‘‘Primarily Health 

Related’’ for Supplemental Benefits’’. In 

addition, Chapter 4 of the Medicare 

Managed Care Manual contains 

guidance on permissible supplemental 

benefits, which gives MA organizations 

and the public an understanding of 

which benefits we have previously 

determined to meet this standard. The 

standard we are finalizing at 

§ 422.100(c)(2)(ii)(A) provides that to be 

primarily health related, a benefit 

must—as a primary matter—diagnose, 

prevent, or treat an illness or injury; 

compensate for physical impairments; 

act to ameliorate the functional/ 

psychological impact of injuries or 

health conditions; or reduce avoidable 

emergency and health care utilization. A 

supplemental health benefit proposed 

by an MA organization must be 

reasonably and rationally encompassed 

by this standard and may not have a 

primary purpose that is outside of this 

standard. The primary purpose of an 

item or service is determined by 

national typical usages of most people 

using the item or service and by 

community patterns of care. To be 

considered healthcare benefits, 

supplemental benefits must focus 

directly on an enrollee’s healthcare 

needs and be medically appropriate for 

the enrollee. While we do not require 

that the physician or health care 

professional prescribe or order an item 

or service for it to be considered 

primarily health care, we believe that 

recommendation by a licensed provider 

as part of a care plan is an important 

sign that an item or service meets this 

standard. We cannot provide an 

exhaustive list of items and services that 

potentially are primarily health related. 

We consider this sufficient general 

guidance for plans to make sure that 

supplemental benefits meet the 

‘‘primarily health related’’ requirement. 

Comment: In light of COVID–19, one 

commenter suggested CMS provide 

additional flexibility to provide 

supplemental benefits for high-risk 

populations that must remain in their 

homes. This commenter suggested CMS 

allow plans to provide home delivered 

meals, grocery, produce, and nonmedical transportation for this 

population. 

Response: We are not finalizing a 

change to the proposed standards for 

defining supplemental benefits to 

specifically address the COVID–19 

public health emergency. Earlier in 

2020, CMS issued guidance 74 to MA 

plans, in response to the unique 

circumstances resulting from the 

outbreak of COVID–19. CMS exercised 

its enforcement discretion to adopt a 

temporary policy of relaxed 

enforcement in connection with the 

prohibition on mid-year benefit 

enhancements that was adopted in a 

2008 final rule (73 FR 43628); CMS 

allowed MA plans to implement 

additional or expanded benefits that 

address medical needs and access to 

healthcare raised by the COVID–19 

outbreak, such as covering meal 

delivery or medical transportation 

services to accommodate the efforts to 

promote social distancing during the 

COVID–19 public health emergency. For 

CY2021, CMS issued additional 

guidance on December 28, 2020 titled 

‘‘Contract Year 2021 Coronavirus 

Disease 2019 (COVID–19) Permissive 

Actions FAQ’’ stating that we will 

continue this use of enforcement 

discretion in connection with the 

prohibition on mid-year benefit 

enhancements. 

Comment: A commenter requested 

that CMS provide additional clarity 

around what is intended by CMS’s 

statement in the preamble and 

referenced guidance that a primarily 

health related benefit should be 

recommended by a licensed medical 

professional as part of a care plan and 

to clarify what is acceptable when the 

supplemental benefit is not directly 

provided by a licensed medical 

professional and the enrollee does not 

receive case management services and 

an individual care plan. 


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Response: A medical professional 

does not have to be the individual or 

entity furnishing the supplemental item 

or service. We recognize that there are 

scenarios in which a medical 

professional would not be furnishing a 

service (for example, meals). However, 

the item or service must still meet the 

regulatory criteria for a supplemental 

benefit at § 422.100(c)(2)(ii)(A) being 

finalized here, that is to be primarily 

health related, a benefit must benefits 

diagnose, prevent, or treat an illness or 

injury; compensate for physical 

impairments; act to ameliorate the 

functional/psychological impact of 

injuries or health. Recommendation by 

a medical professional, even if not part 

of a formal care management or care 

coordination plan, is an important 

indicator that a particular item or 

service is being furnished for primarily 

health-related purposes but is not 

necessarily the only indication. The 

primary purpose of an item or service is 

determined by national typical usages of 

most people using the item or service 

and by community patterns of care and/ 

or by established research or medical 

compendia and journals about such 

item or service. To be considered 

healthcare benefits, supplemental 

benefits must focus directly on an 

enrollee’s healthcare needs and must be 

medically appropriate for the enrollee. 

We expect MA plans to have procedures 

and processes in place to ensure a 

reasonable determination is made that 

the covered benefit is medically 

appropriate for the enrollee in the event 

that it is not practical for a medical 

professional to make a specific 

recommendation or evaluation. 

After consideration of the comments 

received and for the reasons outlined in 

the proposed rule and our responses to 

comments, we are finalizing, 

substantively as proposed but with 

clarifications, the proposed 

amendments to § 422.100(c) to 

restructure the regulation text and add 

the three requirements for an item or 

benefit to be a supplemental benefit and 

to § 422.100(d)(2) to restructure the 

regulation text and add a provision 

explicitly addressing how supplemental 

benefits that are tied to disease state or 

health status may meet the uniformity 

requirement and be offered as 

supplemental benefits. Although we are 

finalizing this provision as applicable 

beginning January 1, 2022 (2022 

calendar/contract year), it effectively 

applies to 2022 bids and all plan 

materials and activities affecting or in 

furtherance of facilitating enrollment for 

the 2022 contract year. Therefore, the 

final rule will govern most plan 

communication and marketing activities 

and materials during the second half of 

2021. Furthermore, it codifies current 

policies so we encourage MA 

organizations to take this final rule into 

account immediately. 

In addition, we are finalizing 

§ 422.100(c)(2)(ii)(A) with clarifying 

changes. First, we are adding the phrase 

‘‘prevent, or treat an illness or injury,’’ 

which was mistakenly left out of the 

proposed rule but is part of the current 

policy we are codifying. Second, we are 

finalizing the regulation text in this 

paragraph with semi-colons between 

each phrase to make it clear that 

fulfilling one of the listed functions as 

the primary function is sufficient for an 

item or service to be considered 

primarily health related under this final 

rule. Third, we are adding text to clarity 

that supplemental benefits must not be 

items and services covered by Parts A, 

B or D; to further clarify this point, we 

added the words ‘‘Parts A, B, and D’’ in 

parenthesis next to the word Medicare 

in paragraph (c)(2)(ii)(C). The proposal 

was to codify already existing guidance 

and practices and we stated that it is not 

expected to have additional impact 

above current operating expenses; this 

final rule is the same on this point. 

D. Rewards and Incentives Program 

Regulations for Part C Enrollees 

(§ 422.134 and Subpart V) 

As noted in the February 2020 

proposed rule, based on CMS’ authority 

under sections 1856(b)(1) and 1857(e)(1) 

of the Act, CMS, in 2014, authorized 

MA organizations, including those 

offering a Medicare Medical Savings 

Account (MSA) plan option, to offer 

rewards and incentives (R&I) programs 

(79 FR 29956, May 23, 2014). We 

adopted this regulation that authorized 

Part C R&I programs for a number of 

reasons. In some cases, MA 

organizations wished to extend rewards 

and incentives already offered to their 

commercial members to their Medicare 

enrollees. Many MA organizations 

wished to sustain their current R&I 

programs as well as stay competitive 

with other MA organizations with 

comparable offerings. Additionally, 

there is evidence suggesting that healthdriven reward and incentive programs 

may lead to meaningful and sustained 

improvement in enrollee health 

behaviors and outcomes. 

Our experience has shown that most 

R&I programs offered by MA plans fall 

into the following four areas: 

(i) Specified use of plan benefits such 

as rewards provided for obtaining 

preventive benefits at specified 

intervals; 

(ii) Following a specified program that 

promotes exercise and/or good 

nutrition; 

(iii) Participating in specified 

programs that educate on health matters 

and/or self-management of nutrition and 

exercise; 

(iv) Specified utilization of plan 

resources such as hotlines, patient 

portals, and similar items that facilitate 

promotion of health. 

In the February 2020 proposed rule, 

CMS proposed to amend § 422.134 to 

codify the guidance we have given since 

adopting the regulation in 2014, unify 

principles governing MA rewards and 

incentive programs, clarify the 

requirements of the regulation, and 

clarify flexibilities available to MA 

organizations under the regulation. 

Readers are directed to the proposed 

rule for a detailed discussion of the 

proposal (85 FR 9204 through 9108) as 

we are not fully repeating our proposal 

here. 

In this final rule, CMS is re-organizing 

the regulation at 42 CFR 422.134 to 

clarify and codify existing guidance that 

reflects how we have addressed 

inquiries about the R&I program over 

the past 5 years. The reorganization of 

42 CFR 422.134 is outlined as follows: 

(a) Definitions, (b) the option for an MA 

plan to offer an R&I program subject to 

the requirements of this section, (c) the 

requirements and prohibitions for target 

activities, (d) requirements and 

prohibitions on the offering of reward 

items, (e) marketing requirements, (f) 

disclosure requirements, and (g) 

miscellaneous requirements, for 

example, bids, sanctions, and 

grievances. As finalized, § 422.134 is 

substantially reorganized compared to 

the current regulation. The finalized 

policy presented here differs from the 

NPRM in the following areas: We have: 

(i) Further clarified the definition of 

qualifying individual at paragraph (a), 

(ii) Moved the requirements of 

uniformity of the target activity and 

provision of accommodations from 

paragraphs (c)(2)(iii)(A) and (B) to 

paragraphs (c)(1)(iv) and (v), 

(iii) Modified the requirement of 

providing accommodations (moved 

from paragraph (c)(2)(iii)(B) to 

paragraph (c)(1)((v)) to respond to 

commenter concerns, 

(iv) Reworded the requirement of 

uniformity in the reward item at 

paragraph (d)(1)(i), 

(v) Removed the prohibition of 

midyear changes at paragraph (g)(iv) 

and, 

(vi) Although not changing the 

regulatory text, clarified in the preamble 

the requirements at paragraph (d)(1)(iii). 


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The details of these changes including 

comments and responses and the 

rationale for the changes are provided in 

their respective discussions below. 

We are not specifically addressing 

here those aspects of our proposal that 

were merely moving a provision 

currently in § 422.134 to a different 

paragraph and on which we did not 

receive substantive comments. See 

Table E6 for a comparison of the current 

regulation text with the regulation text 

we are finalizing in this rule. 

We now discuss the new 

requirements proposed in the February 

2020 proposed rule, the comments 

received, and our decision about 

finalization. 

Definitions. We proposed to codify 

various definitions at § 422.134(a), 

including ‘‘target activity,’’ ‘‘reward 

item,’’ ‘‘incentive item,’’ and ‘‘reward 

and incentive program.’’ Along with a 

proposed definition, we also introduced 

the term ‘‘qualifying individual’’ as a 

way to refer to the individual who could 

be eligible for or earn a reward; we 

proposed that a qualifying individual, in 

the context of a plan-covered health 

benefit, means any plan enrollee who 

would qualify for coverage of the benefit 

and satisfies the plan criteria to 

participate in the target activity; in the 

context of a non-plan-covered health 

benefit, a qualifying individual means 

any plan enrollee who satisfies the plan 

criteria to participate in the target 

activity. 

As we considered the proposed rule, 

we believe that the definition of 

‘‘qualifying individual’’ can and should 

be refined even though no commenter 

specifically raised the issue. To avoid 

any confusion about the limitations 

plans may set regarding who may 

participate in target activities, we are 

finalizing the definition with 

modifications from the proposal. In the 

context of a plan-covered health benefit 

(whether an Original Medicare benefit, 

an SSBCI, or other supplemental 

benefit), qualifying individual refers to 

any individual meeting coverage 

criteria. We introduced this definition to 

communicate how MA plans should 

offer reward uniformly and without 

discrimination to all enrollees and to 

avoid problems with uniformity 

discussed in detail below. For example, 

it is not a violation of uniformity if a 

plan offers rewards and incentives for 

any qualifying individual who gets a 

mammogram. While it is true that many 

men and some women do not qualify for 

mammograms, the plan is not violating 

uniformity in this example since we 

now define uniformity as requiring 

plans offer R&I to ‘‘all qualifying 

individuals’’ which in the case of plancovered benefits is different than ‘‘all 

enrollees.’’ CMS’ intention in the 

proposed rule was to codify current 

CMS reward and incentive policy, not to 

add new criteria for program 

participants to qualify for participation 

in an R&I program or to earn a reward. 

The proposed definition, by including 

references to satisfying the MA plan’s 

criteria for participating in the activity, 

suggested that MA plans could limit 

participation in R&I programs in a 

broader manner than we intended. 

We received no comments on the 

proposed definitions in paragraph (a) 

itself and are finalizing paragraph (a) 

substantially as proposed for the reasons 

provided in the proposed rule. We also 

are finalizing edits in the definition of 

qualifying individual so that it is clearer 

in setting forth how enrollees are to be 

offered access to reward programs: 

Qualifying individual in the context of 

a plan-covered health benefit means any 

plan enrollee who would qualify for 

coverage of the benefit. In the context of 

a non-plan-covered health benefit, 

qualifying individual means any plan 

enrollee. 

Direct involvement of enrollee. At 

§ 422.134(c)(1)(i), we proposed to codify 

our existing guidance requiring that 

target activities must directly involve 

the qualifying individual and 

performance by the qualifying 

individual. Under our proposal, the 

completion of activities by caregivers 

would not qualify for a reward item. 

We received no comments on this 

provision and are finalizing it as 

proposed for the reasons provided in the 

proposed rule. 

Level of completion requirements. At 

§ 422.134(c)(1)(ii), we proposed to 

clarify that target activities must be 

specified (by the MA organization) in 

detail as to the level of completion 

needed in order to qualify for a reward 

item. We explained in the proposed rule 

how this was based on current 

§ 422.134(c)(1)(i), which requires a 

reward to be offered in connection with 

an entire service or activity, and our 

current guidance, which provided 

flexibility for MA organizations to 

identify ‘‘an entire service or activity.’’ 

Our proposal was essentially to codify 

our current guidance, which permitted 

MA organizations to offer and furnish 

rewards for completion of components 

of a multi-part activity so long as the 

MA organization reasonably defined the 

scope of the entire activity. For 

example, an MA organization may offer 

an eight-session weight management 

class; under this example, the MA 

organization may offer and provide a 

reward for either completion of all eight 

sessions of this eight-session weight 

management class or for attendance at 

each individual session of the weight 

loss class that the enrollee attends. Both 

of these scenarios are permissible as 

long as the plan (or R&I program) 

defines the target activity that will be 

rewarded. 

Comment: A few commenters 

requested that CMS allow provision of 

the entire incentive upfront, rather than 

after the incentivized benefit has been 

utilized, to capitalize on humans’ innate 

tendency toward loss aversion. 

Response: We thank the commenters 

for their interest in incentivizing 

enrollees. We however are not adopting 

the recommended change. The R&I 

program, although not a benefit, is an 

expense to the Medicare Advantage 

program. Certain safeguards, such as a 

requirement of actual completion of 

activities to receive the reward, 

therefore, are necessary to avoid 

inappropriate use of Medicare dollars. 

In addition, we are mindful of how 

section 1851(h)(4) of the Act requires 

the adoption of standards that prohibit 

MA organizations from providing for 

cash, gifts, prizes, or other monetary 

rebates as an inducement for enrollment 

or otherwise; providing the reward in 

advance of the performance of the 

health related activity could create the 

appearance that MA plans are providing 

items of value as a prohibited 

inducement. 

We are finalizing this provision as 

proposed for the reasons provided in the 

proposed rule and indicated in the 

response to comments. 

Health related activity requirements. 

At § 422.134(c)(1)(iii), we proposed to 

move the standard stated in the current 

regulations that R&I programs reward 

enrollees ‘‘in connection with 

participation in activities that focus on 

promoting improved health, preventing 

injuries and illness, and promoting 

efficient use of health care resources.’’ 

We proposed to move this requirement 

to § 422.134(c)(1)(iii) to more clearly 

outline that target activities must be 

health-related by doing at least one of 

the following: promoting improved 

health, preventing injuries and illness, 

or promoting the efficient use of health 

care resources. 

Comment: Some commenters praised 

the clarity in the enumeration at 

§ 422.134(c)(1)(iii). 

Response: We thank the commenters 

for their support. We take this 

opportunity to clarify that we interpret 

the reference to the efficient use of 

health care resources in the final 

regulatory text as capable of being 

determined from either the perspective 

of the plan or the beneficiary. We are 

finalizing this provision as proposed. 


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Uniformity: To achieve greater clarity 

and to address issues raised by 

commenters, we are finalizing 

§ 422.134(c) with several changes from 

the NPRM in connection with 

uniformity and non-discrimination 

requirements. 

The requirements of uniformity and 

provision of accommodations (that is, 

that rewards must be offered uniformly 

to all qualifying individuals and that 

accommodations must be provided to 

otherwise qualifying individuals who 

are unable to perform the target activity 

in a manner that satisfies the intended 

goal of the target activity. for target 

activities) were proposed to be codified 

at § 422.134(c)(2)(ii) as standards to 

ensure that anti-discrimination 

requirements were met. We are 

finalizing these concepts as part of the 

standards for target activities, at 

§ 422.134(c)(1)(iv) and (v). Upon 

reflection and based on the comments 

requesting clarification related to these 

concepts, we believe that uniformity 

and provision of accommodations are 

positive statements and best classified 

as requirements for target activities at 

§ 422.134(c)(1) rather than as part of 

demonstrating compliance with a 

prohibition against discrimination. We 

believe these standards serve purposes 

in addition to anti-discrimination, such 

as encouraging participation in health 

related activities in the broadest way 

possible even if limiting access to a 

reward would not necessarily be based 

on a prohibited basis like health status, 

race or sex. This reorganization of how 

these standards apply provides greater 

clarity and transparency for the 

application of § 422.134. 

We now discuss each of these 

requirements separately by presenting 

the comments we received on them. 

Uniformity: We are finalizing the 

requirement that a target activity must 

uniformly offer any qualifying 

individual the opportunity to 

participate in the target activity at 

§ 422.134(c)(1)(iv). This means that 

target activities must be designed so that 

they are uniformly offered to all 

qualifying individuals, as that term is 

defined in paragraph (a). For example, 

regarding an R&I program that provides 

a reward for obtaining a mammogram, 

providing rewards only to those 

enrollees who have never before 

obtained a mammogram would violate 

the uniformity requirement as it would 

leave out members who have previously 

obtained a mammogram but are 

otherwise qualifying individuals. We 

believe that this uniformity requirement 

is key to preventing discrimination 

against different groups of enrollees and 

consistent with our current guidance in 

section 100 of Chapter 4 of the Medicare 

Managed Care Manual. This 

requirement ensures that reward 

programs encourage all enrollees to be 

actively engaged in their health care and 

activities that ultimately improve and 

sustain their overall health and wellbeing. 

The purpose of CMS implementing 

the R&I program requirements this way 

is to incentivize all individuals to 

engage in target activities that will meet 

one of three health-related goals. 

Enrollees who have previously taken 

steps to care for their health should be 

incentivized to continue to do so as 

much as individuals who are taking 

such steps for the first time. 

Comment: Some commenters 

suggested we allow R&I programs to 

target a beneficiary’s clinical status, for 

example, those who would most benefit 

from the incentivized intervention or 

those who are not using a benefit. 

Another commenter wanted to reward 

women who had not had mammograms 

in three years with a higher reward to 

encourage them to get mammograms 

more regularly by providing a higher 

reward. These commenters noted that 

recent legislative and regulatory 

activities have permitted Medicare 

Advantage plans to tailor health benefits 

to targeted populations, ensuring they 

meet the unique needs of specified 

groups of beneficiaries based on 

diagnosed conditions or diseases. The 

commenters indicated that, in the same 

way, CMS should explore permitting 

Medicare Advantage plans to tailor R&I 

programs for beneficiaries to meet the 

needs of clearly defined groups of 

beneficiaries. The commenters believed 

this could improve participation in care 

and improve outcomes by incentivizing 

compliance in clinical 

recommendations such as attending 

office visits or participating in wellness 

programs tailored to their needs. 

Response: We thank the commenters 

for raising these issues. In response to 

the suggestion that we allow R&I 

programs to target those who are not 

using a benefit, we note that this would 

not be allowed because it would not be 

offered uniformly to all qualifying 

individuals and, as explained above, 

goes against the goal of R&I programs. In 

response to the suggestion that CMS 

allow an R&I program to reward women 

who had not had mammograms in three 

years with a higher reward, we note 

that, as worded by the commenter, this 

violates the general non-discrimination 

provision at 42 CFR 422.134(g)(1) 

because the reward would only go to 

women. If the target activity had instead 

been formulated by the commenter as 

targeting any qualifying individual who 

has not had a mammogram in three 

years, this would still not be allowed 

since it does not offer the target activity 

uniformly to all qualifying individuals 

but only to those individuals who have 

not had a mammogram in three years. 

Providing different rewards to those 

completing a mammogram based on 

their past history of mammogram 

services would violate the uniformity of 

reward requirement at 42 CFR 

422.134(d)(1)(i), which is discussed 

further below. 

We believe the reference to recent 

legislative and regulatory activity refers 

to Special Supplemental Benefits for the 

Chronically Ill (SSBCI) recently codified 

in CMS–4190–F1. We are not persuaded 

that the same approach is necessary for 

R&I programs because SSBCI is a benefit 

but rewards and incentives are not 

benefits. In the case of SSBCI, these 

special types of benefits are allowed to 

be targeted to enrollees who specifically 

need them while enrollees who do not 

need SSBCI are not allowed these items; 

contrastively, R&I is beneficial for all 

enrollees irrespective of their past since 

both those who are currently using 

benefits as well as those who are not 

currently using benefits can be 

incentivized to either start using the 

benefit or continue using the benefit. 

CMS believes the intent of R&I programs 

to incentivize all enrollees to engage in 

healthy behaviors to improve health 

outcomes applies universally. 

Maximizing access to R&I programs by 

enrollees will result in broader benefits 

and broader engagement in health 

related activities. Further, ensuring 

broad access by any qualifying enrollee 

to the target activity (and therefore 

access to earning the reward) ensures 

that a beneficiary will not be persuaded 

to enroll in a particular plan based on 

the reward program and subsequently 

learn that he or she is not able to 

participate in the reward program 

because the target activity is limited to 

enrollees who have never engaged in it. 

However, an MA plan may design an 

R&I program that could effectively target 

enrollees with a specific condition or 

disease state and for those who would 

benefit most from the incentivized 

interventions (as suggested by 

commenters) without violating the nondiscrimination or uniformity 

requirements being finalized in 

§ 422.134. Plans may do this by 

rewarding qualifying individuals for 

participating in target activities that are 

covered benefit items and services as 

these benefits must be medically 

necessary, or for SSBCI have a 

reasonable expectation of improving or 

maintaining the health or overall 

function of the chronically ill enrollee, 


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for an individual to obtain. As finalized, 

§ 422.134 does not require a plan to 

cover an item or service when it is not 

medically necessary, even if getting that 

particular covered benefit is the target 

activity for an R&I program. Therefore, 

these types of target activities are 

already tailored to the qualifying 

individual’s needs based on a specific 

condition or disease state and would be 

available to those who would benefit 

most from the incentivized intervention. 

For example, an R&I program designed 

to offer rewards to any qualifying 

individual for using glucose test strips 

would likely help an MA plan reach 

their diabetic enrollee population, as 

glucose test strips are generally only 

considered medically necessary if an 

enrollee is diabetic, while also allowing 

other members, in rare instances, who 

may need glucose test strips an 

opportunity to be rewarded for engaging 

in the healthy behavior as well. 

We are finalizing the uniformity 

requirement for target activities at 

paragraph (c)(1)(iv) as proposed (with 

the move from paragraph (c)(2)(iii)(A) to 

paragraph (c)(1)(iv) discussed above) for 

the reasons provided in the proposed 

rule and our discussion in this final 

rule. 

Accommodations: We next discuss 

the requirement of providing 

accommodations at § 422.134(c)(1)(v) 

(moved from § 422.134(c)(2)(iii)(B)) and 

comments received on this requirement. 

Proposed paragraph (c)(1)((v) stated a 

requirement for an MA organization to 

provide accommodations to otherwise 

qualifying individuals who are unable 

to perform the target activity in a 

manner that satisfies the intended goal 

of the target activity. 

Comment: Comments on our proposal 

that MA organizations provide 

accommodations to qualifying 

individuals were generally supportive. 

The commenters generally stated that 

providing accommodations to those 

who wish to participate, but are without 

the means to do so, will allow the 

benefits of these R&I programs to 

positively impact the health of a broader 

population of members. However, a 

commenter pointed out that an 

accommodation should not be permitted 

if such an accommodation would 

contradict the purpose of the target 

activity. This commenter agreed that as 

a general matter plans should 

accommodate members without internet 

access wherever possible to offer an 

alternative offline activity consistent 

with the purpose of the target activity. 

For example, a plan that rewards 

members who report their exercise 

online can accommodate a member 

without internet access by allowing that 

member to verbally report their exercise 

to a call center. In this example, 

rewarding the alternative activity serves 

the purpose of the original target health 

activity. However, where the target 

activity is intended to promote the 

efficient use of resources, such as 

agreeing to electronic delivery of 

documents, the commenter statutes that 

it would not reasonable to require plans 

to offer an offline alternative, as an 

offline activity would not promote the 

efficient use of resources and would be 

directly contrary to the reward’s 

purpose. 

Response: We appreciate the support 

for the requirement that MA 

organizations provide accommodations. 

As stated previously, we believe that 

this requirement will ensure that R&I 

programs are broadly based and 

encourage enrollees to be actively 

engaged in their health care and, 

ultimately, improve and sustain their 

overall health and well-being. We agree 

with the commenter’s concern and are 

therefore finalizing the requirement for 

accommodations with additional text to 

provide that the required 

accommodation be consistent with the 

goal of the target activity. We encourage 

MA organizations to take into account 

the resources, abilities, and 

characteristics of its enrolled population 

in devising R&I programs and in 

identifying target activities. As noted 

above, we believe moving the 

accommodation requirements from 

paragraph (c)(2)(iii)(B) to paragraph 

(c)(1)(v) provides greater clarity and 

transparency in imposing this as an 

affirmative standard for all target 

activities. It also removes any implied 

limitation that accommodations are only 

necessary to ensure that a prohibited 

basis for discrimination (such as race, 

ethnicity, sex or health status) is not 

being used. As illustrated in our 

example in the proposed rule and our 

current guidance in section 100.2 of 

Chapter 4 of the Medicare Managed Care 

Manual, the requirement for 

accommodations is broadly interpreted 

in order to ensure access for all 

qualifying individuals. 

Part D target activities. We proposed, 

at § 422.134(c)(2)(i), to prohibit target 

activities that are related to Part D 

benefits because the provisions in Part 

422 pertain to Medicare Advantage Part 

C and not to Part D. This is consistent 

with our subregulatory guidance in 

Chapter 4 of the Managed Care Manual 

as well as with responses to comments 

in the 2014 rule which initially 

authorized MA plans to use R&I 

programs (79 FR 29917). Should a Part 

D R&I program be developed, it will be 

a separate provision from this one, with 

regulatory language added to Part 423. 

We note that in section IV.F of this final 

rule, we are finalizing a narrow reward 

program provision for Part D plans. 

Comment: We received several 

comments from stakeholders urging 

CMS to allow Part D sponsors to offer 

rewards for target activities related to 

Part D benefits, such as beneficiary 

adherence to a medication regimen(s). 

Commenters generally believed that 

such an allowance could benefit 

enrollees by improving compliance. One 

commenter noted that the specific 

application of R&I for healthy 

prescription drug behaviors of enrollees 

of MA–PD plans is being tested by 

CMMI in the MA VBID model. An 

initial evaluation based on the first year 

of experience found that plans were able 

to drive more appropriate use of 

medical services by providing rewards 

and incentives. Beginning in plan year 

2019, plan sponsors were able to 

include R&I for prescription drugs as 

well; however, these programs have not 

yet been evaluated. Commenters 

recommended allowing Part D R&I 

programs for both MA–PD plans as well 

as stand-alone prescription drug plans. 

Response: We thank the commenters 

for their recommendations and the 

citations of similar programs offered 

elsewhere. CMS regularly reviews the 

various models being tested by the 

Center for Medicare and Medicaid 

Services Innovation Center to ascertain 

what works and what can be 

incorporated into our general programs. 

An example of CMS’s commitment to 

new ideas may be found in Section IV.F 

of this final rule which creates a limited 

R&I program for the real time benefit 

tool. We note that Section IIIC of this 

final rule presents a comment similar to 

the comment just cited, requesting that 

R&I be used to incentivize return of 

unused opioids. However, as noted in 

Section IIIC and as noted above, it is out 

of scope of § 422.134 to allow a Part D 

R&I program. CMS did not propose a 

regulation to authorize general Part D 

reward and incentive programs and 

therefore is not finalizing such a new 

regulation. 

We are therefore finalizing 

§ 422.134(c)(2)(i) as proposed and 

reiterate that it does not authorize 

rewards or incentives tied to Part D 

benefits, either by MA organizations 

that offer MA–PD plans or by other Part 

D sponsors that offer stand-alone Part D 

plans. 

Non-Discrimination and Health 

Status. R&I programs must not be 

discriminatory; there is a general 

prohibition about that proposed and 

finalized at § 422.134(g)(1). At 

§ 422.134(c)(2)(ii), we proposed to revise 


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and clarify the non-discrimination 

requirements in the current regulation 

and codify our current guidance on 

those requirements. Proposed at 

paragraph § 422.134(c)(2)(ii)(C) and 

finalized at § 422.134(c)(2)(ii), this 

regulation generally prohibits target 

activities from discriminating against 

enrollees and requires specifically that 

MA organizations comply with 

§ 422.134(g)(1) and not design a reward 

program that is based on the 

achievement of a health status 

measurement. Current sub-regulatory 

guidance provides that nondiscrimination, which is part of the 

current regulation at § 422.134(c)(1)(ii), 

requires in part that a target activity not 

consist of the achievement of a specific 

health status or measurement or 

outcome as this would be 

discrimination based on health status. 

For example, an MA organization would 

be prohibited from creating a target 

activity that stipulates achieving a 

certain weight, or achieving a certain 

Body Mass Index (BMI) score. However, 

a target activity could consist of some 

combination or all of the following: 

Maintaining an exercise program, eating 

nutritious meals (with ‘‘nutritious’’ 

being further defined by the plan), and 

taking weight measurements at periodic 

intervals. Similarly, an MA organization 

would be prohibited from creating a 

target activity that stipulates achieving a 

blood pressure reading in a certain 

range but a permissible target activity 

could consist of taking blood pressure 

measurements at periodic intervals. 

We did not receive any comments that 

specifically discussed this part of the 

proposed rule. We are finalizing the 

provisions at § 422.134(c)(2)(ii) as 

proposed for the reasons provided in the 

proposed rule. 

Offered Uniformly. We proposed at 

new paragraph (d)(1)(i) to require 

reward items to be offered uniformly to 

any qualifying individual who performs 

the target activity. In the proposed rule, 

we explained that this would codify our 

current subregulatory guidance, which 

ties the standard to the nondiscrimination requirement in the 

current version of § 422.134(b)(2) that 

reward programs must be designed so 

that all enrollees are able to earn 

rewards. 

We did not receive any comments 

specific to the proposed requirement 

proposed in paragraph (d)(1)(i) that 

reward items be offered uniformly to 

qualifying individuals. However, in 

order to avoid conflating this 

requirement with the uniformity 

requirement we are finalizing at 

paragraph (c)(1)(iv) regarding target 

activities, we are finalizing paragraph 

(d)(1)(i) as a requirement that reward 

items must be offered identically to any 

qualifying individual who performs the 

target activity. This requirement is to 

ensure that each enrollee has access to 

the same reward items (or same choice 

among reward items if applicable). 

While related to the uniformity 

requirement for target activities, it is 

designed to address the potential that 

some enrollees would receive different, 

potentially more valuable, reward items 

compared to other enrollees. This 

requirement is a reflection of the nondiscrimination principles underlying 

several other requirements being 

finalized in § 422.134. We believe that 

this additional standard is necessary to 

ensure that R&I programs are operated 

in an equitable way and that the use of 

different reward items does not result in 

more incentive being offered by the MA 

plan to certain enrollees. As discussed 

previously, R&I programs should be 

broadly based and operated for the 

benefit of all enrollees or as many 

enrollees as possible; using identical 

rewards for each qualifying individual 

who performs the same target activity 

contributes to that goal. 

Note that throughout § 422.134 we use 

the term ‘‘perform’’ or ‘‘performance.’’ 

However at paragraph (c)(1)(ii) we refer 

to the ‘‘level of completion needed in 

order to qualify for the reward.’’ We 

therefore clarify that our use of 

‘‘perform’’ refers to the performance of 

the entire health related activity. At 

paragraph (c)(1)(ii) we refer to the ‘‘level 

of completion needed’’ because rewards 

must be earned by completing an entire 

service or activity (or combination of 

services/activities), as established by the 

MA plan, and may not be offered for 

completion of less than any/all required 

component(s) of the eligible service or 

activity. This requirement allows CMS 

and MA plans to interpret the value of 

a reward or incentive in relation to the 

service or activity for which it is being 

offered. Plans are expected to 

reasonably define the scope of a health 

related service or activity within their RI 

Program design and assign a value of the 

reward accordingly. For example, a plan 

may decide to offer rewards and/or 

incentives for participation in a smoking 

cessation program. The plan may decide 

to give smaller rewards for each class or 

counseling session attended or may 

offer a single, larger reward for 

completing a pre-determined number of 

classes or counseling sessions. 

We did not receive any comments that 

specifically discussed this part of the 

proposed rule. We are finalizing the 

provisions at § 422.134(d)(2) as 

proposed for the reasons provided in the 

proposed rule and. 

Direct and Tangible. At 

§ 422.134(d)(1)(ii), we proposed, 

consistent with current guidance, to 

require that reward items be direct and 

tangible. For example, a reward item 

cannot consist of a charitable donation. 

We received no comments on this 

provision and are finalizing it as 

proposed for the reasons provided in the 

proposed rule. 

Transfer of ownership. At 

§ 422.134(d)(1)(iii), we proposed to 

require that the reward item must be 

provided, such as through transfer of 

ownership or delivery, to the enrollee in 

the contract year in which the activity 

is completed, regardless if the enrollee 

is likely to use the reward item after the 

contract year. 

Comment: Several commenters 

pointed out that this provision may pose 

operational concerns. For example, in 

late December an enrollee may complete 

a target activity that the plan finds out 

about at the beginning of the next plan 

year, which is outside of the time the 

enrollee could claim the reward as the 

guidance currently states. 

Response: We agree with the 

commenters’ concerns. We believe the 

language in the NPRM did not 

adequately communicate our intent that 

the R&I program be based on activities 

completed during the contract year. As 

stated in the NPRM, we believe that MA 

plans should not be able erase a gift card 

provided as a reward or invalidate the 

reward in the next contract year after 

the enrollee has completed the target 

activity. We believe that this is an 

important beneficiary protection to 

ensure that rewards are timely provided 

to the enrollee and that the enrollee 

retain the rights to use the reward 

whenever he or she wants. (85 FR 9107) 

While we acknowledge that the 

preamble explanation introduced the 

idea of ‘‘timely provision to the 

enrollee,’’ that was not part of the 

proposed regulation text. Our regulatory 

text was intended to require that the 

reward item be provided to the enrollee, 

such as through transfer of ownership or 

delivery, for a target activity completed 

in the contract year during which this 

R&I program was offered, regardless if 

the enrollee is likely to use the reward 

item after the contract year. The 

intended criterion was that the rewarditem be delivered based on a target 

activity completed in the contract year 

during which this R&I program was 

offered. 

We are finalizing paragraph (d)(2)(ii) 

with modifications such that the 

regulation requires delivery based on 

the completion of the target activity 

during the contract year. Under this 

final rule, delivery of the reward item in 


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the next contract year, such as after 

administrative activities associated with 

the reward program are performed, is 

permissible. However, the qualifying 

individual cannot be required to 

continue activities into the next contract 

year to retain or gain the reward earned 

during a prior contract year. 

Reward Items. At § 422.134(d)(2)(i), 

we proposed to reorganize existing 

provisions and codify existing guidance 

to set forth clearer regulation text about 

what items could not be offered as 

rewards. Currently, § 422.134(c)(2) 

prohibits rewards from being offered in 

the form of cash or monetary rebates 

and our subregulatory guidance 

explains that this includes reductions in 

cost sharing or premiums and gift cards 

that are redeemable for cash. We 

proposed regulation text explicitly to 

prohibit reward items from being 

offered in the form of cash, cash 

equivalent or other monetary rebates 

(including reduced cost sharing or 

premiums). We also proposed regulation 

text to set forth that an item is 

considered cash or cash equivalent if it: 

(A) Is convertible to cash (such as a 

check); or (B) Can be used like cash 

(such as a general purpose debit card). 

In addition, the proposed rule 

prohibited reward items that involve 

elements of chance or have a value that 

exceeds the value of the target activity 

itself. 

We also proposed, at paragraph (d)(3), 

to list examples of permissible reward 

items for a target activity, specifically 

that reward items may: (i) Consist of 

‘‘points’’ or ‘‘tokens’’ that can be used to 

acquire tangible items; and (ii) be 

offered in the form of a gift card that can 

be redeemed only at specific retailers or 

retail chains or for a specific category of 

items or services. Like the prohibition 

on using items that involve an element 

of chance, the examples of permissible 

reward items were based on our 

guidance and responses to questions 

since § 422.134 was first adopted. 

Comment: We received many 

comments on these provisions. 

Commenters advocated for authority to 

use general debit cards as a reward item, 

specifically arguing that targeted gift 

cards can be burdensome and confusing. 

A commenter advocated for the 

provision of incentives in the form of 

monetary credits toward monthly 

premiums or cost sharing requirements. 

Response: Section 1851(h)(4) and 

1854(d)(1) of the Act both prohibit an 

MA organization from giving enrollees 

cash or monetary rebates as an 

inducement for enrollment or otherwise. 

Since the statute prohibits cash or 

monetary rebates, we proposed, 

consistent with the statute, to prohibit 

reductions in cost-sharing from being 

used as a reward. Since the statute 

prohibits cash, we proposed to prohibit 

giving a reward for anything that can be 

used as cash or cash equivalent such as 

checks or general debit cards. In arriving 

at this conclusion, we saw the primary 

attribute of cash as its universal use to 

purchase. For this reason, we proposed 

to prohibit general debit cards which 

can be used universally but to allow, at 

paragraph (d)(3)(ii), a gift card that can 

be redeemed only at specific retailers or 

retail chains or for a specific category of 

items or services. We similarly 

prohibited checks which are easily 

converted to cash and then can be used 

universally. 

As to the suggestion that using that 

targeted gift cards can be burdensome 

and confusing and therefore CMS 

should permit the use of general debit 

cards as rewards, we note that the use 

of any gift card as a reward item is 

optional. If a plan finds that 

beneficiaries are confused or burdened 

by targeted gift cards, the MA plan may 

choose to use another form of reward. 

As explained above, we view general 

debit cards as the equivalent of cash and 

believe that § 422.134 must be 

consistent with the statutory prohibition 

on MA organizations providing cash as 

an inducement. Our experience with the 

program suggests that many 

stakeholders implement R&I with 

multiple gift cards. While it would be 

more convenient to have just one gift 

card, we do not believe it correct to say 

that multiple gift cards are burdensome 

and cumbersome since in practice plans 

are already using this vehicle for 

rewards, implying that their enrollees 

find the benefits of multiple gift cards 

outweigh the burdensomeness. As to the 

minor inconvenience of multiple gift 

cards, minor inconvenience is not a 

sufficient reason to override a statutory 

prohibition. Further, we note that 

providing a choice among equal value 

gift cards, so long as all qualifying 

individuals are offered the identical 

choice consistent with § 422.134(d)(1)(i) 

as finalized here, is also permitted. 

We are finalizing these provisions as 

proposed for the reasons outlined in the 

proposed rule and our responses to 

comments. 

Marketing. As part of the 

reorganization of § 422.134, we 

proposed at paragraph (e) a provision 

requiring compliance with all marketing 

and communications requirements in 

Part 422, Subpart V rather than 

specifically adopting marketing and 

communication requirements for reward 

programs in § 422.134. Section VI.H of 

the proposed rule and section V.E of 

this final rule discuss the marketing and 

communications requirements for MA 

organizations, including provisions 

specific to reward programs. 

Comment: Commenters expressed 

concern that while CMS has proposed 

that R&I programs be subject to the 

marketing requirements, they are only 

communications and not subject to 

marketing requirements. 

Response: As proposed (and finalized) 

in § 422.134(g)(3), and as indicated in 

CMS’ subregulatory guidance in Chapter 

4, R&I are classified as non-benefits. 

Consequently, R&I are not subject to 

inclusion in the Annual Notice of 

Change (ANOC) or Evidence of Coverage 

(EOC). Nevertheless, CMS believes 

treating materials about R&I programs 

offered by MA plans as subject to the 

marketing and communications 

requirements and standards in Part 422, 

Subpart V is appropriate. As proposed 

and finalized in Section V.E of this final 

rule, the definition of marketing 

(§§ 422.2260 and 423.2260) includes 

content regarding rewards and 

incentives; we believe that this is 

appropriate because the availability of 

R&I programs and rewards may 

influence the decision of a beneficiary 

to enroll or stay enrolled in a particular 

MA plan. The beneficiary protections, 

review standards and prohibitions that 

apply to marketing materials and 

activities (as well as those that apply to 

communications) will apply to materials 

and activities about rewards and 

incentives when those materials and 

activities are intended to (i) draw a 

beneficiary’s attention to an MA plan or 

plans or (ii) influence a beneficiary’s 

enrollment decision(s). We also direct 

readers to section V.E of this final rule 

for additional discussion of the 

definition of marketing and the 

standards and requirements that apply 

to marketing and communications 

materials. 

We are finalizing paragraph (e) as 

proposed for the reasons outlined in the 

proposed rule and our responses to 

comments. 

Reporting requirements. At 

§ 422.134(f), we proposed regulation 

text to require an MA organization to 

make information available to CMS 

upon request about the form and 

manner of any rewards and incentives 

programs it offers and any evaluations 

of the effectiveness of such programs. 

Comment: We received comments on 

this proposal. A commenter supported a 

reporting requirement to ensure that 

plans are implementing any reward 

programs fairly and without 

discrimination. Another commenter 

believed it sufficient for the purpose of 

monitoring and oversight that MAOs 

provide information upon request 


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without the additional burden of a 

specific reporting format. 

Response: We thank the commenters 

for their interest in oversight and 

fairness and support for a reporting 

requirement. Currently, § 422.134(c)(3) 

includes a reporting requirement in 

connection with R&I programs and our 

proposal carried over that provision 

verbatim to the proposed revision at 

422.134(f). The policy itself was not 

originally proposed in this rulemaking; 

what is finalized in this rule is the 

change of location from paragraph (c)(3) 

to paragraph (f). Based on the current 

regulation, CMS has had for several 

years annual reporting requirements for 

R&I programs. These reporting 

requirements are accessible at https://

www.cms.gov/files/document/cy2020- 

part-c-reporting-requirements

04222020.pdf. Thus far, CMS has found 

these reporting requirements sufficient 

for its oversight needs. 

Miscellaneous. At § 422.134(g)(2), we 

proposed regulation text to clarify that 

plan failure to comply with R&I program 

requirements may result in a violation 

of one or more of the bases for imposing 

sanctions at § 422.752(a). At 

§ 422.134(g)(3), we proposed regulation 

text to codify existing guidance that the 

reward and incentive program is 

classified as a non-benefit expense in 

the plan bid and that disputes on 

rewards and incentives must be treated 

as a grievance under 422.564. 

Comment: A few commenters 

supported our codification at paragraph 

(g)(3) that R&I programs are classified as 

a non-benefit expense. 

Response: We thank the commenters 

for their supportive comments. 

We received no other comments on 

these provisions and are finalizing as 

proposed for the reasons provided in the 

proposed rule. 

Midyear changes. At § 422.134(g)(4), 

we proposed regulation text to prohibit 

mid-year changes to reward and 

incentive programs. We explained in the 

proposed rule that this new provision 

was based on how the reward and 

incentive program must be included in 

the plan bid each year and that we 

considered it an important beneficiary 

protection. 

Comment: We received numerous 

comments with diverse perspectives on 

our proposal to prohibit mid-year 

changes in R&I programs. Some 

commenters were supportive: They 

were aware of the issue of the integrity 

of the bid and also believed that midyear R&I program changes would be 

confusing to enrollees. By contrast, 

some commenters wanted the flexibility 

to respond mid-year to low utilization of 

plan resources and benefits by designing 

rewards targeted to those populations. 

Other commenters suggested a 

compromise: Allow additions of R&I 

mid-year (positive changes) but prohibit 

negative changes (removal of R&I). 

Response: We thank all commenters 

for their insights. In reviewing these 

comments, we also considered that 

reward and incentives are not classified 

as benefits and therefore are not subject 

to the same prohibition on mid-year 

changes in benefits that we adopted in 

2008 (73 FR 43628). Historically, we 

have permitted changes in 

administrative rules or policies for other 

things that are not benefits; non-benefit 

changes midyear are governed by the 

requirements relating to mid-year plan 

rule changes presented at 42 CFR 

422.111(d), which ensures that enrollees 

are notified of the changes at least 30 

days before the effective date of the 

change. We believe that these 

considerations resolve the concerns 

underlying our proposal to prohibit 

mid-year changes in reward and 

incentive programs. Consequently, we 

are not finalizing the proposed 

regulatory change to prohibit midyear 

changes to R&I. 

After consideration of the comments 

we received on proposed § 422.134 and 

for the reasons outlined in the proposed 

rule and our responses to comments, we 

are finalizing the proposed regulation 

with some limited changes from the 

proposal. Specifically, we are finalizing 

minor technical and grammatical 

changes throughout the regulation and 

several substantive changes. The 

substantive changes include: (1) 

Changes in the codification and 

application of the uniformity and 

accommodation policies finalized in 

paragraphs (c)(1)(iv) and (v) but that 

were proposed in paragraphs 

(c)(2)(ii)(A) and (B); (2) clarifying 

changes in paragraph (d)(1)(i) regarding 

how all qualifying individuals must be 

offered the same rewards for the 

particular target activity; (3) clarifying 

changes in the definition of qualifying 

individual; and (4) clarifying changes in 

paragraph (d)(1)(iii) to address delivery 

of a reward. In addition, we are not 

finalizing paragraph (g)(4). Because 

§ 422.134 as finalized here substantially 

reorganizes the existing regulation while 

maintaining most of the current 

requirements, Table E6 summarizes 

where existing provisions have been 

moved and where we are codifying 

existing guidance. 

TABLE E6—COMPARISON OF FINALIZED CFR REGULATIONS WITH CURRENT CFR REGULATIONS

§ 422.134, CMS–4190–F2 

(as finalized) Brief summary Current provision 

(a) Definitions ....................... Provide definitions of R&I, reward item, target activity 

etc.

Codifies terms and concepts used in the regulation 

consistent with current guidance. 

(b) Offering an R&I program Plans may offer an R&I Program .................................... Current 422.134(a). 

(c) Target Activities .............. One comprehensive list of all requirements and prohibitions (Details are provided in the following rows).Requirements and prohibitions are currently scattered 

throughout current § 422.134 and codifies existing 

guidance. 

(c)(1) ..................................... Requires that the level of completion of the target activity be specified.Requirements and prohibitions are currently scattered 

throughout current § 422.134 and codifies existing 

guidance. 

(c)(1)(i) ................................. Specifies that the target activity must directly involve 

the qualifying individual.

Codifies existing guidance. 

(c)(1)(ii) ................................. The target activity must be specified, in detail, as to the 

level of completion needed in order to qualify for the 

reward item.

Clarification and restatement of current 

§ 422.134(c)(1)(i) and codifies existing guidance. 

(c)(1)(iii) ................................ The target activity must be health related ...................... Currently § 422.134(a) and in existing guidance. 

(c)(1)(iv) ................................ The target activity is required to be uniformly offered to 

all qualifying enrollees.

Current § 422.134(b)(2). 

(c ) (1) (v) ............................. Accommodations are required for those unable to do 

the target activity but otherwise qualify.

Codifies existing guidance related to the non-discrimination requirement in current § 422.134(1)(1)(ii). 


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TABLE E6—COMPARISON OF FINALIZED CFR REGULATIONS WITH CURRENT CFR REGULATIONS—Continued 

§ 422.134, CMS–4190–F2 

(as finalized) Brief summary Current provision 

(c)(2) ..................................... Prohibitions on target activities ....................................... Requirements and prohibitions are currently scattered 

throughout current § 422.134 and codifies existing 

guidance. 

(c)(2)(i) ................................. The target activity shall not be related to Part D benefits.Codifies existing guidance and the interpretation adopted in the 2014 final rule. 

(c)(2)(ii) ................................. The target activity shall not be discriminatory ................ Current § 422.134(b)(1) prohibits discrimination in the 

R&I program generally. 

(c)(2)(ii)(A) ............................ Not reward a health status measurement ...................... Codifies existing guidance related to the non-discrimination requirement in current § 422.134(1)(1)(ii). 

(d) Reward items ................. List of requirements, prohibitions, and permissions ....... Requirements and prohibitions are currently scattered 

throughout current § 422.134 and codifies existing 

guidance. 

(d)(1) .................................... Requirements that must be met for reward items .......... Requirements and prohibitions are currently scattered 

throughout current § 422.134 and codifies existing 

guidance. 

(d)(1)(i) ................................. Reward items must be identically offered to all qualifying enrollees completing the target activity.Current § 422.134(b)(2) and codifies current guidance. 

(d)(1)(ii) ................................ Reward is direct and tangible ......................................... Codifies existing guidance. 

(d)(1)(iii) ................................ Ownership transfer of reward items for target activities 

completed within the contract year during which this 

R&I program was offered.

Codifies and clarifies existing guidance. 

(d)(2) .................................... Prohibitions on reward items .......................................... Requirements and prohibitions are currently scattered 

throughout current § 422.134 and codifies existing 

guidance. 

(d)(2)(i) ................................. Prohibition of cash and monetary rebates ...................... Current § 422.134(c)(2)(i). 

(d)(2)(i)(A) and (B) ............... Definition of cash, cash equivalents or other monetary 

rebates.

New provision to clarify terms. 

(d)(2)(ii) ................................ Value of reward item does not exceed value of target 

activity.

Current § 422.14(c)(1)(iii). 

(d)(3) .................................... Reward not based on elements of chance ..................... Codifies existing guidance. 

(d)(3) .................................... Allowance of i) tokens and ii) specified gift cards .......... Codifies existing guidance. 

(e) Marketing Requirements Makes marketing requirements as found in Subpart V 

of 42 CFR 422 applicable to this section 422.134.

Current § 422.134(c)(2)(ii) prohibits targeting new enrollees; marketing requirements are otherwise not in 

current § 422.134. 

(f) R&I Disclosure ................. Disclose information and provide reports on request to 

CMS.

Current § 422.134(c)(3). 

(g) Miscellaneous ................. Items not directly about requirements of reward item, 

target activity, marketing, or disclosure.

Requirements and prohibitions are currently scattered 

throughout current § 422.134 and codifies existing 

guidance. 

(g)(1) .................................... Compliance with other laws (anti-kickback, fraud, etc.) Current § 422.134 (c)(1)(iv). 

(g)(2) .................................... Possible sanctions for violation ....................................... Current § 422.134(b)(3). 

(g)(3) .................................... Non-benefit expense in bid ............................................. Codifies current guidance about application of bidding 

regulations at §§ 422.254 and 422.256. 

E. Requirements for Medicare 

Communications and Marketing 

(§§ 422.2260–422.2274; 423.2260– 

423.2274) 

Sections 1851(h) and (j) of the Act 

provide a structural framework for how 

Medicare Advantage (MA) organizations 

may market to beneficiaries and direct 

CMS to adopt standards related to the 

review of marketing materials and 

limitations on marketing activities. 

Section 1860D–1(b)(1)(B)(vi) of the Act 

directs that the Secretary use rules 

similar to and coordinated with the MA 

rules at section 1851(h) for approval of 

marketing material and application 

forms for Part D plan sponsors. Section 

1860D–4(l) of the Act applies certain 

prohibitions under section 1851(h) to 

Part D sponsors in the same manner as 

such provisions apply to MA 

organizations. CMS has adopted 

regulations related to marketing and 

mandatory disclosures by MA 

organizations and Part D sponsors in 

§ 422.111; 42 CFR part 422, subpart V; 

§ 423.128; and 42 CFR part 423, subpart 

V; these regulations include the specific 

standards and prohibitions in the statute 

as well as standards and prohibitions 

promulgated under the statutory 

authority granted to the agency. 

Additionally, under § 417.428, most 

marketing requirements in Subpart V of 

part 422 apply also to section 1876 cost 

plans. CMS has long provided further 

interpretation and guidance for these 

regulations in the form of a marketing 

manual titled the Medicare 

Communications & Marketing 

Guidelines (MCMG), previously known 

as the Medicare Marketing Guidelines. 

Because the proposal and this final rule 

are applicable to MA organizations, Part 

D plan sponsors, and cost plans, we 

refer to each of these regulated entities 

as a ‘‘plan.’’ 

In the February 2020 proposed rule, 

CMS proposed to codify guidance 

contained in the MCMG by integrating 

it with the existing regulations. To 

incorporate the guidance, we proposed 

to reorganize and redesignate the 

existing and proposed provisions 

according to the topics included in the 

MCMG; we explained that this order 

and organization was familiar to the 

Medicare Advantage, cost, and Part D 

plans that are subject to the rules. As a 

result, the proposed regulatory 

provisions reflected some changes to the 

current regulations, even though CMS 

did not propose to substantively change 

much of the policy. To be clear, the 

policies we proposed to codify are not 

new; they are in the MCMG and were 


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developed over time in concurrence 

with stakeholder feedback to implement 

and administer the current regulations. 

The first of the policies that CMS 

proposed to codify, in §§ 422.2260 and 

423.2260, is the guidance related to the 

definitions of ‘‘marketing’’ and 

‘‘communications,’’ as well as 

additional definitions from the MCMG. 

As explained in the February 2020 

proposed rule, CMS has amended the 

marketing regulations for both the MA 

and the Part D programs at 42 CFR parts 

422 and 423, subparts V, respectively, 

since their original implementation, and 

provided sub-regulatory guidance in the 

MCMG each time to ensure beneficiaries 

receive the necessary information to 

make informed choices. Recently, in the 

April 2018 final rule, we established 

new definitions for communications 

materials and activities and marketing 

materials and activities in 42 CFR 

422.2260 and 423.2260, which set out 

the scope of materials and activities 

subject to the regulations. In the 2019 

MCMG, we clarified these definitions 

based on our interpretation of the 

regulatory terms ‘‘intent’’ and ‘‘content’’ 

as the deciding factors for when a 

communication activity or material is 

marketing. 

We proposed to codify the MCMG 

guidance and revise the regulation text 

at §§ 422.2260 and 423.2260 to align 

more closely with the interpretation 

explained in our guidance. Specifically, 

we proposed that ‘‘marketing’’ means 

communications materials and activities 

that meet certain standards for intent 

and content that were enumerated in the 

proposed regulation text. For the intent 

standard, we proposed the same intent 

language that is in the current 

regulation, with a technical change to 

separately list out two different intent 

standards (paragraphs (1)(i)(B) and (C) 

in the proposed definition of marketing) 

that are in one paragraph (paragraph (3)) 

in the current definition of marketing at 

§§ 422.2260 and 423.2260. We note that 

a typographical error appeared in the 

description of this technical change in 

the preamble to the February 2020 

proposed rule, which incorrectly stated 

that the two separate intent standards 

described here appeared at paragraphs 

(1)(ii) and (iii) of the proposed rule’s 

definition of marketing (whereas this 

text actually appeared in paragraphs 

(1)(i)(B) and (C) of the proposed rule), 

and that these standards appear in one 

paragraph (paragraph (3)) of the current 

definition of marketing materials at 

§§ 422.2260 and 423.2260 (whereas 

these standards currently appear in 

paragraph (3) of the current definition of 

marketing in the same regulations). We 

explained in the February 2020 

proposed rule that, when evaluating the 

intent of an activity or material, we 

intended, consistent with our current 

practice and guidance, to consider 

objective and contextual information 

(for example, audience, timing, etc.) in 

applying the proposed definition. Under 

our proposal, CMS would not be limited 

by the plan’s statements about its intent. 

In the content standard, we proposed 

that the regulation state affirmatively 

what must be included for a 

communications activity or material to 

be a marketing activity or material, 

rather than stating what is excluded (as 

the current regulation does). We 

explained that the first two types of 

content listed (paragraphs (2)(i) and (ii)) 

in the proposed definition of marketing 

are derived from the current regulation 

(although we explained that 

‘‘premiums’’ was also included, 

consistent with the MCMG). We 

proposed to codify a third type of 

content in the definition (information 

on rewards and incentives programs), as 

we wanted to be clear that while 

rewards and incentives themselves are 

not a benefit, they are used as a means 

of prompting a beneficiary to use a 

specific benefit, and therefore our policy 

has been that information on rewards 

and incentives fall within the definition 

of marketing. We explained that our 

proposal would avoid any confusion 

and ensure that plans continue to be 

aware that when providing any 

information on rewards and incentives, 

they must follow the same requirements 

as for other marketing. We also 

proposed to streamline the definitions 

by removing the list in the current 

regulation of examples of materials (for 

example, brochures or posters) and 

explained that we did not believe this 

list of examples is necessary, as we 

evaluate whether a material is marketing 

based on intent and content rather than 

its particular form. Additionally, we 

proposed to combine the definitions for 

‘‘communications’’ and 

‘‘communications materials,’’ as well as 

‘‘marketing’’ and ‘‘marketing materials’’ 

to streamline the definitions section. We 

also explained that this would be 

consistent with how we have 

interpreted the current regulations that 

both activities and materials are subject 

to the same intent and content 

standards. We also proposed that the 

regulatory definition of 

‘‘communications’’ state that 

communications activities and use of 

materials are those ‘‘created or 

administered by the MA organization or 

any downstream entity.’’ 

Finally, we proposed to codify at 

§§ 422.2260 and 423.2260 additional 

definitions that apply to plan marketing. 

Specifically, we proposed to add 

definitions of ‘‘advertisement (ad),’’ 

‘‘alternate format,’’ ‘‘banner,’’ ‘‘bannerlike advertisements,’’ and ‘‘Outdoor 

Advertising (ODA).’’ We explained that 

these familiar terms have been defined 

and used throughout the MCMG. Our 

proposed definitions of these terms 

included some technical and clean-up 

edits but were substantively consistent 

with current policy and guidance. We 

explained that in codifying much of the 

MCMG, we believed it was paramount 

that we codify these definitions which 

are used throughout the MCMG and in 

our proposed regulations. 

We next proposed to codify, at 

§§ 422.2261 and 423.2261, requirements 

for plans to submit certain materials to 

CMS for review, the process for CMS 

review, and the standards by which 

CMS will perform the review. These 

requirements are currently found in 

§§ 422.2262, 422.2264, 423.2622, and 

423.2264, as well as in section 90 of the 

MCMG, which builds upon those 

sections and includes detailed 

operational instructions to plans 

regarding submission, review, and 

distribution of marketing materials 

(including election forms). In particular, 

we proposed at §§ 422.2261(a)(1) and 

423.2261(a)(1) that the Health Plan 

Management System (HPMS) would be 

the primary system of record and the 

mechanism by which CMS would 

collect and store submitted plan 

materials for review and evaluation. 

Additionally, we proposed to codify, at 

§§ 422.2261(a)(2) and 423.2261(a)(2), 

our current policy that only plans can 

submit materials to CMS for review and 

approval for use and to specify that this 

policy prohibits third parties/ 

downstream entities from submitting 

materials directly to CMS. Additionally, 

in new §§ 422.2261(d) and 423.2261(d), 

we proposed to codify that CMS would 

review submitted materials for 

compliance with all applicable 

requirements in §§ 422.2260 through 

422.2267 and §§ 423.2260 through 

423.2267 and that the benefit and cost 

information accurately reflects the 

plan’s bid. We explained the proposed 

standards are consistent with our 

current policy and how we review 

marketing materials. 

We next proposed to codify general 

standards for plan communications, 

including requirements related to 

product endorsements and testimonials 

and standardization of certain materials 

(specifically, certain telephone numbers 

and material IDs) at §§ 422.2262 and 

423.2262. These standards are currently 

found in §§ 422.2268(a) and 

423.2268(a), which also include 

examples of what plans may not do. 


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While the proposed regulations 

included the current general standards 

prohibiting MA plans from misleading, 

confusing, or providing inaccurate 

information to current or potential 

enrollees, we proposed to include 

additional examples of what plans may 

not do (in paragraph (a)(1)) and to 

incorporate examples of what plans may 

do (in paragraph (a)(2)), consistent with 

section 30 of the MCMG. 

We also proposed to codify, at 

§§ 422.2262(b)(2) and 423.2262(b)(2), 

requirements regarding endorsements 

and testimonials that are in the policy 

currently found in section 30.8 of the 

MCMG. We proposed in 

§§ 422.2262(b)(1) and 423.2262(b)(1) 

that, consistent with our current policy, 

product endorsements and testimonials 

may take different forms. We also 

proposed to codify at §§ 422.2262(c) and 

423.2262(c) requirements currently 

found in section 30 of the MCMG 

related to including telephone numbers 

(specifically, customer service numbers 

and 1–800–MEDICARE) in materials. 

We explained that these additional 

parameters for how telephone numbers 

are communicated in communications 

and marketing ensure that beneficiaries 

get useful and accurate information. 

Finally, we proposed to codify at 

§§ 422.2262(d) and 423.2262(d) 

requirements related to standardized 

material identification, currently found 

in section 90.1 of the MCMG. 

We proposed to codify at §§ 422.2263 

and 423.2263 requirements related to 

how plans may conduct marketing, 

which is specified as a subset of 

communications and therefore also 

subject to the requirements proposed in 

§§ 422.2262 and 423.2262. First, we 

proposed to clarify, at §§ 422.2263(a) 

and 423.2263(a), that October 1 is the 

date plans may begin marketing for the 

upcoming plan year. This is consistent 

with longstanding guidance, but the 

current rule lacks specificity and 

context. We also proposed to codify at 

§§ 422.2263(b) and 423.2263(b) 

examples of what plans may not do in 

marketing. As explained in the February 

2020 proposed rule, this list reflects 

current policy in existing 

§§ 422.2268(b), 423.2268(b) and section 

40.1 of the MCMG, with some technical 

edits. As our proposal was to codify all 

current requirements and guidance on 

marketing and communications, we 

explained that a number of the 

prohibitions that are currently stated in 

§§ 422.2268(b) and 423.2268(b) would 

be codified elsewhere in our proposed 

regulations, where the provisions would 

topically belong under the new 

regulatory structure. Although not 

discussed in the preamble to the 

February 2020 proposed rule, 

§§ 422.2263(b)(2) and 423.2263(b)(2) 

included a provision specific to the 

prohibition on providing gifts unless 

they are of a nominal value; the 

proposed regulation provided that we 

would defer to guidance from the HHS 

Office of the Inspector General (OIG) to 

determine what dollar threshold to use 

to determine if a gift is of nominal 

value. Under current CMS guidance in 

the MCMG, section 40.4 applies the 

current regulation prohibiting gifts other 

than nominal gifts to set a cost threshold 

of $15 per gift and $75 aggregated, per 

person per year, which are the amounts 

that the HHS OIG identified as nominal 

amounts in its current applicable 

guidance, dated December 7, 2016 and 

available on-line here: https://

www.hhs.gov/guidance/sites/default/ 

files/hhs-guidance-documents/ 

2006053221-hi-oigpolicystatementgiftsof

nominalvalue.pdf. Proposed 

§§ 422.2263(b)(2) and 423.2263(b)(2) 

provided that a determination of 

nominal value would be governed by 

guidance published by the HHS OIG in 

order for §§ 422.2263(b)(2) and 

423.2263(b)(2) to remain in alignment 

with OIG guidance and policy about 

nominal gifts going forward. We note 

here that achieving alignment on this 

issue provides clearer and more 

consistent direction from the 

government to regulated plans and 

provider greater consistency in overall 

monitoring and enforcement. Finally, at 

§ 422.2263(c), we proposed to codify 

requirements related to marketing of 

Star Ratings currently located in section 

40.6 of the MCMG. 

We next proposed to codify, at 42 CFR 

422.2264 and 423.2264, requirements 

related to plan contact with Medicare 

beneficiaries and a beneficiary’s 

caregivers. Our proposed regulation text 

used the term ‘‘beneficiary contact’’ to 

include all outreach activities to a 

beneficiary or a beneficiary’s caregivers 

by the plan or its agents and brokers. 

First, in 42 CFR 422.2264(a)(1) and 

423.2264(a)(1), we proposed to codify 

the policy for when unsolicited contact 

is permitted, including direct mail and 

email which are currently found in the 

MCMG. Under 42 CFR 422.2264(a)(2) 

and 423.2264(a)(2), we proposed to 

codify the rules for when unsolicited 

direct contact with beneficiaries is and 

is not permitted. Currently, 

§§ 422.2268(b)(13) and 423.2268(b)(13) 

explicitly prohibit plans from soliciting 

door-to-door or engaging in other 

unsolicited contact and our guidance in 

section 40.2 of the MCMG applies and 

interprets this prohibition in specific 

contexts, with additional detail about 

activities we consider (and do not 

consider) unsolicited contact. 

Additionally, under 42 CFR 

422.2264(a)(2) and 423.2264(a)(2), we 

also proposed to codify the current 

policy that unsolicited direct messages 

from social media platforms are also 

prohibited, as currently addressed in 

section 30.6 of the MCMG. We also 

proposed to clarify that plans may 

contact their current members 

(including those individuals enrolled in 

commercial plans who are becoming 

eligible for Medicare) regarding plan 

business, which is consistent with our 

current policy in the MCMG in section 

40.3. Finally, in §§ 422.2264(c) and 

423.2264(c), we proposed to codify 

requirements regarding events (such as 

meetings) with beneficiaries, currently 

found in section 50 of the MCMG. As 

explained in the February 2020 

proposed rule, the proposed regulation 

text included specific provisions that 

are consistent with our current policies 

of what plans may do. Our proposed 

revisions to §§ 422.2267 and 423.2267 

would incorporate the policy currently 

in §§ 422.2264 and 423.2264, 

‘‘Guidelines for CMS Review,’’ with 

more detail. We explained that whereas 

the current §§ 422.2264 and 423.2264 

provide general guidance on important 

information that plans must provide to 

a beneficiary interested in enrolling, 

proposed §§ 422.2267 and 423.2267 

would include more detailed standards 

and requirements on the specific 

materials or content that a plan must 

produce. The proposed rule explained 

that, collectively, the required materials 

and content outlined in proposed 

§§ 422.2267 and 423.2267 account for 

the requirements in the current 

§§ 422.2264 and 423.2264. 

We next proposed to codify 

requirements for plan websites at new 

§§ 422.2265 and 423.2265. As explained 

in the February 2020 proposed rule, the 

current regulations at §§ 422.111(h)(2) 

and 423.128(d)(2) establish the 

requirement for Part C and Part D plans 

to have an internet website and include 

requirements regarding content that 

must be posted on the website and the 

MCMG has historically provided 

additional detail on required website 

content, including the dates by which 

plan content was required to be posted 

annually. Proposed §§ 422.2265 and 

423.2265 would restate the requirement 

to have a website and codify the 

additional requirements and guidance 

currently in section 70 of the MCMG. 

We next proposed to codify at 

§§ 422.2266 and 423.2266 requirements 

plans must follow for activities in a 

healthcare setting, including 

requirements for provider-initiated 


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activities, plan-initiated provider 

activities, and plan activities. We 

explained that proposed §§ 422.2266 

and 423.2266 would include 

requirements currently located in 

§§ 422.2268(b)(7) and 423.2268(b)(7) 

and codify policies interpreting those 

requirements in section 60 of the 

MCMG. 

We next proposed to codify, at new 

§§ 422.2267 and 423.2267, instructions 

for how plans should submit required 

materials to CMS for review. 

Specifically, we proposed to codify the 

guidance for standardizing and 

monitoring the production of required 

documents, including a listing of these 

required documents, currently found in 

section 100 and Appendices 2, 3, 4, and 

5 of the MCMG. As we explained in the 

February 2020 proposed rule, some of 

these required materials are addressed 

in current regulations (for example, the 

Annual Notice of Change (ANOC) and 

the Evidence of Coverage (EOC)) while 

others are only described in the MCMG 

(for example, the Summary of Benefits 

(SB)). Therefore, we proposed to specify 

all of the required materials and content 

in §§ 422.2267(e) and 423.2267(e). In 

doing so, we refer to current established 

regulatory authority when relevant. We 

did not propose any changes to 

§§ 422.2272 and 423.2272, which 

address licensure of marketing 

representatives and confirmation of 

marketing resources. 

Finally, we proposed to consolidate, 

at §§ 422.2274 and 423.2274, 

requirements related to plan 

compensation to agents, brokers and 

other third parties currently found at 

§§ 422.2272, 422.2274, 423.2272, and 

423.2274, and section 110 of the MCMG. 

We explained in the February 2020 

proposed rule how our proposed revised 

and consolidated text generally would 

not change the policies currently laid 

out in the existing regulations and 

guidance, but that significant technical 

and organizational edits were used to 

improve clarity and reduce duplication 

in the proposed regulation text. We 

proposed to codify our method for 

calculating fair market value for agent/ 

broker compensation, as current 

regulations limit compensation to fair 

market value but do not further define 

it or provide the methodology CMS uses 

for calculating it. As we explained in 

the February 2020 proposed rule, CMS 

first developed the Fair Market Value 

(FMV) calculation used for regulating 

plan compensation paid to agents and 

brokers for contract year 2009 and 

published these rates in an HPMS memo 

on December 24, 2008. To develop the 

FMV, we requested that plans submit 

the fees they paid in 2006 and 2007, as 

well those planned for 2009; plans 

submitted approximately 19,000 records 

that we analyzed based on geographic 

location and organization type. 

Following this analysis, we developed 

the FMV for MA plans, 1876 cost plans 

and Part D plans. The MA FMV rates for 

enrolling a single beneficiary were 

established at a national rate of $400, 

with exceptions for Connecticut, 

Pennsylvania, and DC ($450), and 

California and New Jersey ($500), based 

on higher rates being reported in those 

geographic areas. The PDP rate was set 

at $50 for a single enrollment nationally. 

For years after contract year 2009, we 

calculated the FMV based on the 

National Per Capita MA Growth Rate for 

aged and disabled beneficiaries for Part 

C and 1876 Cost plans and the Annual 

Percentage Increase for Part D, using the 

following formula: Current Year FMV + 

(Current Year FMV * National Per 

Capita MA Growth Rate for aged and 

disabled beneficiaries) for MA and 1876 

cost plans and Current Year FMV + 

(Current Year FMV * Annual Percentage 

Increase for Part D) for PDP plans. Our 

proposal for §§ 422.2274 and 423.2274 

would codify a definition of FMV with 

this formula. Based on this formula, the 

FMV for 2022 would be the FMV for CY 

2021 + (CY2021 FMV * National Per 

Capita Growth Rate for aged and 

disabled beneficiaries). We issued an 

HPMS memo on May 29, 2020 with the 

FMV amounts for 2021. For CY2021, the 

FMV rates for MA and 1876 Cost Plans 

are: National FMV is $539, FMV for 

Connecticut, Pennsylvania, and the 

District of Columbia is $607, FMV for 

California and New Jersey is $672 and 

the FMV for U.S. Virgin Islands and 

Puerto Rico is $370. For CY2021, the 

FMV rate for all Prescription Drug Plans 

is $81. 

Additionally, we noted that section 

110.7.1 of the MCMG currently clarifies 

when the regulations at 

§§ 422.2274(b)(2) and 423.2274(b)(2), 

which require recovery of agent 

compensation when a newly-enrolled 

individual disenrolls within the first 3 

months of enrollment (rapid 

disenrollment), do not apply. We 

proposed to codify that guidance at 

§§ 422.2274 and 423.2274; although the 

preamble of the February 2020 proposed 

rule identified this policy as being 

codified in proposed paragraph 

(g)(2)(ii)(C), our proposed regulation text 

addressed exceptions to the requirement 

for plans to recover agent compensation 

at paragraph (d)(5)(iii). In addition, we 

refer readers to section IV.C. of this final 

rule, which addresses our proposal 

regarding referral and finder’s fees for 

agents and brokers. 

In summary, our proposal was for 

new and revised regulatory sections in 

Subpart V as follows: 

• Sections 422.2260 and 423.2260 

revise and streamline the current 

definitions of ‘‘communications’’ and 

‘‘marketing,’’ and codify definitions for 

additional key terms from the MCMG 

used throughout the proposed 

regulations. 

• Sections 422.2261 and 423.2261 

contain requirements for plans to 

submit certain materials to CMS for 

review, the process for CMS review and 

the standards by which CMS will 

perform the review, taken from current 

§§ 422.2262, 422.2264, 423.2622, and 

423.2264 and section 90 of the MCMG. 

• Sections 422.2262 and 423.2262 

specify the general standards for plan 

communications materials and 

activities, including endorsements and 

testimonials, and examples of what 

plans may and may not do. These 

sections also contain requirements 

related to standardization of certain key 

elements of communications materials 

(specifically, telephone numbers and 

material IDs). These sections include 

policies currently articulated in current 

§§ 422.2268 and 423.2268, as well as 

sections 30 and 90.1 of the MCMG. 

• Sections 422.2263 and 423.2263 

contain requirements for how plans 

must conduct marketing. These sections 

will incorporate requirements currently 

in §§ 422.2268 and 423.2268, as well as 

additional guidance from section 40 of 

the MCMG. 

• Sections 422.2264 and 423.2264 

address the rules for plan contact with 

Medicare beneficiaries. These sections 

include requirements and standards 

currently in §§ 422.2268 and 423.2268, 

and further expanded upon in sections 

40 and 50 of the MCMG. 

• Sections 422.2265 and 423.2265 

explain the requirements for plans to 

have a website as well as what must, 

may, and must not be on the website. 

These sections include material 

currently in section 70 of the MCMG. 

• Sections 422.2266 and 423.2266 

contain the requirements plans must 

follow for activities in a healthcare 

setting. These sections include material 

from current §§ 422.2268 and 423.2268, 

and from section 60 of the MCMG. 

• Sections 422.2267 and 423.2267 

provide instructions on materials and 

content that CMS requires plans to 

deliver or make available to 

beneficiaries, including required 

disclaimers. These sections include 

material from section 100 and 

Appendices 2, 3, 4, and 5 of the MCMG. 

• Sections 422.2274 and 423.2274 

consolidate requirements from 

§§ 422.2272, 422.2274, 423.2272, and 


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423.2274, and section 110 of the MCMG 

regarding agents, brokers, and 

compensation to third parties. 

Finally, we requested comment on 

how CMS should implement 

prohibitions related to plan marketing 

during the open enrollment period 

(OEP). Section 1851(e)(2)(G)(iv) of the 

Act, as added by section 17005 of the 

Cures Act, prohibits marketing during 

the open enrollment period (OEP). The 

current regulations implementing the 

statutory prohibition on plan marketing 

during the OEP are at §§ 422.2268(b)(10) 

and 423.2268(b)(10). We explained in 

the February 2020 proposed rule that 

the MCMG includes additional guidance 

about what activities fall within this 

prohibition including, specifically, that 

plans are prohibited from sending 

unsolicited materials that call out the 

opportunity afforded by the OEP, using 

mailing lists or other anecdotal 

information to target individuals who 

made enrollment requests during the 

annual coordinated enrollment period 

(AEP), and leveraging agent/broker 

activities that target the OEP as a way 

to make further sales. 

We received the following comments 

on our proposal and our responses 

follow: 

Comment: Several commenters 

expressed support for CMS codifying 

the various requirements traditionally 

found in the MCMG. Many of these 

commenters questioned if CMS still 

intended to produce an MCMG after 

these regulations are adopted as final. 

Similarly, other commenters specifically 

requested that CMS continue to produce 

the MCMG in tandem with the 

requirements found in the final rule. 

Response: CMS appreciates the 

favorable response to the codification of 

the many requirements typically found 

in the MCMG. While the agency 

believes it would be duplicative to 

continue to produce the MCMG in its 

current form, we do intend to continue 

producing sub-regulatory guidance to 

provide operational instruction to plans. 

We believe that the regulations we are 

finalizing in parts 422 and 423, subparts 

V are clear and succinct. 

Comment: A commenter expressed 

concern that beneficiaries could be 

negatively impacted by CMS’s decision 

to stop collecting co-branded 

relationship data in the Health Plan 

Management System (HPMS). 

Response: CMS notes that the 

decision to no longer collect this data 

through the HPMS Marketing Module 

predates this rulemaking. Although 

CMS no longer collects co-branding 

information through the HPMS 

Marketing Module, the co-branding 

relationship data is collected elsewhere 

in HPMS, making the need to collect it 

twice in one system duplicative. In 

addition, plans continue to be 

responsible for all materials and 

activities, including those that they 

create or carry out in conjunction with 

any co-branded entities. All regulatory 

requirements pertaining to 

communications and marketing still 

apply to co-branded materials, 

including the requirement to submit all 

marketing materials to CMS. As a result, 

we do not believe that the negative 

impact on beneficiaries as contemplated 

by the commenter is likely. 

Comment: A commenter suggested 

that CMS eliminate the requirement that 

plans and sponsors prorate agent/broker 

commissions. The commenter noted the 

amount of work to enroll an individual 

does not change if the enrollment takes 

place in November or in January, so the 

requirements related to prorating 

payments do not make sense and are 

unfair to Medicare-certified health 

insurance agents. 

Response: CMS thanks the commenter 

for their input. Prorated payments of 

agent/broker commissions are a 

necessary component of the 

compensation requirements finalized in 

this rule because we believe that 

providing a full year payment to an 

agent, rather than a prorated amount, 

might incentivize agents and brokers to 

encourage beneficiaries to switch plans 

during the coverage year in order for the 

agent or broker to receive a full year of 

compensation, thus resulting in the 

unnecessary churning of beneficiaries 

from one plan to another. Section 

1851(j)(2)(D) of the Act specifically 

directs the Secretary to establish 

limitations on compensation for agents 

and brokers to ensure payments create 

incentives for agents and brokers to 

enroll beneficiaries into the plan that 

best meets the beneficiary’s needs. 

Providing a prorated amount 

incentivizes the agent or broker to find 

the plan that is the best fit for the 

beneficiary so that the beneficiary will 

remain enrolled throughout the year, 

rather than changing plans due to 

dissatisfaction with the coverage or 

feeling as though they were misled. The 

prorated compensation also provides an 

incentive for the agent or broker to 

continue to service the beneficiary’s 

needs after the sale. 

Comment: A commenter was in favor 

of CMS codifying the rules for agent/ 

broker compensation, noting that the 

transparency is helpful for plans as well 

as agents and brokers. 

Response: CMS appreciates the 

comment. 

Comment: A few comments suggested 

that CMS provide more examples of 

specific materials that would fall under 

the definition of communication or 

marketing in §§ 422.2260 and 423.2260 

of the regulation. 

Response: CMS understands that 

examples can aid plans in better 

understanding the definitions of 

communications and marketing, but we 

do not believe that including examples 

in the regulation text are the best 

manner in which to achieve this 

objective. Given the more static 

structure of regulations as compared to 

the dynamic nature of communications 

and marketing, we believe that subregulatory guidance and training is the 

more appropriate manner by which to 

apply the regulatory definitions and 

standards to particular facts in order to 

identify and convey our requirements. 

With the finalization of the proposed 

amendments to §§ 422.2260 and 

423.2260, CMS will gauge need for 

examples and provide them as required. 

With that said, we note the definitions 

codified in this final rule are consistent 

with our current practice and the 

current regulations, as we discussed in 

the February 2020 proposed rule; 

therefore the examples in section 20.1 of 

the MCMG dated September 5, 2018, 

and available online here: https://

www.cms.gov/Medicare/Health-Plans/ 

ManagedCareMarketing/Downloads/ 

CY2019-Medicare-Communicationsand-Marketing-Guidelines_Updated090518.pdf, remain applicable. In 

addition, we note that the extensive list 

of standardized and model materials in 

§§ 422.2267(e) and 423.2267(e) 

generally specifies which materials are 

communication materials and which are 

marketing materials. 

Comment: A commenter suggested 

that definitions in §§ 422.2260 and 

423.2260 such as ‘‘alternate format,’’ 

‘‘banner,’’ ‘‘banner-like advertisements,’’ 

and ‘‘outdoor advertising’’ should be 

considered marketing activities because 

these types of materials are also 

evaluated on intent and content and not 

on their particular form. 

Response: We agree that ‘‘alternate 

format,’’ ‘‘banner,’’ ‘‘banner-like 

advertisements,’’ and ‘‘outdoor 

advertising’’ are evaluated based on 

their intent and content. We clarify, 

however, that such materials are not 

automatically considered marketing 

under the definitions we proposed and 

are finalizing here at §§ 422.2260 and 

423.2260, as specific materials in these 

formats could meet either the definition 

of communications or of marketing 

based on their intent and content. For 

example, a billboard (outdoor 

advertising) that says ‘‘Super Medicare 

Advantage—a new choice in Medicare 

for 2022’’ is not marketing as it does not 


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5986 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

include or address the content outlined 

in paragraph (2) of the definition of 

‘‘marketing’’ under §§ 422.2260 and 

423.2260. Based on the possibility of 

these items being communications or 

marketing depending on the particular 

facts or circumstances, CMS is not 

changing the definitions. 

Comment: A commenter suggested 

that CMS should consider establishing a 

separate pre-release review process for 

communications, given their importance 

for beneficiaries. The commenter 

specifically cited CMS required 

materials that are communications. The 

commenter strongly urged that in cases 

where CMS identifies inaccuracies or 

misleading information through a postrelease review, CMS allow affected 

beneficiaries to have a special 

enrollment period, in order to mitigate 

consequences of decisions based on 

inaccurate or misleading information. 

Response: We agree that appropriate 

oversight of communication materials is 

an important beneficiary protection. We 

believe that our current oversight 

processes ensure the appropriate level 

of beneficiary protection. CMS currently 

collects certain CMS required materials, 

such as the Evidence of Coverage 

making them subject to retrospective 

reviews. In addition, CMS reviews the 

accuracy of CMS required materials 

outside of the formal material 

submission process, for example 

provider directory reviews have been 

conducted outside of the formal HPMS 

material submission process for several 

years. 

In this final rule, CMS is also 

maintaining authority (currently in 

§§ 422.2262(d) and 423.2262(d) and 

codified here at §§ 422.2261(c)(1) and 

423.2261(c)(1)) to collect, prior to use by 

plans, certain designated 

communications materials that are 

critical to beneficiaries and plan 

enrollees understanding plan options or 

accessing their benefits; the final 

regulation text provides an example of 

a communications material that meets 

this standard: The Evidence of Coverage 

(EOC). CMS may also retrospectively 

collect any communications materials 

for subsequent review under 

§§ 422.504(f)(2)(vii) and 

423.505(f)(2)(viii). In addition, CMS can 

collect data on communications 

materials through beneficiary 

complaints, and communication and 

marketing surveillance activities. In this 

final rule, we have included 

§§ 422.2261(c)(2) and 423.2261(c)(2) to 

ensure that CMS has the authority to 

require additional communications 

materials be submitted, or submitted 

and reviewed, prior to use based 

identified as a concern based on errors 

identified through the methods outlined 

above. 

These regulatory authorities allow 

CMS to focus more closely on those 

materials that have the potential to have 

the greatest impact on beneficiary 

enrollment decision-making, without 

the need for a more burdensome process 

of collecting and reviewing all 

communication materials that have little 

impact on beneficiary choice. 

In addition, in the proposed rule 

under §§ 422.2262(c) and 423.2262(c), 

we said that ‘‘CMS does not generally 

require submission and approval of 

communications materials prior to use 

. . .’’, which unintentionally did not 

accurately depict the current processes 

for material collection through the 

HPMS Marketing Module. In general, 

there are two ways that designated 

materials are submitted to CMS through 

the HPMS Marketing Module. The 

‘‘path’’ a material takes is 

predetermined by CMS. One submission 

path includes when plans submit 

materials to HPMS, but these materials 

are not reviewed prospectively by CMS, 

but are subject to a retrospective review. 

An example of a material that would fall 

under this pathway is the EOC. A 

second submission pathway includes 

when plans submit materials to HPMS 

that CMS must review and approve 

prospectively and prior to their 

distribution. To clarify these 

requirements regarding the submission 

of materials, in this final rule we are 

editing §§ 422.2262(c) and 423.2262(c) 

to say that CMS does not generally 

require submission, or submission and 

approval, of communications materials 

prior to use. 

With regard to the comment that CMS 

grant a special enrollment period based 

on receipt of inaccurate or misleading 

information, CMS has the ability to 

grant SEPs under §§ 422.62(b)(3)(ii) and 

423.38(c)(8)(iii) when a plan or its agent, 

representative, or plan provider 

materially misrepresented the plan’s 

provisions in communications as 

outlined in Subpart V of this part. Such 

actions are made on a case-by-case 

basis. 

Comment: A commenter offered 

support of the codification of ‘‘intent’’ 

and ‘‘content’’ standards currently in 

the Medicare Communications and 

Marketing Guidelines. Specifically, the 

commenter supported CMS’ proposal to 

provide a list of what must be included 

for a communication material or activity 

to be considered marketing, believing it 

eases the interpretation of the previous 

definition under §§ 422.2260 and 

423.2260. 

Response: We thank the commenter 

for their support. 

Comment: A commenter voiced 

concern regarding the use of the word 

‘‘address’’ as part of the definition of 

marketing under §§ 422.2260(2) and 

423.2260(2). The commenter stated that 

the term was too expansive and vague 

and overly broadens the definition of 

marketing. 

Response: CMS believes that since we 

changed the definition of marketing in 

the final rule ‘‘Medicare Program; 

Contract Year 2019 Policy and 

Technical Changes to the Medicare 

Advantage, Medicare Cost Plan, 

Medicare Fee-for-Service, the Medicare 

Prescription Drug Benefit Programs, and 

the PACE Program’’ published in the 

Federal Register on April 16, 2018 (the 

April 2018 final rule), we have gained 

valuable experience through two 

‘‘marketing cycles’’ applying and using 

the new definition. During this time, we 

have observed plans using marketing 

tactics that skirted the definition of 

marketing by addressing marketing 

content, such as benefits, premiums, or 

plan comparisons, without explicitly 

including the content that are specified 

in the definition of ‘‘marketing’’ that we 

proposed and are finalizing in 

§§ 422.2260 and 423.2260. For example, 

a plan advertisement that says ‘‘Plan X 

monthly premiums are lower than your 

current Medicare Advantage plan’’ 

would be marketing under our new 

definition but is not clearly within the 

scope of marketing materials in the 

current regulatory definition and 

guidance. While the advertisement 

doesn’t list the premium or a specific 

ranking standard, it addresses both of 

these concepts and is clearly designed 

to draw a beneficiary’s attention to a 

plan and to influence the beneficiary’s 

enrollment decision. By using the term 

‘‘address’’ in the definition we have 

proposed and are finalizing, we ensure 

our review of materials such as this 

example would be marketing under the 

revised definition adopted in this final 

rule. The revised definition that we are 

finalizing provides an important 

safeguard for Medicare beneficiaries. 

Comment: A commenter expressed 

displeasure with the ‘‘benefits 

disclaimer’’ not being included in 

§§ 422.2267 and 423.2267 of the 

regulation. Prior to August 6, 2019, the 

MCMG required plans to include on 

marketing materials that list ten or more 

benefits the following disclaimer: ‘‘this 

is not a complete description of benefits. 

Call [insert customer service phone 

number/TTY] for more information.’’ 

Response: We proposed to codify our 

current policy as the decision to no 

longer require this specific benefits 

disclaimer predates this rulemaking. As 

plans must provide a Summary of 


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Benefits (SB) and the Pre-Enrollment 

Checklist (PECL) with an enrollment 

form, we believe the benefits disclaimer 

is no longer necessary. The SB outlines 

key benefits, and also provides 

information on how to access the 

Evidence of Coverage (EOC) for a 

comprehensive list of all benefits. The 

PECL prompts the beneficiary to review 

important information before making an 

enrollment decision, including 

reviewing the EOC. We believe these 

documents adequately put beneficiaries 

on notice that the EOC is the complete 

list of benefits and that the other 

documents are merely summaries. 

Therefore, we did not propose and are 

not finalizing a requirement to use the 

benefits disclaimer used in the past. 

Comment: One commenter noted an 

error in § 422.2266(b). The commenter 

pointed out that the sentence should be 

fixed to say ‘‘. . . including but not 

limited to,’’ rather than ‘‘. . . including, 

are not limited to . . .’’ 

Response: We agree with the 

commenter and are correcting the 

sentence by replacing ‘‘including, are 

not limited to’’ with ‘‘including’’ in 

§ 422.2266(b). However, we are not 

inserting the remainder of the text 

suggested by the commenter (‘‘but not 

limited to’’), as it is an accepted practice 

to interpret ‘‘including’’ as meaning 

‘‘including but not limited to.’’ For 

consistency, we will apply these 

changes to § 423.2266(b). 

Comment: A commenter expressed 

concern that we did not include the 

requirement that Plans/Part D Sponsors 

may only advertise in their defined 

service area, unless unavoidable. 

Response: We note the decision to no 

longer restrict marketing outside of a 

plan’s designated service area predates 

this rulemaking. This decision was 

made because it is self-policing, as CMS 

believes that MA Plans and Part D 

sponsors have little incentive to 

advertise outside of their service area 

since beneficiaries must live in the 

service area to be enrolled in the plan. 

In addition, CMS believes that there is 

no negative outcome should a 

beneficiary view marketing for a specific 

plan that is not available in their service 

area, with the exception of marketing 

about Star Ratings; with Star Ratings, a 

beneficiary might be misled of confused 

about the rating of specific plan availing 

in one area that is offered by a company 

with a higher rated plan in a different 

service area. We are finalizing, in 42 

CFR 422.2263(c)(5) and 423.2263(c)(5), 

the current prohibition on marketing 

Star Ratings outside of a service area 

that is discussed in the MCMG, section 

40.6 (applying the prohibition on 

misleading marketing and 

communications) unless the marketing 

is conveying overall the organization’s 

performance. If the Star Ratings are used 

in marketing that is distributed outside 

of the specific service area, the plan 

must do so in a way that is not 

confusing or misleading. CMS’s current 

policy is to limit Star Rating marketing 

to the service area in which the rating 

is applicable. This policy is to ensure 

that beneficiaries are not mislead into 

believing that a Star Rating earned by 

‘‘Plan A’’ applies to ‘‘Plan B’s’’ service 

area. However, we recognize that 

organizations that are expanding into 

new service areas would not necessarily 

have received Star Ratings. We believe 

that an organization entering a new area 

should be able to demonstrate the 

quality of their plan when marketing, 

provided it is not misleading or 

confusing. Therefore, we are modifying 

our current policy to permit the 

marketing of Star Ratings outside of the 

service area if done in a way to convey 

overall organization performance 

without being misleading or confusing. 

This is consistent with the overall 

policy of permitting marketing to occur 

outside of a plan’s service area. 

Comment: A few commenters 

requested that we expand the Annual 

Notice of Change (ANOC) to include 

notice to enrollees when providers seen 

by that enrollee during the past year are 

no longer in the plan’s network 

(focusing on Primary Care Providers and 

specialists). 

Response: The ANOC is a document 

geared for mass distribution to all 

enrollees. Adding specific beneficiary 

information of this type to the ANOC 

would not be feasible or advisable given 

the limitations of current technology, 

the effort such an addition would 

require, and the possibility of inaccurate 

data being provided to enrollees given 

the fluid nature of provider networks 

and contracting. Moreover, adding this 

information to the ANOC would 

duplicate an existing requirement at 42 

CFR 422.111(e) that plans notify their 

enrollees when a provider the enrollee 

regularly sees will no longer be in the 

plan’s network. 

Comment: A commenter stated that 

the prohibition on robocalling is 

implied in §§ 422.2264 and 423.2264. 

The commenter requested that CMS list 

robocalling as a prohibited activity. 

Response: We appreciate the 

comment and agree that the prohibition 

on unsolicited telephone calls includes 

robocalling. We are finalizing the 

regulation text at §§ 422.2264(a)(2)(iv) 

and 423.2264(a)(2)(iv) with the addition 

of robocalls to the list of prohibited 

activities to eliminate any chance of 

ambiguity when it comes to robocalls 

being considered an unsolicited 

telephone call. We note as well that any 

other type of telephone solicitation 

would be prohibited even if not 

specifically listed because the regulation 

prohibits all unsolicited telephone 

solicitation, not merely calls from a live 

person. 

Comment: A commenter requested 

that CMS prohibit MA plans and Part D 

sponsors from contacting enrollees 

based on plan business if the enrollee 

has an external agent of record. The 

commenter expressed concern that 

plans could reach out to a member who 

was enrolled by an agent, and through 

a process such as upselling, enroll the 

member into a different plan, which 

could result in the agent no longer 

receiving renewal compensation. 

Response: We understand the 

concern, but believe that this concern — 

regarding changes in enrollment directly 

solicited by the plan that lead to 

changes in agent compensation — is a 

matter that should be addressed in the 

contract between plans and brokers. We 

reiterate that cost plans, in addition to 

MA organizations and Part D sponsors, 

must comply with the marketing and 

communications standards that we are 

finalizing here based on existing 

§ 417.428, which requires cost plans to 

comply with part 422, subpart V, with 

the exception of § 422.2276. In applying 

those provisions, references to MA 

organizations should be read as 

references to HMOs and CMPs, that is 

cost plans in part 417. 

Comment: A commenter noted 

differences in the wording between the 

February 2020 proposed rule in 

§§ 422.2264(a)(4) and 423.2264(a)(4) 

(‘‘MA organizations are responsible for 

ensuring sales staff, including agents 

and brokers, abide by Federal and state 

laws related to consumer protection, 

including, but not limited to, do not call 

requirements,’’) and section 110.3 of the 

MCMG (Plan/Part D sponsor Oversight) 

(‘‘Plans/Part D sponsors must oversee 

downstream entities to ensure agents/ 

brokers abide by all applicable state and 

federal laws, regulations, and 

requirements.’’). The commenter 

expressed concern that the wording 

might result in states requiring that MA 

plans and Part D sponsors be subject to 

a multiplicity of state laws that are 

expressly preempted by federal law. 

Response: Existing regulations at 

§§ 422.504(i) and 423.505(i) regulate the 

relationship between plans and their 

first tier, downstream, and related 

entities and require plans to maintain 

oversight and monitoring of these 

entities and that the related entity, 

contractor, or subcontractor must 

comply with all applicable Medicare 


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laws, regulations, and CMS instruction. 

Therefore, we believe that there are 

adequate standards in place to ensure 

that the beneficiary protections and 

marketing and communications rules 

we are adopting here will apply to 

related entities, contractors and 

subcontractors that market on a plan’s 

behalf. In addition, section 

1851(h)(7)(A) provides that agents and 

brokers must be licensed and appointed 

for the states where they sell and we 

believe the regulation is consistent with 

that statutory requirement. Based on 

this, CMS is not including the provision 

in proposed §§ 422.2264(a)(4) and 

423.2264(a)(4) in the final rule. 

Comment: A commenter requested 

CMS expand the requirement at 

§§ 422.2274(c)(8) and 423.2274(c)(8) to 

state that plans must oversee first tier, 

downstream, and related entities to 

ensure agents and brokers do not charge 

beneficiaries a marketing fee. 

Response: CMS shares the 

commenter’s concern about charging 

beneficiaries marketing fees. This final 

rule governs MA organizations, Part D 

sponsors, and their first tier, 

downstream, and related entities 

(including agents and brokers). As 

required under §§ 422.504(i) and 

423.505(i), MA organizations and Part D 

sponsors are ultimately responsible for 

their downstream entities. Therefore, 

CMS could take compliance action 

against the MA organization or Part D 

sponsor for the individual’s behavior if 

they are affiliated with, or acting on 

behalf of the organization, plan, or 

sponsor. To clarify this point further, we 

are finalizing §§ 422.2274(c)(8) and 

423.2274(c)(8) with revisions to prohibit 

marketing consulting fees from being 

charged when a beneficiary is 

considering enrollment in a plan. The 

marketing and communications 

regulations finalized here also apply to 

cost plans based on § 417.428; although 

there are no explicit regulatory 

provisions in Part 417 regarding the 

downstream entities and subcontractors 

of cost plans, cost plans must comply 

with the requirement that the plan 

ensure that beneficiaries are not charged 

marketing consulting fees; we therefore 

expect that cost plans will instruct and 

contract with their subcontractors 

accordingly to ensure that beneficiaries 

are not charged these fees. 

Comment: Several commenters 

suggested that CMS do more to protect 

dually eligible beneficiaries from 

misleading marketing practices. The 

commenters suggested that CMS require 

when an agent/broker disenrolls a 

beneficiary from an integrated product 

that the agent/broker provide the 

beneficiary a clear explanation of the 

product from which the beneficiary is 

disenrolling, including explaining how 

the beneficiary’s disenrollment from an 

integrated product to a non-integrated 

product might impact their health care 

service delivery. Commenters also 

suggested that outbound enrollment 

verification calls by plans and sponsors 

include similar information. 

Commenters also suggested that CMS 

should require actual contact with the 

beneficiary during these verification 

calls. 

Response: CMS believes the 

requirements under § 422.2262(a)(1)(xv), 

(xvi), (xvii), and (xviii) (and the parallel 

provisions in Part 423 applicable to Part 

D plans) function to protect dually 

eligible beneficiaries from misleading 

marketing practices. Before additional 

requirements are considered, CMS will 

continue to monitor how MA plans and 

Part D sponsors market to dually eligible 

beneficiaries to determine if additional 

requirements are needed. CMS believes 

that the general requirements set forth 

in Subpart V of this rule establish the 

framework necessary for the agency to 

pursue additional oversight activities to 

apply the standards in this final rule to 

specific factual circumstances without 

further rulemaking. We will also explore 

changes to agent/broker training and 

testing to address this. 

Regarding outbound enrollment 

verification, as reflected in the 

requirement in current §§ 422.2272(b) 

and 423.2272(b) (which are not being 

amended in this final rule), plans are no 

longer limited to verifying enrollment 

by only phone calls. We now permit 

plans to confirm enrollment by letter 

through the mail because our experience 

has demonstrated that it is virtually 

impossible for plans to guarantee actual 

beneficiary contact by phone. Moreover, 

a hardcopy letter gives the beneficiary a 

detailed record that can be saved and 

provided to others, including the State 

Health Insurance Assistance Program 

(SHIP), for help and guidance, if 

needed. 

Comment: Several commenters 

offered support for the requirement at 

§§ 422.2262(a)(1)(xv)–(xviii) and 

423.2262(a)(1)(xiv)–(xvii) prohibiting 

MA plans marketing non-D–SNPs as if 

they were designed for dually eligible 

beneficiaries or claiming that they have 

a relationship with the state Medicaid 

agency. 

Response: We thank the commenters 

for their support. 

Comment: A commenter voiced 

concern that the language found in 

§§ 422.2262(a)(1)(xvi), stating that plans 

may not market a non-dual eligible 

special needs plan as if it were a dual 

eligible special needs plan, was too 

vague and ambiguous. The commenter 

noted that the language goes beyond the 

language found in the current MCMG 

and that existing objective limitations 

are already incorporated in the other 

subparagraphs under § 422.2262(a)(1). 

Response: We disagree with the 

commenter that the language is vague 

and ambiguous. Through our experience 

of investigating complaints concerning 

D–SNP look-alikes, we have found 

many examples of plans mimicking the 

look and language used by D–SNPs in 

a manner that is confusing or 

misleading to the beneficiary. While we 

agree that other provisions in this rule, 

for example § 422.2262(a)(1)(i), 

generally protect against misleading 

materials, given the vulnerability of the 

dually eligible population, we believe 

that the requirements as written are 

warranted and are finalizing these 

prohibitions as proposed. 

Comment: A commenter noted that 

the guidance regarding dual look-alike 

plans in the MCMG prohibits ‘‘targeting 

marketing efforts exclusively to dual 

eligible individuals . . .’’, whereas, the 

requirement in the February 2020 

proposed rule prohibits ‘‘targeting 

marketing efforts primarily to dual 

eligible individuals . . . .’’ The 

commenter suggested that the final rule 

use the ‘‘exclusively’’ standard from the 

MCMG. 

Response: We respectfully disagree. In 

our experience investigating complaints 

concerning the marketing of D–SNP 

look-alikes, the current MCMG language 

of ‘‘exclusively’’ has allowed look-alike 

plan materials to include content that is 

targeted almost exclusively towards 

dually eligible beneficiaries with the 

exception of one or a few sentences 

noting that the plan was open to all 

Medicare eligible individuals. Based on 

this experience, combined with the 

vulnerability of the dually eligible 

population, we believe it is important to 

bolster the language to include those 

materials that are primarily focused at 

the dually eligible individuals. As such, 

we will finalize the language under 

§ 422.2262(a)(1)(xvii) as proposed. 

Comment: A commenter was 

concerned that the language proposed in 

§§ 422.2264(c)(2)(i) and 423.2264(c)(2)(i) 

was too vague. The proposal requires 

the agent/broker to provide an 

opportunity for the beneficiary to 

determine if they want to continue to a 

marketing event directly following an 

educational event. The commenter 

stated this was too vague, resulting in 

the agent/broker determining if the 

beneficiary has given consent. 

Response: We agree with this concern 

in part and have strengthened the 

language at §§ 422.2264(c)(2)(i) and 


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423.2264(c)(2)(i) that requires agents 

and brokers make the beneficiary aware 

of a change in meeting type from 

educational to marketing and to provide 

the opportunity for beneficiaries to 

leave prior to the start of the marketing 

event. With this change from the 

proposed rule, we do not believe that 

the regulation text is vague or requires 

the agent, broker or other plan 

representative to guess whether a 

beneficiary wishes to remain for the 

marketing event. We also note that 

agents and brokers, as downstream 

entities of plans, must abide by the 

requirements in Subpart V of this rule, 

including §§ 422.2262(a)(1)(iii) and 

423.2262(a)(1)(iii), which prohibits 

them from engaging in activities that 

could mislead or confuse Medicare 

beneficiaries. 

Comment: A commenter expressed 

concern that the revisions found in 

§§ 422.2264(c)(1)(ii) and 

423.2264(c)(1)(ii) of the February 2020 

proposed rule will allow agents or 

brokers to set up marketing 

appointments directly following 

educational events. The commenter 

stated that ‘‘it appears that an agent or 

broker could immediately step out of 

the room, so to speak, and conduct a 

sales event.’’ Similarly, another 

commenter questioned why a previous 

sub-regulatory requirement regarding 

separation of the time and place of 

marketing and educational events was 

not included in the February 2020 

proposed rule. 

Response: The policy decision to 

allow marketing and educational events 

to occur in a close physical and time 

proximity predates this rulemaking, as 

reflected in CMS’s August 6, 2019 

Medicare Communications and 

Marketing Guidelines Update 

Memorandum (https://www.cms.gov/ 

Research-Statistics-Data-and-Systems/ 

Computer-Data-and-Systems/HPMS/ 

HPMS-Memos-Archive-Weekly). We 

made this change because it can be 

burdensome for beneficiaries to travel to 

events. If the beneficiary attends an 

educational event and wants to hear 

more plan specific information via a 

sales event, we believe it should be 

allowed to happen around the same 

time, rather than requiring the 

beneficiary to return on a different day 

or to a different venue. We, however, 

share the concern regarding the meeting 

type switching without the beneficiary 

being aware. As such, we are further 

strengthening the language proposed at 

§§ 422.2264(c)(2)(i) and 

423.2264(c)(2)(i), to require that a 

beneficiary be made aware of a change 

from educational event to marketing 

event and given the opportunity to leave 

prior to the event beginning. 

In addition, if a beneficiary is 

attending a personal marketing 

appointment with a plan representative, 

the representative would need to have 

the beneficiary complete a scope of 

appointment (SOA) form prior to any 

discussion as required under 

§§ 422.2274(b)(3) and 423.2274(b)(3). 

Finally, current beneficiary protections, 

such as the requirements under 

§§ 422.2262 and 423.2262 that plans 

may not engage in activities that could 

mislead or confuse Medicare 

beneficiaries or misrepresent the plan 

(or the entity offering the plan, such as 

the MA organization, cost plans, or Part 

D sponsor), remain in place under the 

regulations we are finalizing here. 

Comment: Several commenters noted 

that in an HPMS memo released on 

August 6, 2019 titled ‘‘Medicare 

Communications and Marketing 

Guidelines,’’ CMS deleted the 

requirement to include the hours of 

operations from the MCMG (section 30.4 

of the 2019 MCMG) when listing the 

customer service telephone number 

from materials. 

Response: CMS thanks the 

commenters for identifying this issue. 

Our intention in the HPMS memo was 

to eliminate the listing of the hours of 

operation for telesales telephone 

numbers and not to eliminate the need 

for including the customer service hours 

of operation when the customer service 

call center is mentioned. CMS 

inadvertently removed section 30.4 

entirely. We believe enrollees (or 

prospective enrollees) should know 

when they can reach their plan. As 

proposed and finalized, the substance of 

§§ 422.2262(c)(1)(i) and 423.2262(c)(1)(i) 

remains largely the same: when a plan 

includes its customer service number, 

the hours of operation for the call center 

must be prominently included at least 

once. However, we are finalizing 

changes from the proposed regulation 

text (which addressed the first time the 

customer service number appears) to 

focus on ensuring that the information 

is provided in a useful way to 

beneficiaries by finalizing a requirement 

that the hours of operation be 

prominently included at least once. In 

addition, we note that we are finalizing 

a similar change in §§ 422.2262(c)(1)(iii) 

and 423.2262(c)(1)(iii) regarding 

inclusion of the hours of operation for 

1–800–MEDICARE; we proposed that 

the hours of operation be included each 

time the 1–800–MEDICARE telephone 

number or Medicare TTY appears but 

are finalizing a requirement that the 

hours of operation be prominently 

included at least once on the material 

that includes the 1–800–MEDICARE 

telephone number or Medicare TTY. 

These provisions will ensure that 

beneficiaries have sufficient information 

to know how and when to reach the 

customer service call center. 

Comment: A commenter requested 

that CMS consider updating 

§§ 422.2262(c)(1)(i) and 423.2262(c)(1)(i) 

to say that the hours of operation must 

be listed ‘‘at least once’’ instead of ‘‘the 

first time’’ as it was in the February 

2020 proposed rule. The commenter 

stated that changing the requirement 

would provide flexibility regarding 

where the hours of operation are placed 

on materials, resulting in a more 

beneficiary-friendly location. 

Response: We agree that allowing 

flexibility in where the hours of 

operation for the customer service call 

center is listed could result in more 

beneficiary-friendly materials. We are, 

however, concerned that updating the 

requirement to say ‘‘listed at least once’’ 

may allow the hours of operation to be 

placed in a way that would obscure this 

information from beneficiary view or 

make it difficult for beneficiaries to find 

how to contact the plan call center. To 

address this concern, we are finalizing 

§§ 422.2262(c)(1)(i) and 423.2262(c)(1)(i) 

with the standard that the plan must 

prominently include the hours of 

operation at least once when including 

its customer service number. 

Comment: Two commenters suggested 

that CMS should not include rewards 

and incentives (R&I) as a part of the 

content that is considered marketing in 

paragraph (2)(iii) of the marketing 

definition in proposed § 422.2260(2)(iii). 

The commenters claimed that the 

inclusion of reward and incentive (R&I) 

would consider this to be programmatic 

content and more appropriately treated 

as Communications, not subject to the 

same submission and review 

requirements. In addition, one 

commenter said that are two kinds of 

R&I related content that are 

communicated to beneficiaries. The 

commenter referred to them as 

promotional and programmatic. The 

commenter said that information plans 

may include in their open enrollment 

materials regarding R&I is intended to 

influence a beneficiary’s decisionmaking process when making a MA 

plan selection and would be 

promotional, and rightly characterized 

as marketing and subject to submission 

and review requirements. The 

commenter went on to make the 

distinction that R&I program content 

that does not discuss or mention 

benefits, does discuss and mention 

healthcare services, but it does not 

promote or communicate cost-sharing, 


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available network providers, or other 

benefit details should not be considered 

marketing. The commenters also noted 

that a blanket classification of R&I 

materials as marketing materials, subject 

to regulatory requirements, would create 

additional administrative burden and 

could lead to member confusion. 

Response: We respectfully disagree 

with these comments. For marketing 

purposes, we view such information as 

analogous to benefits in the 

beneficiary’s view even though R&I are 

not benefits per se. We believe 

marketing of rewards and incentives or 

R&I programs could influence a 

beneficiary’s decision making process 

when making a plan selection. As such, 

we believe that its inclusion in the 

content part of the definition of 

marketing fits with the overall 

definition of marketing. We note to the 

commenter that, for an activity or 

material to be considered marketing, it 

must meet both intent and content. To 

that point, an activity or material that 

includes or addresses content about R&I, 

but does not meet the intent standard 

specified in the definition at § 422.2260 

would not be considered marketing 

under this final rule. Instead, this 

activity or material would be considered 

communications and generally not 

require submission to CMS. For 

example, a plan sending R&I 

information to a current member as a 

means of influencing the member to get 

a flu shot would not be considered 

marketing because the information does 

not meet the intentions provided under 

paragraph (1) of the definition of 

‘‘marketing’’ under §§ 422.2260 and 

423.2260. Conversely, a plan marketing 

to a prospective member with an 

advertisement stating ‘‘Members of Plan 

X receive a $15 coupon book by simply 

getting their flu shot’’ would be 

considered marketing as the clearly 

communicated intent is to use the R&I 

as a means of influencing the 

beneficiary’s decision-making process 

when making a plan selection. CMS 

considers information about Rewards & 

Incentives to be marketing content and 

therefore, if the intent standard in the 

new definition is met, is subject to all 

the review and requirements applied to 

communications and marketing content. 

Comment: A commenter expressed 

concern that CMS did not include 

specific reward and incentives (R&I) 

communication and marketing 

requirements as was done in section 

40.8 of the MCMG. The commenter 

noted this means plans can market such 

programs independently, without 

context of overall plan benefits to allow 

individuals to do cost-benefit analyses 

regarding whether such incentives are 

worth it. 

Response: The decision to remove 

certain marketing requirements directly 

targeting to R&I programs from CMS 

marketing and communication oversight 

predates this rulemaking. In the MCMG 

prior to August 6, 2019, plans were 

directed to provide R&I information in 

conjunction with information about 

plan benefits and include information 

about all R&I programs offered by the 

MA Plan. We determined that these 

requirements were overly prescriptive. 

For example, if a beneficiary requested 

information about a specific reward or 

incentive, we determined it unnecessary 

for a plan to include information about 

all rewards and incentives. The 

additional requirements previously 

addressed in the MCMG, specifically 

that the rewards not be used in 

exchange for enrollment and be 

provided to all potential enrollees 

without discrimination, are duplicative 

of other requirements found in this final 

rule. We direct readers to section D. 

Rewards and Incentives Program 

Regulations for Part C Enrollees 

(§ 422.134 and Subpart V) of this final 

rule for discussion of requirements for 

R&I programs. We proposed, and are 

finalizing, inclusion of information 

about R&I as part of the content measure 

for the definition of marketing under 

§ 422.2260. This means that the 

marketing of R&I (and materials that 

discuss R&I) must comply with all, in 

some cases more stringent, marketing 

requirements set forth in Subpart V, 

except where otherwise noted. 

Comment: A commenter expressed 

concern that CMS removed the language 

used in the 2019 MCMG that required 

plans to support any comparisons with 

other plans ‘‘by studies or statistical 

data.’’ The commenter acknowledged 

that the February 2020 proposed rule, at 

§§ 422.2263(b)(5) and 423.2263(b)(5), 

includes the requirement that such 

comparisons be not misleading, which 

was also in the MCMG. 

Response: CMS believes the final rule 

addresses the commenter’s concerns. 

Under §§ 422.2263(b)(5) and 

423.2263(b)(5), as proposed and 

finalized, plans may not make plan 

comparisons unless the information is 

accurate, is not misleading, and can be 

supported by the plan making the 

comparison. By using the term 

‘‘accurate’’, CMS expects that any plan 

comparison can be substantiated, 

including by the use of studies or 

statistical data or other information. In 

addition, the paragraph (2)(ii) of the 

definition of marketing, at §§ 422.2260 

and 423.2260, again as proposed and 

finalized, makes it clear that plan 

comparisons are content that is 

considered marketing, and thus 

resulting in a greater level of oversight. 

Comment: A commenter 

recommended that CMS develop 

marketing materials for beneficiaries 

and providers to educate them on the 

different types of integrated products 

and benefits of being in an integrated 

product. The commenter also stated that 

CMS should consider requiring agents 

and brokers that use CMS developed 

materials to educate all dually-eligible 

individuals on the availability of highly 

integrated products in their market and 

to use beneficiary education materials 

that include a description of the benefits 

of integrated product offerings. 

Response: We appreciate the 

comment, but do not believe that 

additional actions are needed at this 

time. Extensive information about plan 

options is available to beneficiaries 

through Medicare.gov, the Medicare & 

You booklet and Medicare Plan Finder 

website. To date, CMS, in partnership 

with states, has developed standardized, 

state-specific model materials for MMPs 

that factually describe the benefits 

received from Medicare and Medicaid 

in one plan. In addition, SHIPs play a 

non-biased educational role in 

providing information to beneficiaries 

about their Medicare choices as well. 

We also note that states play a role in 

educating beneficiaries regarding 

integrated products, such as Health Care 

Options (https://

www.healthcareoptions.dhcs.ca.gov/ 

need-help-choosing-program) which is a 

beneficiary-focused website sponsored 

by the state of California. We will 

continue to evaluate the need for 

additional communications. Finally, we 

note that plans may continue to market 

how their plan benefits structure and 

organization are beneficial to enrollees, 

including providing information about 

access to integrated Medicare and 

Medicaid benefits. We do not believe 

that additional action by CMS is 

necessary at this time. 

Comment: A commenter requested 

that the requirement under 

§§ 422.2262(a)(1)(x) and 

423.2262(a)(1)(x) to include the plan 

type at the end of the plan name should 

not be required every time the plan 

name is mentioned. The commenter 

noted that such a requirement is not 

reader-friendly to beneficiaries and 

seemed unnecessary. 

Response: We agree with this 

comment and are finalizing the 

regulation at §§ 422.2262(a)(1)(x) and 

423.2262(a)(1)(x) with additional text to 

clarify that plans are not required to 

repeat the plan type when the plan 


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name is used multiple times in a 

material. 

Comment: A commenter requested 

that CMS add the word ‘‘materially’’ in 

front of ‘‘inaccurate’’ in §§ 422.2262 and 

423.2262 so it would read ‘‘MA 

organizations may not mislead, confuse 

or provide materially inaccurate 

information to current or potential 

enrollees.’’ The commenter noted that 

doing so would mirror current guidance 

standards (presumably 30.7 of the 

MCMG and § 422.2264 of the current 

regulation). 

Response: As explained in the 

February 2020 proposed rule, our intent 

with the revisions to §§ 422.2262 and 

423.2262 was to redesignate and 

reorganize requirements in the current 

regulations and to codify existing 

guidance. As current §§ 422.2264(d) and 

423.2264(d) and section 30.7 of the 

MCMG use ‘‘materially’’ in setting forth 

the requirement, we agree that the 

revisions finalized here for §§ 422.2262 

and 423.2262 should preserve that 

standard. We are finalizing §§ 422.2262 

and 423.2262 to prohibit plans from 

misleading, confusing or providing 

materially-inaccurate information to 

current or potential enrollees. 

Comment: In addition to the ‘‘mail 

by’’ dates provided for various required 

materials and content under 

§§ 422.2267(e) and 423.2267(e), one 

commenter suggested that CMS also 

codify the earliest date health plans may 

release this information. The commenter 

suggested that doing so would simplify 

the process and allow health plans to 

prepare for the mailing. 

Response: We agree with this 

comment and that setting earliest date 

that a plan may begin sending materials 

for a plan year will help minimize 

potential confusion for beneficiaries. 

Therefore, we are finalizing 

§§ 422.2267(e) and 423.2267(e) with 

additional text to permit plans to send 

required materials once a fully executed 

contract is in place but no later than the 

due dates listed in §§ 422.2267(e) and 

423.2267(e) for each material. Use of the 

date that the contract is executed for a 

particular year ensures that enrollees 

and potential enrollees are not 

furnished materials for an upcoming 

plan year before both the plan and CMS 

have committed to the plan being 

offered. We note that only required 

materials that do not meet the definition 

of marketing may be sent once a fully 

executed contract is in place. Any 

material that meets the definition of 

marketing, unless otherwise noted or 

instructed by CMS, may not be 

distributed until October 1 of each year 

as required under §§ 422.2263(a) and 

423.2263(a). 

Comment: A commenter pointed out 

a typo in §§ 422.2267(e) and 423.2267(e) 

with the words ‘‘or perspective.’’ 

Response: We appreciate the 

commenter catching the typographical 

error. We are finalizing §§ 422.2267(e) 

and 423.2267(e) with corrections, to 

read, ‘‘. . . must be provided to current 

and prospective enrollees. . . .’’ 

Comment: A commenter requested 

that CMS also exclude envelopes, ID 

cards, and call scripts from the 

requirement to provide the Federal 

Contracting Statement under 

§§ 422.2267(e)(30)(ii) and 

423.2267(e)(32)(ii). The commenter 

noted that these materials were 

excluded from requiring the Federal 

Contracting Statement in Appendix 2 of 

the MCMG. 

Response: We agree with the 

commenter in part because, as 

explained in the February 2020 

proposed rule, our intent, with a few 

exceptions, with the revisions to 

Subpart V was to redesignate and 

reorganize requirements in the current 

regulations and to codify existing 

guidance. We are finalizing 

§§ 422.2267(e)(30)(ii) and 

423.2267(e)(32)(ii) with an additional 

exclusion for envelopes. We are not 

finalizing an exclusion of this required 

statement from ID cards or call scripts 

related to sales and enrollment. Sections 

1851(d) and 1860D–1(c) of the Act 

require CMS to provide for activities to 

disclose the potential for termination of 

MA and Part D plans to promote 

informed choice by enrollees; requiring 

plans to include the Federal Contracting 

Statement is consistent with the statute. 

First, ID cards are issued after a 

beneficiary had made an informed 

choice and are already excluded from 

the Federal Contracting Statement 

requirement. Second, while appendix 2 

of the MCMG did exclude disclaimers 

(including the Federal Contracting 

Statement) from call scripts, the Federal 

Contracting Statement is only required 

to be a part of materials and information 

furnished to beneficiaries in connection 

with information promoting informed 

choice regarding enrollment into a plan. 

Consistent with this, we are requiring 

that any call scripts which meet the 

definition of marketing, such as sales 

scripts and enrollment scripts, include 

this statement. Under this final rule, the 

Federal Contracting Statement must be 

verbally conveyed along with the other 

content of the script. 

Comment: A commenter requested 

that the exceptions that apply to 

§§ 422.2267(e)(30)(ii) and 

423.2267(e)(32)(ii), the Federal 

Contracting Statement, apply to all 

disclaimers specified in §§ 422.2267(e) 

and 423.2267(e). 

Response: We respectfully disagree 

with this comment. Unlike the Federal 

Contracting Statement that, with few 

exceptions, is required on all marketing 

materials, the other disclaimers listed in 

§§ 422.2267(e) and 423.2267(e), by 

design, are limited by their application 

(for example, when inviting 

beneficiaries to an event), or are 

triggered based on specific material 

content (for example, the Star Ratings 

disclaimer). Therefore, we do not 

believe that the general exclusions in 

§§ 422.2267(e)(30)(ii) and 

423.2267(e)(32)(ii) are appropriate for 

the other required disclaimers and 

notices. 

Comment: A commenter asked if CMS 

intentionally omitted the requirements 

found in 60.4.1 of the MCMG (Special 

Guidance for Institutional Special Needs 

Plans (I–SNPs) Serving Long-Term Care 

Facility Residents). The commenter 

noted that the additional flexibility 

afforded to I–SNPs is important and 

should either be added to the final rule 

or incorporated into sub-regulatory 

guidance. 

Response: We appreciate the 

feedback. As explained in the February 

2020 proposed rule, we intended to 

redesignate and reorganize requirements 

in the current regulations in Subpart V 

and to codify existing guidance; that 

included an intent to incorporate 60.4.1 

of the MCMG into the codified 

requirements. CMS inadvertently 

excluded the marketing restrictions for 

I–SNPs from the proposed regulation 

text; the preamble of the proposed rule, 

85 FR 9110–9111, however, did make 

clear that we intended to include all of 

the policies regarding marketing in a 

health care setting in section 60 of the 

MCMG in these updated regulations. We 

agree with the commenter that this 

guidance is important to plans, 

beneficiaries, and caregivers. We are 

finalizing § 422.2266 with an additional 

paragraph (f) to codify the current 

policy addressing how I–SNPs may 

market in the context of a long term care 

facility. We note that the requirements 

in § 422.2266(f) apply to I–SNPs that are 

contracted with long term care (LTC) 

facilities as well as those I–SNPs that 

have an ownership stake in the LTC 

facility. This new regulation text, 

combined with the other requirements 

proposed and finalized in § 422.2266, 

includes the substance of our existing I– 

SNP guidance for MA plans. We note 

that 42 CFR part 423 regulates the 

marketing of Part D and we are not 

finalizing similar regulation text for Part 

D sponsors. Part D only plans should 

not be marketing I–SNPs because Part D 


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plans do not provide the medical 

services and thus would not have 

contracts with I–SNPs; further, while I– 

SNPs must be MA–PDs (see § 422.2 

definition of specialized MA plans for 

special needs individuals), compliance 

with the marketing and communications 

requirements in § 422.2266(f) will 

necessarily include materials and 

activities related to the I–SNP’s Part D 

coverage. 

In addition, we also finalizing an 

additional provision at 

§§ 422.2264(c)(3)(iv) and 

423.2264(c)(3)(iv), to provide that plans 

may schedule appointments with 

residents of long-term care facilities (for 

example, nursing homes, assisted living 

facilities, board and care homes) upon a 

resident’s request. If a resident did not 

request an appointment, any visit by an 

agent/broker is considered unsolicited 

door-to-door marketing and therefore 

prohibited. 

Comment: A commenter expressed 

strong support of CMS’s proposal to 

prohibit marketing activities and 

distribution of marketing materials in 

dialysis facilities. 

Response: We thank the commenter 

for the support. Stemming from section 

1851(j)(1)(D)(i) of the Act, CMS has had 

a longstanding policy and requirements 

that limit marketing in healthcare 

settings. We would like to clarify that 

our rules have always allowed for 

marketing activities in common areas. 

We clarify that the prohibition on 

marketing activities and the provision of 

materials in treatment areas, where 

patients interact with a provider or the 

clinical team, does not include a 

prohibition of marketing activities or the 

provision of marketing materials in 

common areas. We are including an edit 

in sections 422.2266(a)(3) and 

423.2266(a)(3) to clarify that, to the 

extent that dialysis facilities actually do 

have such common areas, that the same 

limitations would apply to them as to 

other healthcare settings. It is not our 

intent to prohibit marketing for every 

single area in a facility/health care 

provider’s location and this change in 

policy for dialysis facilities would 

mirror the policy as it has been applied 

previously for all other provider 

locations. 

Comment: A commenter urged CMS 

to not include the prohibition on 

providers being compensated for 

marketing or enrollment activities in the 

final rule. The commenter noted that, 

the section 70.5.1 of the Medicare 

Marketing Guidelines (MMG) issued on 

7/20/17 (available here online: https://

www.cms.gov/Medicare/Health-Plans/ 

ManagedCareMarketing/Downloads/CY2018-Medicare-Marketing-Guidelines_

Final072017.pdf), only restricted 

compensation based on enrollment 

activities. The commenter stated that 

the language could be read to prohibit 

plans and providers from sharing the 

costs of otherwise permissible provider 

affiliation activities and advertising. 

Response: We respectfully disagree 

with this comment. The steps taken by 

CMS to restrict compensation to 

providers for marketing activities are 

rooted in ensuring the provider is a 

neutral party who is offering guidance 

to patients based solely on what is best 

for the patient. We note that the 

decision to preclude plans from 

compensating providers for marketing 

activities predates this rulemaking and 

has been in section 60.2 of the MCMG 

since it was first released on July 20, 

2018. Additionally, the MMG issued in 

July 2017, under section 70.5.1, still 

precluded providers from mailing 

marketing materials on behalf of Plans/ 

Part D sponsors. Under our current 

policies, affiliation announcements (a 

provider announcing that they are now 

[or continue to be in] a plan’s network) 

are communications if limited to that 

information, and thus would be 

allowed. However, if a plan is using 

such an announcement as a veiled 

means of provider-based marketing, it 

would be precluded by this rule, as it 

would under the MCMG since the July 

2018 version. For example, an affiliation 

announcement that says Dr. Smith is 

now accepting Medicare Advantage X, 

then goes on to say that Medicare 

Advantage X offers $0 copays, and $0 

monthly premiums, and that Dr. Smith 

thinks Medicare Advantage X is the 

greatest Medicare Advantage Plan 

would be prohibited by this rule, as well 

as the current rule, as interpreted in the 

MCMG. 

Comment: Several commenters urged 

CMS to add specific provisions in the 

marketing and communications 

regulations regarding MA special 

supplemental benefits for the 

chronically ill (SSBCI) and how plans 

may market them. 

Response: In general, CMS 

respectfully disagrees that additional 

regulatory requirements specific to 

communications and marketing related 

to SSBCI are necessary. The 

requirements in Subpart V establish 

standards and requirements to address a 

wide range of issues and contexts, rather 

than having standards for individual 

benefits, items, issues, and services. 

This allows CMS to be more dynamic 

with regard to the ever changing 

communications and marketing 

environment. The regulations that we 

proposed and finalized are as applicable 

to SSBCI as they are to other benefits 

covered and offered by an MA plan. 

However, we recognize that 

beneficiaries should be aware that 

SSBCI are not available to all plan 

enrollees and that the eligibility for 

these benefits is limited by section 

1852(a)(3)(D) of the Act and § 422.102(f); 

ensuring a clear statement of these 

limitations guards against beneficiary 

confusion or misunderstanding the 

scope of these new benefits. To that end, 

a new requirement for a disclaimer to be 

used when SSBCIs are mentioned is 

being finalized at § 422.2267(e)(32). 

Comment: A few commenters 

expressed concern that marketing SSBCI 

would lead to inappropriate steering or 

targeting of beneficiaries. Similar to 

other comments, the commenters urged 

CMS to implement specific 

requirements under Subpart V of the 

regulation to guard against such 

predatory sales tactics. A commenter 

feared that brokers may ask individuals 

about their health status and use that 

information to steer them toward 

specific plans in violation of antidiscrimination rules. 

Response: CMS respectfully disagrees 

that additional requirements for 

communications and marketing related 

to SSBCI should be placed under 

Subpart V. The requirements, as written 

in this rule, allow CMS to pursue any 

marketing or sales tactics that are 

misleading or confusing to the 

beneficiary, regardless of whether the 

violation is tied to specific benefits (like 

SSBCI). In addition, although CMS 

understands the concern expressed 

about agents and brokers asking 

individuals about their health status, 

when done appropriately, such 

activities can be an important part to 

identifying the best plan for a 

beneficiary and addressing eligibility for 

SNPs that serve individuals with severe 

or disabling chronic conditions. CMS 

has requirements in place in this rule to 

ensure plans (including agents and 

brokers, as downstream entities of 

plans) act appropriately when it comes 

to health status, namely 

§§ 422.2262(a)(1)(vi) and 

422.2264(c)(2)(iii)(B). 

Comment: Several commenters 

requested that CMS provide more 

examples pertaining to the restrictions 

of marketing during the OEP in 

§§ 422.2263(b)(7) and 423.2263(b)(7). 

Response: We agree that providing 

more examples and illustrations of how 

the regulatory standards apply in 

specific factual situations can be 

helpful. However, we believe that subregulatory guidance is the best location 

for providing additional examples. 

Comment: Another commenter also 

expressed the need for examples. 


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However, the commenter also cited the 

need for CMS to more closely monitor 

marketing activities during the OEP. 

The commenter noted that if the 

consequences of marketing during the 

OEP are not explicit or consistent, it 

defeats the purpose of prohibiting plans 

to market during this time. 

Response: We agree with the 

commenter that appropriate oversight is 

necessary for effective regulatory 

guidance. The Medicare Advantage OEP 

was added to section 1851(e)(2)(G) of 

the Act by the 21st Century Cures Act 

with a prohibition on unsolicited 

marketing or marketing materials being 

sent to Medicare beneficiaries during 

the OEP and, in the April 2018 final 

rule, we adopted the specific 

prohibition in current 

§§ 422.2268(b)(10) and 423.2268(b)(10) 

that is being redesignated with 

additional provisions at 

§§ 422.2263(b)(7) and 423.2263(b)(7) in 

this final rule. Since the April 2018 final 

rule, CMS has fielded several questions 

from plans concerning what can and 

cannot be done during the OEP. In 

addition, CMS has also investigated 

complaints received concerning plans 

the complainant felt were not in 

compliance with the prohibitions of 

marketing during the OEP. CMS has 

used this experience to shape the 

requirements in this final rule, which 

includes specific provisions regarding 

prohibited conduct (such as sending 

unsolicited materials that advertise the 

availability of this enrollment period 

and calling former enrollees to solicit 

reenrollments) and permitted conduct 

(such as responding to beneficiary 

requests for sales meetings) in addition 

to the general prohibition on knowingly 

targeting or sending unsolicited 

materials during the OEP. CMS will 

continue to monitor compliance with 

the prohibition of knowingly marketing 

to beneficiaries during the opportunity 

afforded by the OEP, and take 

appropriate compliance or enforcement 

action when necessary. CMS encourages 

beneficiaries to report any abusive, 

confusing or misleading marketing 

practices by plans, agents and brokers 

by contacting contact 1–800–Medicare. 

In addition, we encourage reports of 

potential violations of this requirement. 

Comment: A commenter requested 

that CMS consider lifting the restriction 

on marketing to beneficiaries during the 

OEP. The commenter believed 

information about the OEP should be 

shared proactively with beneficiaries so 

that they are aware of the option to 

switch MA plans if the enrollee’s MA 

plan is not a good fit. The commenter 

noted that beneficiaries may be losing 

out on an enrollment opportunity and 

forced to stay with their existing plan 

until the next AEP to make a change 

because CMS prohibits plans from 

proactively marketing information about 

the OEP. 

Response: The prohibition of 

marketing during the OEP is statutorily 

required so we do not have authority to 

eliminate it. Further, CMS believes that 

the intent of Congress was to allow 

beneficiaries to make an enrollment 

decision during the OEP, without 

creating a second opportunity for plans 

to proactively persuade or attempt to 

persuade beneficiaries to switch MA 

plans. Neither the statute nor regulation 

restricts a plan from providing 

educational materials or marketing 

materials if and when the beneficiary 

proactively reaches out looking for help 

during or regarding the OEP. 

Comment: A commenter agreed with 

CMS that marketing and advertisements 

should be restricted during the MA 

OEP. The commenter noted that during 

the MA OEP, excessive marketing can 

be confusing to seniors and leads people 

to unnecessarily believe that they need 

to make a plan change. The commenter 

additionally stated that the OEP should 

be a time to help seniors process 

necessary changes that are based on real 

issues; not those who have been 

influenced by excessive marketing. 

Response: We agree with the 

commenter and believe the 

requirements proposed and finalized at 

§§ 422.2263(b)(7) and 423.2263(b)(7) 

implement the statutory prohibition and 

provide the appropriate beneficiary 

protections. 

Comment: A commenter requested 

that CMS include language in 

§§ 422.2263(b)(7) and 423.2263(b)(7)(i) 

to allow general information on 

websites, as currently permitted in 

section 40.7 of the MCMG. 

Response: We agree with this 

comment. We are finalizing the 

§§ 422.2263(b)(7)(i) and 

423.2263(b)(7)(i) with an additional 

paragraph (E) that permits plans to 

include educational information, 

excluding marketing, on the plan’s 

website about the existence of the OEP. 

Comment: A commenter stated that 

the language at §§ 422.2263(b)(7)(ii)(C) 

and 423.2263(b)(7)(ii)(C) stating plans 

‘‘must not engage in or promote agent/ 

broker activities that intend to target the 

OEP as an opportunity to make further 

sales . . .’’ was vague and overbroad, as 

it suggests the intent of the activity 

alone may determine whether it is 

compliant. 

Response: We respectfully disagree 

with the comment. Our goal, as when 

the prohibition on marketing during the 

OEP was originally codified in the April 

2018 final rule, is to implement the 

statute in a manner that protects 

beneficiaries without creating undue 

burden on plans. To accomplish this, 

we consider the intent of marketing 

materials or activities. If CMS focused 

only on the content of materials or 

activities, bad actors would be able to 

evade oversight by simply excluding 

certain words, while using materials or 

conducting activities with the same 

overall focus and intended outcome. We 

also believe that plans are well 

equipped to determine if materials or 

activities are intended to be used or are 

being used to target beneficiaries during 

the OEP. 

Comment: A commenter requested 

that CMS revise the regulatory text 

pertaining to non-renewal notices at 

§ 422.2267(e)(10) to address the earliest 

date that health plans may release this 

information. The commenter noted that 

section 100.4 of the MCMG states 

information about non-renewals or 

service area reductions may not be 

released to the public, including current 

enrollees, until notice is received from 

CMS. 

Response: CMS agrees with this 

comment. Section 100.4 of the MCMG 

provides that information about nonrenewals or service area reductions may 

not be released to the public, including 

current enrollees, until notice is 

received from CMS. As explained in the 

February 2020 proposed rule, we 

intended to redesignate and reorganize 

requirements in the current regulations 

in Subpart V and to codify existing 

guidance. As such, we are finalizing 

§§ 422.2267(e)(10)(i) and 

423.2267(e)(13)(i) with additional text to 

permit release of non-renewal notices 

after CMS provides notification to the 

plan. We note that §§ 422.506(a)(2)(ii) 

and 423.507(a)(2)(ii) state the 

beneficiary must receive notice by mail 

at least 90 calendar days before the date 

on which the nonrenewal is effective; 

we are not changing or limiting that 

timeframe in this final rule. 

Comment: A commenter suggested 

that CMS reclassify payments to third 

parties, addressed in §§ 422.2274(e) and 

423.2274(e), as ‘‘payments other than 

compensation.’’ The commenter 

explained that the change would not 

only account for payments to third 

parties, but also for payments to agents/ 

brokers that are not considered 

compensation. The commenter gave the 

example that payment to an agent for 

completion of health risk assessments is 

a payment other than compensation 

because the payment is not for the sale 

or renewal of a policy. 

Response: CMS agrees with the 

commenter that additional clarification 


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is necessary. We are finalizing 

§§ 422.2274(e) and 423.2274(e) as a 

provision identifying payments that are 

not compensation but are administrative 

payments. We are finalizing the scope of 

these payments as proposed, meaning 

payments for services other than 

enrollment of beneficiaries (for example, 

training, customer service, agent 

recruitment, operational overhead, 

assistance with completion of health 

risk assessments), but without the 

limitation that the payments be made to 

a third party. As proposed and finalized, 

all payments of this type must not 

exceed the value of those services in the 

marketplace. This standard is intended 

to ensure that plans do not use these 

administrative payments as a means to 

circumvent the limits on compensation 

to agents and brokers. Plans must limit 

these payments to the amounts that 

would be fairly negotiated on the open 

market for the administrative services 

being performed and should be able to 

demonstrate that the administrative 

payments were made for actual 

performance when necessary. We are 

finalizing paragraph (e)(2) as proposed 

but without limiting the provision to 

payments to third parties. 

Comment: A commenter voiced the 

concern that permitting plans to contact 

beneficiaries in another line of business 

could lead to an onslaught of 

unsolicited marketing. The commenter 

was especially concerned about 

unsolicited marketing to dually eligible 

beneficiaries. The commenter urged 

CMS to limit plan outreach/marketing to 

once a quarter, a limitation that 

corresponds with the LIS special 

enrollment periods. 

Response: CMS understands the 

commenter’s concern. However, CMS 

does not believe that outreach for plan 

business has harmed beneficiaries. CMS 

uses the Complaints Tracking Module to 

log concerns from beneficiaries and 

others who call 1–800-Meducare. We 

have not received complaints related to 

inappropriate outreach to enrollees 

regarding plan business. In addition, 

§§ 422.564 and 423.564 provide 

beneficiaries who feel they are being 

overly bothered by such calls the option 

of filing a grievance with the plan under 

the part C and D grievance rules. The 

intent of allowing contact for plan 

business is to ensure CMS’s rules are 

not a barrier to a beneficiary gaining 

access to helpful plan information, 

rather than exposing the enrollee to 

unsolicited burdensome contact. We do 

not agree with adopting the remedy 

suggested by commenters of limiting 

contact to once per quarter because 

doing so may unintentionally limit what 

could be wanted or needed 

communication for the enrollee. Instead, 

we are finalizing a requirement that the 

plan offer an opt-out when contacting a 

beneficiary for plan business at 

§§ 422.2264(b)(2) and 423.2264(b)(2). As 

a result, plans must respect requests 

from enrollees to cease calls to enrollees 

about plan business. We encourage 

plans to develop opt-out procedures and 

policies that provide the enrollees the 

ability to limit calls to particular topics 

or timeframes as well as opting out of 

all future calls. We believe this remedy, 

as opposed to an arbitrary cap on calls, 

provides enrollees with the means to 

stop calls should they wish. 

Comment: A commenter offered 

support to CMS’s bifurcation of provider 

activities under §§ 422.2266(c)–(d) and 

423.2266(c)–(d). The commenter noted 

that §§ 422.2266(c) and 423.2266(c) 

allowed providers to provide fact-based 

guidance to their patients on MA plans. 

Response: CMS thanks the commenter 

for the support. 

Comment: A commenter expressed 

concern that the language used for the 

review of communications materials 

under §§ 422.2261(c) and 423.2261(c) 

implies that the EOC would require 

filing, as well as CMS review and 

approval, before it could be used. The 

commenter stated that it was not 

feasible for plans to get an EOC 

completed after annual bid approval, 

printed for member requests by 10/15 

and accessibility-processed for website 

availability by 10/15, if plans have to 

wait for CMS to review and approve the 

EOC. The commenter also noted that 

currently CMS requires plans to file the 

EOC, but it gets ‘‘NM’’ status and is 

available for use immediately after filing 

in HPMS. 

Response: CMS is not changing the 

process for the submission and review 

of the EOC. The EOC is a standardized 

material, meaning plans must use the 

language provided by CMS with no 

modification. As such, the potential for 

a beneficiary to be misled by an EOC is 

low, and therefore, the EOC is not 

prospectively reviewed. Plans are 

required to submit the EOC to CMS for 

retrospective review, and plans must 

provide CMS with ready access to the 

EOC should CMS receive a beneficiary 

complaint about the EOC. 

Comment: A commenter requested 

that the CMS final rule include the 

qualification under section 30.7 of the 

MCMG that unsubstantiated absolute 

and/or qualified superlatives may be 

used in logos and taglines. 

Response: CMS agrees with this 

comment. As explained in the February 

2020 proposed rule, we intended to 

redesignate and reorganize requirements 

in the current regulations in Subpart V 

and to codify existing guidance; that 

included an intent to incorporate 30.7 of 

the MCMG into the codified 

requirements. This exception to the 

unsubstantiated statement requirement 

was unintentionally not included in the 

proposed rule. We are finalizing 

additional text at §§ 422.2262(a)(1)(ii) 

and 423.2262(a)(1)(ii) to allow 

unsubstantiated statements, which 

could be in the form of superlatives or 

pejoratives, in logos or taglines. We note 

that plans are permitted to use 

unsubstantiated statements only in 

taglines and logos, which means that 

plans may not include unsubstantiated 

statements in larger or longer marketing 

materials. We further note that it may be 

possible for some superlatives or 

pejoratives to qualify as substantiated 

statements. 

Comment: A commenter, citing 

proposed §§ 422.2267(d)(2)(i) and 

423.2267(d)(2)(i), requested that CMS 

provide specific guidance in one place 

on the requirements in the notice for 

electronic delivery of materials and 

requested clarification whether plans 

would be permitted to create their own 

notice. 

Response: Paragraphs (D) and (E) of 

§§ 422.2267(d)(2)(i) and 

423.2267(d)(2)(i) outline the content 

requirements for the notice. In addition, 

paragraphs (A), (B), (C), and (F) provide 

additional requirements for a plan to 

use the flexibility of notice of electronic 

access to the EOC, Provider and 

Pharmacy Directories and Formulary 

without prior authorization from the 

enrollee. Provided the requirements 

under §§ 422.2267(d)(2)(i) and 

423.2267(d)(2)(i) are followed, plans are 

permitted to create their own notice. 

Comment: A commenter expressed 

concern that listing the SB as a model 

material in §§ 422.2267(e)(5) and 

423.2267(e)(4) of the February 2020 

proposed rule was going to result in the 

required use of a model. The commenter 

expressed concern that doing so would 

impact a plan’s freedom to design the 

SB and explain benefits as they 

currently can under Appendix 5 of the 

MCMG. 

Response: As proposed and finalized, 

the requirements for the SB are 

consistent with the current policy in the 

MCMG, including Appendix 5 of the 

MCMG. We clarify here that the term 

standardized materials, which are 

specified in §§ 422.2267(b) and 

423.2267(b) must be used in the form 

and manner provided by CMS. Model 

materials, which are specified in 

§§ 422.2267(c) and 423.2267(c) are 

created by CMS is an example of how 

to convey beneficiary information. As 

with current policy and practice, plans 


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may customize the SB so long as all 

required content is included and are not 

required to use the CMS model SB 

without customization. 

Comment: A commenter noted that 

the MCMG requires the PECL to be 

included with the SB, whereas 

§§ 422.2267(e)(4) and 423.2267(e)(3) of 

the February 2020 proposed rule would 

require the PECL be included with the 

SB and the enrollment form. The 

commenter explained that while 

typically the SB and an enrollment form 

are provided together in a preenrollment packet, if a prospective 

enrollee elects to access plan marketing 

materials on the plan’s website, the 

individual will access the SB and 

enrollment form separately. The 

commenter recommended that CMS 

allow the checklist to continue to only 

be included with the SB as required in 

current guidance. 

Response: We agree with this 

comment in part. We agree that it is 

unnecessary to require the PECL be 

included with the SB and the 

enrollment form. However, the PECL 

was originally developed as a tool to 

help beneficiaries consider important 

questions about their needs and 

coverage choices and we have always 

intended it to be reviewed prior to 

making an enrollment decision. As 

such, we believe it best to require the 

PECL with the enrollment form as 

opposed to the SB. Plans may include 

the PECL with other materials, if they 

choose. We are finalizing 

§§ 422.2267(e)(4) and 423.2267(e)(3) to 

require that the PECL be provided with 

the enrollment form. As finalized, these 

regulations do not require the PECL to 

be included with the SB but we 

encourage plans to do so when it is 

appropriate and helpful to potential 

enrollees. 

Comment: A commenter pointed out 

an error to the requirement for mailing 

statements at § 423.2267(e)(36)(i). 

Response: CMS appreciates the 

commenter bringing this error to its 

attention. CMS is finalizing 

§ 423.2267(e)(35)(i) (proposed 

§ 423.2267(e)(36)(i)) with a correction to 

include the same language as proposed 

and finalized at § 422.2267(e)(34)(i). 

These regulations require MA plans, 

cost plans and Part D plans to include 

the following statement when mailing 

information about the enrollee’s current 

plan: ‘‘Important [Insert Plan Name] 

information.’’ 

Comment: A commenter requested 

that CMS clarify that, consistent with 

current policy, the ‘‘Important plan 

information’’ mailing statement would 

only be required for current member 

mailings, as indicated in Appendix 2 of 

the MCMG. 

Response: CMS confirms that the 

commenter is correct. Under 

§§ 422.2267(e)(34)(i) and 

423.2267(e)(35)(i), as finalized, plans 

must include the statement when 

mailing information about the 

‘‘enrollee’s’’ current plan, which is 

synonymous with ‘‘current member.’’ 

Comment: A commenter requested 

that CMS re-evaluate the HPMS timing 

and submission of the Star Ratings 

Document to remove the 5-day waiting 

period. The commenter stated that, 

because the document is automatically 

generated from HPMS, there is no value 

in requiring plans to resubmit the Star 

Ratings Document back into HPMS as a 

file and use material, which requires a 

5-day waiting period before the 

document can be used. The commenter 

requested that CMS apply the same 

guidance to the Star Ratings document 

as the Annual Notice of Change 

(ANOC). 

Response: Based on the regulatory 

definition of marketing under 

§§ 422.2260 and 423.2260, CMS has 

determined the Star Ratings Document 

is a marketing material. Because the 

collection of marketing materials is 

required under section 1851(h)(1) of the 

Act, the Star Ratings Document, as a 

marketing material, must continue to be 

submitted via the HPMS Marketing 

Module under the defined process. CMS 

is finalizing the requirement that the 

Star Ratings documents are subject to 

the 5-day waiting period. This period 

will provide an opportunity for CMS to 

ensure that organizations do not alter 

the document as that document is a key 

piece required with an enrollment form. 

Comment: Two commenters requested 

that CMS remove the requirement for 

the Availability of Non-English 

Translations disclaimer under proposed 

§§ 422.2267(e)(32) and 423.2267(e)(34). 

Both commenters referenced the 

requirement tied to section 1557 of the 

Affordable Care Act (ACA) as having 

duplicative requirements. The 

commenters stated that the Availability 

of a Non-English Translations 

disclaimer would result in beneficiaries 

receiving the disclaimer language 

multiple times within the same mailing. 

Response: CMS understands the 

concern with duplication. As of this 

final regulation, the Office for Civil 

Rights (OCR) finalized the regulations 

implementing section 1557 of the ACA 

without requiring disclaimers. 

Acknowledging OCR’s finalized 

regulations did not include languagebased disclaimers, CMS will not finalize 

the proposed Availability of NonEnglish Translation disclaimer, 

proposed §§ 422.2267(e)(32) and 

423.2267(e)(34), in this final rule. To 

clarify, there would be no requirement 

in this regulation for the Availability of 

Non-English Translation disclaimer; 

however, plans must still abide by 

OCR’s current or future requirements on 

this topic as they have the authority to 

impose such requirements. As such, 

CMS believes future rulemaking 

regarding non-English disclaimers, if 

appropriate, is best addressed by OCR, 

as those requirements would be HHSwide instead of limited to CMS. In 

addition, we note that the other 

paragraphs in §§ 422.2267(e) and 

423.2267(e) will be renumbered as 

compared to the proposed rule as a 

result. 

Comment: Several commenters 

provided support for CMS including 

non-English language disclaimers in the 

proposed regulation. 

Response: CMS appreciates the 

support but has made the decision not 

to finalize proposed at 

§§ 422.2267(e)(32) and 423.2267(e)(34) 

in this final rule and to defer to OCR for 

possible future rulemaking. CMS has 

determined that deferring to OCR’s 

oversight and management of any 

requirements related to non-English 

disclaimers is in the best interest of the 

Medicare program. 

Comment: Several commenters 

requested that CMS remind plans about 

their obligations to comply with section 

1557 notice requirements, including 

‘‘taglines’’ or disclaimers in the top 15 

languages and to conduct enforcement 

and oversight when appropriate. 

Response: We appreciate the 

comments. We believe it is important 

for plans to be cognizant of obligations 

as they relate to applicable rules and 

regulations that require interpreter 

services, translation of materials, and 

associated notices or disclaimers and 

have included the requirement in this 

final rule under §§ 422.2267(a)(3) and 

423.2267(a)(3). 

Comment: Two commenters urged 

CMS to take this opportunity to revisit 

§§ 422.2267(a)(2) and 423.2267(a)(2) and 

require using a threshold of five percent 

or 1,000 people in the service area, 

whichever is lower, of a population 

speaking a language other than English 

to trigger translations for vital 

documents. 

Response: CMS respectfully disagrees 

with this comment. CMS previously 

considered a similar standard when 

translation requirements were first 

added to §§ 422.2264 and 423.2264 in 

the final rule, ‘‘Medicare Program; 

Changes to the Medicare Advantage and 

the Medicare Prescription Drug Benefit 

Programs for Contract Year 2012 and 


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Other Changes,’’ published in the 

Federal Register on April 15, 2011. (73 

FR 21423, 21512 through 21514) At that 

time, CMS stated that use of a standard 

of the lesser of 5 percent or 500 people 

would result in all PDPs and nearly all 

MAOs providing translated materials in 

all languages captured in the ACS data, 

which would result in a significant 

increase in the number of plans required 

to translate and the number of languages 

required for translation. Absent 

definitive evidence to support the sharp 

increase, this would result in 

insupportable costs and burden. 

Although the commenter was suggesting 

a five percent or 1,000 people in the 

service area, CMS believes the reasons 

identified by final rule cited above still 

apply and that raising the alternative 

minimum standard to 1,000 people from 

500 would not significantly reduce the 

potential burden. As such, CMS will is 

finalizing as proposed the provision at 

§§ 422.2267(a)(2) and 423.2267(a)(c) 

setting the translation standard at five 

percent of the individuals in a plan 

benefit package (PBP) service area. 

Comment: A commenter requested 

that CMS allow the Scope of 

Appointment (SOA) provision found at 

§§ 422.2264(c)(3)(i) and 423.2264(c)(3)(i) 

to be satisfied by a simple question on 

the coverage application, with 

additional paperwork only required if 

the appointment topic shifts beyond the 

scope of Medicare. 

Response: Section 1851(j)(2)(A) of the 

Act requires the Secretary to establish 

limitations to require advance 

agreement with a prospective enrollee 

on the scope of the marketing 

appointment and documentation of 

such agreement, which must be in 

writing if the marketing appointment is 

in person; section 1860D–4(l) imposes 

the same requirements in the Part D 

program. The regulations proposed, and 

finalized, at §§ 422.2264(c)(3)(i) and 

423.2264(c)(3)(i), implement these 

statutory requirements. We believe that 

using the enrollment form, typically a 

document that is used at the end of a 

personal marketing appointment, would 

not be consistent with the statute. 

Therefore, we are finalizing these 

provisions. 

Comment: A commenter requested 

that CMS clarify what is meant by ‘‘use 

of a previous post’’ as stated in 

§§ 422.2262(b)(1)(iv) and 

423.2262(b)(1)(iv). The commenter 

stated that it is unclear what types of 

social media ads would be considered 

product endorsements or testimonials. 

Response: The phrase ‘‘previous post’’ 

refers to a social media post that had 

been made in the past or prior to its use, 

sharing, or posting by a different user. 

For example, a plan enrollee tweets that 

they were able to quit smoking thanks 

to a smoking cessation program offered 

by Super Duper Medicare; if Super 

Duper Medicare shares (by retweeting or 

otherwise) that tweet with their 

followers, it would be considered a use 

of a previous post. Under 

§§ 422.2262(b)(1)(iv) and 

423.2262(b)(1)(iv), as proposed and 

finalized, this use of the previous post 

is a product endorsement or testimonial. 

We will provide additional examples as 

necessary through sub-regulatory 

guidance and training. 

Comment: A commenter requested 

that CMS consider changing the training 

and testing standards at 

§§ 422.2274(b)(2) and 423.2274(b)(2) to 

relax the requirements for more 

seasoned (5 years or longer) agents and 

brokers. The commenter stated doing so 

would encourage longevity and stability 

among private Medicare agents and 

brokers. 

Response: CMS appreciates the 

comment and will consider this in 

future rulemaking, but believes further 

analysis and consideration is necessary 

before adopting such a policy. This 

policy would potentially increase the 

complexity of agent and broker 

oversight. Further, we believe we 

should analyze the cost implications, 

including potential additional costs (or 

savings) of implementing a tiered 

approach to agent and broker training 

and testing. 

Comment: A commenter requested 

CMS clarify that ‘‘applicable 

disclaimers,’’ as used in 

§§ 422.2265(a)(1)(iii) and 

423.2265(a)(1)(iii), are those disclaimers 

required by CMS. 

Response: Sections 422.2265(a)(1)(iii) 

and 423.2265(a)(1)(iii) refer to notices, 

statements, disclosures, and disclaimers 

required for plan use under other 

statutes or regulations, such as (but not 

necessarily limited to) the disclaimers 

required under §§ 422.2267(e) and 

423.2267(e). To clarify this point, we 

have updated the language at 

422.2265(a)(1)(iii) and 

423.2265(a)(1)(iii) to include notices, 

statements, disclosures in addition to 

disclaimers. 

Comment: A commenter requested 

that CMS limit the requirement at 

§ 422.2265(a)(1)(iv) regarding the need 

to update websites with the most 

current information within 30 days to 

only updates to the website that are 

material changes. 

Response: CMS agrees with this 

comment as it would be overly 

burdensome to require plans to update 

non-material changes, such as a new 

company mascot, within 30 days. 

Moreover, non-materials changes are not 

impactful to a beneficiary’s ability to 

have access to the information needed 

to make an educated enrollment 

decision. CMS is finalizing 

§§ 422.2265(a)(1)(iv) and 

423.2265(a)(1)(iv) with revisions to limit 

the requirement to update the website to 

material changes. CMS is finalizing the 

remaining substance of the regulation as 

proposed. 

Comment: One commenter requested 

that CMS complete a thorough review of 

the website requirements to ensure 

consistency with current guidance as 

well as inclusion of any requirements 

outside of the MCMG. The commenter 

provided two examples. They noted that 

the Final Rule published on February 

12, 2015 (CMS–4159) required plans to 

post their disaster and emergency policy 

annually on the website and the CY 

2014 Final Call Letter required plans to 

have a dedicated Medication Therapy 

Management MTM program linked from 

their plan website and it be accessible 

by clicking through a maximum of two 

links. 

Response: We agree with this 

commenter and confirm the two 

requirements noted. We are finalizing 

§ 422.2265(b) with a modification to 

include a requirement to post disaster 

and emergency policy annually as 

outlined under § 422.100(m)(5)(iii). We 

are finalizing § 423.2265(b) with a 

modification to include the most recent 

MTM program website requirements. 

While CMS strives to list all website 

requirements under §§ 422.2265 and 

423.2265, we note that the lack of a 

requirement in these sections does not 

remove plan responsibility for 

compliance if requirements are adopted 

elsewhere. 

Comment: A commenter 

recommended CMS align Provider 

Directory PDF web posting requirements 

with MCMG section 70.2 (Searchable 

Formularies and Directories), which 

indicates that a searchable tool (for 

example, search engine/database) may 

be a substitute for downloadable PDF 

directories as long as all instructions 

and template information are provided. 

Response: CMS respectfully disagrees 

with this comment. Currently, the 

regulation at § 422.111(h)(2)(ii) requires 

the MA plan’s website to have 

information (names, addresses, phone 

numbers, and specialty) about network 

providers. Our current guidance, in 

MCMG section 70.2, provides that 

organizations that have a searchable 

directory on their website are not 

required to have a downloadable 

directory on their website. However, 

regulations at §§ 422.111(h)(2)(ii) and 

423.128(d)(3) still require organizations 


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to provide materials in hard copy when 

requested. Therefore, the provision of 

hard copies of provider and pharmacy 

directories is currently a requirement for 

plans. In addition, now that a greater 

number of materials may be made 

available electronically under 

§§ 422.2267(d)(2) and 423.2267(d)(2), 

we believe that it is even more 

important for beneficiaries to have 

access to a PDF of the compete directory 

or formulary; this is especially true for 

the provider directories because prior 

consent from the enrollee is not 

required for a plan to use electronic 

delivery instead of mailing hard copies 

for provider directories. Our electronic 

delivery regulations permit 

organizations to notify individuals that 

certain materials can be accessed via a 

website or other method. These 

materials, unless requested by the 

beneficiary, will not be mailed in hard 

copy. As proposed and finalized, 

§§ 422.2265(b)(3) and 423.2265(b)(3) 

require plans to post a pdf or copy of a 

printable version of their provider and 

pharmacy directories on their website. 

Even though there is great value in 

making available on the website a tool 

or functionality that allows the 

beneficiary to search for a specific 

provider or drug based on set criteria, 

searchable formularies or directories do 

not allow a beneficiary the ability to 

view or download the directory or 

formulary as they would if it had been 

mailed. For that reason, we believe 

searchable directories and 

downloadable PDF documents are 

distinctly different and are not 

equivalent in their utility to a 

beneficiary. 

Comment: A commenter inquired 

about the elimination of the requirement 

that plans use CMS standard icons 

when marketing a plan’s Star Rating. 

The commenter noted that, previously, 

plans were not permitted to create their 

own gold star icon or any other icon of 

distinction, however, under the revision 

of the MCMG, plans could create their 

own gold star icon (or any other icon of 

distinction) so long as the icon is not 

misleading or confusing to beneficiaries. 

The commenter then stated that it was 

unclear to them how CMS would 

determine whether a plan-created icon 

was misleading or confusing. 

Response: As explained in the 

February 2020 proposed rule, we 

intended to redesignate and reorganize 

requirements in the current regulations 

in Subpart V and to codify existing 

guidance; that included the ability for 

plans to create their own star icon, 

which we proposed at 

§§ 422.2263(c)(6)(ii) and 

423.2263(c)(6)(ii) and are finalizing 

here. The revision to the MCMG, section 

40.6.1, to permit such plans to create 

their own Star Ratings icons was 

announced in an HPMS memo updating 

the MCMG on August 6, 2019 and 

predates this rulemaking. If warranted, 

CMS may examine the effects of 

allowing plans to use their own icons to 

denote CMS 5 Star Ratings. CMS will 

take appropriate action against any plan 

that uses icons that are misleading or 

confusing to beneficiaries and we intend 

to use information such as, but not 

limited to, beneficiary complaints, CMS 

marketing reviews, and CMS 

surveillance activities to identify 

violations of the prohibitions on 

misleading or confusing beneficiaries. 

At this time, we believe that providing 

plans with this flexibility, while also 

continuing to prohibit misleading 

marketing and communications, is 

appropriate. We note that we proposed 

and are finalizing the longstanding 

requirement that low performing plans 

use the specific CMS-created Low 

Performing Icon, state what that icon 

means, and may not attempt to refute or 

minimize their Low Performing Status, 

as stated in §§ 422.2263(c)(7) and 

423.2263(c)(7). In situations where a 

plan has been assigned the Low 

Performing Icon, there is a greater 

incentive for a plan to mischaracterize 

its Star Ratings; therefore, by requiring 

use of the CMS-created icon in those 

situations, we are sufficiently guarding 

against the negative consequences of 

allowing plans to create and use their 

own Star Ratings icons. Additionally, 

we will continue to rely on the practices 

we have developed, discussed in prior 

responses, for determining whether 

marketing language and methods are 

misleading or confusing, including the 

use of plan-created icons. 

Comment: A commenter was 

concerned about the limited 

enforcement in the marketplace 

regarding marketing and referral fees. 

The commenter suggested that instead 

of making changes to the requirements, 

CMS should improve its coordination 

with state departments of insurance to 

enforce existing regulations. 

Response: CMS has mechanisms in 

place to monitor agent and broker 

behavior in the marketplace, including 

prospective and retrospective marketing 

reviews, CMS regional office account 

manager oversight, ad hoc review by 

CMS Central Office staff, notification by 

peers (that is, other health plans), and 

notification through 1–800–MEDICARE 

(via the Complaints Tracking Module 

(CTM)) on a case-by-case basis. 

Additionally, CMS reviews agent/broker 

payment data in the HPMS agent/broker 

payment database for anomalies. CMS 

has a memorandum of understanding 

(MOU) with all states to facilitate 

coordination with state Departments of 

Insurance in order to share information 

and work with these departments as 

appropriate. CMS also may take 

compliance or enforcement action if it 

determines plans are not adhering to 

CMS’ requirements, including the 

requirements at §§ 422.504(i) and 

423.505(i) for the oversight of first tier, 

downstream, and related entities, which 

includes for agents and brokers. 

Comment: A commenter suggested 

that individuals not discuss benefits 

with beneficiaries in any Medicare plan 

unless they are licensed and certified. 

Response: CMS believes beneficiaries 

need to understand their benefits and to 

require a beneficiary to only speak to a 

licensed and certified agent about the 

benefits in a plan would be burdensome 

to both the beneficiary as well as the 

plan. For example, CMS does not 

require a customer service 

representative (CSR) to be licensed and 

certified to answer a beneficiary calling 

to determine what the co-pay would be 

for a medical procedure. The 

requirements in §§ 422.2272 and 

423.2272 are designed to ensure that an 

individual conducting marketing 

activities (that is selling) and enrolling 

individuals into a plan are licensed and 

certified. CMS also has rules in place at 

§§ 422.503(b)(4)(vi)(F), 422.504(i)(3)(iii), 

423.504(b)(4)(vi)(F), and 

423.505(i)(3)(iv) requiring that MA 

organizations and Part D plans 

contractually require downstream and 

first tier entities to comply with 

Medicare rules when doing Medicare 

business. We believe these requirements 

appropriately safeguard the beneficiary 

without the need for additional 

restrictions. 

After careful consideration of all the 

comments we received, and for the 

reasons set forth in the February 2020 

proposed rule and in our responses to 

the comments, we are finalizing the 

proposed changes to amend part 422, 

Subpart V (§§ 422.2260 through 

422.2274) and part 423, Subpart V 

(§§ 423.2260 through 423.2274), with 

some modifications. Some comments 

alerted us to typographical errors in 

either the preamble or regulatory text of 

the proposed rule; we are finalizing the 

regulation text with those necessary 

corrections. Some comments requested 

immediate clarification of our intentions 

or semantics, which we have provided 

as appropriate. Some comments were 

ultimately requests for clarifications or 

for additional guidance and, in most 

cases as noted in our responses to those 

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instructions. There were some 

comments that caused us to rethink the 

nature of our proposed changes. We 

have also made technical and 

grammatical changes to some provisions 

without changing the substance of the 

proposed policy. Finally, we are 

finalizing the following substantive 

changes compared to the proposed 

provisions in addition to the substantive 

changes discussed in our responses to 

comment (e.g., the revision to 

§§ 422.2264(c)(3) and 422.2264(c)(3) 

regarding appointments with residents 

of long-term care facilities). 

We are making four changes that are 

not specifically based on comments. 

First is with regard to how required 

content (disclaimers) outlined under 

§§ 422.2267(e) and 422.2267(e) are 

classified as either standardized under 

§§ 422.2267(b) and 423.2267(b), or as 

model under §§ 422.2267(c) and 

423.2267(c). We have reconsidered 

some of those classifications to provide 

for more flexibility for certain 

disclaimers by changing them from 

standardized to model content. This 

change will give plans the option to 

adjust the language used to convey the 

required message (that is, the 

disclaimer) in a manner that is both 

understandable and consistent with 

other plan-based communications. 

Aside from providing more flexibility, 

the requirement for when the noted 

content must be used, as well as the 

beneficiary protections afforded by the 

substantive message the content is 

conveying, remains the same. 

The following required content is 

changing from standardized to model: 

• §§ 422.2267(e)(31) and 

423.2267(e)(33), Star Ratings 

disclaimer 

• §§ 422.2267(e)(33) and 

423.2267(e)(34), accommodations 

disclaimer 

• §§ 422.2267(e)(36) and 

423.2267(e)(37), provider co-branding 

disclaimer 

• § 422.2267(e)(37), out of network noncontracted provider disclaimer 

• § 422.2267(e)(38), NCQA SNP 

approval statement 

We remind plans that, as required 

under §§ 422.2262 and 423.2262, the 

language used for required content may 

not mislead, confuse, or provide 

materially inaccurate information. 

Second change, we are finalizing 

§§ 422.2261(a)(2) and 423.2261(a)(2), 

with the heading Submission, review, 

and distribution of materials, with 

modifications from the proposal. In the 

February 2020 proposed rule, we 

proposed that materials must be 

submitted to the HPMS directly by the 

MA organization and that third party 

and downstream entities are not 

permitted to submit materials directly to 

CMS. This provision was, in part, based 

on technological limitations of the 

HPMS Marketing Module that did not 

have a means for third parties to submit 

materials directly to CMS. During the 

time between publishing the NPRM and 

this final rule, we have begun updating 

the HPMS Marketing Module. As a part 

of this update, we are considering 

changes that may allow third parties, 

with the appropriate safeguards, to 

submit materials on behalf of a plan or 

plans. As such, we are updating the 

final rule to include §§ 422.2261(a)(3) 

and 423.2261(a)(3) which state that 

unless specified by CMS, third party 

and downstream entities are not 

permitted to submit materials directly to 

CMS. This added flexibility will give 

the agency the ability to grant third 

party access in the future. 

Third, we are finalizing a change to 

remove ambiguity from the prohibition 

on providing gifts unless they are of a 

nominal value under §§ 422.2263(b)(2) 

and 423.2263(b)(2) by clearly indicating 

the provision is applicable to all 

beneficiaries, that is both current and 

potential enrollees. In the February 2020 

proposed rule, we proposed edits to the 

language in the existing regulations 

(§§ 422.2268(b)(2) and 423.2268(b)(2)) to 

cite the HHS OIG guidance governing 

nominal gifts for Medicare beneficiaries. 

In doing so, our intention was for this 

requirement to apply to both current 

and potential enrollees (that is those 

eligible for Medicare), as is the case 

with the OIG’s requirements as well as 

our current requirements found under 

section 40.4 of the MCMG. Sections 

1851(j)(2) and 1860D–04(l)(2) of the Act 

effectively prohibit gifts unless they are 

nominal gifts to prospective enrollees by 

requiring that limitation to be included 

in marketing standards established for 

the Part C and Part D programs. In 

addition, section 1856(b) authorizes 

CMS to adopt standards to implement 

the statute and section 1857(e)(1) of the 

Act authorizes the adoption of 

additional contract terms that the 

agency determines are necessary and 

appropriate and not inconsistent with 

the Medicare statute. Similar authority 

in connection with the Part D program 

is in section 1860D–12(b)(3) of the Act. 

Under this authority, we are finalizing 

the prohibition on gifts to any 

beneficiary, except for nominal gifts that 

are within the value set in the OIG 

guidance that are offered to all 

beneficiaries. This is consistent with our 

current policy. CMS has historically 

viewed prohibitions on gift giving to 

apply to both prospective and current 

plan members and Medicare 

beneficiaries are prospective enrollees. 

This prohibition protects beneficiaries 

from making an adverse enrollment 

decision because they were influenced 

by the receipt of a plan gift. It also 

protects those beneficiaries who may 

have been persuaded to remain enrolled 

in a particular plan based on receiving 

a plan gift. We are also finalizing a 

change in §§ 422.2268(b)(2) and 

423.2268(b)(2) of the regulation to say 

that nominal gifts must be provided to 

‘‘similarly situated’’ beneficiaries as 

opposed to the current wording of ‘‘all 

beneficiaries’’. We are making this 

change to allow plans to provide 

nominal gifts as a part of attending an 

event without obligating the plan to 

provide that gift to all current and 

prospective members regardless of event 

attendance. 

Fourth, we failed to list the Part D 

EOB under § 423.2267(e) (CMS required 

materials and content), even though we 

did list the Part C EOB under 

§ 422.2267(e)(2). (For additional 

information on the Part C EOB, please 

see § 422.111(k) of this final rule.) This 

was an oversight when we published 

the proposed rule. It is important to note 

that the Part D EOB is already required 

under § 423.128(e) and its inclusion in 

the list at § 423.2267(e)(2) is to make it 

easier for users of the regulation to 

identify the various materials and 

content required as a Part D sponsor. We 

have also renumbered this section 

accordingly to account for the addition. 

CMS is finalizing these provisions as 

applicable for coverage beginning 

January 1, 2022, so these regulations 

will cover marketing and mandatory 

disclosures made in 2021 for 

enrollments made for effective dates in 

2022. Additionally, this final rule 

largely reorganizes current regulations 

and codifies current policies. As such, 

CMS encourages MA organizations to 

take this final rule into account 

immediately. 

F. Past Performance (§§ 422.502 and 

423.503) 

Since the publication of the first 

Medicare Advantage (MA) and Part D 

program regulations in 2005, CMS has 

established, at §§ 422.502(b) and 

423.503(b), that we may deny an 

application submitted by an 

organization seeking an MA or Part D 

sponsor contract if that organization has 

failed to comply with the requirements 

of a previous MA or Part D contract. In 

the April 2011 final rule, we completed 

rulemaking that placed limits on the 

period of contract performance CMS 

would review (that is, 14 months 


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preceding the application deadline) and 

established that CMS would evaluate 

contract compliance through a 

methodology that would be issued 

periodically through sub-regulatory 

guidance (75 FR 19684 through 19686). 

In the April 2018 final rule, we reduced 

the review period to 12 months (83 FR 

16638 through 16639). 

In the proposed rule, CMS sought to 

add clarity and predictability to our 

review of MA and Part D applicants’ 

prior MA or Part D contract performance 

by identifying in the regulation text the 

criteria we will use to make a 

determination to deny an application 

based on prior contract performance. 

This approach will replace the past 

performance methodology that CMS 

developed and issued annually through 

sub-regulatory guidance. 

CMS’ overall policy with respect to 

past performance remains the same. We 

have an obligation to make certain that 

MA organizations and Part D sponsors 

can fully manage their current contracts 

and books of business before further 

expanding. CMS may deny applications 

based on past contract performance in 

those instances where the level of 

previous non-compliance is such that 

granting additional MA or Part D 

business opportunities to the 

responsible organization would pose a 

high risk to the success and stability of 

the MA and Part D programs and their 

enrollees. Accordingly, we proposed to 

adopt three factors, each of which, on its 

own, represents significant noncompliance with an MA or Part D 

contract, as bases for denying an MA or 

Part D application: (A) The imposition 

of civil money penalties or intermediate 

sanctions, (B) low Star Ratings scores, 

and (C) the failure to maintain a fiscally 

sound operation. We proposed that the 

presence of any one of these factors in 

an applicant’s record (with the 

exception of intermediate sanctions 

imposed on dual eligible special needs 

plans (D–SNPs) under § 422.752(d)) 

during the past performance review 

period could subject it to the denial of 

its MA or Part D application. Once 

finalized, these three bases would be 

added to our already codified authority 

and may be used to deny an application 

based on CMS’ termination of an 

applicant’s previous contract under 

§ § 422.502(b)(3) and 423.503(b)(3). We 

note that while in the June 2020 (85 FR 

33796) final rule we adopted 

§ 422.116(a)(1)(ii), which states that 

CMS will not deny an application on 

the basis of an evaluation of the 

applicant’s contracted provider 

network, we also stated in the preamble 

to the final rule at 85 FR 33866 that 

CMS would still consider intermediate 

sanctions or CMPs imposed based on 

non-compliance with network 

requirements as bases for the denial of 

an application based on failure to 

comply with a current or previous 

contract. Also, we decline to consider 

an application from an organization still 

covered by the 2-year period during 

which it had agreed, pursuant to 

§ § 422.508(c) and 423.508(e), not to 

submit applications for new MA or Part 

D contracts as part of a mutual 

termination agreement entered into with 

CMS pursuant to § § 422.508(a) and 

423.508(a). 

For one of these proposed bases for 

application denial to be considered, we 

proposed that the relevant noncompliance must be documented by 

CMS (through the issuance of a letter, 

report, or other publication) during the 

12-month review period established at 

§§ 422.502(b)(1) and 423.503(b)(1). 

Thus, CMS may include in our analysis 

conduct that occurred prior to the 12- 

month past performance review period 

but either did not come to light, or was 

not documented, until sometime during 

the review period. 

In evaluating applications submitted 

by organizations with no recent MA or 

Part D contracting history, we proposed 

to consider the performance of contracts 

held by the applicant’s parent 

organization or another organization 

controlled by the same parent and 

ascribe that performance to the 

applicant. Specifically, we proposed to 

identify applying organizations with no 

recent prior contracting history with 

CMS (that is, a legal entity brand new 

to the Medicare program, or one with 

prior Medicare contract experience that 

precedes the 12-month review period). 

We would then determine whether that 

entity is held by a parent of other MA 

organizations or Part D sponsors or 

otherwise shares common control with 

another contracting organization. In 

these instances, it is reasonable in the 

absence of any recent actual contract 

performance by the applicant due to a 

lack of recent Part C or Part D 

participation, to impute to the applicant 

the performance of its sibling 

organizations as part of CMS’ 

application evaluation. Should one or 

more of the sibling organizations meet 

one of the bases for denial stated in 

(b)(1)(i), the application from the new 

legal entity would be denied. 

We proposed to codify the new bases 

for application denial based on past 

contract performance as paragraphs 

(b)(1)(i)(A)—low Star Ratings, 

(b)(1)(i)(B)—intermediate sanction or 

CMP, and (b)(1)(i)(C)—failure to 

maintain fiscally sound operation under 

§§ 422.502 and 423.503. The provision 

governing the consideration of 

applicant’s parent organizations or 

sibling entities will be stated at 

§§ 422.502(b)(1)(ii) and 423.503(b)(1)(ii). 

Comment: A commenter noted that 

the proposed regulatory provision as it 

applies to Part D is stated in error. The 

revisions should have been made to 

§ 423.503, not § 423.502. 

Response: We have revised the 

regulation language to be consistent 

with our discussion in the preamble to 

the proposed rule, so that the 

modification is made to § 423.503. 

Comment: Several commenters 

objected to the use of CMPs as a sole 

basis for denying an application based 

on past performance. Some commenters 

noted that CMPs are imposed in a wide 

range of dollar amounts and for a wide 

range of instances of non-compliance. 

They maintain that often CMPs are not 

issued based on what could be 

considered substantial failures to meet 

MA or Part D program requirements. 

Also, CMPs are frequently based on 

performance information resulting from 

a routine CMS program audit. 

Commenters stated that, since CMS 

audits only a portion of all MA or Part 

D sponsors in a given year, using CMPs 

as a basis for evaluating past 

performance is unfair since 

organizations are not uniformly at risk 

of earning a CMP and thus being subject 

to an application denial based on past 

performance. As a result, some 

commenters recommended the 

elimination of CMPs altogether as a 

basis for denial. Others suggested that 

CMS count only CMPs above a certain 

threshold dollar amount. 

Response: We appreciate these 

comments and acknowledge that, while 

all CMPs are based on significant noncompliance, the wide range of dollar 

amounts of CMPs imposed each year 

reflects a variation in the severity of 

conduct upon which they are based. It 

is worth considering whether all CMPs 

warrant treatment as a basis for 

determining that an applicant’s past 

Medicare contract performance warrants 

denial of their MA or Part D contract 

qualification application. Therefore, we 

will strike CMPs from the regulation as 

a basis for an application denial based 

on past performance. We may consider 

in a future rule whether we should 

establish thresholds in dollar amounts 

or types of non-compliance that would 

warrant denial. 

Comment: Several commenters 

expressed opposition to the use of just 

one year of low Star Ratings as a basis 

for denying an application based on 

poor past performance. Generally, they 

stated that one year of Star Ratings was 

not necessarily a true reflection of an 


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organization’s performance and that 

consideration of a three-year period of 

ratings was a better basis for making a 

determination of poor past performance. 

Adopting this approach would be 

consistent with the standard used to 

identify contracts with the low 

performing icon (LPI) on the Medicare 

Plan Finder (MPF). Commenters also 

contend that one year’s performance 

might be an outlier for an organization 

that otherwise has consistently good 

ratings. This is a particular concern 

given the uncertainty surrounding the 

potential impact of the COVID–19 

pandemic on quality measures. Finally, 

one commenter suggested that we adopt 

overall scores as opposed to summary 

scores as the Star Ratings basis for 

denial for MA–PD organizations since 

the overall score reflects the full range 

of operations of those organizations. 

Response: The regulations at 

§§ 422.510(a)(4)(xi) and 423.509(a)(4)(x) 

already establish our authority to 

terminate an MA or Part D sponsor 

contract in the event that it fails for 

three consecutive years to achieve at 

least one summary rating score of at 

least three stars. Also, for 38 months 

following such a termination, CMS may 

deny a contract qualification application 

submitted by the terminated 

organization or one of its related 

entities, per §§ 422.502(b)(3) and (4) and 

423.503(b)(3) and (4). 

After reviewing comments and 

reconsidering, we are persuaded that 1 

year of low ratings may be considered 

a contract compliance failure, but not a 

substantial failure on par with the other 

two denial bases being finalized in this 

rule (that is, sanctions and financial 

solvency). By regulation, we have 

already established that 3 years of low 

ratings is a substantial failure, justifying 

termination. In comparison, enrollment 

sanctions are almost always based on 

substantial compliance failures. Also, 

financial solvency issues by definition 

pose a significant risk to a contracting 

organization’s ability to substantially 

comply with a contract. Therefore, those 

two topics continue to warrant adoption 

as bases for application denial based on 

poor past contract performance. 

Accordingly, in the final rule, we are 

removing low Star Ratings from the list 

of bases for an application denial. We 

note, however, that low Star Ratings 

remain a basis for the denial of an 

application during the three years 

following the CMS termination of a 

contract based on three consecutive 

years of low ratings, pursuant to 

§§ 422.52(b)(3) and 423.503(b)(3). 

Comment: Several commenters 

recommended that a determination to 

deny an application based on past 

performance should be based on 

multiple factors, not the presence of any 

one of the bases (that is, sanction/CMP, 

low Star Ratings, or financial risk). This 

approach would be modeled more like 

our previous approach to making past 

performance determinations, where we 

used a published methodology that 

described 11 elements we would 

consider, along with point values 

assigned to each and established point 

total thresholds for denying an 

application. Commenters believe that, 

by allowing denial based on the 

presence of any one of our three 

proposed bases, our approach does not 

allow for a comprehensive review of the 

applicant’s true performance. 

Response: The two bases for an 

application denial that we adopt 

through this rule (enrollment sanctions 

and financial solvency) each by their 

nature already capture significant and 

comprehensive information about an 

applicant’s past contract performance. 

Therefore, it is appropriate for CMS to 

rely on the presence of either of the 

bases to support a determination to 

deny an application. 

CMS may impose enrollment 

sanctions in instances where it has 

found that an organization has 

substantially failed to comply with the 

terms of its Medicare contract. In our 

experience, such a determination may 

be based on a systemic failure of the 

organization that produces noncompliance across a range of 

requirements or a comprehensive failure 

to properly administer a critical MA or 

Part D plan function. Either way, the 

information that would support an 

enrollment sanction would in all 

instances paint a detailed enough 

portrait of the organization’s 

performance to warrant the application 

denial. 

Financial solvency goes to the heart of 

any organization’s ability to meet all of 

its obligations as an MA organization or 

Part D sponsor. For an organization that 

cannot meet the programs’ solvency 

requirements, no further analysis of its 

capacity to take on additional Medicare 

business is necessary, since this type of 

non-compliance places in jeopardy the 

organization’s ability to even meet its 

current contractual requirements. 

Comment: Several commenters 

recommended that CMS should afford 

applicants the opportunity to correct the 

performance that would form the basis 

for a determination that they failed to 

comply with a current contract before 

CMS makes a final decision to deny the 

application. 

Response: We believe that a ‘‘curing 

opportunity’’ is inconsistent with the 

purpose of the past performance review. 

In effect, through the past performance 

denial authority, CMS takes a snapshot 

of an applicant’s performance during a 

specific period of time and uses that 

information as a kind of credit report to 

evaluate whether the applicant should 

reasonably be entrusted with a new or 

expanded Medicare contract. In that 

kind of analysis, the only relevant 

information is the actual history of 

significant non-compliance that has 

occurred during the review period. The 

fact that the non-compliance occurred 

in the first place speaks to recent gaps 

in the applicant’s ability to manage its 

current Medicare business. An applicant 

curing non-compliance during the 

review period reassures CMS that the 

organization should continue to 

administer its current contract, but a 

more sustained period of compliance is 

appropriate to demonstrate that its 

operations are stable enough to warrant 

eligibility for new Medicare business. 

We also note that the past 

performance provision has its own 

built-in cure period in the form of the 

12-month review period. By operation 

of the regulation, CMS reviews a new 

12-month period during each annual 

application review cycle. As a result, 

past non-compliance does not stay on 

an applicant’s record for a sustained 

period of time, and an applicant that 

might have been denied based on past 

performance in one application cycle 

can find itself eligible for approval in 

the very next cycle if it has taken 

effective corrective action. 

Comment: Some commenters 

recommended that the regulation be 

revised to exclude intermediate 

sanctions as a basis when the 

organization has cured the relevant noncompliance and the sanction has been 

lifted during the review period. The 

commenters maintain that the lifting of 

the sanction is evidence that the 

organization has restored its ability to 

successfully manage its current 

operations and therefore should be 

eligible to apply for additional 

contracts. 

Response: For the purposes of 

assessing qualification for a new MA or 

Part D contract, we believe that we 

should consider all instances of failure 

to comply described in the regulation 

that occurred throughout the twelvemonth review period. While, of course, 

CMS expects all sanctioned 

organizations to move promptly to 

complete the necessary corrective action 

to have a sanction removed, we believe 

that in any instance, the fact that a 

sanction had to be imposed at all speaks 

to the stability of the organization and 

is relevant to whether it should be 

approved for a new contract. The 


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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. 

Comment: A commenter advocated 

that our past performance authority 

should not be applied to applications 

where the purpose is not for the 

applicant to qualify for a new contract 

or a current contract with an expanded 

service area, but for a parent 

organization to restructure their existing 

set of MA or Part D sponsor contracts. 

The commenter noted that parent 

organizations periodically restructure 

their Medicare managed care business 

without taking on new Medicare 

business. Often this is done through one 

affiliate of the parent applying to qualify 

as an MA organization so that it may 

assume responsibility, through 

novation, of a contract held by another 

of the parent’s affiliates or through 

consolidation of two current contracts. 

The commenter is concerned that our 

proposed policy would preclude parent 

organizations from making legitimate 

reorganizations of their business 

arrangements. Therefore, the commenter 

urges us to adopt an exception to our 

use of poor past performance as a basis 

for denying MA and Part D applications 

when they are part of a parent 

organization’s plan to reorganize its 

contracting arrangements 

Response: We note that under the 

regulation, parent organizations are not 

precluded from reorganizing their 

business arrangements. CMS conducts 

the past performance analysis at the 

level of the contracting entity. Parent 

organizations looking to have other 

entities take over one of their 

subsidiary’s Medicare contracts can 

select an entity that already has an MA 

or Part D sponsor contract for that 

purpose. Assuming that the experienced 

entity does not meet any of the bases for 

a past performance-based denial, the 

entity would be eligible for approval to 

take over the contract held by its sibling 

company. 

The only instance where CMS 

considers the past performance of an 

entity other than the applicant is when 

the applicant does not currently hold an 

MA or Part D sponsor contract but is 

related to a parent organization that has 

at least one subsidiary that is an MAO 

or Part D sponsor. In that instance, if 

one of the parent’s subsidiaries met the 

criteria for a past performance-based 

application denial, we would deny the 

application from the ‘‘inexperienced’’ 

entity. While the application approval 

would not necessarily result in 

additional or expanded Medicare 

business for the parent organization, 

allowing another contracting entity with 

no Medicare experience of its own but 

related to an entity with demonstrated 

compliance issues does not promote the 

effective administration of the Medicare 

program. Even if the parent organization 

is seeking only to rearrange the 

contracting entities holding its Medicare 

contracts, and not to expand its number 

of contracts, plan offerings, or enrollees, 

it still would be looking to add to its 

roster of qualified contracting entities at 

a time when its efforts should be 

focused on bringing all of its current 

contracting entities into compliance 

with their contracts. In effect, the parent 

organization would be attempting to 

expand its Medicare business capability 

without focusing attention on resolving 

existing weaknesses in its operations. 

We do not believe that parent 

organizations should be permitted to 

evade our past performance review 

authority in that manner. 

Comment: A commenter stated that 

organizations that acquire poor 

performing contracts should not have 

the performance of the acquired contract 

counted as part of the parent 

organization’s past performance. The 

commenter noted that the acquiring 

organization should have time to focus 

on improving the performance of the 

newly acquired contract, for which it 

had no responsibility, without having to 

jeopardize its opportunity to pursue 

other MA or Part D lines of business. 

Response: We agree with this 

comment. The commenter is in effect 

requesting that we codify the ‘‘grace 

period’’ policy we had previously 

included in the Past Performance 

Methodology. Specifically, when an 

organization acquired a contract with a 

record of issues related to noncompliance, under the Methodology, the 

purchasing parent was afforded a twoyear period, calculated from the date of 

closing, before any negative 

performance by the purchased entity or 

contract would be imputed to the 

parent’s existing entities. We adopted 

this policy in recognition of the fact that 

the enrollees in the non-compliant 

plans, as well as CMS, can benefit from 

a stronger organization taking over 

responsibility for a poor performing 

contract. The acquisition of a Medicare 

contract by a competent contracting 

organization is much less disruptive to 

plan enrollees than termination or nonrenewal, which would require enrollees 

to obtain different Medicare coverage, 

often resulting in different benefit plans 

and providers. We believe, in the 

context of the evaluation of contract 

qualification applications, that it is 

important to the administration of the 

MA and Part D programs that qualified 

organizations not be discouraged from 

pursuing acquisitions that could resolve 

issues created by non-compliant 

contracting organizations and result in 

uninterrupted access to benefits and 

providers for the affected enrollees. To 

ensure that our past performance policy 

supports that goal, we are amending the 

regulation to exempt organizations for 

two years following the completion of 

an acquisition from the provision that 

applies the past performance record of 

other subsidiaries of a parent to an 

applicant from the same parent with no 

Medicare contracts. This provision will 

remove any concerns an acquiring 

organization might have that taking on 

a poor performing contract would 

compromise its ability to submit a 

successful contract qualification 

application. 

Comment: A commenter recommends 

that we provide clarification regarding 

our use of the term, ‘‘may’’ in the 

regulation text for this provision. 

Specifically, the commenter notes that 

language at § 422.502(b)(1)(i) stating 

that, ‘‘An applicant may be considered 

to have failed to comply with a contract 

. . .’’ [emphasis added] conveys the 

message that CMS may or may not deny 

an application from an organization that 

meets at least one of the proposed 

criteria. The commenter also states that 

such an interpretation means that 

applicants meeting the criteria should 

have the opportunity to present 

information about extenuating 

circumstances. The commenter asks that 

if CMS intends that there be no 

flexibility in the application of our 

denial authority, we should make that 

explicit in the regulation text. 

Response: As we stated in the 

preamble to the proposed rule, by 

adopting these new past performance 

review criteria, we sought to ‘‘add 

clarity and predictability to our review 

of MA and Part D applicants’ prior MA 

or Part D contract performance.’’ 

Accordingly, we proposed to establish 

three clear bases for denial, each of 

which on its own is sufficient to 

establish conclusively that an applicant 

has failed in a significant way to comply 

with MA or Part D requirements. This 

streamlined approach differed from our 

previous approach of publishing an 

annual Past Performance Methodology, 

through which we would announce the 

scoring of the multiple performance 

elements we would consider and how 

we would score applicants’ past 

performance, including setting point 

thresholds to identify those whose 

application would be denied. In 


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establishing all of our review criteria in 

regulation and streamlining the number 

of factors to be considered, we intended 

to convey to applicants that CMS will 

deny any applicant that meets any of the 

new bases for a denial based on past 

performance. Therefore, organizations 

should expect that we will not consider 

requests that we exercise flexibility in 

the application of the new criteria and 

grant an approval to an application that 

meets the denial criteria. 

With respect to requesting an 

opportunity to provide information 

about extenuating circumstances to 

CMS for consideration, we note that our 

regulations still provide the opportunity 

for denied applicants to request a 

review by a CMS hearing officer, and if 

unsuccessful there, by the 

Administrator. More significantly, 

enrollment sanctions have their own 

reconsideration process through which 

an organization may assert that 

extenuating circumstances justify a CMS 

decision to decline to impose the 

sanction. 

Comment: A commenter urged that 

the past performance review should not 

include contracts that the applicant has 

already non-renewed or terminated for 

the upcoming contract year. 

Response: We believe that the past 

performance analysis must be based on 

an applicant’s actual performance 

history, which should not be subject to 

revision after the fact. An organization 

that non-renews a particular contract for 

an upcoming contract year has already 

established its performance history 

through its operation of that contract. 

The non-renewal does not change the 

fact that there is record of performance 

for CMS to review and consider in 

evaluating whether that entity deserves 

a new or expanded MA or Part D 

contract. Moreover, we would be 

concerned that adopting the 

commenter’s policy would create the 

wrong set of incentives for contracting 

organizations. They should be 

encouraged to improve the performance 

of their existing contract rather than 

abandon the contract, and its enrollees, 

for the opportunity to seek to operate a 

new set of plans under a new contract. 

Comment: A commenter questioned 

us to clarify that the analysis of past 

performance under this provision is to 

be done of the contracting organization 

and not of all contracts controlled by its 

parent organization. The commenter 

believed that our previous application 

of the past performance authority was 

done at the parent organization level 

and unfairly punished large parent 

organizations that controlled an 

extensive number of Medicare contracts. 

Response: The new provisions we 

adopt in this rule continue our general 

policy of evaluating the past 

performance of the contracting 

organizations that have submitted 

applications, not their parent 

organizations. We have codified here 

the exception to that policy that we 

established under the previous Past 

Performance Methodology. That is, 

when an organization that does not hold 

an MA or Part D sponsor contract but is 

related to a parent organization that 

does hold at least one contract itself or 

through another subsidiary, we do apply 

the past performance record of the 

experienced subsidiary to the new 

applicant. 

Comment: A commenter expressed 

support for our decision to exclude 

enrollment sanctions imposed against 

D–SNP organizations from 

consideration as a sanction that would 

form the basis for a past performancebased application denial. 

Response: We appreciate the 

commenter’s expression of support. 

Comment: One commenter agreed 

with our proposal not to penalize an 

MA organization based on noncompliance with integration standards 

at the plan level. They suggested that 

CMS provide an initial enforcement safe 

harbor from enrollment sanctions for D– 

SNPs who have made a good faith effort 

to negotiate SMAC contracts with states. 

They stated that imposing these 

sanctions on D–SNPs while 

implementing look-alike standards 

could mean that beneficiaries could lack 

access to transition into otherwise 

compliant D–SNPs. 

Response: We appreciate the support 

for excluding D–SNP intermediate 

sanctions for failure to implement the 

BBA of 2018 D–SNP requirements from 

past performance. However, changes to 

the D–SNP intermediate sanction policy 

are out of scope for this regulation. 

Comment: A commenter questioned 

CMS to clarify whether an enrollment 

prohibition imposed pursuant to 

§§ 422.2410(c) and 423.2410(c) against 

an organization that failed for three 

consecutive years to meet the minimum 

medical loss ratio (MLR) threshold 

would count as an enrollment sanction 

for the purposes of a past performancebased application denial. 

Response: We intended to include all 

enrollment sanctions, including those 

based on the failure to meet the 

minimum MLR, as a basis for 

application denial based on past 

performance, with the exception of 

those related to the failure of D–SNPs to 

integrate Medicare and Medicaid 

benefits, which we specifically 

excluded. The failure to reference the 

MLR sanctions in the proposed rule was 

simply a drafting oversight since that 

sanction authority resides in a different 

part of the MA and Part D regulations 

than Subpart O of Parts 422 and 423 

where the general enrollment sanction 

authority resides. Accordingly, we are 

revising § 422.502(b)(1)(A) to add, ‘‘an 

enrollment sanction imposed pursuant 

to § 422.2410(c)’’ and § 423.503(b)(1)(A) 

to add ‘‘an enrollment sanction imposed 

pursuant to § 423.2410(c)’’ to the 

statement of enforcement-related bases 

for CMS to deny an application based 

on poor past performance to make 

explicit the imposition of an MLR 

sanction as a basis for application 

denial. 

Congress established the significance 

of the MLR requirement by mandating 

as part of the MA statute at section 

1857(e)(4)(B) of the Act and 

incorporating by reference into the Part 

D statute through1860D–12(b)(3)(D) of 

the Act that organizations that 

consistently fail to meet the 85 percent 

threshold should be prohibited from 

accepting new enrollments until they 

can demonstrate that they comply with 

the MLR requirement. Since the failure 

to meet the MLR requirement for three 

consecutive years is subject to the same 

penalty that may be applied to all other 

forms of substantial compliance failures, 

it follows that we include the MLR 

failure among the bases for an 

application denial based on poor past 

performance. 

Comment: A commenter maintained 

that contracts with low enrollment or a 

large portion of plan enrollees of low 

socioeconomic status (SES) should not 

be subject to application denials based 

on poor past performance. 

Response: The commenter provided 

no explanation of why, specifically, 

organizations that operate plans with 

low enrollment or with a large portion 

of beneficiaries with low SES should be 

excluded from the past performance 

review standard. These characteristics 

should have no bearing at all on two of 

the new bases for denial, financial 

solvency and intermediate sanctions. 

No matter the level of a Medicare plan 

sponsor’s enrollment or its proportion of 

beneficiaries with low SES, it must have 

sufficient financial resources to meet 

adequately its obligations to provide 

health care and prescription drug 

benefits to its members. Also, the 

required level of financial resources 

varies at least in part based on an 

organization’s enrollment, so those with 

low enrollment should not be uniquely 

adversely affected by the financial 

solvency bases for application denial. 

An MA organization or Part D sponsor 

must comply with the requirements of 


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the Part C and D programs, regardless of 

their level of enrollment or proportion 

of beneficiaries with low SES. Enrollees 

in low enrollment plans are not entitled 

to any lesser level of access to Medicare 

services, nor should CMS expect weaker 

Medicare contract administration from 

organizations offering such plans. 

Therefore, again, organizations with low 

enrollment are not uniquely in jeopardy 

of being unfairly subject to an 

intermediate sanction. Also, as with any 

sanctioned organization, a low 

enrollment organization may always 

challenge the imposition of the sanction 

through the appeals process stated in 

subpart O of Part D 422 and 423. 

Similarly, enrollees with low SES 

should receive the same level of 

Medicare services as all other enrollees, 

and should receive these services from 

organizations with sufficient resources 

to provide them. 

Comment: A commenter questioned 

that CMS continue to produce the Past 

Performance Outlier report that CMS 

previously issued every six months to 

provide contracting organizations 

information concerning their past 

performance record. 

Response: We will discontinue 

publishing the Past Performance Outlier 

report. CMS had adopted the report as 

a tool to assist organizations in tracking 

their scores as it was calculated under 

the multi-factor Past Performance 

Methodology. Such a report was useful 

when an organization’s performance 

was assessed various point values and 

denial was based on those points 

meeting certain thresholds. However, 

given the simplicity of the new method 

for determining whether an applicant 

will be denied based on past 

performance, all organizations can track 

their past performance status for 

themselves, and no CMS report is 

needed. 

After consideration of these 

comments, we are finalizing the 

proposal with the following 

modifications: 

(1) We are removing from 

§§ 422.502(b)(1)(i)(A) and 

423.503(b)(1)(i)(A) references to CMPs 

as a basis for a determination that an 

applicant has failed to comply with a 

previous Medicare contract; 

(2) We are removing the references to 

Star Ratings as a basis for denial at 

paragraph (B) of §§ 422.502(b)(1)(i) and 

423.503(b)(1)(i) and re-labeling the 

proposed paragraph (C) concerning 

fiscal solvency as the new paragraph 

(B). 

(3) We are adding language to 

§§ 422.502(b)(1)(ii) and 423.503(b)(1)(ii) 

to provide parent organizations that 

acquire poor performing contracts a 

two-year grace period during which the 

performance of the acquired contract 

will not be considered as part of our 

evaluation of an application submitted 

by a new subsidiary of the parent; 

(4) We are adding language to 

§§ 422.502(b)(1)(i)(A) and 

423.503(b)(1)(i)(A) clarifying that 

enrollment sanctions imposed for 

failure to comply with MLR 

requirements for three consecutive years 

will be considered among the sanctions 

that qualify for a determination that the 

applicant failed to comply with a 

previous Medicare contract; and 

(5) We are making the technical 

correction to make the relevant Part D 

modifications at § 423.503, not 

§ 423.502. 

G. Prescription Drug Plan Limits 

(§ 423.265) 

Section 1857(e)(1) of the Act, 

incorporated for Part D by section 

1860D–12(b)(3)(D) of the Act, provides 

CMS with the authority to establish 

additional contract terms, not 

inconsistent with Part D, that CMS finds 

‘‘necessary and appropriate.’’ Section 

1860D–11(d)(2)(B) of the Act provides 

CMS with the authority to negotiate bids 

and benefits that is ‘‘similar to’’ the 

statutory authority given to the Office of 

Personnel Management (OPM) in 

negotiating health benefit plans. We 

interpreted this authority to mean that 

we can negotiate a plan’s administrative 

costs, aggregate costs, benefit structure 

and plan management (70 FR 4296). 

CMS regulations at §§ 423.272(a) and 

423.272(b) require Part D sponsors to 

submit bids and benefit plans for CMS 

approval. As stated in § 423.272(b), CMS 

approves the plan only if the plan’s 

offerings comply with all applicable 

Part D requirements. Similarly, 

regulations at § 423.265(b)(2) require 

that multiple plan offerings by Part D 

sponsors represent meaningful 

differences to beneficiaries with respect 

to beneficiary out-of-pocket costs or 

formulary structures. 

As we have gained experience with 

the Part D program, we have made 

consistent efforts to ensure that the 

number and type of plans that PDP 

sponsors may market to beneficiaries are 

no more numerous than necessary to 

afford beneficiaries choices from among 

meaningfully different plan options. 

CMS has declined to approve more than 

three stand-alone prescription drug 

plans offered by a Part D sponsor in a 

PDP region—one basic plan and (at 

most) two enhanced plans. A basic plan 

consists of the following: (1) Standard 

deductible and cost-sharing amounts (or 

actuarial equivalents), (2) an initial 

coverage limit based on a set dollar 

amount of claims paid on the 

beneficiary’s behalf during the plan 

year, (3) a coverage gap phase, and (4) 

a catastrophic coverage phase that 

applies once a beneficiary’s out-ofpocket expenditures for the year have 

reached a certain threshold. An 

enhanced plan is an optional plan 

offering, which provides additional 

value to beneficiaries in the form of 

reduced deductibles, reduced cost 

sharing, additional coverage of some or 

all drugs while the beneficiary is in the 

gap phase of the benefit, coverage of 

drugs that are specifically excluded as 

Part D drugs under paragraph (2)(ii) of 

the definition of Part D drug under 

§ 423.100, or some combination of those 

features. Section 423.104(f)(2) prohibits 

a Part D sponsor (as defined in § 423.4) 

from offering enhanced alternative 

coverage in a service area unless the 

sponsor also offers a prescription drug 

plan in that service area that provides 

basic prescription drug coverage. 

Prior to adopting regulations requiring 

meaningful differences between each 

plan sponsor’s plan offerings in a PDP 

Region, our guidance allowed sponsors 

to offer additional basic plans in the 

same region as long as they were 

actuarially equivalent to the basic plan 

structure described in statute. However, 

under § 423.265(b)(2), PDP sponsors are 

no longer permitted to offer two basic 

plans in a PDP Region because Part D 

sponsors cannot demonstrate a 

meaningful difference between two 

basic plans and still satisfy statutory 

actuarial equivalence requirements. In 

addition, we believe that allowing more 

than one basic plan could result in 

sponsor behaviors that adversely affect 

the program, such as the creation of 

plan options designed solely to engage 

in risk segmentation whereby one basic 

plan would target enrollment of the LIS 

beneficiaries and the second basic plan 

would target a lower risk population. As 

it stands, healthier beneficiaries are 

increasingly being incentivized to enroll 

in low premium enhanced plans, 

leading to a higher risk pool in the basic 

plans. Permitting a sponsor to offer two 

basic plans in a region could ultimately 

result in increasing bids and premiums 

for basic plans, given that LIS autoenrollment is limited to basic plans. 

Total government costs would likely 

increase because CMS pays most of the 

premium for LIS beneficiaries. 

Since the beginning of the Part D 

program, CMS has consistently tried to 

ensure that Part D sponsors only market 

the number and type of PBPs necessary 

to offer beneficiaries meaningfully 

different plan options and allow them to 

carefully examine all of the plan 

offerings. However, we were persuaded 


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by the argument that allowing sponsors 

to offer enhanced prescription drug plan 

offerings that are not meaningfully 

different with respect to beneficiary outof-pocket costs could lead to more 

innovation and provide sponsors with 

added flexibility to offer health care 

options that can be tailored to different 

beneficiary choices with a portfolio of 

plan options with different benefits, 

pharmacy networks, and premiums. As 

such CMS eliminated the meaningful 

difference requirement between a plan 

sponsor’s enhanced alternative benefit 

offerings effective for contract year 

2019. As a result of eliminating this 

requirement, we have seen a greater 

number of enhanced plan offerings. 

CMS has examined Part D plan 

payment data in cases and markets with 

different numbers of enhanced plans. 

When looking at this data, we noted that 

markets with a greater number of 

enhanced plans have higher costs than 

basic plans. This was true even when 

controlling for other factors, such as 

population health and age. In these 

cases, the basic component of enhanced 

plans’ bids was found to trend higher 

than basic plan bids themselves. Given 

the upward impact to program costs, 

CMS proposed to codify our policy of 

limiting the total number of allowed 

plan offerings by a Part D sponsor in a 

PDP region to offering no more than 

three prescription drug plans (one basic 

and up to two enhanced) per PDP region 

by adding a new paragraph at 

§ 423.265(b)(2). Since this change would 

codify our existing practice, this change 

would not alter any existing processes 

or procedures within the Part D bid 

submission and approval process. 

We solicited stakeholder input as to 

the impact of limiting the number of 

enhanced plan offerings to two. In 

addition, we sought information on 

what type of impact expanding the 

number of enhanced plan alternatives 

would have and whether there is any 

need for more than two standalone 

enhanced plan options per PDP sponsor 

per PDP region. 

We received 15 comments on this 

proposal, which we have summarized 

below, and our responses follow: 

Comment: Most commenters 

supported our proposal, citing the 

benefit of helping ensure that 

beneficiaries are able to choose from 

among meaningfully different plan 

offerings and the harm of risk 

segmentation. The few commenters that 

disagreed with the proposal stated their 

belief that the plan limit unnecessarily 

hinders sponsors from offering a broader 

range of more innovative plan designs. 

Response: We appreciate commenters 

support for this proposal as well as the 

concern that was raised by the 

commenters that opposed it. Based on 

our annual review of Part D sponsors 

plan benefit packages, we believe that 

the current policy gives plans sufficient 

ability to innovate. In addition, we 

believe that the potential negative 

consequences of permitting sponsors to 

offer more than one basic plan and two 

enhanced plans per PDP region, those 

consequences including risk 

segmentation leading to additional costs 

to the government coupled with the risk 

that there may not be meaningful 

differences between plans offerings, 

outweigh any minimal benefit that may 

occur from allowing Part D sponsors the 

ability to administer additional plan 

offerings. 

After careful consideration of all 

comments received, and for the reasons 

set forth in the proposed rule and in this 

response to comments, we are finalizing 

the proposed changes to § 423.265(b)(2) 

without modification. However, we 

recognize that this regulatory provision 

is closely intertwined with our policy 

for crosswalking of enrollees, under 

varying circumstances, within a plan 

sponsor’s benefit offerings. In the event 

that we decide to reexamine that policy, 

we may revisit this limitation on the 

number of PDP plans offered in a region. 

Although we are finalizing this 

provision as applicable beginning 

January 1, 2022, it codifies current 

policies so we encourage Part D 

sponsors to take this final rule into 

account immediately. 

H. Definition of a Parent Organization 

(§§ 422.2 and 423.4) 

Pursuant to our authority under 

sections 1856(b) and 1860D–12(f)(1) of 

the Act, we proposed to codify our 

definition of parent organization for 

purposes of the MA and Part D 

programs as the legal entity exercising 

controlling interest in an MA 

organization or Part D sponsor. We 

proposed adding a definition for the 

term ‘‘parent organization’’ to § 422.2 in 

part 422, subpart A, and § 423.4 in part 

423, subpart A, to reflect this 

understanding. 

We proposed the codification to 

ensure that the MA and Part D programs 

apply a consistent definition of parent 

organization. CMS uses the identity of 

an MA organization’s or Part D 

sponsor’s parent organization in a 

variety of operational contexts, 

including, but not limited to: 

—Determining whether an individual 

can be deemed to have elected 

enrollment in a D–SNP based in part 

on his enrollment in an affiliated 

Medicaid managed care plan 

(§ 422.66(c)(2)); 

—Accounting for contract 

consolidations in assigning Star 

Ratings under the Quality Rating 

System for health and/or drug 

services of the same plan type under 

the same parent organization 

(§§ 422.162 and 423.182); 

—Determining whether a new MA 

contract constitutes a new MA plan 

for calculation of Star Ratings, 

benchmarks, quality bonus payments, 

and beneficiary rebates, (§ 422.252). 

—Recognizing an individual’s 

appointment as an MA organization’s 

or Part D sponsor’s compliance officer 

based on his or her status as an 

employee of the organization, its 

parent organization, or a corporate 

affiliate (§§ 422.503(b)(4)(vi)(B)(1) and 

423.504(b)(4)(vi)(B)(1)); 

—Determining whether an applicant for 

a new PDP contract is eligible to 

receive a contract in a particular 

service area (§ 423.503(a)(3)) after 

evaluating whether the approval of an 

application would result in a parent 

organization, directly or through its 

subsidiaries, holding more than one 

PDP contract in a PDP region; 

—Determining whether to administer an 

essential operations test to a Part D 

contract applicant new to the Part D 

program (§§ 423.503(c)(4) and 

423.505(b)(27), taking into account 

the exemption from the essential 

operations test for subsidiaries of 

parent organizations that have 

existing Part D business; 

—Releasing summary Part D 

reconciliation payment data at the 

parent organization level 

(§ 423.505(o)); and 

—Determining whether CMS will 

recognize the sale or transfer of an 

organization’s PDP line of business, 

where CMS regulations require the 

transfer of all PDP contracts held by 

the selling or transferring sponsor 

unless the sale or transfer is between 

wholly owned subsidiaries of the 

same parent organization 

(§ 423.551(g)). 

We currently define the term ‘‘parent 

organization’’ for purposes of applying 

the prohibition against approving an 

application that would result in a parent 

organization holding more than one PDP 

sponsor contract in a region as an entity 

that exercises a controlling interest in 

the sponsor. (See § 423.503(a)(3)). In 

conjunction with the proposal to codify 

a more detailed definition that would 

apply throughout the MA and Part D 

programs, we proposed to delete that 

language in § 423.503(a)(3). 

Under the proposed definition, a 

parent organization is the legal entity 

that holds a controlling interest in the 


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MA organization or Part D sponsor, 

whether it holds that interest directly or 

through other subsidiaries. The 

controlling interest can be represented 

by share ownership, the power to 

appoint voting board members, or other 

means. Control of the appointment of 

board members is particularly relevant 

with respect to not-for-profit 

organizations, where there is often no 

direct corollary to the ownership of 

corporate shares in for-profit 

organizations. We recognize that the 

many ways that one legal entity may 

have a controlling interest in another 

legal entity are varied and could take 

many forms too numerous for us to 

create an exhaustive list. Therefore, we 

proposed a definition that includes the 

ability for us to look at other means of 

control to be exercised or established. 

We further specified that the parent 

organization cannot itself be a 

subsidiary of another entity. This 

ensures that each MA organization or 

Part D sponsor has a single parent 

organization for purposes of the MA and 

Part D programs. For example, if 

Company A owns 80 percent of 

Company B, which in turn owns 100 

percent of an MA organization, 

Company A would be the parent 

organization of the MA organization 

under the proposed definition. 

We explained that the proposed 

definition codifies current policy and 

ensures continued consistency 

throughout the MA and Part D 

programs. We note that this definition of 

parent organization will apply in 

implementing the proposed change to 

§ 422.550 regarding the type of change 

of ownership that CMS would permit 

for MA contracts; we discuss that 

proposal in section V.D. of this final 

rule. 

Comment: A commenter suggested 

that we further clarify what we mean by 

‘‘controlling interest’’ by specifying that 

it means ownership of a ‘‘majority’’ of 

shares, appointment of a ‘‘majority’’ of 

voting board members, and/or by being 

a sole member. 

Response: We do not believe this 

clarification is necessary or appropriate. 

We also believe it may unnecessarily 

narrow the definition of ‘‘controlling 

interest’’ to one that simply counts 

shares of stock when organizations may 

adopt other criteria for allocating board 

membership and voting rights. For 

example, two organizations may own 

equal shares in a legal entity, so that 

neither holds a majority of shares, but 

the articles of incorporation or other 

organizational documents may specify 

that one of them has the power to cast 

the deciding vote when they disagree. In 

such a situation, CMS may determine 

that the organization with the power to 

make decisions in case of dispute is the 

parent despite there not being a single 

majority shareholder. Conversely, if two 

organizations owned equal shares of a 

legal entity and appointed equal 

numbers of board members and the 

organizational documents specified that 

decisions must be made jointly, CMS 

might determine that neither 

organization is the parent; additional 

factual information might be necessary 

to identify the organization that owns a 

controlling interest in the particular 

entity. 

After consideration of the comments 

and for the reasons outlined in the 

proposed rule and our response to 

comments, we are finalizing the 

provision as proposed without 

modification. Although we are 

finalizing this provision as applicable to 

coverage beginning January 1, 2022, it 

codifies current policies so we 

anticipate that there will be no change 

in operations or administration of the 

MA and Part D programs and encourage 

MA organizations and Part D sponsors 

to take this final rule into account 

immediately. 

I. Call Center Requirements (§§ 422.111 

and 423.128) 

In implementing sections 1851(d) and 

1860D–4(a)(3) of the Act, CMS 

established, at §§ 422.111(h) and 

423.128(d), that MA organizations and 

Part D sponsors are required to have in 

place a mechanism for providing, on a 

timely basis, specific information to 

current and prospective enrollees, and, 

for a Part D plan, to pharmacies in the 

plan network, upon request. One of 

these enumerated mechanisms includes 

operating a toll-free customer service 

call center. 

In this final rule, CMS is adding 

greater specificity and clarity to our 

requirements for MA and Part D plans 

by delineating more explicit minimum 

performance standards for MA and Part 

D customer service call centers, as well 

as ensuring greater protections for 

beneficiaries. We proposed changes to 

§§ 422.111(h) and 423.128(d) for this 

purpose and explained in the proposed 

rule our goals of providing plans clear 

standards under which to operate their 

customer service call centers and 

eliminating uncertainty with regard to 

CMS’s expectations. Customer service 

call centers include call centers 

operated for current enrollees, 

prospective enrollees, and for 

pharmacies in plans’ networks that are 

seeking information on drug coverage 

for customers enrolled in a particular 

plan. For the most part, we proposed, 

and are finalizing, amendments to 

§§ 422.111(h) and 423.128(d) to codify 

existing guidance and CMS’s overall 

policy with respect to operating a tollfree customer service call center 

remains largely the same. We have 

always expected MA organizations and 

Part D sponsors to operate customer 

service call centers in a way that 

ensures beneficiaries and pharmacies 

have timely and accurate access to 

information about benefits in a manner 

that they can understand and use. 

Providing specific performance 

standards in regulation text clearly lays 

out the performance requirements and 

our expectations for customer service 

call centers. Additionally, beneficiaries 

will benefit from CMS holding plans to 

clearly defined call center standards. As 

we explained in the proposed rule, 

failure to comply with the more specific 

minimum requirements finalized in this 

rule would represent significant 

deviation from acceptable call center 

operational practices and a significant 

risk to beneficiaries’ well-being under 

our enforcement policies and applicable 

regulations. 

In §§ 422.111(h)(1)(i) and 

423.128(d)(1)(i), we proposed that 

customer service call centers must be 

open from at least 8:00 a.m. to 8:00 p.m., 

local time, in all service areas and 

regions served by the MA or Part D plan, 

and for Part D plans, that any call center 

serving network pharmacies or 

pharmacists employed by those 

pharmacies must be open any time a 

pharmacy in the plan service area is 

open. We reminded stakeholders that 

MA–PD plans are Part D plans that must 

comply with Part 423 requirements. We 

proposed these timeframe standards to 

lend greater specificity to the current 

regulation text, which only requires a 

call center to be open during ‘‘normal 

business hours.’’ We explained that 8:00 

a.m.–8:00 p.m. constitutes normal 

business hours for beneficiary access, 

based both on our knowledge of 

industry-wide practices and our 

experience with MA and Part D plans’ 

call center operations in particular. 

Codifying the requirement for call 

centers serving network pharmacies to 

be open any time a pharmacy in that 

network in the plan’s service area is 

open reflects the need to resolve 

questions about benefits and coverage 

promptly at the point of sale. The vast 

majority of current MA and Part D plans 

meet these standards. We explained that 

by requiring plans to be open for calls 

from current and prospective enrollees 

from 8:00 a.m. to 8:00 p.m. in all service 

areas or regions served by that Part C or 

D plan, our proposal would ensure that 

in instances in which plans operate in 


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service areas that straddle multiple time 

zones, all beneficiaries and pharmacists 

have equal access to call center services. 

We proposed in §§ 422.111(h)(1)(ii) 

and 423.128(d)(1)(ii) a series of 

minimum requirements that define 

specific operational requirements for 

customer service call centers. In 

§§ 422.111(h)(1)(ii)(A) and 

423.128(d)(1)(ii)(A), we proposed to 

codify the requirement that the average 

hold time be 2 minutes or less, with 

specific text to explain when the twominute count starts to ensure consistent 

application of the metric by defining the 

hold time as the time spent on hold by 

callers following the interactive voice 

response (IVR) system, touch-tone 

response system, or recorded greeting, 

before reaching a live person. In 

§§ 422.111(h)(1)(ii)(B) and 

423.128(d)(1)ii)(B), we proposed to 

codify the requirements that the call 

center answer 80 percent of incoming 

calls within 30 seconds after the 

Interactive Voice Response (IVR), touchtone response system, or recorded 

greeting interaction. In 

§§ 422.111(h)(1)(ii)(C) and 

423.128(d)(i)(ii)(C), CMS proposed to 

codify the requirement that 5 percent or 

less of incoming call calls be 

disconnected or unexpectedly dropped 

by the plan customer call center. These 

standards both ensure that beneficiaries 

can consistently access call centers in a 

timely manner and set thresholds that 

plans can reasonably attain. We 

explained that data gathered from our 

call center monitoring studies indicates 

that 90 percent of MA organizations and 

Part D sponsors have average hold times 

of less than 2 minutes, 87 percent 

answer 80 percent incoming calls 

within 30 seconds, and 82 percent have 

disconnect rates of less than 5 percent. 

As we further explained, longstanding 

CMS policy interpreting the current 

regulatory requirement for the call 

center to meet standard business 

practices requires call centers to answer 

calls within 30 seconds and plans 

overwhelmingly comply with this 

requirement. 

CMS also proposed to amend 

§§ 422.111(h)(1)(iii) and 

423.128(d)(1)(iii) to further delineate 

accessibility requirements for nonEnglish speaking and limited English 

proficient (LEP) individuals. Plans have 

always been required to provide 

interpreters when necessary to ensure 

meaningful access to limited English 

proficient individuals, as that is 

consistent with existing civil rights 

laws. In addition, it ensures meaningful 

access to Medicare beneficiaries to 

Medicare-covered benefits. We 

proposed to further require that 

interpreters be available within 8 

minutes of reaching the customer 

service representative and that the 

interpreter be available at no cost to the 

caller. These requirements are 

consistent with our interpretation of the 

requirement for call centers to meet 

standard business practices and 

performance is measured against this 

standard in our current monitoring and 

oversight activities. We explained that 

data from our call center monitoring 

indicates that 95% of plans already 

meet this standard. 

CMS proposed to add 

§§ 422.111(h)(1)(iv) and 

423.128(d)(1)(v), explicitly requiring 

that call centers respond to TTY-to-TTY 

calls, consistent with standards 

established under existing law 

governing access for individuals with 

disabilities at 47 CFR part 604, subpart 

F. Section 504 of the Rehabilitation Act, 

Section 1557 of the Affordable Care Act, 

and the Americans with Disabilities Act 

already require the provision of 

appropriate auxiliary aids and services 

for individuals with disabilities, such as 

deaf or hard-of-hearing individuals. We 

also proposed, at §§ 422.111(h)(1)(v) and 

423.128(d)(1)(v), that when using 

automated-attendant systems, MA and 

Part D plans must provide effective realtime communication with individuals 

using auxiliary aids and services, 

including TTYs and all forms of FCCapproved telecommunications relay 

systems. See 28 CFR 35.161, 36.303(d). 

We explicitly clarified that the 

requirements proposed at 

§§ 422.111(h)(1)(ii) and 

423.128(d)(1)(ii)—regarding the average 

hold time, average answer time, and 

disconnect rate—also apply to TTY 

calls. CMS will hold plans accountable 

for complying with the requirements of 

§§ 422.111(h)(1)(ii) and 423.128(d)(1)(ii) 

when receiving TTY calls. We explained 

in the proposed rule how the proposed 

standards are consistent with current 

CMS interpretation and implementation 

of the requirement that plans have a call 

center that meets standard business 

practices and how. We explained that 

CMS data shows that 91 percent of 

plans currently respond to TTY calls 

within 7 minutes. We solicited 

comments on adopting the 7-minute 

response time as a TTY standard. 

We proposed to codify our existing 

interpretations and policies regarding 

MA and Part D plan call centers as 

explicit requirements for operating a 

toll-free customer service call center in 

§§ 422.111(h) and 423.128(d). We 

proposed this codification to ensure 

transparency and stability for plans 

about the performance standards they 

must meet. 

In this section of this rule, we 

summarize the comments we received 

and provide our responses and final 

decisions. 

Comment: Several commenters 

requested that we clarify whether the 

requirements for customer service call 

centers apply to call centers operated 

primarily for sales and marketing to 

prospective enrollees. The August 6, 

2019 HPMS memo issuing the updated 

Medicare Communication and 

Marketing Guidelines permitted plans to 

operate telephone lines designated 

solely for marketing activities, such as 

sales and enrollment, under different 

business hours than customer service 

call centers for current and prospective 

enrollees. The guidelines required that 

sales lines adhere to all other 

requirements for customer service call 

centers. Some commenters requested 

that CMS revise the proposed rule to 

reflect that guidance permitting sales 

and enrollment telephone lines to 

operate during different business hours 

than customer service call centers for 

current and prospective enrollees. 

Response: Once applicable, the 

provisions of this final rule will 

supersede prior, inconsistent call center 

guidance in the Medicare 

Communications and Marketing 

Guidelines. While we proposed to 

codify existing guidance, we did not 

include a provision permitting call 

centers operated for the MA plan to 

have different business hours based on 

specific functions. Sections 422.111(h) 

and 423.128(d) require the call centers 

to be a mechanism for providing the 

information described in those 

regulations to current and prospective 

enrollees. Using a separate call center 

for prospective enrollees is not 

consistent with the current regulation or 

the proposed revisions. We have 

therefore reconsidered that prior 

guidance and will not be using it going 

forward. Specifically, the policies 

included in this final rule apply the 

same requirements applicable to all 

customer service call centers for current 

and prospective enrollees, including 

those used for sales and enrollment. 

This includes the requirements related 

to hours of operation. 

The guidance issued in in August 

2019 to permit separate standards for a 

sales-only call center has proved 

difficult for CMS to enforce and 

confusing for some plans to adhere to. 

Specifically, plans have expressed 

confusion about the distinction between 

sales call centers and customer service 

call centers for prospective enrollees. 

CMS discovered that some plans were 

inappropriately using their automated 

answering system to direct calls from 


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numbers not known to be associated 

with plan enrollees to sales lines, 

making it difficult for both current 

enrollees and prospective enrollees to 

reach the customer service call center 

they were attempting to call and 

compromising the ability of current and 

prospective enrollees to get access to the 

information specified in §§ 422.111 and 

423.128. That information addresses 

topics and specifics that beneficiaries 

should have, such as information about 

benefits (including cost sharing and out 

of network coverage), access, and 

enrollment procedures, to make an 

enrollment election. Returning to a 

clearer and uniform approach to 

interpreting and implementing the call 

center requirements is important to 

ensure consistency and clarity. We also 

do not believe that this increases burden 

on plans, as even after the August 2019 

guidance plans were required to 

continue operating call centers for 

current and prospective enrollees from 

8 a.m. to 8 p.m. Under this final rule, 

all plan call centers must comply with 

the regulation standards. 

Comment: Some commenters wrote in 

approval of what they perceived to be 

stricter requirements for customer 

service call centers than CMS 

previously applied. For example, a 

commenter noted that the proposed rule 

would require call centers to connect 

callers with LEP to an interpreter within 

8 minutes 100 percent of the time. A 

few requested that CMS apply more 

stringent standards than proposed and 

currently used, including requiring that 

all customer service call centers be open 

24 hours a day, 7 days a week. 

Response: CMS appreciates the 

support. Our intention in codifying the 

current policy on customer service call 

center is to provide a uniform standard 

for customer service call centers, 

including call centers for current and 

prospective enrollees. We were explicit 

that under our proposal, CMS’s overall 

policy with respect to operating a tollfree customer service call center would 

remain largely the same and did not 

describe our proposals as creating more 

stringent specific standards. We do not 

believe that the requirements of the final 

rule represent a significantly more 

stringent standard than that which we 

expected under earlier guidance. In 

particular, it was not our intention to 

apply a stricter standard for interpreter 

availability or call center hours of 

operation than is described in current 

guidance. To clarify this, we are 

finalizing §§ 422.111(h)(1)(iii)(B) and 

423.128(d)(1)(iii)(B) with a change from 

the proposal to reflect the current 

compliance standard we used 

evaluating interpreter availability—80 

percent of calls being connected to an 

interpreter within 8 minutes. We note 

that plans already largely comply with 

this requirement of the final rule 

because 95 percent of plans already 

meet this standard and, in addition, the 

80 percent threshold is consistent with 

the thresholds codified with respect to 

the speed of answer. 

We are also finalizing, at 

§§ 422.111(h)(1)(i)(B) and 

423.128(d)(1)(i)(A), the proposed 

standards for operating hours, with a 

change to clarify that we are not 

expanding the hours of operation 

required for customer call centers 

compared to current practice (except to 

the extent we are discontinuing the 

allowance for sales and enrollment call 

centers to be open for shorter hours than 

customer service call centers for current 

and prospective enrollees). Not only do 

we not believe that customer service call 

centers for current and prospective 

enrollees need to be open 24 hours a 

day, 7 days a week without exception to 

ensure adequate service to Medicare 

beneficiaries, we do not believe it is 

necessary to expand the current policy 

in section 80 of the Medicare 

Communications and Marketing 

Guidelines, which permits call centers 

to be closed most Federal holidays and 

on weekends from April 1 through 

September 30. Therefore, we are 

finalizing our proposal for hours of 

operation with the addition of the same 

exceptions that have been outlined in 

the Medicare Communication and 

Marketing Guidelines for several years: 

—From October 1 through March 31 of 

the following year, call centers may be 

closed on Thanksgiving Day and 

Christmas Day, so long as the 

interactive voice response system or 

similar technology records messages 

from incoming callers on those 

holidays and such messages are 

returned in one (1) business day. This 

time period encompasses both the MA 

and Part D Annual Enrollment Period 

and the MA Open Enrollment period. 

Plans must not close their call centers 

for any other days during this period 

because of the need for both current 

and prospective enrollees to reach 

plans during these generally 

applicable enrollment periods in 

order to make informed decisions 

about their plan choices. 

—From April 1 through September 30, 

call centers may be closed on any 

Federal Holiday and on any Saturday 

or Sunday, so long as the interactive 

voice response system or similar 

technology records messages from 

incoming callers and such messages 

are returned in one (1) business day. 

These exceptions have been in place for 

many years and that there has been no 

indication that allowing call centers to 

close on these days has negatively 

impacted beneficiaries’ ability to reach 

and obtain services and information 

from plans. 

Comment: Some commenters 

expressed approval of CMS codifying 

performance standards in the regulation. 

Response: CMS appreciates 

commenters’ support for the proposed 

rule. In this final rule, we are organizing 

and structuring the addition of these 

more specific, minimum standards for 

plan call centers to §§ 422.111(h)(1) and 

423.128(d)(1) in a different way than 

proposed. Instead of replacing the 

existing regulation text with the more 

specific standards, we are maintaining 

the current regulation text that requires 

plan call centers to be open during 

usual business hours, provide customer 

telephone service in accordance with 

standard business practices, and 

provide interpreters for non-English 

speaking and limited English proficient 

(LEP) individuals. These general 

performance requirements remain 

applicable to plan call centers and are 

not changed by this final rule. Rather, 

this final rule adds the new specific 

standards with additional language to 

clarify how these specific standards will 

be applicable for coverage beginning on 

and after January 1, 2022. This means 

that these standards will apply to call 

center operations made in 2021 for 

enrollments made for contract year 2022 

(e.g., for call center activities during the 

Annual Election Period for 2022 that 

takes place in fall 2021). This clarifies 

how these specific standards are 

minimum performance thresholds for 

plan call centers and illustrates CMS’ 

expectation that plan call centers 

operate consistent with standard 

business practices to provide 

information and assistance to current 

and prospective enrollees. Regardless of 

whether there is a specific, minimum 

quantitative standard in our regulations, 

plans should ensure that their call 

centers provide high quality customer 

service, at a minimum consistent with 

usual and standard business practices. 

The regulations at §§ 422.111(h) and 

423.128(d) are clear that call centers are 

one of several mechanisms by which 

plans must provide specific information 

on a timely basis to current and 

prospective enrollees upon request. By 

adding certain specific minimum 

standards, we do not intend to dilute or 

lower that requirement. 

Comment: A few commenters 

requested that CMS apply the standards 

for pharmacy call centers to call centers 

for other health care providers, such as 


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physicians and hospitals. The 

commenter explained that health care 

providers also operate 24 hours, 7 days 

a week and may therefore need real time 

access to plan representatives to 

determine coverage for services. 

Response: CMS appreciates the 

suggestion. We understand that 

hospitals, physicians, and other nonpharmacy providers often operate 24 

hours a day, 7 days a week and may 

wish to have real time access to plan 

representatives at all times. However, 

unlike pharmacies, physicians and 

hospitals do not administer a point of 

sale benefit. Rather, they bill 

retrospectively. Therefore, immediate 

access to the plan through the call 

center does not appear to be necessary 

to ensure access to medically necessary 

covered health care. While CMS is open 

to considering future rulemaking in this 

area, we need to gather more evidence 

and stakeholder input to determine 

whether it is appropriate or necessary to 

require plans to operate 24-hour, 7-daya-week call centers for non-pharmacy 

providers. 

After consideration of the comments 

and for the reasons outlined in the 

proposed rule and our response to 

comments, we are finalizing the 

amendments to §§ 422.111(h) and 

423.128(d) regarding call centers as 

proposed, with five modifications. 

Two of the modifications address 

concerns explicitly raised by 

commenters. We are finalizing the 

proposed standards for interpreter 

availability with the addition that 80 

percent of calls requiring an interpreter 

must be connected to an interpreter 

within the proposed 8 minutes, rather 

than simply requiring all such calls to 

be connected within 8 minutes. In 

addition, CMS is finalizing the proposed 

hours of operation requirements with 

modifications to provide exceptions for 

certain federal holidays and on certain 

weekends so long as callers can leave 

messages and those messages are 

returned within one business day. These 

modifications reflect CMS’s intention to 

largely codify existing policy in this 

rule. 

The third modification that we are 

finalizing is similar to these two 

changes. CMS requested comment on 

whether to adopt the 7-minute TTY 

response time in the regulation. We 

received no comments on this issue and 

have decided to finalize the rule with a 

requirement that 80 percent of TTY calls 

be connected to an operator within 7 

minutes. As discussed in the February 

2020 proposed rule, this reflects current 

performance by plans (91 percent 

connect calls within the required time 

frame) and is consistent with the 

thresholds codified with respect to 

speed of answer and interpreter 

availability. 

Fourth, it has come to CMS’s attention 

that 47 CFR, part 64, subpart F applies 

to state-operated TTY relay systems and 

not to plan call centers. The proposed 

rule would have, at 42 CFR 

422.111(h)(1)(iv) and 

423.128(d)(1)(v)(A), required plan call 

centers to comply with these standards. 

However, neither CMS nor plans have 

authority over state-operated relay 

systems and Medicare plan call centers 

do not perform the same function as 

state relay systems. Therefore, CMS is 

not finalizing those provisions and is 

designating the remaining regulation 

text accordingly. 

Finally, we are finalizing the 

proposed additions to §§ 422.111(h) and 

423.128(d) with a slightly different 

structure to be consistent with how this 

final rule is adding specific minimum 

standards and is generally applicable 

beginning with coverage for 2022. 

Although we are finalizing these 

changes to §§ 422.111(h)(1) and 

423.128(d)(1) regarding call centers, 

with the modifications described above, 

as applicable with coverage beginning 

on and after January 1, 2022, it codifies 

current policies so we encourage MA 

organizations and Part D sponsors to 

take this final rule into account 

immediately. 

VI. Changes to the Programs of AllInclusive Care for the Elderly (PACE) 

The intent of this final rule is to revise 

and update the requirements for the 

Programs of All-Inclusive Care for the 

Elderly (PACE) under the Medicare and 

Medicaid programs. The PACE program 

is a unique model of managed care 

service delivery for the frail elderly, 

most of whom are dually-eligible for 

Medicare and Medicaid benefits, and all 

of whom are assessed as being eligible 

for nursing home placement according 

to the Medicaid standards established 

by their respective states. The proposals 

addressed reassessments, service 

delivery requests, appeals, participant 

rights, required services, excluded 

services, interdisciplinary team 

requirements, medical record 

documentation, access to data and 

records, safeguarding communications, 

and service delivery requirements. The 

finalized changes would reduce 

unnecessary burden on PACE 

organizations, provide more detail about 

CMS expectations and provide more 

transparent guidance. 

A. Service Determination Request 

Processes Under PACE (§§ 460.104 and 

460.121) 

Sections 1894(b)(2)(B) and 

1934(b)(2)(B) of the Act specify that 

PACE organizations must have in effect 

written safeguards of the rights of 

enrolled participants, including 

procedures for grievances and appeals. 

We issued regulations on grievances at 

§ 460.120, and we issued regulations on 

appeals at § 460.122. Additionally, CMS 

created a process under § 460.104(d)(2) 

to allow participants or their designated 

representatives to request that the 

interdisciplinary team (IDT) conduct a 

reassessment, when the participant or 

designated representative believes the 

participant needs to initiate, eliminate 

or continue a service. The process under 

§ 460.104(d)(2) is commonly referred to 

by CMS and industry as the service 

delivery request process. This process 

serves as an important participant 

protection, as it allows a participant to 

advocate for services. As we stated in 

the Medicare and Medicaid Programs; 

Programs of All-Inclusive Care for the 

Elderly (PACE); Program Revisions final 

rule (hereinafter referred to as the 2006 

PACE final rule), ‘‘[t]he provisions for 

reassessment at the request of a 

participant [were] intended to serve as 

the first stage of the appeals process.’’ 

(71 FR 71292). Section 460.104(d)(2) 

currently sets out the responsibilities of 

a PACE organization in processing each 

request. Currently, a participant or their 

designated representative initiates a 

service delivery request when they 

request to initiate, eliminate, or 

continue a service. Once the IDT 

receives the request, the appropriate 

members of the IDT, as identified by the 

IDT, must conduct a reassessment. The 

IDT member(s) may conduct the 

reassessment via remote technology 

when the IDT determines that the use of 

remote technology is appropriate and 

the service request will likely be 

deemed necessary to improve or 

maintain the participant’s overall health 

status and the participant or their 

designated representative agrees to the 

use of remote technology. However, the 

appropriate member(s) of the IDT must 

perform an in-person reassessment 

when the participant or their designated 

representative declines the use of 

remote technology, or before a PACE 

organization can deny a service request. 

Following the reassessment, the IDT 

must notify the participant or 

designated representative of its decision 

to approve or deny the request as 

expeditiously as the participant’s 

condition requires, but generally no 

later than 72 hours from the date of the 


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request for reassessment. If the request 

is denied, the PACE organization is 

responsible for explaining the denial to 

the participant or the participant’s 

designated representative both orally 

and in writing. The PACE organization 

is also responsible for informing the 

participant of his or her right to appeal 

the decision, including the right to 

request an expedited appeal, as 

specified in § 460.122. If the IDT fails to 

provide the participant with timely 

notice of the resolution of the request, 

or does not furnish the services required 

by the revised plan of care, the failure 

constitutes an adverse decision and the 

participant’s request must be 

automatically processed as an appeal in 

accordance with § 460.122. 

While this section provides an 

important participant protection, we 

have heard from stakeholders that the 

language in § 460.104(d)(2) is overly 

broad as written, and that even simple 

requests to initiate a service require a 

reassessment and a full review of the 

request by the PACE organization’s IDT. 

Stakeholders have also noted that 

addressing the service delivery request 

process in the section of the regulation 

governing participant assessments 

undercuts the importance of the 

requirements for processing these 

requests. Additionally, through CMS 

oversight and monitoring, we have 

identified a need to better define what 

constitutes a service delivery request 

and create clearer guidance on how 

PACE organizations must identify and 

process these requests. 

We proposed moving the 

requirements for service delivery 

requests at § 460.104(d)(2) to a new 

section of the regulations at § 460.121, 

titled ‘‘Service Delivery Requests.’’ We 

used the term ‘‘service delivery request’’ 

because that is the term typically used 

by industry and CMS to describe these 

actions, however, we solicited 

comments on whether we should utilize 

this term or consider something 

different. For example, the initial 

decision to cover a drug in Part D is a 

coverage determination (§ 423.566), and 

the initial decision to cover an item or 

service in Part C is an organization 

determination (§ 422.566). We requested 

feedback on whether a term other than 

‘‘Service Delivery Request,’’ such as 

‘‘PACE Organization Determination,’’ 

‘‘Coverage Determination,’’ or ‘‘Service 

Determination,’’ would be preferable. 

In addition to proposing that the 

requirements for processing service 

delivery requests would be moved from 

§ 460.104(d)(2) into a new section, we 

also proposed to modify these 

requirements based on industry 

feedback and lessons learned through 

our experience operating the PACE 

program and monitoring PACE 

organizations. First, we proposed to 

reorganize the requirements for clarity 

and to better align them with the 

appeals regulations in subpart M of 

parts 422 and 423, for Medicare 

Advantage (MA) and Part D 

respectively, while also ensuring the 

requirements address the specific 

features of the PACE program, which is 

a unique combination of payer and 

direct care provider. We believe aligning 

the layout of the regulation and the 

notification requirements of the initial 

determination processes in PACE, MA, 

and Part D would allow us to minimize 

confusion for participants, who are 

often familiar with the initial 

determination and appeals processes in 

the Parts C and D programs, and would 

also increase transparency for PACE 

organizations regarding CMS’ 

expectations. 

While the current regulation at 

§ 460.104(d)(2) begins with the 

requirements for processing a request 

for reassessment, we added § 460.121(a) 

to require that a PACE organization 

must have formal written procedures for 

identifying and processing service 

delivery requests in accordance with the 

requirements of § 460.121. We believe it 

is important to ensure that PACE 

organizations develop internal processes 

and procedures to properly implement 

this process. 

At § 460.121(b), we define what 

constitutes a service delivery request 

and what does not. We define what 

constitutes a service delivery request at 

§ 460.121(b)(1). Currently, the process in 

§ 460.104(d)(2) is triggered if the 

participant (or his or her designated 

representative) believes the participant 

needs to initiate, eliminate, or continue 

a particular service. At § 460.121(b)(1), 

we specify that the process for service 

delivery requests would apply to 3 

distinct types of service delivery 

requests, specifically, a request to (1) 

initiate, (2) modify, or (3) continue a 

service. 

We note that the term ‘‘services’’ is 

already defined at 460.6 to include 

‘‘items,’’ and we proposed, as discussed 

in section VI.I. of this final rule, to make 

explicit that this definition is meant to 

reflect the full scope of the PACE benefit 

package, and thus also includes ‘‘items’’ 

and ‘‘drugs.’’ Therefore, our use of 

‘‘service’’ or ‘‘services’’ throughout 

§ 460.121 always includes any type of 

PACE-covered services, items, or drugs, 

and participants have the right to 

advocate with respect to all types of 

PACE-covered services, items, or drugs 

that they believe may be necessary. The 

language at § 460.121(b)(1) would retain 

the existing concepts of ‘‘initiating’’ and 

‘‘continuing’’ services but would replace 

the term ‘‘eliminate’’ with the term 

‘‘modify.’’ 

In § 460.121(b)(1)(i) that the first type 

of service delivery request would be a 

request to initiate a service. This first 

type of request is based on the existing 

language at § 460.104(d)(2). In 

§ 460.121(b)(1)(ii) that the second type 

of service delivery request would be a 

request to modify an existing service. 

We specify that requests to modify an 

existing service include requests to 

increase, reduce, eliminate, or otherwise 

change a particular service. We believe 

that defining service delivery requests to 

include requests to modify an existing 

service is an important protection, as 

participants may believe that the 

services they are currently receiving are 

not sufficient to meet their needs. For 

example, a participant may request to 

increase their home care from 3 hours 

a week to 6 hours a week because they 

believe that they are becoming less 

steady in their gait and they are afraid 

to be alone for long periods. 

The third type of service delivery 

request at § 460.121(b)(1)(iii), is a 

request to continue a service that the 

PACE organization is recommending be 

discontinued or reduced. This type of 

request would apply to circumstances 

where the PACE organization is 

recommending to discontinue or reduce 

a service that the participant is already 

receiving, and the participant wishes to 

continue receiving that service. An 

example of this type of request would be 

a participant that is attending the PACE 

center 5 days a week and the PACE 

organization decides to reduce 

attendance to 4 days a week. If the 

participant requests to continue 

attending the center 5 days a week, this 

request must be processed as a service 

delivery request under our proposal. 

Another example would be if a 

participant is receiving a specific drug, 

and the IDT makes a decision to stop 

providing that drug. Under the proposal, 

the participant’s request to continue 

receiving the drug would be processed 

as a service delivery request. Through 

our monitoring of PACE organizations, 

we have identified instances where a 

participant requests to continue 

receiving a service that has been 

reduced or discontinued, and the PACE 

organization provides the participant 

appeal rights under § 460.122 instead of 

conducting a reassessment as required 

under the current § 460.104(d)(2). We 

would include requests to continue 

coverage of a service in part to ensure 

that PACE organizations understand 

that they must process a service delivery 

request for these situations before 


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processing an appeal under § 460.122. 

Our revisions to this section, as well as 

our revisions to the appeals regulation 

discussed in section VI.B. of this final 

rule, would establish that the service 

delivery request process is the first level 

of the appeals process, and requests to 

continue a service must first be 

processed under the service delivery 

request process prior to an appeal being 

initiated under § 460.122. We discuss 

the scope of the appeals process in 

greater depth in our discussion of the 

updates to the appeals process in 

section VI.B. of this final rule. We also 

proposed that participants would be 

allowed to make this type of service 

delivery request before a service was 

actually discontinued, to permit the 

participant to advocate for a 

continuation of the service. This 

requirement is reflected in the language 

we proposed for § 460.121(b)(1)(iii), 

where we emphasize that this provision 

relates to a service that the PACE 

organization is recommending be 

discontinued or reduced. We believe by 

wording this requirement in this way, 

we would make clear that the 

participant could make a service 

delivery request as soon as a PACE 

organization recommends reducing or 

discontinuing a service. For example, if 

the IDT was recommending reducing 

center attendance from three days a 

week to two days a week, and the 

participant wanted to continue coming 

to the center three days a week, the 

participant could request a service 

delivery request once the IDT 

recommended the reduction, even if the 

reduction in days had not yet been 

implemented. 

We recognize that our proposal 

defined what constitutes a service 

delivery request broadly. We also 

understand that there are circumstances 

that are unique to PACE where a request 

may not constitute a service delivery 

request based on the role of a PACE 

organization as a direct care provider 

that is responsible for coordinating and 

delivering care. Therefore, we proposed 

an exception to the definition of a 

service delivery request. In paragraph 

(b)(2) we specify that certain requests to 

initiate, modify, or continue a service 

would not constitute a service delivery 

request, even if the request would 

otherwise meet the definition of a 

service delivery request under (b)(1). 

Specifically, at § 460.121(b)(2) if a 

request is made prior to the 

development of the initial care plan the 

request would not constitute a service 

delivery request. This exemption would 

apply any time before the initial care 

plan was finalized (and discussions 

amongst the IDT ceased). We believe 

this approach would be beneficial to the 

participant and the PACE organization 

as the IDT and the participant or 

caregiver continue to discuss the 

comprehensive plan of care taking into 

account all aspects of the participant’s 

condition as well as the participant’s 

wishes. For example, if the PACE 

organization is developing the initial 

plan of care and actively considering 

how many home care hours the 

participant should receive, and the 

participant makes a request for a 

particular number of home care hours, 

that request would not be a service 

delivery request because the IDT was 

actively considering that question in 

developing the plan of care. Once the 

initial plan of care is developed, if a 

service was not incorporated into the 

plan of care in a way that satisfies the 

participant, the participant would 

always have the right to make a service 

delivery request at that time. 

While drafting the proposal, we 

considered other ways to potentially 

limit the application of the service 

delivery request process to account for 

situations where it is possible to 

adequately address a request without 

undertaking the full service delivery 

request process. First, we considered 

excluding requests for services made 

during the course of a treatment 

discussion with a member of the IDT 

from the service delivery request 

process, so long as the IDT member is 

able to immediately approve the service. 

Ultimately we decided these situations 

should constitute service delivery 

requests, in order to avoid confusion by 

requiring PACE organizations to 

distinguish between requests for 

services that constitute service delivery 

requests and those that do not. 

However, in an effort to reduce burden, 

we determined that it would be 

appropriate to process service delivery 

requests that an IDT member is able to 

approve in full at the time the request 

is made in a more streamlined manner 

than other service delivery requests. We 

discuss our proposals on this point in 

more detail in the section relating to 

§ 460.121(e)(2) in this final rule. 

We also considered whether we could 

exclude other types of requests from the 

service delivery request process. For 

example, we have received questions 

from PACE organizations about requests 

that do not relate to health care or to a 

participant’s medical, physical, 

emotional, and social needs, such as a 

participant requesting lemons in their 

water, or a participant requesting a 

particular condiment at lunch. We 

considered proposing to exclude 

requests that are not related to health 

care or to the participant’s medical, 

physical, emotional, and social needs, 

and therefore would not constitute a 

service delivery request. We strongly 

believe that any time a service may be 

necessary to maintain or improve the 

participant’s overall health status, 

taking into account the participant’s 

medical, physical, emotional, and social 

needs, that request should be processed 

as a service delivery request. We 

similarly understand that some requests 

are completely unrelated to the 

participant’s health care or condition. 

However, we believe that adding a 

provision to address this relatively 

insignificant issue would potentially 

cause confusion for PACE organizations 

and participants and therefore we did 

not propose such a provision at this 

time. We solicited comments on 

whether specifying that requests 

unrelated to a participant’s medical, 

physical, emotional, and social needs 

need not be processed using the service 

delivery request process would benefit 

PACE organizations without restricting 

participants’ ability to advocate for any 

service they believe may be necessary, 

regardless of whether that is meals, 

transportation, drugs, home care, or 

other services provided as part of the 

PACE benefit, and if so, how we should 

word such a provision. 

We also proposed at § 460.121(c) to 

specify the individuals who can make a 

service delivery request. Under the 

current requirements in § 460.104(d)(2), 

only the participant or the participant’s 

designated representative may request 

to initiate, eliminate, or continue a 

particular service. This proposal would 

expand the number of individuals who 

can make a service delivery request on 

behalf of a PACE participant to include 

the participant, the participant’s 

designated representative, or the 

participant’s caregivers. We believe that 

the proposal would be consistent with 

the current practice of most PACE 

organizations, in part because caregivers 

are often also participants’ designated 

representatives; however, it would 

affirmatively state in regulation that 

these individuals may make service 

delivery requests. We believe this would 

provide an important safeguard for 

participants, as caregivers are usually 

aware of the participant’s situation and 

have valuable insight into what services 

would be beneficial. For example, if a 

PACE participant’s wife believes that 

the participant needs more home care to 

assist with toileting, bathing and 

dressing, she would be able to make a 

service delivery request to the PACE 

organization and advocate for that 

service delivery request, regardless of 


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whether she is her spouse’s designated 

representative. The proposal also 

aligned with current care plan 

regulations (§ 460.106(e)) which state 

that the IDT must develop, review, and 

reevaluate the plan of care in 

collaboration with the participant or 

caregiver or both. Because caregivers are 

involved in the care planning process 

and determining what care may be 

necessary, we believe that it is also 

appropriate for these individuals to be 

able to advocate for services as 

necessary on behalf of a participant, 

regardless of whether these service 

delivery requests result in changes to 

the plan of care. While a designated 

representative or caregiver such as a 

family member may initiate the service 

delivery request process, the PACE 

organization remains responsible for 

issuing a decision based on the 

individual needs of the participant 

regardless of the party that initiated the 

request. We solicited comments on this 

proposal to expand the number of 

individuals who can make a service 

delivery request on behalf of a PACE 

participant. In addition, we solicited 

comment regarding whether or not there 

are other individuals that should be 

allowed to make service delivery 

requests on behalf of a participant. For 

example, in MA and Part D, providers 

or prescribers can initiate a request for 

coverage (either coverage determination 

or organization determination) on behalf 

of a beneficiary, which allows 

prescribers or other providers to 

advocate for drugs or services that are 

unique to their discipline or scope of 

practice. In PACE, this would mean that 

if a participant went to a contracted 

specialist, that specialist would be 

allowed to advocate or request a service 

specific to their discipline. We 

specifically solicited comments on 

whether we should specify that 

prescribers or providers, outside of the 

IDT, can make a service delivery request 

on behalf of a participant in PACE. 

We also proposed at § 460.121(d) to 

specify how a service delivery request 

may be made. The current regulation at 

§ 460.104(d)(2) is silent regarding how a 

participant or his or her designated 

representative may request to initiate, 

eliminate, or continue a particular 

service. We proposed at § 460.121(d)(1) 

to permit service delivery requests to be 

made either orally or in writing. We 

believe this is consistent with current 

practice for all PACE organizations. The 

right to request an initial determination 

either orally or in writing is provided as 

an enrollee safeguard in both MA and 

Part D (see §§ 422.568(a)(1), 422.570(b), 

423.568(a)(1), and 423.570(b)), and 

given the vulnerability of the PACE 

population, we believe it is important 

that PACE participants also have the 

ability to submit service delivery 

requests in either form. We also 

proposed at § 460.121(d)(2) that service 

delivery requests may be made to any 

individual who provides direct care to 

a participant on behalf of the PACE 

organization, whether as an employee or 

a contractor. All employees and 

contractors that provide direct 

participant care should be trained to 

recognize and document these requests 

when they are made by a participant 

pursuant to § 460.71. Because of the 

comprehensive nature of the PACE 

program and the requirement that PACE 

organizations provide care across all 

care settings, participants may not know 

whom they should communicate with 

when making a service delivery request. 

For example, certain participants may 

not attend the PACE center on a routine 

basis and a home care aide may be the 

only representative of the PACE 

organization the participant has contact 

with frequently. Under this proposal, 

the participant could make service 

delivery requests to the home care aide, 

and those requests would be considered 

to have been made to the PACE 

organization. All individuals providing 

direct care to participants, whether 

contractors or employees, should be 

trained to recognize service delivery 

requests and ensure such requests are 

documented appropriately and brought 

to the IDT as part of the training 

employees and contractors receive 

under § 460.71(a)(1). While we require 

that all contractors and employees that 

provide direct care be able to receive 

service delivery requests from 

participants, we solicited comment on 

whether this requirement should be 

limited to a smaller subset of 

individuals. For example, we solicited 

comment on whether we should instead 

require only those contractors or 

employees who provide direct 

participant care in the participant’s 

residence, the PACE center, or while 

transporting participants to receive 

service delivery requests. 

We would establish new requirements 

at § 460.121(e) specifying how service 

delivery requests must be processed. In 

§ 460.121(e)(1) all service delivery 

requests must be brought to the IDT as 

expeditiously as the participant’s 

condition requires, but no later than 3 

calendar days after the date the request 

was made. The existing requirement at 

§ 460.104(d)(2)(iii) specifies that the IDT 

must generally notify the participant or 

designated representative of its decision 

in regard to a request to initiate, 

eliminate, or continue a particular 

service no later than 72 hours after the 

date the IDT receives the request for 

reassessment. Stakeholders have 

requested that CMS explain if the 

current 72-hour timeframe begins when 

any member of the IDT receives the 

service delivery request, or when the 

full IDT receives the request. In order to 

avoid similar questions about the new 

service delivery request process we 

proposed, we also established two 

distinct timeframes. Specifically, an 

initial timeframe for the PACE 

organization to bring a service delivery 

request to the IDT, and a second 

timeframe for the IDT to make a 

decision and provide notice of the 

decision to the participant. We would 

include this second timeframe at 

§ 460.121(i), and discuss in more detail 

later in this section. We believe that 

creating these distinct timeframes 

would benefit both PACE organizations 

and participants. We also believe it is 

necessary to ensure that once a service 

delivery request is made, it is brought to 

the IDT for processing as expeditiously 

as the participant’s condition requires 

but no later than 3 calendar days from 

when the request was actually made. In 

monitoring PACE organizations, we 

have seen organizations take a week or 

longer after a request was first made to 

bring the request to the IDT for 

consideration. By establishing a 

requirement that service delivery 

requests must be brought to the IDT as 

expeditiously as the participant’s 

condition requires but no later than 3 

calendar days from the time the request 

is made, we believe this would ensure 

participant requests are handled 

expeditiously while still ensuring the 

IDT has sufficient time to process the 

service delivery request and consider all 

relevant information when making a 

decision. We solicited comments on this 

proposal to establish a new timeframe 

for PACE organizations to bring service 

delivery requests to the IDT. 

We also proposed at § 460.121(e)(2) to 

specify an exception to the processing 

requirements for service delivery 

requests. Specifically, if a member of the 

IDT receives a service delivery request 

and is able to approve the request in full 

at the time the request is made, the 

PACE organization would not be 

required to follow certain processing 

requirements. We understand that PACE 

organizations, as direct care providers, 

routinely interact with participants 

when providing care and services. 

These interactions often include 

treatment discussions between an IDT 

member and a participant about what 

care may or may not be appropriate for 


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the participant to receive. During these 

discussions, a participant may request a 

service that the IDT member receiving 

the request is able to immediately 

approve as requested based on their 

knowledge of the participant and the 

participant’s condition. For example, 

during a physical therapy session, a 

participant may request a walker to 

assist in his or her daily activities. If the 

physical therapist, who is a member of 

the IDT, determines that the item is 

necessary and can approve the walker at 

the time the participant requests it, then 

the request would not need to be 

processed as a normal service delivery 

request. The exception would not apply 

if the IDT member cannot approve 

exactly what is requested. For example, 

if a participant requested 20 hours per 

week of home care but the IDT member 

is only willing to approve 15 hours per 

week, the exception would not apply 

because the participant’s request would 

be partially denied. Specifically, at 

§ 460.121(e)(2)(i) would require that 

when a member of the IDT can approve 

a service delivery request in full at the 

time the request is made, the PACE 

organization must fulfill only the 

requirements in paragraphs (j)(1), (k), 

and (m). These paragraphs are discussed 

in more detail later in this section, and 

generally relate to notice of a decision 

to approve a service delivery request, 

effectuation requirements, and record 

keeping. We also proposed at 

§ 460.121(e)(2)(ii) that PACE 

organizations would not be required to 

process these particular service delivery 

request in accordance with paragraphs 

(f) through (i), paragraph (j)(2), or 

paragraph (l) of this new section, all of 

which are discussed in more detail in 

this section of this final rule. 

This exception to how a service 

delivery request is processed based on 

feedback from stakeholders that IDT 

members often have treatment 

discussions with participants about 

modifying services and make decisions 

to accommodate the participants’ 

requests in full at the time the requests 

are made. Additionally, we have seen 

situations where a caregiver requests an 

item or service that an IDT member is 

able to immediately approve at the time 

the request is made. In these situations, 

it is important that the decision to 

approve the service is communicated to 

the participant or the requestor at the 

time the request is made so that the 

participant/requestor understands the 

outcome of their request. If a decision to 

approve a requested service cannot be 

made in full at the time of the request, 

the PACE organization must fully 

process the service delivery request in 

accordance with all relevant paragraphs 

of this new section. If an IDT member 

can quickly approve a service as being 

necessary for the participant, we do not 

believe that it would benefit the 

participant or the organization to have 

to fully process a service delivery 

request, since the participant or 

requestor has already been successful in 

advocating for the service. Instead, the 

participant would be better served by 

the IDT member quickly communicating 

the approval, and working to provide 

the requested service as expeditiously as 

the participant’s condition requires. We 

want to note that pursuant to our 

proposal in § 460.121(d)(2), a service 

delivery request may be made to any 

contractor or employee who provides 

direct care to a participant, and that all 

individuals providing direct care to 

participants, whether contractors or 

employees, should be trained to 

recognize and receive service delivery 

requests pursuant to § 460.71(a)(1). 

However, to specifically limit the 

exception in § 460.121(e)(2) to requests 

made to IDT members, where the 

receiving member of the IDT is able to 

approve the service delivery request in 

full at the time the request is made. This 

will ensure that the IDT remains 

responsible for determining the benefits 

a participant should receive, and that 

contractors or employees, such as a 

home care aide, are not authorizing 

services without the IDT’s review. 

We also believe this exception at 

§ 460.121(e)(2) would reduce the current 

burden on PACE organizations in three 

primary ways. First, PACE organizations 

would not have to bring requests that 

can be quickly approved by one IDT 

member to the full IDT for consideration 

and discussion, which would allow the 

IDT to use that time for other purposes, 

including to focus on requests that 

require in-depth consideration. Second, 

because the IDT would not have to 

conduct a reassessment in each case, we 

expect that this change would improve 

the overall speed with which PACE 

organizations are able to provide 

necessary services. Third, the IDT 

would not have to provide separate 

notification to the participant because 

the IDT member would inform the 

participant or requestor that the request 

was approved in the initial discussion. 

Currently the IDT is required to 

process requests for reassessments from 

participants and/or designated 

representatives under § 460.104(d)(2). 

The IDT is responsible for selecting the 

appropriate IDT members to conduct the 

reassessment under § 460.104(d)(2), and 

for issuing a decision to approve or 

deny a request under 

§ 460.104(d)(2)(iii). At § 460.121(f), we 

would require that all service delivery 

requests, other than those under 

§ 460.121(e)(2), must be brought to the 

full IDT for review and discussion 

before the IDT makes a determination to 

approve, deny or partially deny the 

request. As required by § 460.102(b), 

each PACE organization’s IDT must, at 

a minimum, be composed of members 

qualified to fill the roles of 11 

disciplines, each of which offers a 

unique perspective on the participant’s 

condition. CMS commonly refers to this 

group as the full IDT. Because service 

delivery requests not processed under 

§ 460.121(e)(2) are processed only for 

services that cannot be approved in full 

at the time the request is received, we 

believe that it is important that the IDT, 

as a whole, discuss the service delivery 

request in order to determine whether 

the request should be approved or 

denied. A discussion by the full IDT 

would allow each discipline to offer 

their perspective on the participant’s 

condition as it relates to the requested 

service, and ensure that the IDT is best 

equipped to determine what services are 

necessary to improve or maintain the 

participant’s health status. As 

previously discussed, service delivery 

requests that are approved in full by a 

member of the IDT at the time the 

request is made would not have to be 

brought to the full IDT for review. 

In § 460.121(g) we would require that 

the IDT must consider all relevant 

information when evaluating a service 

delivery request. Currently, the 

regulation is silent on what the IDT 

must consider when making a decision 

under § 460.104(d)(2). The IDT must 

consider, at a minimum, the findings 

and results of any reassessment(s) 

conducted in response to a service 

delivery request, as well as the criteria 

used to determine required services 

specified in § 460.92(b), as discussed in 

section VI.C. of this final rule. We have 

seen through our monitoring efforts that 

certain IDTs do not always consider the 

reassessments conducted in response to 

a service delivery request when making 

a decision. For example, a physical 

therapist and occupational therapist 

may both indicate in their disciplinespecific reassessments that a participant 

would benefit from additional home 

care hours, but the IDT might deny the 

request without explaining why the 

recommendations resulting from those 

reassessments were not followed. We 

believe it is important that an IDT is 

able to demonstrate that it took any 

reassessments performed in the process 

of reviewing a service delivery request 

into consideration when making a 

decision on that service delivery 


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request. Additionally, we believe that 

IDT decision making for service delivery 

requests should be aligned with the 

IDT’s decision making for what 

constitutes a required service under 

§ 460.92(b). Specifically, we believe that 

a decision by the IDT to provide or deny 

services must be based on an evaluation 

of the participant that takes into account 

the participant’s medical, physical, 

emotional and social needs. We have 

encountered situations where the IDT 

made its decision based on one aspect 

of the participant’s condition, for 

example, their physical health related to 

their ability to perform activities of 

daily living, but disregarded other 

aspects of the participant’s condition, 

such as their medical, emotional, and 

social needs. We believe that the IDT 

must consider all aspects of the 

participant’s condition in order to make 

an appropriate decision. For example, if 

the participant is requesting to attend 

the PACE center on additional days due 

to feelings of social isolation and 

depression, it would be inappropriate 

for the IDT to make a decision based on 

the participant’s physical needs without 

considering their emotional and social 

needs. Additionally, under the 

modifications in § 460.92, we would 

also expect PACE organizations to 

utilize current clinical practice 

guidelines and professional standards of 

care when rendering decisions, as 

applicable to a requested service. We 

discuss this decision making process 

and use of these guidelines in more 

detail in section VI.C. of this final rule. 

Based on feedback from PACE 

organizations and advocacy groups, at 

§ 460.121(h) we proposed to require an 

in-person reassessment only prior to an 

IDT’s decision to deny or partially deny 

a service delivery request. Currently, the 

IDT must perform a reassessment as part 

of its consideration of any request to 

initiate, eliminate, or continue a service 

under § 460.104(d)(2), regardless of 

whether the request is approved or 

denied. We modified the requirements 

related to conducting reassessments in 

response to a participant or designated 

representative’s request to initiate, 

eliminate, or continue a service in the 

2019 PACE Final Rule (84 FR 25644 

through 25646). The regulations now 

permit the IDT to conduct that 

reassessment via remote technology if 

certain requirements are met, but the 

IDT must conduct an in-person 

reassessment prior to denying a request. 

However, since that rule was published 

on June 3, 2019, we have continued to 

receive feedback from PACE 

organizations requesting further action 

to address the burden of conducting 

reassessments in response to service 

delivery requests, specifically when the 

IDT can approve a request without 

performing a reassessment. Under our 

proposal, if a service delivery request is 

brought to the full IDT and the IDT 

determines that it can approve the 

request based on the information 

available, the IDT would not be required 

to conduct a reassessment of the 

participant prior to making a decision to 

approve the service delivery request. We 

understand that many IDTs have 

frequent interactions with PACE 

participants and may be able to make a 

decision to approve a request without 

having to conduct another reassessment 

based on internal consultation and 

knowledge of the participant. As we 

indicated in our discussion for 

§ 460.121(e)(2), we do not believe that 

delaying the provision of a requested 

service the IDT has determined is 

necessary, in order to conduct a 

reassessment, benefits the PACE 

organization or the participant. We 

believe the IDT, with its knowledge of 

the participant, is in the best position to 

determine if a reassessment is necessary 

prior to approving a service delivery 

request. Therefore, CMS would only 

require a reassessment prior to the IDT 

denying or partially denying a request 

under this proposal. 

If, after consideration of all available 

information, the full IDT expects to 

make a decision to deny or partially 

deny a service delivery request, the IDT 

would be required to perform an 

unscheduled in-person reassessment 

pursuant to § 460.121(h)(1), prior to 

making a final decision. We would 

consider a request denied or partially 

denied whenever the IDT makes a 

decision that does not fully approve the 

service delivery request as originally 

requested. For example, if a participant 

requested 3 hours of home care a week, 

and the IDT made a decision that the 

participant only required 2.5 hours of 

home care each week, such a decision 

by the IDT would constitute a partial 

denial because the request was not fully 

approved as requested by the 

participant. In other words, any 

decision to offer a compromise, an 

alternative service, or to grant only a 

portion of the request would constitute 

a partial denial. The in-person 

reassessment must be conducted by the 

appropriate members of the IDT, as 

identified by the IDT, in order to align 

with the current requirement under 

§ 460.104(d)(2) that the IDT is 

responsible for identifying the 

appropriate members to conduct the 

reassessment. We believe this change 

would strike an appropriate balance 

between protecting participants and 

ensuring that the process for handling 

service delivery requests is not overly 

burdensome for PACE organizations. 

We also proposed in § 460.121(h)(1) to 

require that any reassessment conducted 

for a service delivery request must 

evaluate whether the requested service 

is necessary to meet the participant’s 

medical, physical, emotional, and social 

needs in a manner consistent with 

§ 460.92, and the revisions we proposed 

to those provisions. We have seen 

through our monitoring efforts that in 

conducting reassessments as a result of 

requests to initiate, eliminate or 

continue particular services, the IDTs 

are not always evaluating whether the 

requested service would actually 

improve or maintain the participant’s 

condition, taking into account all 

relevant aspects of the participant’s 

condition, including assessing the 

participant’s medical, physical, 

emotional and/or social needs as 

applicable. We believe this information 

is vital, and must be considered by the 

full IDT in making its decision. For 

example, if a participant is requesting 

more days at the PACE center for social 

reasons, the IDT should ensure that the 

appropriate members of the IDT conduct 

the reassessment in order to evaluate the 

participant’s social needs, and whether 

additional center days are necessary to 

meet the participant’s needs, including 

improving the participant’s social 

condition. We discuss our proposed 

modifications for § 460.92 in greater 

detail in section VI.C. of this final rule. 

In accordance with our belief that the 

IDT is in the best position to determine 

if a reassessment is necessary prior to 

approving a service delivery request, at 

§ 460.121(h)(2) we proposed that the 

IDT may choose to conduct a 

reassessment (via either remote 

technology or in-person) before 

approving a service delivery request, but 

we do not believe we should require one 

as part of the process for approving 

service delivery requests. If the IDT 

determines a reassessment should be 

conducted prior to approving the 

request, the IDT would still be 

responsible for processing the service 

delivery request, and notifying the 

participant, in the timeframe specified 

at § 460.121(i). 

In paragraph (i) we would establish a 

time frame in which the IDT must make 

its determinations regarding service 

delivery requests and provide 

notification of its decisions. The current 

requirement under § 460.104(d)(2)(iii) 

states that the IDT must notify the 

participant or designated representative 

of its decision to approve or deny a 

service delivery request as expeditiously 


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as the participant’s condition requires, 

but no later than 72 hours after the date 

the IDT receives the request, unless the 

IDT extends the timeframe. CMS has 

interpreted this language as requiring 

that the IDT must notify the participant 

or their designated representative 

within 3 calendar days of receiving a 

request, based on the wording of the 

requirement which states ‘‘72 hours 

from the date’’ and thus requires that 

the timeframe starts on the day received. 

We proposed a similar timeframe at 

§ 460.121(i), to require that the IDT 

make its determination and notify the 

participant or their designated 

representative of the determination as 

expeditiously as the participant’s health 

condition requires, but no later than 3 

calendar days after the date the IDT 

receives the request. We continue to 

believe this is a reasonable timeframe 

for the IDT to discuss the request, 

conduct reassessments when required, 

and make a decision. 

The IDT is currently allowed to 

extend the timeframe for notifying a 

participant or their designated 

representative by no more than 5 

additional days under 

§ 460.104(d)(2)(iv). Extensions are 

currently permitted when the 

participant or designated representative 

requests an extension, or when the IDT 

documents its need for additional 

information and how the delay is in the 

interest of the participant. In 

§ 460.121(i)(1) we proposed to include a 

similar provision for extensions, which 

would allow the IDT to extend the 

timeframe for review by up to 5 

calendar days beyond the original 

deadline in certain circumstances. In 

§ 460.121(i)(1)(i) we proposed that the 

IDT may extend the timeline for review 

and notification if the participant or 

other requestor listed in § 460.121(c)(2) 

or (3) requests the extension. We would 

change designated representative to 

requestor to account for the change we 

made in § 460.121(c) regarding who can 

make a service delivery request, and 

including caregivers in situations where 

that person may not already be a 

designated representative. We believe 

that the participant or other requestor 

should be able to request an extension. 

For example, the participant may be out 

of town and the caregiver may request 

the IDT to take an extension in order for 

the participant to be in-person for the 

reassessment related to the request. 

Under proposed § 460.121(i)(1)(ii) the 

IDT could extend the timeframe for 

review and notification when the 

extension is in the best interest of the 

participant due to the IDT’s need to 

obtain additional information from an 

individual who is not directly employed 

by the PACE organization, and that 

information may change the IDT’s 

decision to deny a service. We believe 

it is important that the IDT does not 

routinely take extensions when the 

participant or other requestor has not 

asked for an extension. We understand 

that when the IDT has to obtain 

information from individuals not 

employed directly by the organization, 

it may be difficult to get timely 

responses. We also understand that 

obtaining this information is beneficial 

for the IDT and the participant in order 

to ensure that the IDT has sufficient 

information to make a decision on 

whether or not a service should be 

approved. For example, if the IDT is 

considering a request for dentures, 

information from the participant’s 

dentist would be relevant to the review, 

and the IDT may need to take an 

extension if the dentist does not 

respond within the initial 3 calendar 

days. However, we believe it is 

important that PACE organizations 

develop processes to ensure prompt 

decisions about service delivery 

requests, and that IDTs do not routinely 

or unnecessarily rely on extensions of 

the notification timeframe, such as 

when information can be obtained from 

an employee of the PACE organization. 

We also proposed, for extensions based 

on the need for additional information, 

to apply the requirements currently in 

§ 460.104(d)(2)(iv)(B) which require the 

IDT to document the circumstances that 

led to the extension and to demonstrate 

why the extension is in the participant’s 

interest. We would add a new 

requirement at § 460.121(i)(2) to require 

the IDT to notify the participant or the 

designated representative in writing, as 

expeditiously as the participant’s 

condition requires but no later than 24 

hours after the IDT extends the 

timeframe, and to explain the reason(s) 

for the delay. We would require that the 

notification of the extension must occur 

within 24 hours from the time the IDT 

makes the decision to extend the 

timeframe because we believe it is 

important that participants or their 

designated representatives understand 

that a decision may be delayed and 

why, especially if the extension was 

taken by the IDT. 

In addition, we proposed adding 

requirements at § 460.121(j) related to 

notifying the participant or the 

designated representative of the IDT’s 

decision to approve, deny, or partially 

deny a service delivery request. 

Currently, IDTs are required to notify 

the participant or their designated 

representative of the decision to 

approve or deny a request under 

§ 460.104(d)(2)(iii). As we previously 

discussed, in relation to our proposals 

under § 460.121(c), we proposed to 

expand the number of individuals who 

can make a service delivery request. 

However, we did not change the 

individuals whom the IDT would notify 

of its decision to approve or deny the 

service delivery request. We believe that 

in all circumstances, the participant (or 

designated representative) should 

receive the notification of the IDT’s 

decision to approve or deny the service 

delivery request. In the rare situation 

where a caregiver, such as a family 

member, is not the designated 

representative, notification of the 

service delivery request would be sent 

to either the participant or designated 

representative, and not the family 

member. As always, under current 

§ 460.102(f), the PACE organization 

remains responsible for establishing, 

implementing and maintaining 

documented internal procedures that 

govern the exchange of information 

between participants and their 

caregivers consistent with the 

requirements for confidentiality in 

§ 460.200(e). We would expect that 

PACE organizations, as a part of that 

documented process, have a method for 

determining when notification should 

go to the participant versus a 

representative (including a caregiver). 

In paragraph (j)(1) we would specify 

the notification requirements when the 

IDT approves a service delivery request. 

Specifically, we would require the IDT 

to notify the participant or the 

designated representative of that 

decision either orally or in writing. We 

proposed that the notification must 

explain any conditions for the approval 

in understandable language, including 

when the participant may expect to 

receive the approved service. We 

believe it is important that the IDT 

explain to the participant or their 

designated representative any 

conditions that may apply whenever the 

IDT approves a service delivery request. 

For example, if the IDT is approving a 

service delivery request for home care, 

the IDT should indicate the days and 

hours that are being approved and when 

the home care would start. 

For service delivery requests that can 

be approved in full at the time the 

request is made under § 460.121(e)(2), 

the IDT member who approves the 

request would be responsible for 

ensuring that the notification satisfies 

the requirements in new § 460.121(j)(1). 

Because a request must be able to be 

approved in full at the time the 

participant makes the request under this 

provision, the IDT member who 


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approves the service would be 

responsible for providing notification, 

and ensuring that the conditions of the 

approval (if any) are explained to the 

participant. While we allow for the IDT 

to provide approval notification either 

orally or in writing, because decisions 

under § 460.121(e)(2) are made in real 

time, and communicated to the 

participant at the time the request is 

made, we do not believe written 

notification would be necessary in these 

instances; however, a PACE 

organization may always choose to send 

written notification following the oral 

notification in order to memorialize any 

conditions of the approval. 

We also proposed at § 460.121(j)(2) 

provisions similar to those currently set 

forth in § 460.104(d)(2)(v), to require 

that PACE organizations must notify 

participants or the designated 

representative of a decision to deny or 

partially deny a service delivery request 

both orally and in writing. We believe 

that the requirement to notify the 

participant or their designated 

representative both orally and in writing 

should be maintained to ensure 

participants or their designated 

representatives receive and understand 

the denial. We also proposed to expand 

upon the specific requirements for what 

a denial notice must contain. At 

§ 460.121(j)(2)(i) we require that the IDT 

state the specific reasons for the denial, 

including an explanation of why the 

service is not necessary to improve or 

maintain the participant’s overall health 

status. Under what we proposed, the 

rationale for the denial would have to be 

specific to the participant, taking the 

participant’s medical, physical, 

emotional, and social needs into 

account, and it would include the 

results of any reassessment(s) conducted 

by the PACE organization. The rationale 

would have to be stated in 

understandable language so that the 

participant or designated representative 

can comprehend why the request was 

denied. We believe that it is important 

to continue to require that the IDT 

provide the specific reasons for a denial. 

However, based on our experiences 

monitoring PACE organizations, we 

believe we needed to propose more 

detailed requirements about what the 

explanation of the specific reason(s) for 

the denial should include. Providing 

this explanation for a denial would 

allow the participant or their designated 

representative to more fully understand 

why the IDT determined a requested 

service was not necessary. This would 

also allow a participant or designated 

representative to better understand what 

information they may need to provide if 

they appeal the denial. 

At § 460.121(j)(2)(ii) and (iii), we 

would retain the requirements currently 

codified in § 460.104(d)(2)(v)(A) and (B) 

that the PACE organization inform the 

participant or designated representative 

of the right to appeal any denied service 

delivery request as specified in 

§ 460.122; and that the PACE 

organization must also describe the 

process for both standard and expedited 

appeals, and the conditions for 

obtaining an expedited appeal. 

Additionally, with minor modifications, 

we would retain a requirement similar 

to current § 460.104(d)(2)(v)(C): the 

PACE organization would be required to 

notify Medicaid participants about their 

right to, and the conditions for, 

continuing to receive a disputed service 

through the duration of the appeal. 

Medicaid participants include all 

participants that are enrolled in 

Medicaid only or both Medicaid and 

Medicare (dually eligible). Currently, 

§ 460.104(d)(2)(v)(C) cross-references all 

of § 460.122(e), but we believe that a 

more tailored reference to § 460.122(e) 

would be preferable. Therefore, we 

proposed to cross-reference only 

§ 460.122(e)(1) at § 460.121(j)(2)(iv), 

because the information provided in 

§ 460.122(e)(2) relates to the PACE 

organization’s continued responsibility 

to continue to furnish to participants all 

required services other than the 

disputed service, and is not specifically 

about continuing to receive the disputed 

service. We do not believe we need to 

require that the IDT include information 

from § 460.122(e)(2) in a service 

delivery request denial notification 

because this concept is widely 

understood and could potentially 

confuse participants if they received 

notification of that requirement. 

However, we solicited comments on 

whether it would be preferable to retain 

a cross-reference to all of § 460.122(e). 

In § 460.121(k) we proposed to specify 

the timeframe in which the PACE 

organization must provide services 

approved, in whole or in part, through 

the service delivery request process. We 

would require the PACE organization to 

provide the requested service as 

expeditiously as the participant’s 

condition requires, taking into account 

the participant’s medical, physical, 

emotional, and social needs. We did not 

propose a specific timeframe due to the 

many varying types of services that 

PACE organizations provide. However, 

we expect PACE organizations to 

develop processes to help them identify 

how quickly they need to provide a 

service based on the participant’s 

condition. For example, we would 

generally expect that a drug used to treat 

a participant’s diabetes would be 

provided much more quickly than we 

would expect a dental cleaning to be 

provided. That is because a treatment 

for diabetes may require a more 

immediate response, whereas a dental 

cleaning may not be as urgent. We 

recognize that not all services can be 

physically provided in a rapid 

timeframe, however, we do expect that 

the PACE organization take prompt 

action to ensure the approved service is 

provided as expeditiously as needed. 

Additionally, for services that can be 

approved under § 460.121(e)(2), while 

we require that the IDT member be able 

to approve the request in full at the time 

the request is made, we do not require 

that the approved service be physically 

provided at the time the request is 

made. Instead, those approved service 

delivery requests must also be 

effectuated under the requirements in 

this section. 

The current requirement at 

§ 460.104(d)(2)(vi) states that the PACE 

organization must automatically process 

a participant’s request as an appeal 

when the IDT fails to provide the 

participant with timely notice of the 

resolution of the request or does not 

furnish the services required by the 

revised plan of care. We would retain 

this requirement, unaltered, at 

§ 460.121(l). We continue to believe that 

this is an important safeguard for 

participants to ensure they have access 

to the appeals process, even when a 

PACE organization does not adhere to 

the processing requirements under the 

rules of this part. 

In paragraph (m) we would add 

requirements that would address record 

keeping for service delivery requests. 

While PACE organizations are currently 

required to document all assessments 

under § 460.104(f), we believe that it 

would be important to have a separate 

section in the new § 460.121 that more 

specifically addresses the record 

keeping requirements, to help ensure 

that PACE organizations accurately 

document and track all service delivery 

requests and have a complete and 

accurate record of each request and how 

it was resolved. In § 460.121(m) PACE 

organizations must establish and 

implement a process to document, track, 

and maintain records related to all 

processing requirements for service 

delivery requests. We would specify 

that PACE organizations must account 

for, and document, requests received 

both orally and in writing. PACE 

participants often call PACE 

organizations and request a service over 

the phone, and it is important for the 

PACE organization to have an 


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established process to accurately 

document and track those verbal 

requests, along with requests submitted 

to the organization in writing. Once a 

PACE organization receives a service 

delivery request, the PACE organization 

would be responsible for documenting, 

tracking and maintaining all records 

that relate to the processing of the 

service delivery request, including but 

not limited to, the IDT discussion, any 

reassessments conducted, all 

notification that was provided to the 

participant or designated representative, 

and the provision of the approved 

service, when applicable. These 

documentation requirements would 

apply to all service delivery requests, 

including service delivery requests that 

can be approved in full at the time the 

request is made per § 460.121(e)(2). 

Additionally, as we mention in our 

discussion of § 460.200(d) at section 

VI.E. of this final rule, we would require 

that documentation be safeguarded 

against alteration, and that written 

requests for services must be maintained 

in their original form. We also proposed 

to require that these records must be 

available to the IDT to ensure that all 

members remain alert to pertinent 

participant information. 

Because we proposed toe define the 

requirements for service delivery 

requests in the new § 460.121, we also 

proposed to remove all requirements 

relating to service delivery requests 

from the current § 460.104(d)(2). 

Specifically, we are removing 

§ 460.104(d)(2)(i) through (v) and we 

would modify the existing language in 

§ 460.104(d)(2) to reiterate that the 

PACE organization must conduct an inperson reassessment if it expects to 

deny or partially deny a service delivery 

request. Additionally, as we discussed 

in § 460.121(h)(2), the IDT may conduct 

a reassessment as determined necessary 

for services it intends to approve. We 

would modify language in 

§ 460.104(d)(2) to direct readers to the 

new § 460.121(h) for the requirements 

regarding conducting reassessments in 

response to service delivery requests. 

We summarize the comments 

received on the proposals related to 

service delivery requests and provide 

our responses to those comments below. 

Comment: All commenters that 

addressed this proposal were supportive 

of moving the requirements for service 

delivery requests from § 460.104(d)(2) to 

a new section of the regulations in 

§ 460.121. A few commenters were 

generally supportive of the provisions 

related to service delivery requests. 

Response: We thank the commenters 

for their support of the provisions 

related to service delivery requests. 

Comment: A few commenters offered 

suggestions related to the proposed use 

of the term ‘‘service delivery request’’. 

Most suggested that CMS use ‘‘service 

determinations’’ rather than ‘‘service 

delivery request’’ because it is more 

consistent with the objective of this 

process which is to determine whether 

a PACE organization should initiate, 

modify, or continue a service in 

response to a request from a participant, 

designated representative, or caregiver. 

Another commenter recommended 

using the term ‘‘service request’’ as it is 

consistent with past practice and 

suggested that it was easier for 

participants to understand. 

Response: We appreciate the 

commenters’ response to our request for 

feedback and we are persuaded to make 

changes to the regulation text and 

incorporate both of the recommended 

terms to use the term ‘‘service 

determination request’’ rather than 

‘‘service delivery request’’ for requests 

that are processed under proposed 

§ 460.121. We anticipate that such a 

change will help participants and PACE 

organizations to understand that this 

process is ultimately about the 

determination of whether to initiate, 

modify, or continue a service. After 

consideration of the comments received, 

we recognize that there are two actions 

that largely make up the proposed 

service delivery request process; the 

request itself and the determination 

made by the PACE organization. In 

order to maximize clarity regarding the 

process, we are revising the title of new 

section § 460.121 from ‘‘Service delivery 

requests’’ to ‘‘Service determination 

process.’’ We believe that this modified 

title better reflects the process in its 

entirety and better encompasses the 

nature of these actions. We are also 

revising the remainder of the proposed 

regulatory text for part 460, where 

applicable, to reflect this change in 

terminology. In addition, we will use 

the terms ‘‘service determination 

request’’ and ‘‘service determination 

process’’ when referring to the 

requirements under § 460.121 in the 

remainder of this final rule. 

Comment: All commenters that 

addressed the proposal at § 460.121(a) 

were supportive of the requirement that 

PACE organizations must have formal 

written procedures for identifying and 

processing service determination 

requests. 

Response: We thank the commenters 

for their support of this provision and 

are finalizing this requirement as 

proposed. 

Comment: The majority of 

commenters expressed concern with the 

proposal at § 460.121(b)(1)(ii) to require 

PACE organizations to process a request 

to ‘‘otherwise change’’ an existing 

service as a service determination 

request. These commenters agreed with 

CMS’s position that PACE organizations 

should be responsible for processing 

requests to change existing services, but 

believed that requests to change an 

existing service were more comparable 

to a grievance that should be addressed 

under § 460.120, rather than a service 

determination request because requests 

of this sort suggest that a participant is 

dissatisfied with the characteristics of 

the service. The same commenters also 

recommended that CMS modify the 

proposed language at § 460.121(b)(1)(ii) 

by limiting requests to modify an 

existing service to include requests to 

increase, reduce, or eliminate a service. 

Response: We thank the commenters 

for their feedback and 

recommendations. We disagree that 

requests to otherwise change an existing 

service under § 460.121(b)(1)(ii) are 

better classified as a grievance. A 

grievance for purposes of the PACE 

program, is defined in regulation at 

§ 460.120 as a complaint, either written 

or oral, expressing dissatisfaction with 

service delivery or the quality of care 

furnished. Requests that otherwise 

change an existing service would not be 

considered a grievance under the 

current definition. For example, if a 

participant is currently receiving two 

hours of home care a day in the 

morning, but requests to instead receive 

those hours in the evening because the 

participant is physically weaker in the 

evening and needs more assistance at 

that time, we would not consider this 

request a grievance and would expect 

the organization to process such a 

request as a service determination 

request. However, it’s possible that a 

request to modify a service would be 

both a service determination request 

and a grievance. For example, if the 

participant requests their home care 

hours to be modified but also expresses 

dissatisfaction with the quality of home 

care being provided, we would expect 

the organization to process both a 

service determination request and a 

grievance. In addition, there are no 

regulatory timeframes for processing 

grievances under § 460.120, and the 

participant is not afforded appeal rights 

if a grievance is not fully resolved in 

their favor. As noted in the proposed 

rule, we believe that defining service 

determination requests to include 

requests to modify an existing service, 

which includes requests to increase, 

reduce, eliminate, or otherwise change a 

particular service, is an important 

safeguard, as participants may believe 


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that the services they are currently 

receiving are not sufficient to meet their 

needs (85 FR 9125). We continue to 

believe that this is the best way to 

capture and provide resolution for such 

requests and therefore we are finalizing 

this provision as proposed. As a 

reminder, pursuant to the requirements 

we are finalizing at § 460.121(e)(2), if a 

service determination request can be 

approved in full by a member of the IDT 

at the time the request is made, the full 

IDT does not need to consider it, and 

the PACE organization would not need 

to conduct a reassessment. 

Comment: A commenter agreed with 

CMS’ proposal to limit service 

determination requests to requests made 

after the development of the initial care 

plan. Several commenters 

recommended that CMS expand the 

scope of requests that do not constitute 

a service determination request under 

proposed § 460.121(b)(2), to include 

services requested during the semiannual and change in participant status 

reassessment and care planning 

processes, services requested in the 

course of participants’ treatment 

discussions with PACE IDT members, 

both during and outside the assessment 

and care planning processes, and 

requests for services that are not 

appropriate for the treatment of the 

participants’ conditions. Another 

commenter agreed with expanding the 

scope of exclusions and suggested that 

requests made during a semi-annual or 

unscheduled assessment would 

necessitate pausing the reassessment 

and care planning process currently 

underway and beginning a separate 

service determination request process. 

Another commenter recommended 

limiting requests processed as service 

determination requests to those requests 

that occur after the completion of a 

required initial, semi-annual, or change 

in status assessment and requests that a 

participant or designated representative 

makes when they are not in agreement 

with the care plan at the end of any 

individual encounter with an IDT 

member. 

Response: We agree that routine 

treatment discussions and discussions 

that occur during the assessment and 

care planning process are instrumental 

in determining the services necessary to 

meet a participant’s needs. However, we 

also strongly believe that the recording, 

processing, and tracking of service 

determination requests is an essential 

beneficiary protection which ensures 

PACE participants’ access to necessary 

care and services, and provides 

participants an avenue to appeal 

adverse decisions. As proposed, there is 

an exception at § 460.121(b)(2) for 

requests to initiate, modify or continue 

a service, made prior to the 

development of the initial care plan. We 

continue to believe that this is 

appropriate and are not expanding the 

scope of this exclusion. We do not 

believe that it would be in a 

participant’s best interest to exempt 

requests for services made during 

semiannual or unscheduled 

reassessments required under 

§§ 460.104(c) and (d)(1) or during the 

care planning processes described in 

§§ 460.104(e) and 460.106(d) from the 

service determination process because 

the relevant regulations do not specify 

timeframes for these processes. Absent 

regulatory timeframes, these processes 

frequently take a long time to resolve 

and if a service determination request 

made as part of those processes were 

exempted from the proposed 

requirements for service determination 

requests, these requests could take an 

unacceptably long time to resolve. For 

the same reason, we also believe that 

requests for services made during 

treatment discussions with PACE staff, 

including members of the IDT and 

others, should be processed as service 

determination requests. Through CMS 

monitoring and oversight, we have 

noted cases of non-compliance with the 

existing requirements at § 460.104(d)(2) 

governing the documentation and 

processing of participant requests, and 

the provision of approved services. We 

believe it is important that all requests 

that satisfy the definition of a service 

determination request be processed 

using the process we proposed. As 

stated in the proposed rule (85 FR 

9126), we decided that requests made 

during the course of treatment 

discussions should constitute service 

determination requests in order to avoid 

confusion by requiring PACE 

organizations to distinguish between 

requests for services that constitute 

service determination requests and 

those that do not. 

CMS would like to clarify that the 

exception to the definition of ‘‘service 

determination request’’ for requests 

made prior to the development of the 

initial care plan at § 460.121(b)(2) 

includes requests made during the 

initial care planning process under 

§§ 460.104(b) and 460.106(a). We 

recognize that the regulation text as 

proposed, which permits this exception 

‘‘if the request is made prior to 

development of the initial care plan’’, 

may have caused confusion because this 

could be interpreted to mean that a 

participant or other requestor could 

make a service determination request 

during the development of the initial 

plan of care but prior to the completion 

of the initial plan of care. This was not 

our intent. As noted in the proposed 

rule (85 FR 9125), this exception would 

apply any time before the initial care 

plan was finalized (and discussions 

amongst the IDT ceased), and we 

continue to believe that this approach 

would be beneficial to the participant 

and the PACE organization as it is 

during this process that the IDT and the 

participant or caregiver continue to 

discuss the comprehensive plan of care 

taking into account all aspects of the 

participant’s condition as well as the 

participant’s wishes. In order to avoid 

confusion regarding when this 

exception would apply, we are 

modifying the proposed regulatory text 

at § 460.121(b)(2) in a manner consistent 

with our proposal, to emphasize our 

intent that this exception would apply 

to all requests for services made prior to 

completion of the development of the 

initial plan of care. As revised, the text 

of § 460.121(b)(2) will state ‘‘Requests to 

initiate, modify or continue a service do 

not constitute a service determination 

request if the request is made prior to 

completing the development of the 

initial plan of care’’. 

Comment: Comments on CMS’ 

proposal to allow caregivers to make 

service determination requests at 

§ 460.121(c)(3) were varied. A few 

commenters agreed with the proposal at 

§ 460.121(c)(3) to allow caregivers to 

make service determination requests, 

and one commenter noted that allowing 

caregivers to request services on behalf 

of a participant may increase the 

involvement of caregivers and distribute 

the burden of transmitting provider or 

prescriber recommendations to the IDT. 

However, the majority of commenters 

expressed concern with this proposal, 

which would expand the individuals 

who can make a service determination 

request to include caregivers. These 

commenters suggested that this may 

result in requests from a large number 

of individuals who do not have legal 

authority to speak on behalf of the 

participant, requests that are 

inconsistent with the wishes of the 

participant and designated 

representative, requests that may be 

motivated by financial or personal gain, 

and increased administrative burden on 

PACE organizations in processing these 

requests. These commenters suggested 

that the involvement of multiple 

caregivers could negatively impact 

PACE organizations’ ability to respond 

to the wishes of the participant or their 

designated representative(s), for 

example in regard to end-of-life care 

decisions. These commenters noted that 


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it is important that the PACE 

organization and the IDT remain 

focused on the wishes of the participant, 

either expressed directly or through 

their designated representative. These 

commenters also stated that including 

caregivers, which is not a term defined 

in regulation text, among the 

individuals who are able to request 

service determinations on behalf of 

participants may have unintended, 

negative consequences. The commenters 

noted that although a caregiver or family 

member who has not been identified as 

a designated representative would not 

be able to make service determination 

requests under the existing regulatory 

framework, they would not be 

prevented from providing input related 

to a participant’s care under 

§ 460.102(d)(2)(ii) and § 460.106(c)(2). 

With regard to requests that are 

personally motivated, the commenters 

suggested that this change would permit 

an individual living in a participant’s 

home who might lose housing if the 

participant moved to a nursing home to 

request home modifications or 

additional in-home services to permit 

the participant to remain at home 

despite the fact that those requests 

could be inconsistent with the wishes of 

the participant or their designated 

representative and prior determinations 

by the IDT that the participant cannot 

remain safe in the home. These 

commenters strongly recommended that 

requests for service determinations 

could only be made by participants or 

their designated representatives, stating 

that the term designated representative 

has been interpreted by PACE 

organizations to be either a legal 

representative or a representative 

identified according to the PACE 

organization’s policy who is authorized 

to act on behalf of the participant. 

Additionally, all of these commenters 

recommended modifying the plan of 

care requirements in § 460.106(e) to 

replace the term caregiver with the term 

designated representative. 

Response: We thank commenters who 

supported this provision and appreciate 

the feedback related to permitting 

caregivers to make service 

determination requests. While we 

believe the designation of a 

representative is important, the PACE 

regulations do not require or describe 

any specific formal process for 

designating a representative, nor do they 

require PACE organizations to develop 

such a process. As discussed further, in 

section VI.D. of this final rule related to 

service delivery, in response to 

comments, CMS confirms that the IDT 

may take into consideration informal 

support when developing the 

participant’s plan of care. Specifically, 

the IDT may consider care provided by 

willing and able caregivers when 

determining what necessary services 

will be provided by the PACE 

organization, either directly or through 

its contractors. Given the fact that 

caregivers may provide some care to 

participants, we believe that it is equally 

important that caregivers are able to 

advocate for services on a participant’s 

behalf. It is important that these 

individuals have an avenue to request 

services for a participant, especially 

when caregivers that had actively been 

providing care are no longer willing or 

able to provide care in the manner they 

had been. For example, if a caregiver 

was providing overnight supervision to 

a participant, but is no longer willing or 

able to provide that care due to the 

participant’s increased dementia, the 

caregiver should be able to submit a 

service determination request to the 

PACE organization. In regard to 

commenters’ concerns relating to the 

potential increase in burden on PACE 

organizations related to the proposal to 

permit caregivers to make service 

determination requests, we believe most 

PACE organizations currently allow 

caregivers to make these requests. 

According to data submitted by PACE 

organizations for auditing purposes 

from 2017 through 2019, approximately 

50 percent of service determination 

requests were made by participants and 

30 percent were made by caregivers or 

other family members. Because 

organizations are already accepting and 

processing requests from caregivers (as 

these data show), we do not anticipate 

that modifying the regulation in this 

way would result in a significant influx 

of requests for PACE organizations. In 

addition, the role of caregivers in PACE 

participants’ lives has been recognized 

in CMS’s policies regarding the PACE 

program since the first PACE interim 

final rule was published in 1999 (64 FR 

66249), and caregivers play a vital role 

in the development and reevaluation of 

the plan of care as we noted at VI.A. of 

the preamble of this final rule. 

We would like to state that nothing in 

this provision would expand which 

individuals may be considered a 

caregiver, nor is it meant to imply that 

any person in the participant’s life may 

request services. As we noted in the 

preamble to the 2006 PACE rule (71 FR 

71284), a caregiver is a person who 

attends to a participant’s needs and has 

a caregiving relationship with the 

participant. Historically, CMS has not 

included employees or contractors of 

the PACE organization, such as 

providers or prescribers, as ‘‘caregivers’’ 

under this definition, and instead has 

interpreted this term to include less 

formal support providers such as family 

members. This is consistent with our 

discussion at 71 FR 71284 which stated 

that CMS uses the term ‘‘family 

member’’ and ‘‘caregiver’’ 

interchangeably. Employees and 

contractors of PACE organizations enter 

into a contractual relationship with the 

PACE organization and generally have a 

predominantly financial incentive to 

provide care; we have not considered 

these individuals to be ‘‘caregivers’’ 

under the regulations. PACE 

organizations are already required at 

§ 460.106(e) to involve a participant’s 

caregiver or caregivers for purposes of 

care planning. We believe that those 

individuals, who should already have a 

relationship with the PACE 

organization, should also be able to 

advocate for services outside of the care 

planning process. We believe that 

permitting caregivers to make service 

determination requests on behalf of a 

participant is an important safeguard: 

Those participants who do not have a 

designated representative may rely on a 

caregiver to advocate for services on 

their behalf, and caregivers are usually 

aware of the participant’s situation and 

have valuable insight into what services 

would be beneficial. For the same 

reasons, we also do not agree with the 

commenters’ recommendations to 

exclude caregivers from the care 

planning process at § 460.106(e). 

Additionally, caregivers have been 

involved in the care planning process 

under PACE since the regulations were 

implemented in 1999 through the 

interim final rule and CMS has never 

previously received feedback indicating 

that this practice might be problematic. 

As we gain more experience with 

caregiver service determination 

requests, we may take further action as 

appropriate; for example, to further 

refine our position on who may be 

considered a caregiver for purposes of 

making service determination requests. 

With regard to requests that may be 

motivated by financial or personal gain, 

we believe that the proposed service 

determination process would prevent 

these types of personal conflicts of 

interest from negatively impacting 

participants. The IDT is responsible for 

deciding whether to approve or deny a 

service determination request, and thus 

functions as a gatekeeper preventing the 

provision of unnecessary services. 

Section 460.121(g) also requires the IDT 

to consider all relevant information 

when evaluating a service determination 

request, including the criteria specified 


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in § 460.92(b). Under § 460.92(b), the 

IDT must consider the participant’s 

current medical, physical, emotional, 

and social needs, and current clinical 

practice guidelines and professional 

standards of care applicable to the 

particular service, when deciding to 

provide or deny a service. Additionally, 

if the IDT conducts a reassessment in 

response to the service determination 

request, the reassessment should take 

into consideration the participant’s 

wishes and preferences for care, to 

ensure that services, if approved, are in 

the participant’s best interest, in 

accordance with the participant’s rights 

for participation in treatment decisions 

under § 460.112(e). If a service 

determination request is made and the 

IDT determines, after reassessing the 

participant, that the service is not 

necessary based on all relevant 

information, the IDT should deny the 

request. These requirements would 

apply to all requests for services, 

including requests for end of life care. 

For example, a caregiver may request 

palliative care for the participant, but 

the IDT would need to consider all 

relevant information prior to approving 

or denying the service, including the 

participant’s and designated 

representative’s wishes, applicable 

clinical guidelines, and the participant’s 

current medical, physical, emotional, 

and social needs. Similarly, if a 

caregiver requested the participant to 

remain in the home for self-serving 

purposes, and the IDT determined that 

the participant was not safe to remain in 

the home and did not wish to remain in 

the home, the IDT should not approve 

the caregiver’s request. 

Therefore, we believe that the IDT 

plays a pivotal role in ensuring that 

services are provided only when 

necessary, and this in turn protects 

participants from receiving services that 

are not in their best interest, including 

those that may be motivated by financial 

or personal gain. 

Comment: Several commenters 

provided feedback related to permitting 

prescribers or other providers to make 

service determination requests. One 

commenter was in favor of permitting 

prescribers or other providers to make 

service determination requests on behalf 

of a participant. Most commenters were 

opposed to CMS allowing other 

individuals to make service 

determination requests. These 

commenters noted that PACE 

organizations, through the participant’s 

primary care provider, are currently 

required to oversee the use of 

specialists. In situations when another 

provider or prescriber’s 

recommendation is not implemented, 

the IDT would be required under 

proposed § 460.102(d)(1)(ii) to 

document the reasoning behind this 

determination in the participant’s 

medical record. One commenter noted 

that for these reasons, this contemplated 

proposal would be duplicative of the 

proposed regulatory requirements under 

§ 460.102(d)(1)(ii), and as a result would 

be disruptive to the effective 

functioning of the IDT. Further, the 

commenters noted that a participant or 

his or her designated representative has 

the right to submit a service 

determination request if the PACE 

organization does not provide a 

recommended service. 

Response: We appreciate the 

commenters’ feedback and recognize 

that by finalizing our proposals at 

§ 460.102(d)(1)(ii), we will enhance the 

consideration and documentation of 

recommendations made by specialists, 

and better integrate those individuals 

into the process of determining what 

care and services are necessary for 

participants. As discussed in section 

VI.C.3 of this final rule and in response 

to other comments received, we are 

finalizing the proposal at 

§ 460.102(d)(1)(ii), largely as proposed. 

While we continue to believe that 

communication among specialists and 

the IDT is vital, we agree with 

commenters that these communications 

do not need to be handled through the 

service determination process. By 

requiring that the IDT document such 

recommendations in the medical record 

in accordance with § 460.210(b), 

including proposed §§ 460.210(b)(4) and 

(b)(5), if there is a subsequent service 

determination request made by a 

participant, designated representative, 

or a caregiver, there will be a record of 

the recommendation and why it was not 

provided. We expect that this 

information will provide useful 

perspective to the IDT and will allow 

the IDT to conduct a more meaningful 

review of the service determination 

request under § 460.121(g). We also 

agree with the commenter that a 

participant, designated representative, 

or caregiver could make a service 

determination request for any service 

that was not provided in accordance 

with a recommendation from an 

employee or contractor of a PACE 

organization. Because of these proposals 

and the integral role the IDT plays in 

determining what services are 

necessary, we do not believe that it is 

necessary to specifically include 

prescribers or other providers among the 

individuals who are allowed to submit 

service determination requests at this 

time. Accordingly, we are finalizing our 

proposals for § 460.121(c)(3) as 

proposed. 

Comment: Commenters were 

supportive of CMS’s proposal to allow 

service determination requests to be 

made either orally or in writing. 

Response: We thank the commenters 

for their support of this provision. 

Comment: Some commenters agreed 

with CMS’s proposal at § 460.121(d)(2) 

which would allow service 

determination requests to be made to 

any employee or contractor of the PACE 

organization that provides direct care to 

a participant. The majority of these 

commenters responded to CMS’s 

request for feedback on whether this 

requirement should be limited to a 

smaller subset of individuals and agreed 

that CMS should limit the individuals to 

whom a service determination request 

could be made to a PACE organization’s 

employees and contractors who provide 

direct participant care in the 

participant’s residence, the PACE 

center, and while transporting 

participants, which would preclude 

service determination requests from 

being made to direct care providers with 

whom participants would generally 

have less frequent contact, for example, 

hospital staff or other medical 

specialists. These commenters also 

suggested that requests for services 

made while participants are being 

transported should be limited to routine 

transportation and exclude 

transportation in emergency situations. 

Another commenter recommended 

limiting request submission to any 

employee or contractor who serve in a 

required interdisciplinary team member 

role to eliminate any confusion for 

participants, their designated 

representatives, and employees and 

contractors of the PACE organization on 

the process of submitting service 

determination requests. 

Response: We appreciate the 

commenters’ support for this provision. 

After consideration of the comments 

received, we will specify in the final 

rule that service determination requests 

may be made to any employee or 

contractor of the PACE organization that 

provides direct care to a participant in 

the participant’s residence, the PACE 

center, or while transporting 

participants. These are the settings 

where participants have the most 

frequent contact with employees or 

contractors of the PACE organization, 

often on a daily basis. Therefore, we 

believe that these are the most logical 

settings where service determination 

requests are most likely to occur. It 

would also be a smaller subset of 

employees and contractors for the PACE 

organization to train and oversee to 


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ensure those individuals were correctly 

identifying service determination 

requests when they are made. We note 

that a participant’s residence would 

include a skilled-nursing facility or 

long-term care facility and a participant 

would be able to make a service 

determination request to staff who 

provide direct care to a participant in 

those facilities. We also recognize that if 

we were to finalize this requirement as 

proposed it could be difficult for a 

PACE organization to operationalize 

because of the varied and significant 

roles played by contractors in PACE. For 

example, PACE organizations routinely 

contract with hospitals and it would be 

difficult to train all of the employees 

within the hospital system to recognize 

and accept service determination 

requests. 

In terms of requests made while 

transporting participants, we do not 

believe that it is necessary or 

appropriate to exclude transportation in 

emergency situations from this 

requirement. Under the requirements at 

§ 460.70(a), a PACE organization is 

required to have a written contract with 

each outside organization, agency, or 

individual that furnishes administrative 

or care-related services not furnished 

directly by the PACE organization 

except for emergency services. Because 

the requirement at § 460.121(d)(2) 

would only apply to an employee or 

contractor of the PACE organization, 

this requirement would not apply to 

those situations where the PACE 

organization does not have a contractual 

relationship for emergency services, 

including emergency transportation. 

Additionally, based on our oversight 

and monitoring experience we have 

never seen circumstances where a 

service determination request was made 

while a participant was being 

transported for emergency purposes; 

therefore, we do not expect that this will 

happen with significant frequency. 

More commonly, we would expect 

requests to be made during routine 

transportation services, and the PACE 

organization would be required to 

implement processes for staff and 

contracted employees to identify and 

process these requests. However, to the 

extent that service determination 

requests are made during emergency 

transportation, to a contractor of the 

PACE organization, we believe it is 

important for those requests to be 

captured and processed accordingly. 

With regards to commenters’ 

recommendation that requests only be 

submitted to interdisciplinary team 

members, we do not believe that this 

would be in the participant’s best 

interest based on the nature of the care 

provided by a PACE organization. As 

discussed in the proposed rule, PACE 

organizations are required to provide 

care across all care settings and a 

participant may not know with whom 

they need to communicate in order to 

make a service determination request 

(85 FR 9127). Certain participants may 

also see home care aides more 

frequently than members of the IDT and 

we believe it is appropriate to permit 

individuals to communicate service 

determination requests to home health 

aides rather than requiring them to 

make such requests to a member of the 

IDT. Because of the vulnerability of the 

PACE participant population, we 

believe it is important to have a robust 

system of safeguards in place so that 

participants have the ability to easily 

request and obtain access to those 

services that would improve or maintain 

their overall health status. We believe 

that requiring a participant or other 

requestor to go to a member of the IDT 

would create an unnecessary hurdle and 

could lead to confusion, if for example, 

an individual is instructed by an 

employee or contractor of a PACE 

organization to make requests in a 

different manner. 

Comment: A commenter agreed with 

the proposal at § 460.121(e)(1) which 

would require the PACE organization to 

bring a service determination request to 

the interdisciplinary team as 

expeditiously as the participant’s health 

condition requires, but no later than 3 

calendar days from the date the request 

is made. Other commenters 

recommended that CMS change the 

proposed timeframe for bringing a 

service determination request to the IDT 

from 3 calendar days to 3 business days. 

These commenters were fully 

supportive of CMS’s perspective that 

there is an acceptable period of time 

between when the service determination 

request is made and when it is received 

by the IDT; however, noted that 

implementing a 3 calendar-day 

timeframe will effectively force PACE 

organizations to convene full IDT 

meetings on both Fridays and Mondays 

to consider requests for services 

initiated on Thursdays and Fridays. The 

commenters also noted that holidays 

that fall on Mondays may pose a 

challenge if requests must be brought to 

the IDT within 3 calendar days from the 

day the request is received. The majority 

of commenters also recommended CMS 

change the proposed timeframe for 

notification in paragraph (i) from 3 

calendar days to 3 business days. 

Response: We appreciate the 

commenters’ concerns regarding the 3 

calendar day timeframes that we 

proposed for processing service 

determination requests; however, we 

disagree with the commenters and 

consider this to be a reasonable 

timeframe. Section 1894(b)(1)(B) of the 

Act requires PACE organizations to 

provide necessary covered items and 

services 24 hours per day, every day of 

the year. PACE organizations must 

therefore be able to process requests 

efficiently and timely, even on 

weekends and holidays. Under the 

current requirements at 

§ 460.104(d)(2)(iii), the IDT must 

generally notify a participant or 

designated representative of its decision 

to approve or deny a request within 72 

hours from the date the request is 

received. As we stated in the preamble 

to the proposed rule (85 FR 9129), CMS 

has interpreted this language as 

requiring that the IDT must notify the 

participant or their designated 

representative within 3 calendar days of 

receiving a request, based on the 

wording of the requirement which states 

‘‘72 hours from the date.’’ We stated that 

we believe this is a reasonable 

timeframe for the IDT to conduct these 

reviews, and therefore proposed a 

similar timeframe in the proposed rule. 

We believe that requiring the IDT to 

notify the participant or their designated 

representative of its decision as 

expeditiously as the participant’s health 

condition requires, but no later than 3 

calendar days at § 460.121(i) provides 

the IDT sufficient time to meet and 

make a decision regarding a 

participant’s care, taking into account 

weekends and holidays, and are 

finalizing this requirement as proposed. 

Additionally, we created a second 

timeframe at § 460.121(e) to ensure that 

PACE organizations bring requests to 

the IDT for review within a reasonable 

period of time. Specifically, we 

proposed to require that requests must 

be brought to the interdisciplinary team 

as expeditiously as the participant’s 

condition requires but no later than 3 

calendar days from the time the request 

is made, and we believe this timeframe 

is appropriate for purposes of 

§ 460.121(e). We believe that this 

timeframe strikes an appropriate 

balance between providing sufficient 

time for PACE organization staff to 

transmit the request to the IDT, while 

ensuring timely resolution of participant 

requests. We are therefore finalizing this 

timeframe as proposed. 

Comment: The majority of 

commenters requested that if CMS 

finalizes the proposed requirement at 

§ 460.121(d)(2) which would allow for 

participants to make service 

determination requests to individuals 

other than IDT members, that CMS also 


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allow for service determination requests 

made to non-IDT members to be brought 

to the appropriate IDT member and that 

the IDT member have the opportunity to 

approve the request subject to the 

streamlined requirements set forth 

under § 460.121(e)(2). The commenters 

noted that by adopting this approach, 

the need for a full-IDT review as 

required under § 460.121(f) would not 

be based on who received the request 

but the nature of the request. The 

commenters stated that they would not 

want the additional step of allowing a 

non-IDT member to bring a service 

determination request to the appropriate 

IDT member to lengthen the service 

determination process overall and 

recommended that service 

determination requests be brought to the 

appropriate IDT member in time for him 

or her to consider the request and, if 

approved, notify the participant or his 

or her designated representative of the 

approval within the 3 calendar 

timeframe proposed at § 460.121(e)(1). 

The commenters stated that this 

approach would be consistent with 

CMS’ objectives for § 460.121(e)(2), as 

noted in the proposed rule, ‘‘the 

participant would be better served by 

the IDT member quickly communicating 

the approval, and working to provide 

the requested service as expeditiously as 

the participant’s condition requires.’’ 

(85 FR 9128). The commenters further 

suggested that consistent with CMS’ 

observations in regard to proposed 

§ 460.121(e)(2), the recommended 

approach would also reduce the current 

burden on PACE organizations. 

Response: The exception that we 

proposed at § 460.121(e)(2) provided 

that if a member of the IDT receives a 

service determination request and is 

able to approve the request in full at the 

time the request is made, the PACE 

organization would not be required to 

follow certain processing requirements. 

This provision was intended to allow 

for immediate approval of a service 

determination request during a 

conversation between a participant or 

their designated representative or 

caregiver and a member of the IDT. 

Allowing an employee or contractor of 

a PACE organization who is not an IDT 

member to communicate the request to 

the appropriate IDT member for 

approval would require the non-IDT 

employee or contractor to identify the 

appropriate member of the IDT that 

should receive the request, which could 

take several days and would take away 

from the immediacy of the approval. We 

intended to create an exception to 

expedite the process for approval of 

service determination requests, and 

reduce unnecessary burden on the 

PACE organization, given the fact that 

PACE organizations, as direct care 

providers, routinely interact with 

participants and these interactions often 

include treatment discussions that may 

result in a service determination request 

by the participant. We do not anticipate 

that finalizing this requirement as 

proposed would create a large burden 

on PACE organizations because, if a 

member of the interdisciplinary team 

would have been able to approve a 

particular service determination request 

in full at the time the request was made, 

we presume that in the event the same 

service determination request was 

brought to the full IDT, the full IDT 

would also have the ability to quickly 

approve the request at that time, 

without having to conduct a 

reassessment. Based on these 

considerations, we are not modifying 

this requirement and are finalizing this 

provision as proposed. 

Comment: Commenters were 

supportive of the proposal at 

§ 460.121(e)(2), which would allow a 

member of the IDT to approve a service 

determination request in full at the time 

the request is made and not be required 

to follow certain processing 

requirements. Specifically, this would 

exclude the requirements at proposed 

§ 460.121(f) through (i), (j)(2), and (l) 

which include review by the full 

interdisciplinary team, reassessment in 

response to a service determination 

request, and notification timeframes. 

Response: We thank the commenters 

for their support of this provision. 

Comment: The majority of 

commenters agreed with the proposed 

provisions at § 460.121(g) which set 

forth the specific information the IDT 

must consider when evaluating a service 

determination request. 

Response: We thank the commenters 

for their support of this provision. 

Comment: Several commenters were 

also in favor of the proposal at 

§ 460.121(h), which would require that 

if the IDT expects to deny or partially 

deny a service determination request, 

the appropriate members of the IDT, as 

identified by the IDT, must conduct an 

in-person reassessment before the IDT 

makes a final decision, and that the 

team members performing the 

assessment must evaluate whether the 

requested service is necessary to meet 

the participant’s needs. These 

commenters requested clarification on 

whether assessments can be completed 

in advance of the IDT’s receipt of the 

request, so long as the assessment is 

completed in response to the request. 

Response: We thank the commenters 

for their support of this provision. With 

respect to assessments being completed 

in advance of the request being brought 

to the full IDT, we wish to clarify that 

this would be acceptable provided the 

regulatory requirements, including 

§ 460.121(h), are satisfied. However, we 

would not expect this to occur often. As 

required under § 460.121(h)(1), if the 

IDT expects to deny or partially deny a 

request, the appropriate member of the 

IDT, as identified by the IDT, must 

conduct an in-person reassessment 

before the IDT makes a final decision. 

Given the 3 calendar day timeframe for 

a PACE organization to bring a service 

determination request to the IDT under 

§ 460.121(e)(1), there may be situations 

when one or more members of the IDT 

are able to conduct a reassessment in 

response to a service determination 

request in order to gather the relevant 

information needed for discussion and 

review by the full IDT within that 

timeframe. However, there is a risk that 

the appropriate member of the IDT, as 

identified by the IDT, may not 

participate in a reassessment if the 

reassessment is completed prior to the 

IDT convening. This fact 

notwithstanding, if the reassessment 

was completed in response to a service 

determination request, and when the 

full IDT meets, the IDT determines that 

the assessment was conducted by the 

appropriate IDT members, this would be 

permitted. 

Comment: Several commenters 

expressed concern that the proposed 

criteria that must be met for the IDT to 

extend the 3 calendar day timeframe for 

review and notification of a service 

determination request at § 460.121(i)(1) 

is overly restrictive. The commenters 

also recommended revising the 

proposed requirements under 

§ 460.121(i)(1) to allow for extensions 

when a participant is not available for 

an assessment or when an IDT member 

is unexpectedly not available. The 

commenters explained that in addition 

to situations in which the requestor may 

request an extension of the 3-day 

timeframe, it is also possible that the 

participant may be unavailable for a 

reassessment that is required for the IDT 

to make its determination. These 

commenters suggested, for example that 

the participant may be out of town or 

otherwise unavailable for reasons 

beyond the PACE organization’s control 

and rather than requiring the requestor 

to request an extension in these 

situations, the IDT should, on its own, 

be able to notify the requestor of the 

need for an extension beyond 3 days. 

The commenters also recommended that 

CMS not limit the extension timeframe 

at § 460.121(i)(1) to 5 days when the 


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participant or their designated 

representative requests an extension for 

a longer period of time. Further, the 

commenters stated that while they agree 

it is important that the IDT does not 

routinely take extensions when the 

participant or other requestor has not 

requested one or the participant is 

unavailable for a required reassessment, 

the proposed language in § 460.121(i)(2) 

does not take into account 

circumstances that necessitate such 

extensions. Specifically, it is possible 

that the IDT member identified by the 

IDT as needing to perform a 

reassessment or who is critical to the 

IDT’s discussion of the service 

determination request is unexpectedly 

not available. In situations when the 

PACE organization can demonstrate the 

importance of this reassessment and/or 

the IDT member’s participation in the 

IDT discussion and the potential for it 

to change the IDT’s decision to deny a 

service, and that the circumstances 

surrounding the IDT member’s absence 

could not be anticipated, the 

commenters argue that an extension of 

up to 5 business days is appropriate. 

They expressed their belief that 

extending the timeframe for notification 

of the service determination request 

would be preferable to exceeding the 

standard 3-day timeframe and then 

having to automatically process the 

service determination request as an 

appeal which would further delay the 

requestor’s receipt of a response to his/ 

her request. 

Response: We appreciate the 

commenters’ concerns and agree that 

there may be situations that arise during 

the course of the service determination 

process that would hinder a PACE 

organization’s ability to make its 

decision and notify the participant or 

their designated representative of its 

decision within the required timeframes 

under § 460.121(i). In the proposed rule 

(85 FR 9129), we accounted for 

situations where the participant or other 

requestor should be able to request an 

extension under § 460.121(i)(1)(i) and 

used as an example circumstances 

where the participant is out of town and 

stated that the caregiver could request 

the IDT take an extension in order for 

the participant to be in-person for the 

reassessment required for the request. 

We would encourage the IDT to discuss 

service determination requests with the 

participant where the IDT needs to 

perform a reassessment and the 

participant would be out of town. 

Because decisions related to service 

determination requests must be made as 

expeditiously as the participant’s 

condition requires, we do not believe 

that it would be appropriate to allow for 

any additional extensions beyond the 

proposed 5 calendar day timeframe. If 

the IDT is unable to conduct a 

reassessment within that timeframe, 

then we would expect that the IDT 

would issue a denial and subsequent 

appeal rights. We reiterate in this final 

rule that it is important that the IDT 

does not routinely take extensions when 

the participant or other requestor has 

not solicited it because of the frailty of 

the PACE population. We also note that 

that any extension must be documented 

in accordance with the recordkeeping 

requirements at § 460.121(m). 

With respect to the recommendation 

that CMS allow for extensions when an 

IDT member is unexpectedly not 

available, we do not believe that it 

would be appropriate to view this as 

justifying an extension. The 

requirements at § 460.121(i) specify that 

the IDT must make its decision and 

provide notification of that decision as 

expeditiously as the participant’s 

condition requires but no later than 3 

calendar days after the date the IDT 

receives the request and we do not 

believe that it would be appropriate for 

an extension to be taken for a reason 

unrelated to the participant’s 

availability or condition. It is the 

responsibility of the PACE organization 

to ensure that there is sufficient staff 

coverage to meet these requirements. 

Comment: The majority of 

commenters agreed with the proposed 

provisions at § 460.121(i)(2), which 

would require an IDT to notify the 

participant or their designated 

representative in writing as 

expeditiously as the participant’s 

condition requires but no later than 24 

hours after the IDT decides to extend 

the timeframe under § 460.121(i)(1), and 

explain the reasons for the delay. 

However, these commenters also 

recommended modifying the 

requirement to allow PACE 

organizations to notify the participant or 

designated representative of the 

extension either orally or in writing. 

The commenters suggested that 

regardless of whether the notification is 

oral or in writing it would include an 

explanation of the reason(s) for the 

delay and would be issued no later than 

24 hours after the IDT decides to extend 

the timeframe. They also noted that 

allowing oral notification would 

facilitate the requestor’s receipt of 

notice of the extension, because if CMS 

required PACE organizations to issue 

written notification within 24 hours 

after the IDT decides to extend the 

timeframe, it would require at least a 

day or two for such written notification 

to reach the requestor. Additionally, 

regardless of whether notification was 

provided orally or in writing, 

commenters noted the PACE 

organization would have to maintain 

documentation of the notification in 

accordance with the recordkeeping 

requirements at § 460.121(m). 

Response: We appreciate the 

commenters’ suggestions to modify the 

proposed regulatory text at 

§ 460.121(i)(2) to allow PACE 

organizations to provide notification of 

the decision by the IDT to extend the 

regulatory timeframe either orally or in 

writing. We believe that providing 

written notification of the rationale for 

an extension is important in order to 

ensure the participant receives a full 

explanation. Additionally, a written 

explanation of the extension will allow 

the participant to share that information 

with family members or caregivers if 

desired, for instance if the participant 

needs assistance with understanding the 

rationale. Therefore, we are not 

persuaded to modify the regulation at 

this time to allow PACE organizations to 

notify participants orally instead of in 

writing, and are finalizing the 

requirements under § 460.121(i)(2) as 

proposed. We will consider building 

additional flexibility into the regulation 

through future rulemaking. 

Additionally, while we are not 

modifying the regulation to allow for 

oral notification and PACE 

organizations will be required to 

provide written notification when the 

IDT extends the timeframe for 

processing a service determination 

request, nothing would preclude the 

organization from choosing to call a 

participant in addition to sending a 

written notification. This would 

alleviate any concerns the organization 

might have about providing notice to 

the participant in as timely a manner as 

possible. 

Comment: The majority of 

commenters agreed with CMS’s 

proposal to require PACE organizations 

to provide the participant or designated 

representative with oral or written 

notice of the IDT’s decision to approve 

a service determination request under 

§ 460.121(j)(1). However, these 

commenters also requested clarification 

regarding CMS’ expectations with 

respect to the requirement that such 

notice must explain the conditions of 

the approval. 

Response: We appreciate the 

commenters’ support. The explanation 

of the conditions of an approval that the 

IDT is required to provide to the 

participant or their designated 

representative under § 460.121(j)(1) 

should include any parameters that may 

be applicable to the approval. We wish 


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to clarify that PACE organizations 

would only be required to explain the 

conditions of the approval if the request 

is approved in full, but there are 

conditions applicable to the approval. 

As we discussed in the proposed rule, 

requests are not considered approved in 

full unless the IDT member can approve 

exactly what is requested. (84 FR 9127). 

In these situations, if there are 

conditions on a particular service that 

are not inconsistent with a participant’s 

request but that the IDT still needs to 

make the participant aware of, we 

would expect that they notify the 

participant of the conditions of the 

approval that apply. These conditions 

may include any additional information 

about duration or timing, or a limitation 

on the service that needs to be conveyed 

to the participant. For example, if a 

participant makes a general service 

determination request for physical 

therapy (and does not request a specific 

duration), and the PACE organization 

approves physical therapy, but 

determines that the participant only 

needs physical therapy 3 times a week 

for 6 weeks, the required notice must 

include the specific duration and 

frequency of the approved service. 

Another example would include 

circumstances where the PACE 

organization approves a visit to a 

specialist, but requires the participant to 

go to a particular contracted specialist, 

the required notice must include this 

information. If the request cannot be 

approved in full as requested, then the 

decision is a partial denial and the 

specific reason for the denial and appeal 

rights must be provided both orally and 

in writing pursuant to § 460.121(j)(2). 

For example, if the participant makes a 

service determination request for 8 

hours of home care, split over 3 visits 

each week, but the PACE organization 

approves a total of 6 hours of home care, 

split between 2 visits each week, this 

would be considered a partial denial 

and notification would have to be 

provided pursuant to § 460.121(j)(2). 

Another example would be if a 

participant requested physical therapy 

for six weeks, but the PACE 

organization only approved physical 

therapy for four weeks. Because the 

PACE organization did not approve 

exactly what the participant requested, 

and only approved four weeks instead 

of six, that decision would be 

considered partially denied. 

Comment: The majority of 

commenters agreed with CMS’ proposed 

provisions in § 460.121(j)(2), which 

require PACE organizations to provide 

the participant or designated 

representative with oral and written 

notice of the IDT’s decision to deny or 

partially deny a request. We proposed 

that this notification must include the 

specific reason(s) for the denial, 

including why the service is not 

necessary to maintain or improve the 

participant’s overall health status, 

taking into account the participant’s 

medical, physical, emotional, and social 

needs, and the results of the 

reassessment(s) in understandable 

language, inform the participant or their 

designated representative of his or her 

right to appeal the decision under 

§ 460.122, describe the standard and 

expedited appeals processes, and inform 

a Medicaid participant of his or her 

right to continue receiving disputed 

services during the appeals process and 

the conditions for continuing to receive 

disputed services. One commenter 

recommended that CMS provide PACE 

organizations with template language 

for denial notifications. 

Response: We thank the commenters 

for their support of this provision. 

Historically we have not been 

prescriptive about PACE organizations’ 

appeals processes, and it remains up to 

the PACE organization to develop a 

formal written appeals process with 

specified timeframes for response to 

address noncoverage or nonpayment for 

services under § 460.122(a), subject to 

the minimum requirements specified in 

§ 460.122(c). Accordingly, we believe 

that each PACE organization is in the 

best position to create a notice that is 

tailored directly to its internal 

processes, in accordance with the 

requirements at § 460.122(j). We 

appreciate the commenters’ 

recommendation and we may consider 

providing template language for denial 

notifications in the future, as 

appropriate in light of the needs of the 

PACE program. 

Comment: In response to CMS’ 

request for feedback on whether it 

would be preferable for 

§ 460.121(j)(2)(iv) to cross-reference 

§ 460.122(e) or § 460.122(e)(1), the 

majority of commenters agreed that 

CMS should cross-reference 

§ 460.122(e)(1). Several commenters 

requested confirmation that the 

provisions in § 460.121(j)(2)(iv) would 

not prohibit a PACE organization from 

informing all participants, regardless of 

Medicaid eligibility, of their ability to 

continue receiving disputed services 

during the appeals process until 

issuance of the final determination. 

Response: We appreciate the 

commenters’ responses to our request 

for feedback and are finalizing the cross 

reference at § 460.121(j)(2)(iv) as 

proposed. At this time the requirement 

at § 460.121(j)(2)(iv) applies only to 

Medicaid eligible participants, 

including those participants that are 

dually eligible for Medicare and 

Medicaid, and we are not expanding 

this to include Medicare-only 

participants in this rule. PACE 

organizations are not required under 

§ 460.122(e) to continue to furnish the 

service(s) under dispute during the 

appeals process for Medicare-only 

participants. The requirements under 

§ 460.122(e)(1) specify that for a 

Medicaid participant, the PACE 

organization must continue to furnish 

the disputed services until issuance of 

the final determination if the PACE 

organization is proposing to terminate 

or reduce services currently being 

furnished or if the participant requests 

continuation with the understanding 

that he or she may be liable for the costs 

of the contested services if the 

determination is not made in his or her 

favor. 

Comment: Commenters agreed with 

CMS’ proposal at § 460.121(k) regarding 

the effectuation requirements when the 

IDT approves a service determination 

request, in whole or in part. As 

proposed, § 460.121(k) would require 

PACE organizations to provide 

approved services as expeditiously as 

the participant’s condition requires, 

taking into account the participant’s 

medical, physical, emotional, and social 

needs. This provision would also 

require the IDT to explain when the 

participant may expect to receive the 

service in accordance with 

§ 460.121(j)(1). Commenters also agreed 

with CMS’s proposals under § 460.121(l) 

relating to the effect of failure by the 

IDT to meet the processing timeframes. 

CMS proposed to require the PACE 

organization to automatically process an 

appeal in accordance with § 460.122 if 

the IDT fails to provide the participant 

with timely notice of the resolution of 

the request or does not furnish the 

services required by the revised plan of 

care, as this failure would constitute an 

adverse decision. 

Response: We thank the commenters 

for their support of these provisions and 

are finalizing as proposed. 

Comment: Commenters were also 

supportive of the proposed 

recordkeeping requirements at 

§ 460.121(m), which would require 

PACE organizations to establish and 

implement a process to document, track, 

and maintain records related to all 

processing requirements for service 

determination requests received both 

orally and in writing, and ensure those 

records would be available to the IDT to 

ensure that all members remain alert to 

pertinent participant information. 


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Response: We thank the commenters 

for their support of this provision and 

are finalizing as proposed. 

After consideration of the comments 

received and for the reasons outlined in 

the proposed rule and our responses to 

comments, we are finalizing the changes 

at §§ 460.121(e), (g), (h), (i), (j), (k), (l), 

and (m) as proposed. We are finalizing 

the remaining provisions at § 460.121 

with several modifications. First, we 

have modified the terminology used at 

§ 460.121 by changing the title to refer 

to ‘‘service determination process’’ and 

replacing the term ‘‘service delivery 

request’’ with ‘‘service determination 

request’’ throughout. We have also made 

corresponding changes throughout the 

proposed regulatory text at part 460. We 

are amending proposed § 460.121(a) by 

changing the word ‘‘section’’ to ‘‘Part’’ 

in order to state that PACE 

organizations’ written procedures for 

identifying and processing service 

determination requests must be 

developed in accordance with the 

requirements in part 460 rather than 

§ 460.121. This change will better reflect 

the content of our proposals under 

§ 460.121, which specifically reference 

other applicable requirements in Part 

460 of Title 42 and will not affect the 

meaning of the regulation as proposed 

or described in the final rule. We have 

made modifications to 460.121(b)(2) by 

changing the language from ‘‘made prior 

to the development of the initial care 

plan’’ to ‘‘prior to completing the 

development of the initial plan of care’’ 

to reflect our intent, as expressed in the 

preamble to the proposed rule, that this 

exception applies until the initial plan 

of care is complete. We are also 

amending proposed § 460.121(d)(2) to 

require that individuals may make 

service determination requests to any 

employee or contractor of the PACE 

organization that provides direct care to 

a participant in the participant’s 

residence, the PACE center, or while 

transporting participants, in response to 

comments received about whether we 

should adopt an approach that permits 

service determination requests to be 

made only in those settings. In addition, 

at § 460.121(f) we proposed to use a 

question mark at the end of the 

paragraph title instead of a period. This 

was an oversight and therefore, we have 

modified the regulatory text to reflect 

this change. This change will not have 

a substantive impact on the effect of the 

regulation. Finally, we have made minor 

grammatical corrections to 

§ 460.121(b)(1), (c), and (f) which will 

not change the intended meaning of the 

regulation as proposed or described in 

this final rule. We are finalizing the 

changes at § 460.104(d)(2) as proposed, 

except in regard to the use of the term 

‘‘service determination request.’’ 

B. Appeals Requirements Under PACE 

(§§ 460.122 and 460.124) 

As discussed previously, sections 

1894(b)(2)(B) and 1934(b)(2)(B) of the 

Act require PACE organizations to have 

in effect written safeguards of the rights 

of enrolled participants, including 

procedures for grievances and appeals. 

In the preamble to Medicare and 

Medicaid Programs; Programs of AllInclusive Care for the Elderly (PACE) 

interim final rule which was published 

in the Federal Register on November 24, 

1999 (64 FR 66234) (hereinafter referred 

to as the 1999 PACE interim final rule), 

CMS explained that we considered the 

appeals requirements under what is 

now MA when creating the appeals 

requirements for PACE (see 64 FR 66257 

and 66258). CMS established the 

requirements for PACE organizations’ 

appeals processes in §§ 460.122 (PACE 

organization’s appeals process) and 

460.124 (Additional appeal rights under 

Medicare or Medicaid). Over time, 

PACE organizations have requested that 

CMS explain certain aspects of the 

appeals processes described in 

§§ 460.122 and 460.124. Therefore, we 

proposed certain changes to §§ 460.122 

and 460.124 that would provide 

additional detail about the appeals 

process and help ensure consistency in 

the administration of the appeals 

process among PACE organizations. We 

also proposed a few other changes to 

increase beneficiary awareness of and 

access to the appeals process, and to 

align with other changes in this rule. 

The term ‘‘appeal’’ is currently defined 

in § 460.122 as a participant’s action 

taken with respect to the PACE 

organization’s noncoverage of, or 

nonpayment for, a service including 

denials, reductions, or termination of 

services. We would add a sentence after 

the definition to require that PACE 

organizations must process all requests 

to initiate, modify or continue a service 

as a service delivery request before 

processing an appeal under § 460.122. 

As we discussed in section VI.A. of this 

final rule, we have seen through audits 

that some PACE organizations will 

process an appeal instead of processing 

a service delivery request when a 

participant makes a request to continue 

receiving a service that the PACE 

organization is discontinuing or 

reducing. We would add a sentence to 

this introductory paragraph in order to 

affirmatively require that all requests 

that satisfy the definition of a service 

delivery request under § 460.121(b) 

must first be processed as such before a 

PACE organization may process an 

appeal. Section 460.122(b) currently 

provides that upon enrollment, at least 

annually thereafter, and whenever the 

IDT denies a request for services or 

payment, the PACE organization must 

give a participant written information 

on the appeals process. Consistent with 

the changes to existing § 460.104(d)(2) 

and new § 460.121, which are discussed 

in section VI.A. of this final rule, we 

would modify § 460.122(b) to specify 

that PACE organizations must provide 

participants with written information on 

the appeals process at enrollment, at 

least annually thereafter, and whenever 

the IDT denies a service delivery request 

or other request for services or payment. 

By proposing this change, CMS was 

seeking to ensure that participants 

consistently and timely receive 

information about their appeal rights, 

including when PACE organizations 

deny their service delivery requests. 

Section 460.122(c) provides 

requirements for the minimum written 

procedures that PACE organizations 

must establish for their appeals process. 

We have heard that these requirements 

have created confusion among PACE 

organizations, which has led to 

inconsistent implementation among 

PACE organizations and a lack of 

participant awareness of and 

participation in the appeals process. As 

a result, we proposed a number of 

changes to decrease confusion and 

increase beneficiary awareness of and 

access to the appeals process. 

We proposed two modifications at 

paragraph (c)(2). First, we would add a 

participant’s designated representative 

as someone who has the right to appeal 

on the participant’s behalf. We believe 

that this is an important participant 

safeguard because it allows for 

assistance in navigating the appeals 

process. Additionally, in developing 

procedures for how a participant or a 

participant’s designated representative 

files an appeal, PACE organizations 

would be required to include 

procedures for receiving oral and 

written appeal requests. Because of the 

comprehensive nature of the care PACE 

organizations provide, participants are 

likely to have more verbal interactions 

with staff of the PACE organization and 

may express their desire to appeal a 

decision, but may be unsure or confused 

as to how. We believe that by requiring 

PACE organizations to accept appeal 

requests made both orally and in 

writing, we would create an important 

safeguard for the participant population 

enrolled in the PACE program. By 

allowing both oral and written requests 

for appeals, this proposal would 

enhance participant access to the 


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appeals process, and to services covered 

under the PACE benefit. 

Second, in response to questions 

received from PACE organizations, we 

would add language in paragraph (c)(4) 

to specify the qualifications required of 

an appropriate third party reviewer or 

members of a review committee. 

Specifically, we would require PACE 

organizations to ensure appeals are 

reviewed by an appropriate reviewer or 

committee. This includes separating the 

requirements that an appropriate third 

party reviewer and the members of a 

review committee must be 

‘‘independent’’ and ‘‘appropriately 

credentialed’’ to emphasize the fact that 

an appropriate third party reviewer or 

member of a review committee must be 

both independent and appropriately 

credentialed. We discuss the use of a 

review committee in the preamble to the 

2006 PACE final rule (see 71 FR 71302) 

and PACE organizations currently 

utilize review committees in their 

review processes; therefore, we would 

incorporate review committees in 

regulation at this time and require the 

members of review committees to satisfy 

the same requirements as appropriate 

third party reviewers. Employees or 

contractors of a PACE organization may 

participate in review committees as long 

as they meet the requirements set forth 

in § 460.122(c)(4). Consistent with the 

current requirements at § 460.122(c)(4), 

we would specify that in order to be an 

appropriate third party reviewer or 

member of a review committee, an 

individual must be an impartial third 

party who was not involved in the 

original action and does not have a stake 

in the outcome of the appeal. We also 

proposed to add language that more 

clearly defines an appropriately 

credentialed reviewer. As we discussed 

in the preamble to the 2006 final rule, 

the appropriate third party reviewer 

must be someone with expertise in the 

appropriate field. Thus it would not be 

appropriate for a social worker to review 

an appeal related to a physical therapy 

denial; nor would it be appropriate for 

a gynecologist to review a denial of 

services relating to coronary surgery (71 

FR 71302). Therefore, we would modify 

the language in paragraph (c)(4) to 

specify that an appropriate third party 

reviewer is one who is credentialed in 

a field or discipline related to the 

appeal. We do not believe that these 

proposals would affect the way PACE 

organizations currently choose their 

third party reviewers since the existing 

regulation at § 460.122(c)(4) requires the 

appointment of an appropriately 

credentialed and impartial third party 

that was not involved in the original 

action and who does not have a stake in 

the outcome of the appeal to review the 

participant’s appeal. By proposing 

amendments to expressly state that the 

same requirements also apply to the 

members of a review committee, we 

believe that as proposed this would give 

PACE organizations more clarity and 

flexibility to utilize resources within the 

organization as well as contracted 

employees. 

PACE organizations have expressed 

confusion about the third party review 

process, and we are aware of 

inconsistent decisions made by third 

party reviewers, such as inconsistent 

decisions at different PACE 

organizations. In order to reduce 

confusion, create a more consistent 

application of Medicare and Medicaid 

coverage requirements under PACE, and 

increase consistency for participants, we 

proposed additional modifications to 

the requirements under § 460.122(c). 

Specifically, we added a new paragraph 

(c)(5) that would require PACE 

organizations to take specific steps to 

ensure their third party reviewers 

understand the PACE benefit package 

and the coverage requirements under 

the PACE program, and how to review 

requests in a manner consistent with 

both. As noted in the preamble to the 

2006 PACE final rule (71 FR 71302), 

PACE organizations should ensure that 

credentialed and impartial third party 

reviewers are trained to make decisions 

in a manner similar to the 

determinations under section 

1862(a)(1)(A) of the Act. Such 

determinations would be based on the 

participant’s medical needs and not on 

other reasons such as the cost of the 

disputed care, who is paying the third 

party reviewer’s salary or fee, an 

individual’s reputation, or other factors. 

Therefore, we proposed, in new 

paragraph (c)(5), to require PACE 

organizations to provide written or 

electronic materials to an appropriate 

third party reviewer(s) that, at a 

minimum, explain that services must be 

provided in a manner consistent with 

the requirements in §§ 460.92 and 

460.98, the need to make decisions in a 

manner consistent with determinations 

made under section 1862(a)(1)(A) of the 

Act, and the requirements in § 460.90(a) 

that specify that many of the limitations 

on the provision of services under 

Medicare or Medicaid do not apply in 

PACE. 

The requirements for providing 

appeal notifications at § 460.122(d) 

currently provide that a PACE 

organization must give all parties 

involved in the appeal (1) appropriate 

written notification and (2) a reasonable 

opportunity to present evidence related 

to the dispute, in person, as well as in 

writing. However, PACE organizations 

have expressed that this section of the 

regulation is confusing because it 

discusses both the notification 

requirements and the participant’s 

opportunity to submit evidence during 

an appeal. To reduce confusion, we 

would separate these requirements. 

Accordingly, we would redesignate 

paragraph (g) as (h) and also change the 

title of paragraph (h) to ‘‘Actions 

following a favorable decision.’’ This 

redesignation allows for the addition of 

new paragraph (g) that sets forth 

notification requirements. We would 

modify paragraph (d) to address the 

existing requirement that the PACE 

organization must give all parties 

involved in the appeal a reasonable 

opportunity to present evidence related 

to the dispute in person as well as in 

writing. At new paragraph (g), we 

proposed to revise the notice 

requirements for appeals to more closely 

align with the notice requirements for 

service delivery requests at § 460.121(j) 

by specifying the content of the notice 

in order to ensure consistency and 

minimize confusion for PACE 

organizations and participants. PACE 

organizations would be required to give 

all parties involved in the appeal (for 

example participants or their designated 

representatives) appropriate written 

notice of all appeal decisions. In the 

case of appeal decisions that are 

favorable to the participant, the PACE 

organization would be required to 

explain any conditions on the approval 

in understandable language. For 

partially or fully adverse decisions, the 

PACE organization would be required to 

state the specific reason(s) for the 

denial, explain the reason(s) why the 

service would not improve or maintain 

the participant’s overall health status, 

inform the participant of his or her right 

to appeal the decision, and describe the 

additional appeal rights under 

§ 460.124. Conditions of approval may 

include, but are not limited to, the 

duration of the approval, limitations 

associated with an approval such as 

dosage or strength of a drug, or any 

coverage rules that may apply. We also 

proposed to revise and move the current 

requirements at paragraph (h) into new 

paragraph (g)(2)(ii). These requirements 

specify that for determinations that are 

wholly or partially adverse to a 

participant, at the same time the 

decision is made, the PACE organization 

must notify CMS, the State 

administering agency, and the 

participant. Because this paragraph 

includes additional notification 

requirements that PACE organizations 


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must follow after a decision is made to 

deny an appeal, we believe that this 

belongs in § 460.122(g)(2) for notice of 

adverse decisions. We would revise this 

requirement to use terminology 

consistent with our other amendments 

to § 460.122, specifically, to refer to 

‘‘partially or fully adverse’’ decisions 

and to refer to an appeal decision rather 

than to a determination for consistency 

with § 460.122(g)(2)(i) and other 

sections of this regulation. 

We proposed a few minor changes to 

align with other changes in this rule. 

First, we would change the reference to 

§ 460.104(d)(2)(iv) in § 460.122(c)(1) to 

reference the service delivery request 

requirements in § 460.121(i) and (m). 

The current citation references the 

extension requirements for unscheduled 

reassessments; however, we believe that 

this reference should have been to the 

general timeframes for processing 

service delivery requests. We would 

redesignate the current paragraphs (c)(5) 

and (6) as (c)(6) and (7) in § 460.122 to 

allow for the addition of a new 

paragraph (c)(5), as discussed earlier in 

this section. 

Lastly, we added language to 

§ 460.124 that delineates the additional 

appeal rights that PACE participants are 

entitled to receive under Medicare or 

Medicaid and add processing 

requirements for the PACE organization. 

In response to comments CMS received 

on the 1999 PACE interim final rule, 

CMS discussed stakeholder concerns 

about the PACE appeals process in the 

preamble to the 2006 PACE final rule 

and reiterated the intended process in 

the preamble. (See 71 FR 71303 and 

71304.) Specifically, CMS stated in the 

preamble to the 2006 PACE final rule 

that Medicare beneficiaries have access 

to the Medicare external appeals route 

through the IRE that contracts with CMS 

to resolve MA appeals, while Medicaid 

eligible participants have access to the 

State Fair Hearing (SFH) process (see 71 

FR 71303). However, despite this 

clarification, CMS’s audits have 

revealed that PACE organizations 

continue to misinterpret the 

requirements under § 460.124 relating to 

participants’ additional appeal rights 

under Medicare or Medicaid. To address 

this issue, we proposed several changes 

to § 460.124. First, we would add new 

paragraphs (a) and (b) at § 460.124. In 

§ 460.124(a) we would specify that 

Medicare participants have the right to 

a reconsideration by an independent 

review entity (IRE). We recognize that 

there are differences in the terminology 

used in PACE versus MA and therefore 

have to add similar language at new 

§ 460.124(a)(1), (2), and (3) to establish 

in regulation the requirements for how 

an appeal may be made to the 

independent, outside entity, the 

timeframe in which the independent 

outside entity must conduct the review, 

and who are the parties to the appeal. 

In § 460.124(a) introductory text and 

(a)(1) we have intended to parallel the 

requirements at § 422.592(a) with minor 

differences. Under MA there is 

automatic escalation to the independent 

review entity at this level of appeal if 

the organization upholds its adverse 

decision, in whole or in part. However, 

in PACE, appeals are not automatically 

escalated because most PACE 

participants are dually eligible for 

Medicare and Medicaid benefits and 

these participants may choose to utilize 

the Medicaid or Medicare route for 

independent review. For these dually 

eligible individuals, it may be more 

appropriate to pursue an appeal through 

the Medicaid path rather than the 

Medicare path. The provisions relating 

to automatic-escalation in MA ensure 

that the beneficiary receives a review by 

an independent reviewer; however, this 

protection is not necessary in PACE as 

the PACE participant has already 

received an independent review on the 

appeal during the internal appeal 

processed in accordance with § 460.122. 

Therefore, we proposed at 

§ 460.122(a)(1) to specify that a written 

request for a reconsideration must be 

filed with the independent review entity 

within 60 calendar days of the decision 

by the third party reviewer. We did not 

specify who must file the request 

because we discuss at § 460.124 that the 

PACE organization must assist the 

participant in choosing which appeal 

rights to pursue (that is, Medicaid SFH 

or Medicare IRE) and as such, we 

believe that the PACE organization is 

also responsible for ensuring that the 

request is filed with the appropriate 

external entity. However, a participant 

always maintains the right to file a 

request without assistance from the 

PACE organization. At § 460.124(a)(2) 

we would add a requirement that the 

independent review entity must 

conduct the review as expeditiously as 

the participant’s health condition 

requires but must not exceed the 

deadlines specified in the contract. The 

independent review entity is currently 

operating under these timeframes, 

consistent with the requirements at 

§ 422.592(b), and participants are 

currently utilizing the independent 

review entity to exercise their external 

appeal right, consistent with CMS’s 

historical interpretation that these 

requirements are applicable to the PACE 

program. We also proposed adding 

language at § 460.124(a)(3) that would 

parallel the requirement at § 422.592(c), 

to specify that when the independent 

review entity conducts a 

reconsideration, the parties to the 

reconsideration are the same parties 

described in § 460.122(c)(2), with the 

addition of the PACE organization. We 

are seeking to enhance transparency and 

we believe it is important to make PACE 

organizations aware that they are 

considered a party to the appeal once it 

reaches the independent review entity. 

We would add a new paragraph (b) that 

specifies that Medicaid participants 

have the right to a SFH as described in 

part 431, subpart E. Finally, we would 

add a new paragraph (c) to specify that 

participants who are dually eligible for 

both Medicare and Medicaid have the 

right to external review by means of 

either the IRE or the SFH process. This 

provision would specify that dually 

eligible participants may choose to 

pursue an appeal through either the 

Medicare or Medicaid process. In 

accordance with the existing provisions 

under § 460.124, PACE organizations 

must assist dual eligible participants in 

choosing which route to pursue if both 

the IRE and the SFH review processes 

are applicable. For example, if the 

appeal is related to an enrollment 

dispute, the Medicaid SFH process 

would be the appropriate route for a 

participant to pursue. Whereas for a 

dispute related to a Part D medication, 

the IRE would be the appropriate route 

for a participant to pursue. By codifying 

these appeal rights in regulation, we are 

seeking to enhance transparency for 

PACE organizations to ensure that 

participants are able to access additional 

levels of appeal in order to receive 

services they believe that they are 

entitled to under the PACE benefit. 

We summarize the comments on the 

proposals related to appeal 

requirements under PACE, and provide 

our responses to those comments, 

below. 

Comment: Numerous commenters 

agreed with the proposed changes to the 

definition of ‘‘appeal’’ under § 460.122, 

which the commenters’ noted would 

specifically state their understanding of 

CMS’s longstanding policy, that a 

service determination request must be 

processed before an IDT determination 

regarding a request to initiate, modify, 

or continue a service could be appealed. 

Another commenter recommended 

revising the definition to eliminate the 

language ‘‘a participant’s action taken 

with respect to the PACE organization’s 

noncoverage of, or nonpayment for, a 

service including denials, reductions or 

termination of services’’ and instead 

replace it with ‘‘a participant or their 

designated representative’s action taken 


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with respect to the PACE organization’s 

denial of a service request to initiate, 

continue, increase, decrease or 

discontinue a service.’’ The commenter 

suggested that this would eliminate any 

confusion on what constitutes an 

appeal. 

Response: We appreciate commenter 

support of our changes to the definition. 

While we proposed adding a sentence to 

the introductory language of § 460.122 

to require that PACE organizations 

process any request to initiate, modify, 

or continue a service as a service 

determination request before the PACE 

organization can process an appeal 

under § 460.122, we did not propose 

any changes to the current language 

regarding what constitutes an appeal. 

We have chosen not to include the 

designated representative in the 

definition because we specifically 

provide at § 460.122(c)(2) that a PACE 

organization’s appeals process must 

include written procedures for how ‘‘a 

participant or their designated 

representative files an appeal . . .’’, we 

do not believe it is necessary to refer to 

the designated representative in the 

introductory text. Furthermore, we do 

not believe it is necessary to change the 

proposed definition as the commenter 

suggests since we are maintaining the 

proposed criteria for what constitutes a 

service determination request to include 

requests to initiate, modify, or continue 

a service. Therefore, we are finalizing 

our proposed changes to the 

introductory text of § 460.122 as 

proposed. 

Comment: The majority of 

commenters recommended that CMS 

modify the proposed language in 

§ 460.122(b) from, ‘‘or other request for 

services or payment’’ to ‘‘or request for 

payment.’’ These commenters expressed 

confusion about why CMS would 

include ‘‘or other services’’ in addition 

to a service determination request. A 

commenter stated that ‘‘or other request 

for services or payment’’ is in reality a 

service determination request and 

therefore is redundant in § 460.122(b) 

and should be removed. 

Response: Section 460.122(b) does not 

address the right to appeal, but rather 

the responsibility of the PACE 

organization to provide participants 

with written information about their 

appeal rights. In addition to providing 

notice of these rights at enrollment and 

annually, we believe that it is important 

for the PACE organization to provide 

notice when it denies a service 

determination request, which is why we 

proposed to modify § 460.122(b) to 

include that language. We did not 

propose to make other changes to the 

text of § 460.122(b) such as removing 

‘‘or other requests for services or 

payment.’’ We agree with commenters 

that all requests for services would be 

resolved within the service 

determination request process. Because 

all requests for services would be 

resolved through the service 

determination request process, there 

would be no ‘‘other requests for 

services’’ that might be subject to 

appeal, and removing this language 

would not substantively affect the 

meaning of the revised text of 

§ 460.122(b) as proposed. However we 

also note that certain requests for 

payment may not meet the definition of 

a request to initiate, modify or continue 

a service. For example, a PACE 

participant may go to the hospital or 

emergency room without first requesting 

the service from the IDT, and may 

subsequently submit the bill to the 

PACE organization as a request for 

payment. Since the underlying service 

was already received, this would not be 

a request to initiate, modify or continue 

a service, but we would expect the 

PACE organization to provide 

notification of appeal rights if the 

payment was denied by the IDT. We can 

also envision scenarios where a 

participant receives a bill for routine 

care provided by a contractor of the 

PACE organization, such as care 

provided by a nursing facility or 

specialist, and the participant 

subsequently requests payment from the 

PACE organization. Because these 

services would not involve requests to 

initiate, modify, or continue a service, 

these payment decisions would be 

processed outside of the service 

determination process. For these 

reasons, we are persuaded to remove ‘‘or 

other request for services’’ but will 

retain ‘‘or payment’’ as this would align 

with our proposal to require notification 

of appeal rights following a denied 

service determination request or a 

decision to deny a request for payment 

for a service. We are therefore revising 

§ 460.122(b) to remove the reference to 

‘‘other services’’ and to require that 

upon enrollment, at least annually 

thereafter, and whenever the 

interdisciplinary team denies a service 

determination request or request for 

payment, the PACE organization must 

give a participant written information 

on the appeals process. 

Comment: The majority of 

commenters recommended modifying 

the cross-reference in § 460.122(c)(1), 

‘‘Minimum requirements’’, from 

§ 460.121(g) to § 460.121(i) as it would 

make the appeals requirement clearer. 

Response: We appreciate the 

commenters’ recommendation and agree 

that this cross-reference should be 

revised. In section VI.B. of the proposed 

rule, we proposed in § 460.122(c)(1) to 

change the reference from 

§ 460.104(d)(2)(iv) to §§ 460.122(i) and 

(m) to reference both the notification 

timeframes and the documentation 

requirements for service delivery 

requests. (85 FR 9133). The proposed 

regulation text at § 460.122(c)(1) 

incorrectly referenced § 460.121(g). 

Therefore we have modified the 

regulatory text in this final rule to 

reflect the correct reference, to 

§§ 460.121(i) and (m). 

Comment: The majority of 

commenters agreed with the revisions at 

§ 460.122(c)(2), to require that a PACE 

organization’s appeals process must 

include written procedures for how a 

participant or their designated 

representative files an appeal. The 

commenters specifically noted their 

support for allowing the participant’s 

designated representative as an 

individual who may submit an appeal 

on the participant’s behalf. 

Response: We thank the commenters 

for their support of this provision. 

Comment: We received several 

comments on the proposed 

requirements for third party reviewers. 

The majority of commenters supported 

the requirements that allow for third 

party review by a committee at 

§ 460.122(c)(4). The commenters also 

supported the requirement that a third 

party reviewer or committee member 

must be appropriately credentialed in 

the field or discipline related to the 

appeal. A commenter specifically 

recommended requiring that appeals of 

physical therapy services be reviewed 

by a licensed physical therapist. These 

commenters also supported the 

proposed provisions at § 460.122(c)(5), 

which require distribution of written or 

electronic materials to third party 

reviewers. 

Response: We thank the commenters 

for their support of these provisions. 

With respect to the comment regarding 

review by licensed physical therapists, 

we expect that the PACE organization 

would determine what constitutes an 

appropriately credentialed individual in 

the field or discipline related to the 

appeal as specified at proposed 

§ 460.122(c)(4)(i). Given the vast array of 

services that could be under appeal, we 

do not believe it would be feasible for 

CMS to list each discipline or set of 

appropriate credentials that we would 

expect to see in each case. Therefore, we 

are not adopting this suggestion. In 

section VI.B. of the proposed rule, we 

provided an example stating that it 

would not be appropriate for a social 

worker to review an appeal related to a 

denial of physical therapy services, and 


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75https://www.merriam-webster.com/dictionary/ 

party. 

we would expect a PACE organization 

to consider this guidance when making 

determinations about whether third 

party reviewers are appropriately 

credentialed in the field or discipline 

related to the appeal. 

Comment: The majority of 

commenters recommended that CMS 

either clarify the meaning of, ‘‘all 

parties,’’ as referenced in § 460.122(d) 

and § 460.122(g) by adding a list of 

individuals that would be considered a 

‘‘party’’, or modify the language to state, 

‘‘A PACE organization must give the 

participant or designated representative 

. . .’’ These commenters also 

recommended adding designated 

representative as a party that must be 

provided information on the PACE 

organization’s appeals process in 

§ 460.122(b). 

Response: The use of the terminology 

‘‘all parties’’ is consistent with the 

current language used in the context of 

appeal notification and the opportunity 

to present evidence at § 460.122(d) and 

we proposed to retain the existing 

language. According to MerriamWebster.com, the term ‘‘party’’ includes 

‘‘a person or group taking one side of a 

question, dispute, or contest.’’ 75

Generally, we would interpret the term 

‘‘all parties’’ to refer to all parties taking 

a formal position on one or the other 

side of the appeal, which would include 

the participant (and his or her 

designated representative, if applicable), 

and the PACE organization. This 

terminology has been in use in the 

PACE regulations since 1999 and based 

on CMS oversight activities we do not 

have concerns with how PACE 

organizations are currently interpreting 

this term. Under § 460.122(c)(2) a 

participant may file an appeal, or a 

participant’s designated representative 

may file an appeal on the participant’s 

behalf. If a designated representative has 

filed an appeal on behalf of a 

participant, that representative typically 

acts on the participant’s behalf 

throughout the appeal process, and CMS 

considers the participant and the 

designated representative to be the same 

‘‘party’’ for purposes of the appeal. For 

purposes of notification at § 460.122(g), 

the ‘‘parties’’ to the appeal will depend 

on the circumstances of the appeal. 

Generally, we believe the parties would 

include the participant or the 

designated representative of the 

participant, if applicable. For example, 

if a participant filed an appeal without 

assistance from a designated 

representative, the PACE organization 

would be required to provide 

notification to the participant, but if the 

participant designated a representative 

to represent him or her in the appeal, 

the designated representative should 

also receive notice. For purposes of 

submitting evidence during the appeal 

at § 460.122(d), there may be 

circumstances where a representative 

submits evidence on behalf of the 

participant, and there may be 

circumstances where both the 

participant and the representative 

submit evidence during the appeal. 

After consideration of the comments 

received, we are finalizing this 

provision as proposed. 

With respect to the recommendation 

to add the designated representative as 

a party that must be provided 

information about the PACE 

organization’s appeals process under 

§ 460.122(b), we do not agree that this 

is necessary, although there may be 

circumstances when a designated 

representative should receive 

information about the appeals process. 

As we discussed earlier in this section, 

the PACE organization would be 

required to give a participant written 

information on the appeals process 

upon enrollment, at least annually 

thereafter, and whenever the 

interdisciplinary team denies a service 

determination request or request for 

payment. A participant could designate 

a representative for purposes of 

interacting with the PACE organization 

at any one of these points in time, in 

which case the notice to the participant 

could go to the designated 

representative who is acting on the 

participant’s behalf. Additionally, we 

proposed to retain the current 

requirements for notification of an 

adverse decision in regard to a service 

determination request, which provide 

that a PACE organization must notify 

the participant or the designated 

representative orally and in writing of 

the adverse determination, in a 

notification that includes a description 

of both the standard and expedited 

appeals processes § 460.121(j)(2). 

Comment: A commenter was 

supportive of the proposed notification 

requirements at § 460.122(g). The 

majority of commenters recommended 

revising the language in § 460.122(g)(2) 

to remove the statement, ‘‘the PACE 

organization must provide the 

participant with written notification of 

the decision,’’ since the requirement to 

notify participants is already contained 

in the first paragraph of § 460.122(g). 

These commenters also recommended 

removing the newly redesignated 

§ 460.122(i). The commenters noted that 

the requirements to notify CMS and the 

State administering agency of a wholly 

or partially adverse decision in the 

newly redesignated § 460.122(i), are 

incorporated into § 460.122(g)(2)(ii) and 

are therefore duplicative. 

Response: We thank the commenters 

for their support and for their 

recommendations. We recognize that 

the proposed language at § 460.122(g)(2) 

restates the requirement to provide 

written notification of the decision to 

the participant; we are persuaded to 

revise this section to remove the 

duplicative language. At § 460.122(g), 

we proposed that a PACE organization 

must give all parties involved in the 

appeal appropriate written notification 

of the decision to approve or deny the 

appeal. We did not refer to ‘‘all parties’’ 

at § 460.122(g)(2) and we realize that 

this could be viewed as inconsistent. 

Therefore, we are removing the language 

at § 460.122(g)(2) that states that a PACE 

organization must provide the 

participant with written notification of 

the decision. By making this change we 

are enhancing consistency and also 

ensuring notification to all parties 

involved in the appeal. Because the 

designated representative is permitted 

to file an appeal on a participant’s 

behalf, and therefore are parties to the 

appeal, we believe it is important that 

any notification, including one related 

to a partially or fully adverse decision, 

be communicated to all parties 

involved. 

With regards to removing the 

redesignated § 460.122(i) (existing 

§ 460.122(h)), we agree that the 

requirements to notify CMS and the 

State administering agency of a wholly 

or partially adverse decision in the 

redesignated § 460.122(i) would be 

duplicative of the notification 

requirements in proposed 

§ 460.122(g)(2)(ii). It was not our 

intention to duplicate these 

requirements in the regulations and 

therefore we are revising the 

amendatory language to the regulation 

text to redesignate the current paragraph 

(h) as a new paragraph (g)(2)(ii), as 

revised. 

Comment: A commenter agreed with 

CMS’s proposal at § 460.122(g) which 

sets forth the requirements for providing 

notification of appeal decisions. The 

majority of commenters requested 

clarification regarding the proposed 

requirements in § 460.122(g)(2)(ii), 

which would require PACE 

organizations to provide written 

notification of an adverse appeal 

decision to the participant, CMS and the 

State administering agency (SAA) at the 

same time the decision is made. 

Specifically, the commenters sought to 

clarify the meaning of ‘‘at the same time 

the decision is made’’ and how long 


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76The original PACE protocol was replaced by 

the PACE program agreement (84 FR 25613). 

organizations would have to notify CMS 

and the SAA. 

Response: We appreciate the 

commenter’s support of this provision. 

With respect to the commenters’ 

question regarding what CMS intends 

by the language ‘‘at the same time the 

decision is made,’’ we appreciate the 

opportunity to share our historical 

interpretation of this requirement. 

Under the current requirements at 

redesignated § 460.122(c)(6), the PACE 

organization’s appeals process must 

include written procedures for 

responses to and resolution of appeals 

as expeditiously as the participant’s 

health condition requires, but no later 

than 30 calendar days after the PACE 

organization receives the request. Under 

the current requirements at 

§§ 460.122(f)(1) and (f)(2), a PACE 

organization must also have an 

expedited appeals process and must 

respond to the appeal as expeditiously 

as the participant’s health condition 

requires, but no later than 72 hours after 

it receives the appeal, unless the PACE 

organization takes an extension under 

§ 460.122(f)(3). While both the decision 

and notification must be made within 

these regulatory timeframes, we 

recognize that generally the decision for 

an appeal will occur prior to the 

notification (sometimes by more than a 

day). Additionally, under the current 

requirements at § 460.122(h) 

(redesignated as § 460.122(g)(2)(ii)), the 

PACE organization must notify CMS, 

the State administering agency, and the 

participant of a determination that is 

wholly or partially adverse to a 

participant, at the same time the 

decision is made. We have not 

historically expected PACE 

organizations to notify CMS and the 

SAA of a decision at the same time as 

the decision is made; rather, our 

historical interpretation has been that 

notification to those entities should 

occur around the same time as when the 

PACE organization notifies the 

participant of the adverse decision. We 

would expect that organizations notify 

CMS and the SAA of the adverse 

decision at the time they notify the 

participant of the adverse decision, or 

within the regulatory timeframe for 

notification pursuant to §§ 460.122. 

We are removing ‘‘participant’’ from 

the list at § 460.122(g)(2)(ii) because 

including that term on the list would be 

duplicative in light of the change to the 

wording of that provision. The 

requirement at § 460.122(g) already 

establishes that the PACE organization 

must give all parties involved in the 

appeal, which includes the participant 

(or, as applicable, his or her designated 

representative), appropriate written 

notification of the decision to approve 

or deny the appeal. Therefore, we 

believe that removing participant from 

the list of entities that must also receive 

notification of a denial or partial denial 

at § 460.122(g)(2)(ii) will reduce 

confusion without affecting the 

substance of our proposals. 

Comment: A commenter addressed 

the proposals at § 460.124 and was 

supportive of the additional 

clarifications around additional appeal 

rights under Medicare and Medicaid. 

Response: We thank the commenter 

for their support of this proposed 

provision and therefore are finalizing as 

proposed. 

After consideration of the comments 

received, and for the reasons outlined in 

the proposed rule and our responses to 

comments, we are finalizing the changes 

to the introductory text of § 460.122, 

§ 460.122(c)(2), (c)(4), (c)(5), (d), (h), and 

§ 460.124 as proposed. We are finalizing 

the provisions at § 460.122(b) with 

modifications. Specifically, we have 

modified the requirement at paragraph 

(b) by removing the language ‘‘other 

requests for services’’. We are finalizing 

the provision at paragraph (c)(1) with a 

minor technical correction to change the 

reference from § 460.121(g) to 

§§ 460.121(i) and (m). We are finalizing 

§ 460.122(g) as proposed, with a few 

technical changes to address duplicative 

language. First, we removed duplicative 

language in paragraphs (g)(2)(i) and 

(g)(2)(ii) stating that the requirements in 

question applied to decisions that are 

partially or fully adverse, and added 

‘‘partially or fully’’ in paragraph (g)(2) to 

reflect the fact that all of the 

requirements within (g)(2) applied to 

decisions that were partially or fully 

adverse to the participant. We also 

removed language from paragraph 

(g)(2)(i) that restated the requirement at 

(g) that the PACE organization must 

provide the participant with written 

notification of its decision. Similarly, at 

paragraph (g)(2)(ii) we have removed 

several references to ‘‘the participant,’’ 

including from the list of people who 

must receive notification of a partially 

or fully adverse decision, to reflect the 

fact the participant would already 

receive notice of any decision under 

§ 460.122(g), as a party to the appeal. In 

addition, there was an oversight in the 

proposed amendatory language for the 

regulation text that would reflect the 

move of the current requirements at 

paragraph (h) into new paragraph 

(g)(2)(ii), as proposed at 85 FR 9133. 

Therefore, we are modifying the 

amendatory language to reflect this 

change. 

C. PACE Services, Excluded PACE 

Services, and the Interdisciplinary Team 

(§§ 460.92, 460.96, and 460.102) 

1. Required Services 

Sections 1894(a)(2)(B) and 

1934(a)(2)(B) of the Act state that the 

PACE program provides comprehensive 

health care services to PACE 

participants in accordance with the 

PACE program agreement and 

regulations under those sections. 

Sections 1894(b) and 1934(b) of the Act 

set forth the scope of benefits and 

beneficiary safeguards under PACE. 

Sections 1894(b)(1)(A) and 1934(b)(1)(A) 

of the Act specify in part that PACE 

organizations must provide participants, 

at a minimum, all items and services 

covered under titles XVIII and XIX of 

the Act without any limitation or 

condition as to amount, duration, or 

scope, and all additional items and 

services specified in regulations, based 

upon those required under the PACE 

protocol.76 CMS codified these required 

services in § 460.92 of the regulations, 

which provides that the PACE benefit 

package for all participants, regardless 

of the source of payment, must include 

all Medicare covered items and services, 

all Medicaid covered items and services, 

as specified in the State’s approved 

Medicaid plan, and other services 

determined necessary by the 

interdisciplinary team (IDT) to improve 

and maintain the participant’s overall 

health status. 

We proposed to modify the 

requirements at § 460.92 to more clearly 

define required services, and to specify 

CMS’ expectations for making decisions 

about the services that are required 

under the PACE benefit package. First, 

we would create a new paragraph (a) 

and include under (a) the current 

requirements in § 460.92. In order to do 

that, we proposed to renumber existing 

paragraphs (a), (b), and (c) as (a)(1), (2), 

and (3). We would add a new paragraph 

(b) that provides the standards that the 

IDT must consider when evaluating 

whether to provide or deny services 

described under (a) for a participant. 

In addition to redesignating 

§ 460.92(a) as § 460.92(a)(1), we would 

modify the language to refer to all 

Medicare-covered services. In light of 

our amendments to the definition of 

‘‘services’’ in § 460.6, and the current 

definition of that term, PACE 

organizations should understand that 

providing necessary drugs, whether they 

are covered under Medicare Parts A, B, 

or D, is an important part of the PACE 

benefit package. See section VI.I. of this 


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final rule for a more detailed discussion 

of the definition of ‘‘services.’’ 

We would add a new paragraph (b) in 

order to specify the standards that the 

IDT must consider when evaluating 

whether to provide or deny services 

required under § 460.92(a) for a 

participant. Under § 460.92(b)(1) we 

would require the IDT to take into 

account all aspects of a participant’s 

condition, including the participant’s 

medical, physical, emotional, and social 

needs, when determining whether to 

approve or deny a request for a service. 

As we discussed in section VI.A. of this 

final rule, the determination for a 

service should be based on all aspects 

of the participant’s care. For example, 

additional center days may not be 

necessary when considering the 

participant’s physical needs, but when 

taking into account the participant’s 

social needs, the IDT may find that 

those services become necessary in 

order to improve the participant’s social 

or emotional condition. We have 

discovered through audits that PACE 

organizations sometimes only consider 

the medical or physical needs of a 

participant but do not consider their 

social or emotional needs when those 

social or emotional needs are relevant to 

the request. 

We also proposed to add language at 

§ 460.92(b)(2) that would require 

organizations to utilize current clinical 

practice guidelines and professional 

standards of care when making a 

decision, so long as those guidelines 

and standards are applicable to the 

particular service. PACE organizations 

are currently required to utilize current 

clinical practice guidelines and 

professional practice standards when 

developing the outcome measures for 

their quality improvement programs at 

§ 460.134(b). When we discussed this 

requirement in the preamble to the 1999 

PACE interim final rule, we stated that 

we expect that PACE organizations will 

utilize current clinical standards as a 

routine part of their daily operations 

and care management strategies. (See 64 

FR 66260). However, we have 

discovered through our PACE audits 

that decisions to deny services are 

sometimes not based on accepted 

clinical guidelines or standards. We 

understand that current clinical practice 

guidelines and professional standards of 

care may vary based on the type of 

service that is being considered. For 

example, when determining if a 

participant requires a cardiac 

catheterization, the organization may 

reference clinical practice guidelines 

issued by the American Heart 

Association. On the other hand, when 

determining the appropriate insulin for 

a participant the organization may 

appropriately refer to guidelines 

published by the American Diabetic 

Association. We also understand that 

certain services may not have an 

applicable clinical practice guideline. 

For example, determining the frequency 

of PACE center attendance may not be 

based on clinical practice guidelines, 

but may instead be based on the 

medical, physical, emotional, and social 

needs of the participant. Therefore, we 

added language to (b)(2) to require the 

IDT to take into account current clinical 

practice guidelines and professional 

standards of care if applicable to a 

particular service. By adding this 

requirement, we do not intend to restrict 

a PACE organization’s ability to 

determine what service is appropriate or 

necessary for a participant: The IDT 

would remain responsible for 

determining the participant’s overall 

health status and needs, and ensuring 

those needs are met through the 

provision of necessary services. 

We are not scoring this provision in 

the Regulatory Impact Analysis section 

because PACE organizations are already 

required to utilize current clinical 

practice guidelines as a part of their 

quality improvement program, and they 

are required to consider the 

participant’s physical, medical, 

emotional and social needs as a part of 

care planning discussions. We believe 

that by modifying this provision we will 

not be increasing burden on PACE 

organizations, as they already consider 

these items on a routine basis. 

We summarize the comments on the 

proposals related to required services, 

and provide our responses to those 

comments, below. 

Comment: All commenters that 

addressed this provision recommended 

that CMS modify the proposed language 

at § 460.92(b) to state, ‘‘The 

interdisciplinary team makes 

determinations of whether or not to 

approve, deny or partially deny services 

for participants. These determinations 

must be based on an evaluation of the 

participant that takes into account. . .’’. 

These commenters asserted that this 

modification is necessary based on the 

proposed removal of § 460.96(a) and 

they believed the revised language 

would clarify the IDT’s authority to 

approve or deny services. These 

commenters also agreed with removal of 

§ 460.96(a), contingent on CMS’ use of 

the recommended language in 

§ 460.92(b). 

Response: We thank the commenters 

for their recommendation regarding the 

establishment of the IDT’s authority to 

make decisions. As we stated in the 

preamble to the proposed rule, the IDT’s 

authority and responsibilities are 

defined throughout the PACE 

regulations, and under our proposal the 

IDT would retain the its ability to 

determine which services are 

appropriate for a participant, and would 

remain responsible for coordinating the 

care of participants 24 hours a day, 

every day of the year. Therefore, our 

proposal would retain the IDT’s ability 

to make decisions to approve or deny 

services consistent with the proposed 

regulatory requirements at § 460.92(a). 

85 FR 9136. As proposed, the 

introductory language at § 460.92(b) 

states ‘‘Decisions by the 

interdisciplinary team to provide or 

deny services under paragraph (a) of 

this section. . . .’’ Paragraph (a) of 

section 460.92 encompasses the 

complete PACE benefit package 

including all Medicare-covered services 

and all Medicaid-covered services, as 

specified in the State’s approved 

Medicaid plan. 

We believe that commenter’s 

proposed change to ‘‘the 

interdisciplinary team makes 

determinations’’ was suggested in order 

to ensure that the IDT’s authority to 

render these decision was clear. 

However, we believe our proposed 

introductory language at § 460.92(a) 

appropriately articulates this authority. 

We would also reiterate that decisions 

made under 460.92(b) encompass all 

decisions made by the IDT and are not 

limited to service determination 

requests processed under 460.121. We 

do not believe that the commenters’ 

recommendation would significantly 

clarify the IDT’s authority to make 

decisions regarding what services will 

be approved or denied. 

After consideration of the comments 

received, we are finalizing our changes 

to § 460.92 as proposed, without 

modification. 

2. Excluded Services 

As we stated earlier in this section, in 

the discussion regarding required 

services, the PACE benefit package 

includes all Medicare-covered items and 

services, all Medicaid-covered items 

and services, as specified in the state’s 

approved Medicaid plan, and other 

services determined necessary by the 

IDT to improve or maintain the 

participant’s overall health status. The 

regulations at § 460.96 list a number of 

services that are excluded from coverage 

under PACE. Currently, paragraph (a) 

states that any service that is not 

authorized by the IDT, even if it is a 

required service, is an excluded service 

unless it is an emergency service. In 

addition, paragraph (b) states that in an 

inpatient facility, private room and 


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77https://www.gpo.gov/fdsys/pkg/FR-1999-11-24/ 

pdf/99-29706.pdf. 

78https://www.cms.gov/Medicare/Health-Plans/ 

pace/downloads/programagreement.pdf. 

private duty nursing services (unless 

medically necessary), and nonmedical 

items for personal convenience such as 

telephone charges and radio or 

television rental are also excluded from 

coverage under PACE unless 

specifically authorized by the IDT as 

part of the participant’s plan of care. We 

proposed to remove § 460.96(a) and (b). 

These proposals are consistent with 

our authority to amend the regulations. 

The exclusions in § 460.96 are not 

specifically listed in the PACE statute. 

They were included in the 1999 PACE 

interim final rule that implemented the 

PACE program in part because they 

were included in section A.6 of the 

PACE Protocol included as Addendum 

A to the 1999 PACE interim final rule. 

(See 64 FR 66247 and 66301 and 

subparagraphs 1894(f)(2)(A) and 

1934(f)(2)(A) of the Act.) Sections 

1894(f)(1) and 1934(f)(1) of the Act give 

the Secretary the authority to issue 

regulations to carry out the PACE 

program created under sections 1934 

and 1894 of the Act. Sections 1894(f)(2) 

and 1934(f)(2) of the Act state that, in 

issuing such regulations the Secretary 

shall, to the extent consistent with the 

provisions of sections 1894 and 1934 of 

the Act, incorporate the requirements 

applied to PACE demonstration waiver 

programs under the PACE protocol. As 

we stated in the 2019 PACE final rule 

(84 FR 25613), we believe sections 

1894(f) and 1934(f) of the Act primarily 

apply to issuance of the initial interim 

and final PACE program regulations 

because they refer to the PACE 

Protocol,77 which has now been 

replaced by the PACE program 

agreement.78 Sections 1894(f)(2)(B) and 

1934(f)(2)(B) of the Act permit the 

Secretary to modify or waive provisions 

of the PACE Protocol as long as any 

such modification or waiver is not 

inconsistent with and does not impair 

any of the essential elements, objectives, 

and requirements under sections 1894 

or 1934 of the Act, but precludes the 

Secretary from modifying or waiving 

any of the following provisions: 

• The focus on frail elderly qualifying 

individuals who require the level of care 

provided in a nursing facility. 

• The delivery of comprehensive 

integrated acute and long-term care 

services. 

• The IDT approach to care 

management and service delivery. 

• Capitated, integrated financing that 

allows the PACE organization to pool 

payments received from public and 

private programs and individuals. 

• The assumption by the PACE 

organization of full financial risk. 

Taking this authority into account, we 

would remove § 460.96(a) for the 

following reasons. CMS has gained a 

significant amount of experience with 

the PACE program since the 1999 PACE 

interim final rule, and we now believe 

that a number of PACE organizations are 

interpreting the exclusion under 

§ 460.96(a) in a manner that is not 

consistent with sections 1894 and 1934 

of the Act. Many PACE organizations 

appear to be interpreting § 460.96(a) to 

allow an IDT to exclude from coverage 

any service that the IDT does not 

authorize for a participant, even if it is 

clearly covered under the Medicare or 

Medicaid programs and is medically 

necessary. For example, CMS has 

identified through audits that some 

PACE organizations have denied certain 

types of covered Part D drugs for 

participants, even when the drug is 

medically necessary and the participant 

is qualified to receive the drug under 

Medicare. 

These denials are inconsistent with 

the statutory requirement under sections 

1894(b)(1)(A) and 1934(b)(1)(A) of the 

Act to provide all items and services 

covered by Medicare and Medicaid, as 

well as all additional items and services 

specified in regulations. As we stated in 

the 2006 PACE final rule (71 FR 71248), 

in accordance with sections 1894 and 

1934 of the Act, PACE organizations 

shall provide all medically necessary 

services including prescription drugs, 

without any limitation or condition as 

to amount, duration, or scope and 

without application of deductibles, 

copayments, coinsurance, or other cost 

sharing that would otherwise apply 

under Medicare or Medicaid. PACE 

organizations are required to provide all 

Medicare covered services and all 

Medicaid covered services in 

accordance with the State’s approved 

Medicaid plan under current § 460.92(a) 

and (b). In addition, PACE organizations 

are required to cover other items and 

services that are determined necessary 

by the IDT to improve and maintain the 

participant’s overall health status under 

current § 460.92(c). In order to ensure 

that IDTs continue to make decisions 

that are consistent with the statutory 

requirements, we would remove 

paragraph (a) from § 460.96. We believe 

that removing paragraph (a) is necessary 

in order to ensure that participants 

receive the services to which they are 

entitled under PACE. 

By proposing to remove paragraph (a), 

we did not intend to waive or eliminate 

the IDT approach to care management 

and service delivery. The IDT’s 

authority and responsibility are defined 

throughout the PACE regulations, and 

under this amendment, the IDT would 

retain its ability to determine which 

services are appropriate for a 

participant, and would remain 

responsible for coordinating the care of 

participants 24 hours a day, every day 

of the year. Additionally, as discussed 

in our changes to § 460.92, the IDT’s 

decision to provide or deny required 

services must be based on an evaluation 

of the participant that takes into account 

the participant’s current medical, 

physical, emotional and social needs, 

along with any current clinical practice 

guidelines and professional standards of 

care that are applicable to the particular 

service. We do not believe that the 

current provision at § 460.96(a) affects 

an IDT’s authority for determining what 

services are required under § 460.92, or 

changes the IDT’s responsibility for 

coordinating 24-hour care delivery. 

However, we are concerned that the 

current language at § 460.96(a) is 

confusing and implies that there are 

some required services that are not 

covered under the PACE program 

because they are excluded. The term 

‘‘excluded’’ implies that a service is 

outside of the benefit package or never 

covered. The term ‘‘excluded’’ could 

also suggest that services that are not 

authorized are not appealable, which 

runs counter to our historical 

interpretation of the PACE statutes and 

regulations and the policies we have 

promulgated to safeguard participants’ 

right to appeal adverse decisions by the 

IDT. While the IDT remains responsible 

for determining the needs of each 

participant, and then implementing 

services that would meet those 

identified needs, PACE participants 

should always have the ability to 

advocate for services, through the 

service delivery request and appeal 

process, including any services the IDT 

determines not to be necessary (or does 

not authorize). 

We would eliminate paragraph (b) 

from § 460.96 for the following reasons. 

Currently, this paragraph generally 

excludes from PACE coverage private 

rooms and private duty nursing 

services, and non-medical items for 

personal convenience, in an inpatient 

facility, but notes that a private room or 

private duty nursing services would be 

covered if medically necessary, and 

non-medical items for personal 

convenience would be covered if 

specifically authorized by the IDT as 

part of the participant’s plan of care. We 

continue to believe that services such as 

a private room, private nursing services, 


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or non-medical personal care items 

would not be covered under PACE, 

unless they were medically necessary or 

authorized by the IDT as part of the 

participant’s plan of care. However, we 

believe that including this provision 

under a section of the regulation titled 

‘‘Excluded Services’’ may give a false 

impression that the IDT would not have 

to consider whether those services are 

medically necessary or necessary to 

improve and maintain the participant’s 

overall health status. As we previously 

indicated, the IDT is responsible for 

comprehensively assessing each 

individual participant to determine 

their needs, and then providing services 

that would meet those needs. If the IDT 

determines that private nursing services 

or a telephone are necessary to improve 

and maintain the participant’s health 

status, those services would be covered 

for that participant under PACE. 

Therefore, these are not always or by 

definition excluded services, and we 

would eliminate paragraph (b) from the 

excluded services provision for that 

reason. 

In addition to eliminating paragraphs 

(a) and (b), we would redesignate 

paragraphs (c) through (e) as (a) through 

(c). 

We did not score this provision in the 

Regulatory Impact Analysis section 

because PACE organizations are already 

required to cover all PACE required 

services under § 460.92, and by 

modifying the provisions relating to 

excluded services we are hoping to 

increase compliance with existing 

requirements. 

We summarize the comments on the 

proposals related to excluded services, 

and provide our responses to those 

comments, below. 

Comment: All commenters that 

addressed this proposal expressed 

concern with the removal of § 460.96(b). 

The commenters noted that although 

they understand CMS’ rationale for 

removing this provision, they believe 

this would impede a PACE 

organization’s ability to deny these 

services when they are not necessary to 

maintain the participant’s overall 

health. Specifically, commenters noted 

that removing this provision could be 

interpreted to mean that inpatient 

facilities, private rooms and private 

duty nursing services could be available 

without approval from the IDT. The 

commenters also stated that they do not 

believe removal of this section is 

necessary since the services would be 

provided, if determined necessary by 

the IDT, consistent with criteria 

established in § 460.92(b). 

Response: We appreciate the 

commenters’ concern and wish to 

explain that by removing the excluded 

language at § 460.96(b) we would not 

preclude a PACE organization from 

denying these services if they are 

determined not to be necessary. 

Currently, § 460.96(b) provides that 

private rooms, private duty nursing 

services and nonmedical items for 

personal convenience are excluded from 

coverage under PACE unless medically 

necessary or specifically authorized by 

the IDT as part of the participant’s plan 

of care. As such, these services are not 

actually excluded from coverage under 

PACE, and a participant is currently 

able to receive these services if 

authorized by the IDT. We do not 

include other services that are excluded 

or denied as part of the PACE benefit 

package in this section and we do not 

believe that it is necessary to 

specifically list out these services and 

therefore are finalizing this provision as 

proposed. As noted in the proposed 

rule, we do not want to give a false 

impression by including services that 

should be considered by the IDT, as 

appropriate, under a section of the 

regulation titled ‘‘Excluded Services.’’ 

After consideration of the comments 

received, we are finalizing our proposed 

changes under § 460.96 as proposed, 

without modification. 

3. Responsibilities of the 

Interdisciplinary Team 

A multidisciplinary approach to care 

management and service delivery is a 

fundamental aspect of the PACE model 

of care (see for example, the 1999 PACE 

interim final rule at 64 FR 66254). The 

regulations at § 460.102 require in part 

that the IDT must comprehensively 

assess and meet the needs of each 

participant, and that the IDT members 

must remain alert to pertinent input 

about participants from team members, 

participants, and caregivers. While we 

believe many IDTs appropriately apply 

the multidisciplinary approach to 

providing care, we have learned through 

our monitoring efforts that some IDTs 

may not consider pertinent input about 

participants from specialists and other 

clinical and non-clinical staff, whether 

employees, or contractors (for example, 

home health service providers). Because 

these individuals have direct contact 

with participants, including in the 

participant’s home, and may have a 

similar level of expertise as the 

members of the IDT listed in 

§ 460.102(b) or expertise in another 

medical field, they are likely to be in the 

best position to provide input that may 

contribute to a participant’s treatment 

plan. An IDT could not 

comprehensively assess a participant 

and provide a multidisciplinary 

approach to care management if it did 

not consider pertinent input about a 

participant from any individual with 

direct knowledge of or contact with the 

participant, such as caregivers, 

employees, or contractors of the PACE 

organization, including specialists. For 

example, if a home care aide informed 

the organization that a participant seems 

more confused than normal, the IDT 

might not be able to fully meet the 

participant’s needs if it did not take this 

information into consideration. While 

the IDT is responsible for many aspects 

of care provided to their participants, it 

might not interact with their 

participants on a regular basis. It is 

important that the IDT consider input 

from other individuals that have more 

regular or direct contact with the 

participant population, in order to 

inform its ability to appropriately meet 

participants’ needs. Therefore, we 

would revise § 460.102(d)(2)(ii) by 

adding employees, contractors, and 

specialists to the individuals from 

whom the IDT must remain alert to 

pertinent input. We would include 

specialists because there may be 

circumstances in which a participant is 

receiving care or seeking treatment 

options from a provider that specializes 

in a particular area and we believe that 

input from these medical professionals 

is vital in order for a PACE organization 

to provide comprehensive care to its 

participants. We would add these 

individuals as unique sub-paragraphs 

under § 460.102(d)(2)(ii) in order to 

emphasize that these are unique groups 

of individuals, each of whom may 

provide information that is pertinent to 

the IDT. As part of the requirement that 

the IDT members remain alert to 

pertinent input from these individuals, 

we expect that the IDT members would 

consider all recommendations for care 

or services made by other team 

members, participants, caregivers, 

employees, contractors, or specialists for 

a participant when making treatment 

decisions. 

We proposed a minor change to 

redesignate the provisions at 

§ 460.102(d)(1) under a new (d)(1)(i), 

and to retain the current requirement 

that the IDT is responsible for the initial 

assessment, periodic reassessment, plan 

of care, and coordination of 24-hour 

care delivery. We would add a new 

§ 460.102(d)(1)(ii) to require the IDT to 

document all recommendations for care 

and services and, if the service is not 

approved, the reasons for not approving 

or providing that care or service in 

accordance with the requirements in 

§ 460.210(b). By requiring the IDT to 

document all recommendations for care 


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79The original PACE protocol was replaced by 

the PACE program agreement (84 FR 25613). 

or services and, if not approved or 

provided, the rationale supporting the 

IDT’s decisions, we believe our 

proposals under § 460.102(d) would 

better position the PACE organization 

and the IDT to remain alert to pertinent 

information and to share that 

information with participants, 

caregivers, and appeal entities when 

applicable. 

We believe the burden associated 

with this provision is related to the 

documentation of the recommendations 

in the medical record. We discuss and 

account for the burden of documenting 

these recommendations in the medical 

record in the regulatory impact analysis. 

We summarize the comments on the 

proposals related to responsibilities of 

the IDT, and provide our responses to 

those comments, below. 

Comment: A commenter agreed with 

CMS’ proposed revisions at 

§ 460.102(d)(1)(ii) which would make 

the IDT responsible for documenting all 

recommendations for care or services 

and the reason(s) for not approving or 

providing recommended care or 

services. However, the majority of 

commenters expressed concern that the 

requirement is not consistent with the 

preamble or regulatory language at 

proposed § 460.210(b)(4) and (5), which 

limits documentation to 

recommendations by employees and 

contractors of a PACE organization, 

including specialists, as well as the 

reason(s) for not approving or providing 

recommended services. Specifically, the 

commenters noted that the language as 

proposed at § 460.102(d)(1)(ii) could be 

interpreted to require the IDT to 

document recommendations made by 

the individuals other than those listed 

in § 460.210(b)(4). 

Response: We thank the commenter 

who supported this provision. We do 

not agree, however, that the citation at 

§ 460.102(d)(1)(ii) should be modified. 

We included a citation to § 460.210(b) in 

order to specify the IDT’s responsibility 

for documenting all recommendations 

for care or services and the reasons for 

not approving or providing 

recommended care or services, if 

applicable, in any form encompassed 

under § 460.210(b). While we agree that 

recommendations will most often come 

from the individuals identified in 

§ 460.210(b)(4), we did not propose and 

did not intend to limit this requirement 

to only those individuals. For example, 

redesignated § 460.210(b)(9) relates to 

hospital discharge summaries and, to 

the extent there are recommendations 

for care included in a summary, we 

would want the IDT to consider and 

document those recommendations. 

While PACE organizations contract with 

hospitals, it is possible that a participant 

would be taken to a non-contract 

hospital during the course of an 

emergency, and we would want the 

PACE organization to consider any 

recommendations for care provided by 

hospital staff even though the hospital 

was not a contract provider. 

Comment: All commenters who 

addressed the proposals at 

§ 460.102(d)(2)(ii), agreed with the 

proposal which would require the IDT 

to remain alert to pertinent input from 

any individual with knowledge of or 

contact with the participant. These 

commenters also recommended 

expanding the list to include the 

designated representative, as that 

individual plays a key role in the 

service delivery request process and 

appeals process. 

Response: We thank the commenters 

for their support for this proposal and 

appreciate the suggestion to include the 

designated representative in the list of 

individuals that the IDT must remain 

alert to. We agree that designated 

representatives play an important role 

in advocating for services on behalf of 

the participant. We note that the change 

commenters suggest is consistent with 

our proposal; we proposed to make the 

individual IDT members responsible for 

remaining alert to pertinent input from 

any individual with direct knowledge of 

or contact with a given participant, and 

provided a list of examples of those 

individuals. The list was not allinclusive, and we believe that 

designated representatives would fall 

within the intended class of individuals 

from whom IDT members must remain 

alert to pertinent input. Therefore, we 

are finalizing the regulatory text with a 

modification to include designated 

representatives among the specific list 

of individuals from whom the IDT must 

remain alert to pertinent input. 

After consideration of the comments 

received and for the reasons outlined in 

our responses to comments, we are 

finalizing the changes to 

§ 460.102(d)(1)(i) and § 460.102(d)(1)(ii) 

as proposed. We are also finalizing our 

proposed changes to § 460.102(d)(2)(ii) 

as proposed, with the exception of one 

modification to the regulatory text at 

§ 460.102(d)(2)(ii)(G) to specify that the 

IDT must remain alert to input from 

designated representatives. 

D. Documenting and Tracking the 

Provision of Services Under PACE 

(§ 460.98) 

As discussed at section VI.C. of this 

final rule, under sections 1894(a)(2)(B) 

and 1934(a)(2)(B) of the Act, PACE 

organizations provide comprehensive 

health care services to PACE 

participants in accordance with the 

PACE program agreement and 

regulations under those sections. 

Sections 1894(b)(1)(A) and 1934(b)(1)(A) 

of the Act specify in part that PACE 

organizations must provide participants, 

at a minimum, all items and services 

covered under titles XVIII and XIX of 

the Act without any limitation or 

condition as to amount, duration, or 

scope, and all additional items and 

services specified in regulations, based 

upon those required under the PACE 

protocol.79 Sections 1894(b)(1)(A) and 

1934(b)(1)(A) of the Act also specify 

that, under a PACE program agreement, 

a PACE organization must furnish items 

and services to PACE participants 

directly or under contract with other 

entities. Additionally, sections 

1894(b)(1)(B) and 1934(b)(1)(B) of the 

Act require that a PACE organization 

must provide participants access to all 

necessary covered items and services 24 

hours per day, every day of the year. 

These statutory provisions ensure that a 

PACE participant can receive all PACE 

covered services, as needed, 24 hours a 

day, every day of the year. This includes 

the full range of services required under 

the PACE statute and regulations. We 

have implemented these requirements 

in several sections of the PACE 

regulations. For example, we require in 

§ 460.70 that PACE organizations must 

have written contracts that meet specific 

regulatory requirements with any 

outside entity furnishing administrative 

or care-related services not furnished 

directly by the PACE organization, 

except for emergency services as 

described in § 460.100. We also require 

PACE organizations to establish and 

implement a written plan to furnish care 

that meets the needs of each participant 

in all care settings 24 hours a day, every 

day of the year at § 460.98(a). Through 

oversight and monitoring, we 

recognized that some PACE 

organizations are not appropriately 

implementing these requirements. CMS 

routinely sees PACE organizations deny 

or restrict necessary services. PACE 

organizations have also documented in 

participants’ medical records that they 

do not provide access to care and 

services 24 hours a day, regardless of 

participant need. CMS has also learned 

through monitoring of PACE 

organizations that some organizations 

are not providing all care and services 

through employees or contractors of the 

organization. Instead, these 

organizations purport to rely on 

caregivers such as family members to 


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provide necessary care and services to 

participants. 

We would make several modifications 

to § 460.98 ‘‘Service Delivery’’ in 

response to failure by certain PACE 

organizations to fulfill their 

responsibilities to provide all necessary 

care and services, through the use of 

employees or contractors, as 

expeditiously as the participant’s health 

condition requires, and ensure access to 

those services 24 hours a day, every day 

of the year. Currently, § 460.98(a) 

requires that PACE organizations 

establish and implement a written plan 

to furnish the care that meets the needs 

of each participant in all care settings 24 

hours a day, every day of the year. We 

are concerned that the current version of 

this paragraph places more emphasis on 

the requirement to establish a written 

plan than it does on the requirement 

that the PACE organization actually 

implement such a plan by furnishing 

services. Therefore, we would modify 

paragraph (a) to more clearly emphasize 

that PACE organizations must not only 

have a plan to furnish care as described 

in existing § 460.98(a), but must also 

carry it out. We proposed to change the 

title of § 460.98(a) from ‘‘Plan’’ to 

‘‘Access to services’’ in order to 

emphasize the requirement is that PACE 

organizations must provide access to 

services and not just have a plan. We 

also proposed to revise the language of 

§ 460.98(a) to emphasize that PACE 

organizations are responsible for 

providing care that meets the needs of 

each participant, across all care settings, 

24 hours a day, every day of the year, 

as well as establishing a written plan to 

ensure that care is appropriately 

furnished. We believe the amendments 

would align with the statutory 

requirement that PACE organizations 

provide access to necessary care and 

services at all times. We would retain 

the requirement that PACE 

organizations must establish and 

implement a written plan to furnish 

care, with one modification to specify 

that the plan must ensure that care is 

appropriately furnished. Additionally, 

we want to emphasize that, both under 

the current regulation and the 

amendments, the PACE organization is 

(and would remain, if our proposed 

amendments are finalized) responsible 

for providing this care regardless of the 

care setting. In other words, regardless 

of whether the participant receives care 

in the home, at the PACE center, or in 

an inpatient facility, the PACE 

organization is (and would remain) 

responsible for furnishing care in all 

care settings, 24 hours a day, every day 

of the year. 

Currently, § 460.98(b) specifies in part 

that the PACE organization must furnish 

comprehensive medical, health, and 

social services that integrate acute and 

long term care to each participant, and 

must furnish these services in at least 

the PACE center, the home, and 

inpatient facilities. We would make 

three changes to § 460.98(b) by 

modifying paragraph (b)(1) and adding 

new paragraphs (b)(4) and (5). Sections 

1894(b)(1)(A) and 1934(b)(1)(A) of the 

Act, and the PACE regulations at 

§ 460.70(a), require PACE organizations 

to furnish administrative and carerelated services by employees or 

contractors of the organization. Through 

monitoring and oversight, we have 

identified instances where PACE 

organizations have relied on individuals 

other than employees or contractors to 

provide necessary care and services to 

participants. To address these concerns 

we added a reference to § 460.70(a) at 

§ 460.98(b)(1) to reiterate the 

requirement that PACE organizations 

furnish all services through employees 

or contractors, regardless of whether the 

services relate to medical, health, or 

social services, including both acute and 

long term care. 

We proposed to add a new paragraph 

at § 460.98(b)(4), to require that all 

services must be provided as 

expeditiously as the participant’s health 

condition requires, taking into account 

the participant’s overall medical, 

physical, emotional and social needs. 

While there is a similar requirement in 

§ 460.104(e)(4), that services that result 

in a change to the care plan must be 

provided as expeditiously as the 

participant’s health condition requires, 

we have identified through monitoring 

and oversight that participants routinely 

receive care that is determined 

necessary but is not formally 

incorporated into the care plan, and is 

instead handled through disciplinespecific progress notes or treatment 

plans. For example, the primary care 

provider may order pain medication for 

a participant, but not incorporate that 

order into the participant’s plan of care. 

Regardless of whether the service is in 

the plan of care, we believe that the 

PACE organization retains the 

responsibility of ensuring that 

participants receive all recommended or 

ordered treatment or care as 

expeditiously as the participant 

requires. We would specify at 

§ 460.98(b)(4) that services must be 

provided as expeditiously as the 

participant’s health condition requires, 

taking into account the participant’s 

medical, physical, emotional, and social 

needs. We do not believe that we could 

implement a specific timeframe given 

the vast array of services that PACE 

organizations provide. Additionally, 

determining how quickly a service must 

be provided would depend on more 

than just the physical health of the 

participant, and PACE organizations 

should consider all aspects of the 

participant’s condition, including their 

social, emotional, and medical needs, 

when determining the provision of 

services. For example, if the participant 

has a high risk of falling, the provision 

of a service that mitigates that risk may 

be necessary within a very short 

window of time. However, if the 

necessary service is a preventative trip 

to the dentist for routine care, the 

provision of that service may not be as 

urgent. These decisions must be made 

on a case by case basis and the PACE 

organization will be expected to 

demonstrate that services were provided 

as expeditiously as the participant’s 

medical, physical, emotional, and social 

needs require through monitoring efforts 

by CMS. 

Lastly, we added a new paragraph 

(b)(5) to § 460.98 to require PACE 

organizations to document, track, and 

monitor the provision of services across 

all care settings, regardless of whether 

services are formally incorporated into 

the participant’s plan of care. PACE 

organizations would be required to 

document, track and monitor necessary 

services in order to ensure that they are 

actually provided in accordance with 

§ 460.98(b)(4). CMS’ audits have 

revealed that in practice, certain PACE 

organizations do not routinely track the 

services provided and often lack 

documentation that services have been 

rendered. In order for the IDT to remain 

alert to pertinent information and 

coordinate care appropriately, we 

believe the PACE organization must be 

capable of ensuring that all approved 

services are tracked and documented, 

regardless of whether they are formally 

incorporated into the participant’s plan 

of care. This means that not only should 

a PACE organization document that a 

service has been ordered, but that the 

PACE organization should also 

document when and how the approved 

service was provided. We believe that 

monitoring the provision of services is 

vital for a PACE organization in order to 

ensure their participants are receiving 

appropriate services, and that those 

services are achieving the desired effect. 

In addition, CMS regulations at 

§ 460.134 require that PACE 

organizations use objective measures to 

demonstrate improvement across a 

range of areas, such as the utilization of 

PACE services and the effectiveness and 


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80https://www.merriam-webster.com/dictionary/ 

willing. 

81https://www.merriam-webster.com/dictionary/ 

able. 

safety of staff-provided and contracted 

services, including the promptness of 

service delivery, among other 

requirements. We believe that this 

proposal will ensure that PACE 

organizations are able to more 

effectively meet the minimum 

requirements established at § 460.134. 

We summarize the comments 

received on the proposals related to 

documenting and tracking the provision 

of services, and provide our responses 

to those comments, below. 

Comment: While a commenter agreed 

with CMS’ proposals at § 460.98(a) and 

(b)(1), the majority of commenters 

requested clarification on the preamble 

language describing the proposals. 

Specifically, commenters agreed that 

PACE organizations are responsible for 

providing care that meets the needs of 

the participant across all care settings, 

24 hours a day, every day of the year, 

and that neither PACE organizations nor 

the IDTs may require caregivers to 

provide necessary care or services on 

their behalf. However, the commenters 

were concerned that the preamble 

implied that PACE organizations cannot 

take into consideration family or 

informal caregiver support when 

determining which services the PACE 

organization must furnish in order to 

meet these needs. In order to clarify the 

regulatory requirements and CMS’s 

position, commenters requested that 

CMS confirm that willing and able 

family members or other informal 

caregivers may be actively involved in 

a participant’s care and that a PACE 

organization would be in compliance 

with the proposed regulatory 

requirements if the IDT considers 

services provided to participants by 

willing and able caregivers when 

determining which services must be 

provided by the PACE organization. 

Another commenter suggested that the 

regulation, as proposed at § 460.98(b)(1), 

would not allow any individual 

caregivers and informal support systems 

to be involved in helping meet a 

participant’s needs without contracting 

with the PACE organization. 

Response: As noted in the proposed 

rule, sections 1894(b)(1)(B) and 

1934(b)(1)(B) of the Act require the 

PACE organization to provide 

participants with all PACE-covered 

services, as needed, 24 hours a day, 

every day of the year. This includes the 

full range of services required under the 

PACE statute and regulations. We 

believe the existing requirements are 

clear. Our proposed changes in 

§ 460.98(a) and (b)(1) would not change 

the existing requirements; nor would 

they change how we have historically 

interpreted those requirements. Instead, 

our proposals would better align the 

regulatory language with the statutory 

requirements that require PACE 

organizations to provide access to 

necessary care and services at all times. 

The PACE organization is responsible 

for ensuring that the participant’s needs 

are met 24 hours a day, every day of the 

year, consistent with the existing 

§ 460.98(a). 

We agree with commenters that a 

PACE organization cannot require or 

compel a caregiver to provide care that 

the IDT determines is necessary. 

However, we recognize that caregivers 

may be willing and able to provide some 

care to participants, such as cooking a 

meal or providing transportation to an 

appointment. None of our proposed 

changes would change CMS’ 

expectations regarding the relationship 

between caregivers and PACE 

organizations. While we proposed to 

add a reference to § 460.70(a) at 

§ 460.98(b)(1), we did not propose to 

change the requirement at § 460.70(a) or 

our interpretation of that requirement. 

Historically, CMS has interpreted the 

requirement at § 460.70(a) as not 

applicable in circumstances where 

family members or other informal 

support willingly provide care to PACE 

participants that could otherwise be 

provided by the PACE organization, 

without any compensation from or 

agreement with the PACE organization. 

Thus, we would not expect a PACE 

organization to have a contract with 

such caregivers unless the caregivers are 

providing services on behalf of the 

PACE organization and are receiving 

compensation from the PACE 

organization for doing so. We note that 

Merriam-Webster’s dictionary defines 

willing as ‘‘done, borne, or accepted by 

choice or without reluctance’’ 80 and 

defines able as ‘‘having sufficient 

power, skill, or resources to do 

something’’.81 We believe these 

definitions are widely understood, and 

provide a valuable point of reference in 

this context. 

The IDT may take into consideration 

informal support that willing and able 

caregivers provide when determining 

what necessary services will be 

provided by the PACE organization 

directly or through contractors when 

developing the participant’s plan of 

care. However, the existence of a 

caregiver does not absolve a PACE 

organization of its responsibilities to 

meet the needs of participants 24 hours 

a day, 7 days of the week. In 

determining how informal caregiver 

support affects the necessary services 

the PACE organization must provide 

directly or through contractors, PACE 

organizations must consider whether a 

caregiver is both willing and able to 

provide care, and whether it is safe for 

the participant to receive the care in 

question from the caregiver. This would 

include for example, when the PACE 

organization is evaluating participant 

and caregiver preferences for care 

during the initial assessments under 

§ 460.104(a)(4)(iii) or when obtaining 

approval from the participant or their 

designated representative for a revised 

plan of care under § 460.104(e)(3). In 

particular, PACE organizations should 

not pressure a caregiver to provide any 

service that is necessary and that could 

otherwise be provided by the PACE 

organization, and should not rely on a 

willing caregiver to provide care if there 

is evidence that the caregiver cannot do 

so safely or in a way that meets the 

relevant needs of the participant. 

Additionally, PACE organizations may 

not deny a request to provide a service 

on the basis that a participant has a 

caregiver even if the caregiver has 

historically informally provided care 

that meets the participant’s need for that 

service. We have seen through 

complaints and audits that PACE 

organizations sometimes 

inappropriately rely on caregivers, and 

in some instances attempt to require 

caregivers to provide care the IDT has 

determined is necessary for a 

participant, even when the caregiver is 

unable or unwilling to do so. For 

example, CMS has identified instances 

where PACE organizations attempted to 

require caregivers to provide 24-hour 

supervision or provide assistance with 

activities of daily living (ADLs) even 

after the caregivers indicated they could 

not do so, or were unwilling to do so. 

Through complaints and audits, we 

have also seen situations where a PACE 

organization inappropriately relied on a 

willing caregiver when it was not safe 

for the participant to receive care from 

that caregiver. For example, a caregiver 

may be willing to provide wound care, 

but without the necessary skills and 

knowledge to provide that care, it would 

be unsafe for the caregiver to attend to 

that need because it would increase the 

participant’s risk of infection. We note 

that even when a caregiver previously 

had elected to provide some level of 

assistance to a participant, their ability 

or willingness to provide assistance may 

change during the course of a 

participant’s enrollment in PACE, 

rendering the caregiver unable or 

unwilling to continue to provide that 


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support (e.g., the caregiver does not 

have a vehicle to accommodate a 

motorized wheelchair or the caregiver 

becomes ill). Similarly, a caregiver may 

express an interest in providing 

assistance, but may not be able to meet 

the needs of the participant. For 

example, the participant may need 

assistance with toileting, but the 

caregiver is physically unable to support 

this need. PACE organizations must 

ensure that when a caregiver is 

unwilling or unable to assist with the 

participant’s care for any reason, that 

the needs of the participant are being 

met through employees or contractors of 

the PACE organization. In each of these 

situations, the PACE organization seems 

to be incorrectly or inappropriately 

determining that certain care and 

services are not needed because the 

PACE organization wants to rely upon a 

particular caregiver, even when it is 

clear from the circumstances that the 

participant needs the PACE organization 

to provide services because the 

caregiver is unwilling or unable to 

provide care, or because it is not safe for 

the participant to receive this care from 

the caregiver. For these reasons, we 

proposed to revise the regulations by 

adding a reference to § 460.70(a) at 

§ 460.98(b) to ensure that PACE 

organizations understand their 

responsibilities, and we will continue 

monitoring PACE organizations for 

compliance with these requirements. 

We are finalizing these provisions as 

proposed. 

Comment: A commenter 

recommended that CMS provide further 

clarification on how ‘‘coordination’’ and 

‘‘furnish’’ are used and defined in the 

PACE regulations and to take steps to 

ensure that terms are used consistently 

throughout the PACE regulations. This 

commenter stated that under the 

proposed language at § 460.102(d)(1)(i), 

the IDT would be responsible for the 

initial assessment, periodic 

reassessments, plan of care, and 

coordination of 24-hour care delivery. 

The commenter asserted that this has a 

very different meaning than the 

proposed requirements at § 460.98(b)(1) 

which states that the PACE organization 

must furnish comprehensive medical, 

health, and social services that integrate 

acute and long-term care, and that these 

services must be furnished in 

accordance with § 460.70(a). 

Response: We agree with the 

commenter’s observation that the 

proposed requirements under 

§ 460.102(d)(1)(i) and § 460.98(b)(1) are 

not the same, including the fact that 

§ 460.102(d)(1)(i) uses the term, 

‘‘coordinate’’ while § 460.98(b)(1) uses 

the term ‘‘furnish.’’ However, we did 

not propose that those terms would be 

used interchangeably. We agree that 

those terms have different meanings, 

and we believe that those terms are used 

appropriately within the regulation. 

PACE organizations are responsible for 

furnishing comprehensive services to 

PACE participants. The IDT, which 

consists of a subset of PACE 

organizations employees or contractors, 

is responsible for certain activities, such 

as coordinating care, which includes 

services that are furnished by the IDT as 

well as services furnished by other 

employees and contractors of the PACE 

organization. 

Comment: Multiple commenters 

requested clarification regarding the 

intent of CMS’s proposal under 

§ 460.98(b)(1) to add a reference to 

§ 460.70(a) that would require services 

to be furnished through either an 

employee or contractor of the 

organization. Specifically, those 

commenters requested that CMS modify 

§ 460.70(a) to address circumstances 

that might justify an exception to the 

requirement that PACE organizations 

must have a written contract with each 

entity that furnishes administrative or 

care related services not furnished 

directly by the PACE organization 

except for emergency services. As an 

example, commenters noted that there 

are times when a specialty provider may 

be in short supply and the PACE 

organization may be unsuccessful in 

obtaining a contract. 

Response: We did not propose 

changes to § 460.70(a), and as such are 

not finalizing any changes to that 

section in this final rule. With regards 

to the commenter’s question about out 

of network providers, that comment 

relates to the topic of network adequacy 

for PACE organizations and we will take 

the commenter’s feedback into 

consideration in future policy 

development for PACE. 

Comment: A commenter was 

supportive of the provisions at 

§ 460.98(b)(5), while the majority of 

commenters expressed concern with to 

the use of the term ‘‘track.’’ These 

commenters suggested that requiring a 

PACE organization to track the 

provision of services could imply that 

PACE organizations would be required 

to establish and maintain specific logs, 

universes or data sets, and that such a 

requirement would conflict with CMS’ 

Patients Over Paperwork initiative. 

These commenters stated that PACE 

organizations should have greater 

flexibility to determine how the 

provision of services is monitored and 

rather than dictating the specific 

manner in which PACE organizations 

maintain this documentation, they 

recommended the following regulatory 

text: ‘‘The PACE organization must 

monitor and document the provision of 

services across all care settings in order 

to ensure the interdisciplinary team 

remains alert to the participant’s 

medical, physical, emotional, and social 

needs regardless of whether services are 

formally incorporated into the 

participant’s plan of care.’’ 

Additionally, these commenters 

requested that CMS explain that this 

provision would only require the PACE 

organization to monitor and track 

services furnished by the PACE 

organization’s employees or contractors 

and not by caregivers. 

Response: As noted in the proposed 

rule, in order for the IDT to remain alert 

to pertinent information and coordinate 

care appropriately, we believe that the 

PACE organization must be capable of 

ensuring that all approved services are 

tracked and documented, regardless of 

whether they are formally incorporated 

into the participant’s plan of care (85 FR 

9139). In order to ensure services are 

actually provided, we proposed that 

PACE organizations document, track 

and monitor services. We understand 

from commenters’ concerns that the use 

of the word ‘‘track’’ could be interpreted 

to suggest that PACE organizations 

would be required to maintain a real 

time ‘‘log’’ of services which could 

potentially be burdensome to 

implement. As we stated in the 

proposed rule, we believe that PACE 

organizations should document that a 

service has been ordered as well as 

when and how the approved service 

was provided. It was not our intention 

in the proposal to dictate how an 

organization implements this provision, 

and we agree with the commenter that 

PACE organizations should have 

flexibility in how they operationalize 

the requirement to track, monitor and 

document the provision of services. We 

expect that PACE organizations will 

create their own methods for tracking 

and monitoring services. We reiterate 

that the PACE organization is 

responsible for furnishing all services 

determined necessary through its 

employees or contractors in accordance 

with existing § 460.70(a) and proposed 

§ 460.98(b)(1), and this provision would 

only apply to those services furnished 

by the PACE organization’s employees 

or contractors. 

After consideration of the comments 

received, we are finalizing our proposed 

changes to § 460.98 without 

modification. 


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E. Access to Data and Safeguarding 

Records Under PACE (§ 460.200) 

In accordance with sections 

1894(e)(3)(A) and 1934(e)(3)(A) of the 

Act, § 460.200 requires PACE 

organizations to collect data, maintain 

records, and submit reports, as required 

by CMS and the State Administering 

Agency (SAA). The current requirement 

at § 460.200(b) requires that PACE 

organizations must allow CMS and the 

SAA access to data and records, 

including but not limited to, participant 

health outcomes data, financial books 

and records, medical records, and 

personnel records. Some PACE 

organizations have requested 

clarification on whether access is 

limited to allowing CMS or the SAA to 

view requested information. CMS has 

long interpreted this provision to 

require that CMS and the SAA must be 

able to obtain, examine, or retrieve 

information as needed to administer and 

evaluate the program and fulfill their 

oversight obligations. Therefore, we 

proposed to codify CMS’ interpretation 

of this requirement. Specifically, we 

would redesignate current 

§ 460.200(b)(1) through (4) as 

§ 460.200(b)(1)(i) through (iv), in order 

to add a new paragraph (b)(2) to state 

that CMS and the State administering 

agency (SAA) must be able to obtain, 

examine, or retrieve the information 

described under § 460.200(b)(1). This 

may include CMS or the SAA reviewing 

information at the PACE site or 

remotely. It may also include CMS 

requiring a PACE organization to upload 

or electronically transmit information, 

or send hard copies of required 

information by mail. 

PACE organizations are also required 

to safeguard data and records in 

accordance with § 460.200(d). This 

section currently provides that a PACE 

organization must establish written 

policies and implement procedures to 

safeguard all data, books, and records 

against loss, destruction, unauthorized 

use, or inappropriate alteration. 

Through our monitoring of PACE 

organizations, CMS has discovered that 

PACE organizations do not always 

maintain and safeguard important 

records such as communications related 

to a participant’s care from family 

members, caregivers, and the 

participant’s community. In fact, CMS 

has discovered that organizations may 

summarize written communications and 

sometimes destroy or lose original 

written communications. When CMS 

has obtained copies of original 

communications from an outside source 

(such as the family or caregiver), we 

have noted that organizations are not 

accurately summarizing information or 

retaining the relevant information in the 

communication. In light of these 

findings, we believe that any written 

communication received from a 

participant or their informal support (for 

example, a family member, caregiver, 

designated representative, or other 

member of the community) that relates 

to the participant’s care, health or safety 

must be safeguarded and maintained in 

its original form. Therefore, we 

proposed to modify § 460.200(d) to 

require PACE organizations to maintain 

all written communications received 

from a participant or other parties in 

their original form when the 

communication relates to the 

participant’s care, health, or safety. We 

would expect that this would include 

most, if not all, communications that an 

organization receives on these topics. 

For example, the following types of 

communications would need to be 

protected under this provision: Written 

requests for services that the participant, 

designated representative or caregiver 

believes are necessary; grievances or 

complaints relating to the participant’s 

care or health; and communications 

from the community that indicate 

concerns over the well-being of a PACE 

participant. We proposed corresponding 

changes to § 460.210(b)(6), to require 

PACE organizations to maintain original 

written communications in the 

participant’s medical record, as 

discussed at section VI.F. of this final 

rule. 

We believe the burden associated 

with this provision is related to the 

documentation of these original 

communications in the medical record. 

We discuss and account for the burden 

of documenting these communications 

in the medical record in the regulatory 

impact analysis. 

We solicited comments on these 

proposals. 

We summarize the comments on the 

proposals related to access to data and 

safeguarding records, and provide our 

responses to those comments, below. 

Comment: All of commenters who 

responded to this proposal requested 

clarification on the provision which 

would require access to data described 

in § 460.200(b)(1) both at the PACE site 

and remotely. Specifically, commenters 

requested clarity around whether or not 

the provision meant that the SAA and 

CMS would have independent remote 

access to PACE organizations’ medical 

records, without the knowledge of the 

PACE organizations, or if it meant that 

CMS would require PACE organizations 

to make records available, either 

remotely or onsite, via a web-based or 

comparable application with the 

participation of PACE organization staff. 

Commenters stated that participation of 

PACE organization staff would ensure 

PACE organizations could maintain a 

record of individuals who accessed 

participants’ medical records and would 

also assist CMS and SAA reviewers in 

locating documentation within medical 

records. 

Response: We appreciate commenters’ 

feedback on this proposal. As proposed 

under § 460.200(b)(2), CMS and the 

SAA must be able to obtain, examine, or 

retrieve the information specified at 

paragraph (b)(1) of that section, which 

may include reviewing information at 

the PACE site or remotely. We wish to 

clarify that it is not CMS’s intent that 

CMS or the SAA would have completely 

unrestricted access to a PACE 

organization’s medical records and the 

provision at § 460.200(b)(2) would not 

permit CMS or the SAA to access a 

PACE organization’s medical records 

without the PACE organization’s 

knowledge. PACE organizations will 

continue to be required to grant access 

to medical records, which may be 

electronic and/or paper based, before 

these records are obtained, examined or 

retrieved by CMS or the SAA. In order 

to be able to obtain, examine, or access 

these records, CMS or the SAA may 

need technical assistance from PACE 

organization staff, but otherwise would 

not require staff involvement in the 

review process. For example, CMS or 

the SAA may need assistance with 

navigating medical record systems or 

locating records within medical record 

systems. 

Comment: Commenters were split on 

the proposal to require original 

documentation to be maintained in the 

medical record. A commenter agreed 

with the proposed requirements in 

§§ 460.200(d)(2) and 460.210(b)(6), 

which would require PACE 

organizations to maintain all written 

communications received from 

participants or other parties, in their 

original form, when the 

communications relate to a participant’s 

care, health or safety, including written 

communications from an advocacy or 

governmental agency. Another 

commenter was opposed to this 

provision stating that not all 

communication lends itself to being 

kept in the original form and the 

proposed requirement may be 

impracticable for mundane, routine 

communications such as confirming an 

address for a family member. This 

commenter recommended that CMS 

remove the phrase ‘‘all written 

communication’’ and instead provide a 

specific list of communications that 

must be kept in its original format. The 


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majority of commenters requested 

clarification and expressed some 

concerns regarding the proposed 

requirements. This included concerns 

that maintaining original documentation 

of any written communication relating 

to the care, health or safety of a 

participant in any format in the medical 

record would compromise the 

usefulness of the medical record, due to 

the quantity of information that would 

be required to be stored. These 

commenters also stated that requiring 

direct care providers to download or 

otherwise transfer all such 

communications to the medical record 

would be burdensome and take them 

away from providing care to 

participants. As a solution, these 

commenters recommended permitting 

PACE organizations to scan written 

documentation and copy and paste 

communications received via email or 

text into electronic medical records. The 

same commenters expressed concerns 

that the requirements were overly broad 

and recommended that CMS revise its 

proposals to both allow PACE 

organization staff to use their discretion 

when determining the types of 

communication that must be included 

in a participant’s medical record and 

exclude communications related to 

processing of service requests, appeals 

and grievances as those 

communications are often kept in 

separate systems. Another commenter 

indicated that the practice of 

summarizing verbal conversations and 

documenting in the EMR should apply 

to written communications. This 

commenter also recommended that CMS 

clarify its expectations with regard to 

communications from advocacy or 

governmental agencies and suggested 

that faxes and emails requesting 

documents should not be placed in the 

medical record. 

Response: We appreciate commenters’ 

feedback and suggestions on 

§§ 460.200(d) and 460.210(b)(6). We 

address comments related to 

§ 460.210(b)(6) in more detail at section 

VI.F of this final rule. PACE 

organizations are required to safeguard 

data and records in accordance with 

§ 460.200(d). This section currently 

provides that a PACE organization must 

establish written policies and 

implement procedures to safeguard all 

data, books, and records against loss, 

destruction, unauthorized use, or 

inappropriate alteration. As we stated in 

the proposed rule (85 FR 9134), through 

our monitoring and oversight efforts, 

CMS has discovered that PACE 

organizations do not always maintain 

and safeguard important records, and 

may often summarize written 

communications in their records and 

destroy or lose the original written 

communications. In addition, we have 

discovered that in some cases, PACE 

organizations are not always retaining or 

accurately summarizing all of the 

relevant information in those 

communications. Because our oversight 

efforts have revealed that all relevant 

information in written communications 

has not always been retained or 

accurately summarized by PACE 

organizations, we are not persuaded by 

commenters to allow PACE 

organizations to summarize written 

communications that relate to a 

participant’s care, health or safety 

instead of maintaining the 

communication in its original form. In 

order for the IDT to remain alert to 

pertinent input from the participant and 

their caregivers, and for PACE 

organizations to provide care that meets 

the needs of each participant in all care 

settings 24 hours a day, every day of the 

year, we believe that communications 

from individuals who provide 

information pertinent to a participant’s 

care, health or safety, must be 

safeguarded and maintained in their 

original form. Furthermore, we are not 

persuaded by one commenter’s 

suggestion that the practice of 

summarizing verbal communication in 

the medical record should also apply to 

written communication. We believe that 

summarizing verbal communication is a 

reasonable and necessary practice 

because it would be unnecessarily 

burdensome to require PACE 

organization staff to record verbal 

communication verbatim. In contrast, it 

is not necessary to summarize written 

communications because entire written 

communications can be stored in the 

medical record. We also believe that, in 

many cases, the amount of time spent 

summarizing the contents of written 

communications would exceed the 

amount of time necessary to enter the 

original documentation into the medical 

record, which would negate any benefits 

associated with summarizing the 

written communication. 

With respect to excluding certain 

communications from this requirement 

or providing a specific list of 

communications that must be kept in 

their original format, we note that we 

have already limited this requirement 

by only requiring PACE organizations to 

maintain all written communications 

that relate to a participant’s care, health, 

or safety. As we stated in the proposed 

rule (85 FR 9135), the types of 

communication that would be protected 

under this provision include, but are not 

limited to: Written requests for services 

that the participant, designated 

representative or caregiver believes are 

necessary; grievances or complaints 

relating to the participant’s care or 

health; and communications from the 

community that indicate concerns over 

the well-being of a PACE participant. 

For example, if the participant sent the 

PACE organization a letter requesting 

long-term nursing facility placement or 

Adult Protective Services emailed the 

PACE organization to express concern 

about the participant’s ability to live on 

their own, we would expect these 

communications to be maintained. 

Given the nature of the PACE program, 

we recognize that there is frequent 

communication between a PACE 

organization and various individuals 

regarding each participant and that 

many of these communications would 

not be appropriate to maintain. For 

example, if a caregiver texted the PACE 

organization stating that they were going 

to be 15 minutes late in dropping off a 

participant at the PACE center or a 

participant emailed the PACE 

organization because they wanted to 

know what type of food would be 

served at the PACE center on a 

particular day, we would not expect this 

communication to be maintained. 

After consideration of the comments 

received, we are finalizing § 460.200 as 

proposed with a minor grammatical 

change in the introductory paragraph of 

§ 460.200(d), to add ‘‘a’’ before ‘‘PACE 

organization.’’ This grammatical 

correction will not change the intended 

meaning of the regulation as proposed 

and described in this final rule. 

F. Documentation in Medical Records 

Under PACE (§ 460.210) 

In accordance with § 460.210(a), a 

PACE organization must maintain a 

single, comprehensive medical record 

for each participant, in accordance with 

accepted professional standards, that is 

accurately documented and available to 

all staff, among other requirements. We 

have previously discussed the 

importance of maintaining a complete 

record for each participant. In the 

preamble to the 2006 PACE final rule 

(71 FR 71326), we stated that, because 

care for the PACE population will be 

provided by a variety of sources (for 

example, PACE center employees, 

contracted personnel, hospital staff, 

nursing home staff, etc.), it is critical 

that all information on the participant 

be documented in the medical record to 

ensure quality and continuity of care. 

CMS currently specifies at § 460.210(b) 

the minimum required contents of a 

medical record. Based on audit and 

oversight experience, we identified 


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additional requirements that we believe 

should be added under § 460.210(b) to 

ensure that participant medical records 

are fully comprehensive. 

We proposed to redesignate 

§ 460.210(b)(4) through (12) as (7) 

through (15), and to add three new 

paragraphs under § 460.210(b) to 

address how recommendations for care 

and treatment, decisions regarding those 

recommendations, and communications 

relating to a participant’s care, health or 

safety should be documented in the 

medical record. Specifically, we 

proposed to add a new paragraph (b)(4) 

that would require the PACE 

organization to document all 

recommendations for services made by 

employees and contractors of the PACE 

organization, including by all specialists 

such as dentists, neurologists, 

cardiologists, and others, in the 

participant’s medical record. We believe 

that all recommendations for services 

from these sources must be documented 

in order for the IDT to remain alert to 

all pertinent information, even if the 

IDT decides not to pursue the 

recommendations, for example based on 

a determination that the service is not 

necessary. Recommendations are made 

based on the employee or contractor’s 

determination that a participant might 

benefit from a particular service given 

the participant’s health status or 

condition. Even if the IDT ultimately 

decides that the recommended service 

would not be necessary to improve and 

maintain the participant’s health status, 

the IDT should document that 

recommendation in order to remain 

alert to why a particular contractor or 

employee believed that service was 

necessary as required by 

§ 460.102(d)(2)(ii). 

Additionally, we proposed adding a 

new paragraph (b)(5) that would require 

the IDT to document in the medical 

record the reason(s) for not approving or 

providing a service recommended by 

one of these sources. When an 

employee, contractor, or specialist 

recommends a service within the scope 

of their authority to practice, we believe 

that it is necessary for the IDT to 

consider this information and document 

any decision against providing the 

recommended service in the medical 

record. For example, if a 

gastroenterologist recommends that a 

participant receive drug therapy for 

Hepatitis C, and after reviewing the 

recommendation the IDT determines 

that treatment is not medically 

necessary or is contraindicated, we 

would require the IDT to document in 

the participant’s medical record the 

rationale for not providing the 

recommended drug therapy, including 

the clinical criteria used as the basis for 

that determination. This not only 

ensures that the IDT can review the 

information used to make the decision, 

but also that the participant has access 

to information about the basis of the 

decision not to provide a recommended 

service. This would also align with the 

requirement we finalized in the 2019 

PACE final rule (84 FR 25643) that 

requires the IDT to document the 

rationale for determining certain 

services are not necessary in the 

participant’s plan of care following the 

initial comprehensive assessment. 

While the 2019 PACE final rule required 

the IDT to follow this process during the 

development of the initial care plan, we 

are expanding the requirement to 

account for situations that arise after the 

initial plan of care is developed. For 

example, a participant may be 

diagnosed with diabetes after the 

development of the initial care plan, 

and should the PACE organization 

determine that treatment is not 

necessary, we would expect that it 

document that decision and the reasons 

for that decision in the participant’s 

medical record. 

We also proposed to require PACE 

organizations to maintain certain 

written communications received by the 

PACE organization in the participant’s 

medical record, in new paragraph 

§ 460.210(b)(6). The PACE program 

presents unique challenges in terms of 

providing care to participants. PACE 

participants require a nursing facility 

level of care and often have complex 

medical needs. When a Medicare or 

Medicaid beneficiary is in a nursing 

home, they have daily interactions with 

staff, and their needs, including changes 

in condition, are noted by the staff and 

acted upon. PACE participants, on the 

other hand, largely remain in their own 

homes and might not be seen on a daily 

basis by PACE organization staff. PACE 

participants do, however, often have 

regular interactions with caregivers, 

family members, neighbors, and other 

members of their communities, as well 

as with social service organizations like 

local Area Agencies on Aging (AAA) or 

Adult Protective Services (APS) 

agencies. We believe that maintaining a 

comprehensive, complete, and accurate 

medical record allows a PACE 

organization to remain alert to all 

information that is relevant to a 

participant’s care, health, and safety and 

to provide appropriate and timely care 

to the participant. We also believe 

information about a participant’s care, 

health, or safety provided to a PACE 

organization by any of these sources 

could play a critical role in providing 

comprehensive care to the participant. 

Therefore, we proposed to add a new 

paragraph (b)(6) to § 460.210, to require 

PACE organizations to maintain, in a 

participant’s medical record, original 

documentation of any written 

communication relating to the care, 

health, or safety of a participant that the 

PACE organization receives from certain 

sources in any format (for example, 

emails, faxes, letters, etc.). At a 

minimum, PACE organizations would 

be required to maintain 

communications from the participant, 

his or her designated representative, 

family members, caregivers, or any other 

individual who provides information 

pertinent to a participant’s care, health, 

or safety, as well as communications 

from advocacy or governmental agencies 

like an AAA or APS. We also proposed 

at § 460.200(d)(2) a reference to 

§ 460.210(b)(6) which would require 

that the PACE organization maintain 

this information in its original written 

form rather than summarizing the 

information in the participant’s record. 

See 85 FR 9134–9135 and 9259). 

We summarize the comments we 

received on the proposals related to the 

requirements for the contents of 

participant medical records under 

§ 460.210(b), and provide our responses 

to those comments, below. 

Comment: A commenter agreed with 

the proposals under §§ 460.210(b)(4) 

and (b)(5) which would require PACE 

organizations to document all 

recommendations for services made by 

employees or contractors of the PACE 

organization, including specialists, and 

the reason(s) for not approving or 

providing services recommended by 

these sources in the participant’s 

medical record. 

Response: We thank the commenter 

for their support of this provision. 

Comment: Commenters were split on 

the proposal to require original 

documentation to be maintained in the 

medical record. A commenter agreed 

with the proposed requirements in 

§§ 460.200(d)(2) and 460.210(b)(6), 

which would require PACE 

organizations to maintain all written 

communications received from 

participants or other parties, in their 

original form, when the 

communications relate to a participant’s 

care, health or safety, including written 

communications from an advocacy or 

governmental agency. Another 

commenter was opposed to this 

provision stating that not all 

communication lends itself to being 

kept in the original form and the 

proposed requirement may be 

impracticable for mundane, routine 

communications such as confirming an 


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address for a family member. This 

commenter recommended that CMS 

remove the phrase ‘‘all written 

communication’’ and instead provide a 

specific list of communications that 

must be kept in its original format. The 

majority of commenters recommended 

that the provisions at § 460.210(b)(6) be 

modified consistent with their 

comments on the proposal at 

§ 460.200(d)(2). Specifically, 

commenters were concerned that 

maintaining original documentation of 

any written communication relating to 

the care, health or safety of a participant 

in any format in the medical record 

would compromise the usefulness of the 

medical record, due to the quantity of 

information that would be required to 

be stored. These commenters also stated 

that requiring direct care providers to 

download or otherwise transfer all such 

communications to the medical record 

would be burdensome and take them 

away from providing care to 

participants. As a solution, these 

commenters recommended permitting 

PACE organizations to scan written 

documentation and copy and paste 

communications received via email or 

text into electronic medical records. The 

same commenters expressed concerns 

that the requirements were overly broad 

and recommended that CMS revise its 

proposals to both allow PACE 

organization staff to use their discretion 

when determining the types of 

communication that must be included 

in a participant’s medical record and 

exclude communications related to 

processing of service requests, appeals 

and grievances as those 

communications are often kept in 

separate systems. Another commenter 

indicated that the practice of 

summarizing verbal conversations and 

documenting in the EMR should apply 

to written communications. This 

commenter also recommended that CMS 

clarify its expectations with regard to 

communications from advocacy or 

governmental agencies and suggested 

that faxes and emails requesting 

documents should not be placed in the 

medical record. 

Response: We appreciate commenters’ 

feedback and suggestions on 

§§ 460.200(d)(2) and 460.210(b)(6). As 

we indicated in the discussion regarding 

§ 460.200 at section VI.E. of this final 

rule, we made corresponding changes to 

§ 460.210(b)(6) to require that the PACE 

organization maintain written 

communications in their original 

written form in the participant’s 

medical record. (85 FR 9135). We made 

these corresponding changes at 

§ 460.210(b)(6) in order to establish 

requirements that would govern how 

PACE organizations must maintain 

written communications under 

§ 460.200(d)(2). Currently, 

§ 460.210(b)(7) (redesignated at 

460.210(b)(10) in this rule) requires 

PACE organizations to document reports 

of contact with informal support, for 

example, caregivers, legal guardians, or 

next of kin in the participant’s medical 

record. Since these reports of contact are 

already maintained in the medical 

record, we believe that PACE 

organizations should also maintain 

original written communication from 

the participant, his or her designated 

representative, family members, 

caregivers, or any other individual who 

provides information pertinent to a 

participant’s care, health or safety, as 

well as communications from advocacy 

or governmental agencies like an AAA 

or APS within the medical record. We 

believe that documenting this written 

communication is necessary to maintain 

a comprehensive medical record for 

each participant that is complete and 

accurately documented, and in order to 

ensure that the IDT is remaining alert to 

pertinent information. We do, however, 

agree with the commenters’ 

recommendation that PACE 

organizations should be permitted to 

include an unaltered electronic copy, 

such as a scanned pdf, of the original 

written communication in a 

participant’s medical record, which 

aligns with the intent of this proposal. 

As discussed in the proposed rule 

related to § 460.200(d)(2), we were 

motivated in making this proposal by a 

concern that PACE organizations are not 

accurately summarizing written 

communication or retaining relevant 

information in written communications 

they receive. (85 FR 9134). The original 

basis for the proposal at § 460.200(d)(2) 

also led us to establish the 

corresponding changes to 

§ 460.210(b)(6) which would require 

PACE organizations to maintain these 

communications in the medical record. 

(85 FR 9135). We continue to believe 

that this proposal will ensure that PACE 

organizations retain relevant 

information received in written 

communications relating to the care, 

health and safety of a participant. We 

also believe that commenters’ 

suggestion to permit PACE 

organizations to retain an unaltered 

electronic copy would be consistent 

with this proposal, while also reducing 

the burden associated with storing the 

documentation in its original format. 

This change means that PACE 

organizations would be required to 

maintain all covered written 

communications described in 

§ 460.210(b)(6)(i) and (ii), but that they 

can be maintained in either their 

original form or as an unaltered 

electronic copy. We believe this change 

to § 460.210(b)(6) will ensure that 

written communications are complete, 

accurately documented, readily 

accessible, and available to all staff, 

while allowing additional 

administrative flexibility for PACE 

organizations in operationalizing this 

requirement. We are not establishing 

specific requirements governing where 

affected communications must be stored 

within a participant’s medical record. 

PACE organizations may operationalize 

these requirements in accordance with 

the capabilities of their medical records 

systems. PACE organizations may also 

identify which staff will be responsible 

for entering these communications in 

the medical record. Section 

460.210(b)(6) does not require that 

covered communications be entered by 

direct care staff. Although direct care 

staff must remain alert to the pertinent 

information contained within these 

covered communications, PACE 

organizations may assign the 

responsibility for entering these covered 

communications to any staff, including 

those that does not provide direct care 

to participants. 

After consideration of the comments 

received and for the reasons outlined in 

our responses to comments, we are 

finalizing § 460.210(b)(4) and (5) as 

proposed. We are also finalizing 

§ 460.210(b)(6) with one modification in 

the regulation text, which will require 

PACE organizations to include original 

documentation, or an unaltered 

electronic copy, of any written 

communication the PACE organization 

receives relating to the care, health or 

safety of a participant, in the 

participant’s medical record. 

G. PACE Participant Rights: Contact 

Information and Access Requirements 

(§ 460.112) 

Sections 1894(b)(2)(B) and 

1934(b)(2)(B) of the Act specify in part 

that PACE organizations must have in 

effect written safeguards of the rights of 

enrolled participants including a patient 

bill of rights. Previously, we established 

in § 460.112 certain rights to which a 

participant is entitled. This includes the 

participant’s right to receive accurate, 

easily understood information and to 

receive assistance in making informed 

health care decisions under 

§ 460.112(b); and the participant’s right 

to a choice of health care providers, 

within the PACE organization’s 

network, that is sufficient to ensure 

access to appropriate high-quality 


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82https://www.cms.gov/Medicare/Health-Plans/ 

ManagedCareMarketing/MarketngModels

StandardDocumentsandEducationalMaterial.html. 

health care under § 460.112(c). CMS 

proposed to add three new participant 

rights in § 460.112 to increase 

beneficiary protections: The right to 

contact 1–800–MEDICARE for 

information or to make a complaint; the 

right to have reasonable and timely 

access to specialists as indicated by the 

participant’s health condition and 

consistent with current clinical practice 

guidelines; and the right to receive 

necessary care across all care settings, 

up to and including placement in a long 

term care facility when the PACE 

organization can no longer maintain the 

participant safely in the community 

through the support of PACE services. 

Section 1804(b) of the Act requires 

CMS to provide information on 

Medicare programs through 1–800– 

MEDICARE, as a means by which 

individuals may seek information and 

assistance for Medicare programs. This 

number may be utilized by Medicare 

beneficiaries to address coverage 

questions, find plan information, or 

make complaints related to the 

Medicare program. While PACE 

organizations are responsible for 

providing to all participants all services 

covered under Medicare and Medicaid, 

including prescription drugs, and other 

services determined necessary by the 

IDT to improve and maintain the 

participant’s overall health status, PACE 

organizations are not required to 

provide this toll-free number to 

participants in any current 

communication. In the MA program, 

MA organizations must provide this 

information to beneficiaries in their 

Annual Notice of Change (ANOC) and 

Evidence of Coverage (EOC) under 

§ 422.111 as well as longstanding 

guidance under the Medicare 

Communications and Marketing 

Guidelines.82 We have discovered 

through oversight and monitoring efforts 

that PACE participants and/or their 

caregivers are often not aware that, in 

addition to the internal grievance 

process under § 460.120, participants 

also have the right to contact 1–800– 

MEDICARE; for example, to file quality 

of care complaints, including filing a 

complaint regarding the delivery of a 

necessary service. For example, if the 

IDT approved treatment for a specific 

condition, but the participant never 

received that treatment, the participant 

or caregiver could call 1–800-Medicare 

to lodge a complaint. Given the frailty 

of the PACE population, we believe it is 

important that these participants be 

explicitly notified of their right to have 

their complaints heard and resolved by 

calling 1–800–MEDICARE. When a 

participant files a complaint with 1– 

800–MEDICARE, the complaint gets 

logged and routed to a CMS account 

manager or case worker in order to 

ensure it is appropriately responded to 

and resolved. To ensure PACE 

participants are notified about 1–800– 

MEDICARE, we proposed to amend 

§ 460.112 by adding a new paragraph 

(b)(4) which would specify that 

participants have the right to contact 1– 

800–MEDICARE for information and 

assistance, including to make a 

complaint related to quality of care or 

delivery of a service. PACE 

organizations are required under 

§ 460.116(c)(2) to display the PACE 

participant rights in a prominent 

location in the PACE center, and to 

include the participant bill of rights in 

the enrollment agreement under 

§ 460.154(m). Thus, by adding (b)(4) 

would ensure each PACE organization 

makes the 1–800–MEDICARE number 

available to participants by posting it in 

an accessible location at the PACE 

center and including it in the 

enrollment agreement. 

We also proposed to include a 

participant’s right to have reasonable 

and timely access to specialists as 

indicated by the participant’s health 

condition and consistent with current 

clinical practice guidelines at new 

§ 460.112(c)(3). PACE organizations are 

responsible for ensuring participants 

receive all necessary care from 

specialists, which is coordinated 

through the primary care provider and 

IDT in accordance with 

§ 460.102(c)(2)(ii) and (d)(1). In 

addition, as noted in the preamble to the 

1999 PACE interim final rule that 

implemented the PACE program (see 64 

FR 66260) and the preamble to the 2006 

PACE final rule that implemented 

§ 460.92 of the regulations (see 71 FR 

71305), PACE organizations must utilize 

clinical practice guidelines to ensure the 

quality of care for PACE participants. 

CMS has also historically required the 

use of clinical practice guidelines and 

professional standards in determining 

outcome measures applicable to the care 

of PACE participants as part of the 

PACE organizations quality 

improvement program (see 

§ 460.134(b)). The 1999 PACE interim 

final rule also established the 

expectation that PACE organizations 

will utilize current clinical standards as 

a routine part of their daily operations. 

(64 FR 66260). Because part of the 

purpose of the quality improvement 

program is to identify areas to improve 

or maintain the delivery of services and 

patient care, CMS believes that these 

same guidelines and standards should 

be used as part of care planning and in 

making determinations about services as 

discussed in section VI.C. of this final 

rule. However, CMS’ audits of PACE 

organizations have shown that some 

PACE participants have not received 

timely access to appropriate specialists 

as necessary to improve and maintain 

the participant’s overall health status 

and in accordance with current clinical 

practice guidelines. Instead, the IDTs at 

some PACE organizations seem to be 

making their decisions based on factors 

not related to the participant’s health 

condition. In some instances, 

participants have experienced negative 

outcomes because they have not 

received access to a specialist. 

Therefore, we proposed to redesignate 

paragraph (c)(3) as (c)(5) and add a new 

paragraph (c)(3), which expressly states 

each participant has the right to 

reasonable and timely access to 

specialists as indicated by the 

participant’s health condition and 

consistent with current clinical practice 

guidelines. 

Lastly, we added a new paragraph at 

§ 460.112(c)(4) to address a participant’s 

right to receive care across all care 

settings. A PACE organization is 

expected to provide for the care that is 

necessary for each participant and 

determine the appropriate setting in 

which to provide that care, up to and 

including placement in a long term care 

facility when a participant’s condition 

requires it (see § 460.98(a) and (b)). 

However, CMS’ monitoring and audit 

activity show that some PACE 

organizations are not providing longterm care services, even when their IDTs 

determine a participant can no longer 

live safely in their home and requires a 

higher level of care. We have learned 

that in some cases, affected participants 

disenroll from PACE in order to receive 

the long-term care that is needed. One 

of the purposes of the PACE program is 

to enable frail, older adults to live in the 

community as long as medically and 

socially feasible (see § 460.4(b)(3)). 

PACE organizations are also responsible 

for furnishing comprehensive medical, 

health, and social services that integrate 

acute and long-term care, and providing 

services that are accessible and adequate 

to meet the needs of its participants. 

(See § 460.98(b) and (d)(2) respectively). 

Lastly, enrollment in the PACE program 

continues until the participant’s death, 

regardless of changes in health status, 

unless the participant voluntarily 

disenrolls, or is involuntarily 

disenrolled. (See § 460.160(a)). A PACE 

organization cannot deny placement in 


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a long-term care facility if the IDT 

determines the participant requires 24- 

hour care but the PACE organization 

does not have a method for providing 

that care in the home through either its 

employees or contractors. See the 

relevant discussion under section VI.D. 

of this final rule regarding providing 

participants access to services 24 hours 

a day, every day of the year, across all 

care settings. In order to provide more 

specific detail about what this 

fundamental program requirement 

entails, we added § 460.112(c)(4) which 

would state that a participant has the 

right to receive necessary care in all care 

settings up to and including placement 

in a long term care facility when the 

PACE organization can no longer 

provide the services necessary to 

maintain the participant safely in the 

community. 

We summarize the comments on the 

proposals related to PACE participant 

rights, and provide our responses to 

those comments, below. 

Comment: All commenters that 

addressed this proposal agreed with 

CMS’s proposal to add a participant 

right at § 460.112(b)(4) to inform 

participants of their right to contact 1– 

800–MEDICARE for information or 

assistance, including making a 

complaint related to the quality of care 

or the delivery of a service. These 

commenters also requested that CMS 

ensure that call center representatives 

are trained on PACE requirements and 

are able to handle inquiries from PACE 

participants. 

Response: We thank the commenters 

for expressing support for including the 

1–800–MEDICARE number in the 

participant rights. We are committed to 

ensuring that participants concerns are 

addressed appropriately. Call center 

operatives are currently educated and 

trained on all Medicare programs, 

including PACE, and should be able to 

fully address PACE participant 

inquiries. PACE participants currently 

have the ability to contact 1–800– 

MEDICARE for concerns; however, 

participants are not utilizing this 

resource frequently, potentially because 

of a lack of knowledge about 1–800– 

MEDICARE, and we expect that by 

requiring this telephone number to be 

displayed in the PACE center and 

included in the participant’s bill of 

rights, participants will more frequently 

utilize this resource if needed. 

Comment: All commenters that 

addressed this proposal were fully 

supportive of the addition of 

§ 460.112(c)(3) and (c)(4). These 

commenters noted that while they agree 

with the addition of (c)(4), there may be 

situations when placement in a longterm nursing facility may not be 

compatible with a participant’s wishes. 

Response: We appreciate the 

commenters’ support for these 

proposals. As noted in section VI.G. of 

the proposed rule, a PACE organization 

cannot deny placement in a long-term 

care facility if the IDT determines that 

the participant requires 24-hour care, 

but the PACE organization is unable to 

provide 24-hour care in the home 

through either its employees or 

contractors. Based on our experience 

overseeing PACE organizations, we have 

observed situations in which 

participants and caregivers were 

encouraged to disenroll from the PACE 

organization when long-term care 

placement was necessary to meet the 

participants needs. As required by 

§ 460.162(c), ‘‘a PACE organization must 

ensure that its employees or contractors 

do not engage in any practice that 

would reasonably be expected to have 

the effect of steering or encouraging 

disenrollment of participants due to a 

change in health status.’’ However, we 

understand that placement in a longterm care facility may not always be in 

line with a participant’s wishes, and it 

is not our intent to require PACE 

organizations to place participants into 

long-term care facilities against their 

wishes. 

After consideration of the comments 

received, we are finalizing this 

provision without modification. 

H. Enforcement Action Appeal Rights 

Under PACE (§ 460.56) 

Sections 1894(e)(7) and 1934(e)(7) of 

the Act specify that, under regulations, 

the provisions at section 1857(h) of the 

Act, governing the procedures for 

termination of a contract with an MA 

organization, apply to the termination 

and sanctions of a PACE program 

agreement and PACE organization in the 

same manner as they apply to an MA 

organization under Medicare 

Advantage. The current enforcement 

provisions at 42 CFR part 460, subpart 

D, do not specify a process for appeals 

related to civil money penalties or 

intermediate sanctions. However, at 

§ 460.54, the regulations include appeal 

rights for termination procedures. In the 

preamble to the 1999 PACE interim final 

rule (64 FR 66236), we discuss the 

requirement in the BBA of 1997 that we 

take into account some of the 

requirements established for MA as we 

develop regulations for PACE 

organizations in certain areas common 

to both programs, such as beneficiary 

protections, payment rates, and 

sanctions. CMS has interpreted this 

legal framework as granting the agency 

the authority to utilize the appeals 

processes that apply to MA 

organizations under § 422.756 when 

imposing a suspension of enrollment or 

payment, or imposing civil money 

penalties on PACE organizations. 

Although it has not been codified in 

regulation, CMS currently provides 

PACE organizations with these appeal 

rights when imposing enforcement 

actions under §§ 460.42, 460.46, and 

460.48(b). 

Therefore, in an effort to enhance 

transparency and ensure that PACE 

organizations are aware of their right to 

appeal an enforcement action, we added 

a new § 460.56 in subpart D of the PACE 

regulations to affirmatively state that a 

PACE organization may request a 

hearing according to the procedures at 

§ 422.756 when CMS imposes a sanction 

or civil money penalty under §§ 460.42, 

460.46, or 460.48(b) on PACE 

organizations. 

For suspensions of enrollment or 

payment listed under §§ 460.42 and 

460.48(b), CMS will follow the hearing 

procedures for imposing intermediate 

sanctions at § 422.756(b), which 

includes the right to a hearing before a 

CMS designated hearing officer under 

subpart N of part 422. Under the process 

specified at § 422.756(b), CMS provides 

organizations with a notice of intent to 

impose sanctions and their right to a 

hearing before a CMS hearing officer. 

Organizations are given 15 days from 

the date of the notice to request a 

hearing. 

For civil money penalties listed under 

§ 460.46, CMS will follow the 

procedures for imposition of civil 

money penalties at § 422.756(e)(2)(v), 

which includes the right to a hearing 

before an Administrative Law Judge 

(ALJ) under subpart T of part 422. In 

addition, CMS must send a written 

notice of the agency’s decision to 

impose a civil money penalty, the 

amount of the penalty, the date the 

penalty is due, information about the 

organization’s right to a hearing and 

where to file the request for hearing. 

We believe this will ensure PACE 

organizations understand the process 

CMS utilizes for imposing these 

enforcement actions, as well as the 

PACE organization’s right to appeal 

those actions. 

We did not include § 460.48(a) or (c) 

in the proposed rule because those 

provisions refer to the termination of a 

PACE program agreement, for which 

procedures are already set forth at 

§ 460.54. However, § 460.48(b) 

authorizes us to withhold payment 

under the PACE program agreement, 

which is similar to the suspension of 

payment provided at § 460.42(b)(1). 


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Therefore, the procedures at § 422.756 

would apply, as specified at § 460.56(a). 

We received no comments on our 

proposed new § 460.56 to address 

enforcement action appeal rights and 

therefore are finalizing this provision 

without modification. 

I. PACE Definitions (§ 460.6) 

As discussed briefly at section VI.A. 

of this final rule, we proposed to modify 

our existing definition of ‘‘services.’’ 

Currently, the term ‘‘services’’ is defined 

as including items and services. We 

proposed a change to use the term 

‘‘service’’ in § 460.6 to be consistent 

with the use of the singular in the terms 

defined under § 460.6. The definition of 

the singular ‘‘service’’ would also apply 

to the plural ‘‘services.’’ In addition, we 

proposed to modify our definition of 

‘‘service’’ to better reflect the full scope 

of the PACE benefit package by stating 

that the term ‘‘service’’, as used in part 

460, means all services that could be 

required under § 460.92, including 

items and drugs. In the 1999 PACE 

interim final rule, we stated that 

required services included all current 

Medicare services, all Medicaid-covered 

services as specified by the state’s 

approved Medicaid plan, and 

specifically included ‘‘drugs and 

biologicals’’ as a part of a list of 

minimum benefits PACE organizations 

were required to provide. (64 FR 66246 

and 66301). In the 2006 PACE final rule, 

we removed the specific listing of all 

required services because we 

determined that it was not possible to 

provide a complete list of all services 

that must be furnished to participants if 

ordered by the IDT. (71 FR 71281). 

Instead, we adopted the language that is 

currently used in § 460.92 to identify 

the services required as a part of the 

PACE benefit package. Since that time, 

through CMS’ monitoring and oversight, 

we have found that some PACE 

organizations do not realize that they 

are responsible for providing the full 

Medicare benefit, including the 

provision of Part D drugs. Therefore, we 

proposed to make changes by adding 

‘‘drugs’’ to the definition of services for 

PACE purposes which is consistent with 

how we have historically defined the 

types of services that are required in 

PACE. We believe this change is 

necessary to remove potential ambiguity 

about the meaning of the terms 

‘‘service’’ or ‘‘services’’ when used in 

the PACE regulations. 

We received no comments on the 

proposed definition of ‘‘service’’ in 

§ 460.6 and therefore are finalizing this 

provision without modification. 

VII. Technical Changes 

A. Exclusion of Services Furnished 

Under a Private Contract (§ 422.220) 

We proposed two substantive changes 

to § 422.220 regarding the limits on 

when an MA organization may or may 

not pay an opt-out provider. In our 

proposal to amend § 422.220, we sought 

first to align the regulatory definition of 

‘‘physician’’ in regard to private 

contracts with the definition found in 

corresponding statute. Currently, 

section 1802(b)(6)(B) of the Act defines 

‘‘physician,’’ in regard to private 

contracts, as a term that is defined by 

paragraphs (1), (2), (3), and (4) of section 

1861(r) of the Act; however, § 422.220 

currently defines ‘‘physician,’’ in 

respect to private contracts, using only 

paragraph (1) of section 1861(r) of the 

Act—narrowing the regulatory 

definition to exclude physicians who 

are not doctors of medicine or 

osteopathy. To avoid confusion about 

what kinds of providers the opt-out and 

private contracting rules apply to, we 

proposed to extend the regulatory 

definition of ‘‘physician’’ to match the 

statutory definition when the term is 

used in regard to private contracts. We 

designed our proposal to achieve this by 

adding references to paragraphs (2), (3) 

and (4) of section 1861(r) of the Act to 

the definition of ‘‘physician’’ at 

§ 422.220 to make the regulatory 

provision consistent with the statute. 

Second, we proposed to clarify the 

prohibition at § 422.220 in regard to the 

types of items and services for which an 

opt-out provider may and may not 

receive payment from an MA 

organization. In the proposed rule, we 

discussed our interpretation of the 

Medicare statute that payments for 

supplemental benefits are outside the 

scope of the statutory restriction on 

payments to opt-out providers. Section 

1802(b)(1)(B) of the Act states that an 

opt-out physician or practitioner must 

receive no reimbursement under the 

Medicare statute directly or on a 

capitated basis and ‘‘no amount for such 

item or service from an organization 

which receives reimbursement for such 

item or service under [Title XVIII] 

directly or on a capitated basis.’’ We 

explained that because MA 

organizations only receive 

reimbursement for Part A and Part B 

items and services under Title XVIII of 

the Act, supplemental benefits are not 

among the items and services for which 

an MA organization is prohibited from 

making payments to an opted-out 

provider. In our proposal, we 

recommended amending the regulations 

at § 422.220 to make this distinction so 

that paragraph (a) states the prohibition 

on payment while paragraphs (b) and (c) 

direct when an MA organization must or 

may nonetheless pay an opt-out 

provider. We use the terms ‘‘basic 

benefits’’ and ‘‘supplemental benefits’’ 

consistent with how those terms are 

used in §§ 422.100(c) and 422.102 and 

in section VI.F. of this final rule. 

We received the comments noted on 

this proposal and our responses follow. 

Comment: CMS received comments 

from an MA organization and a provider 

association in regard to our proposals. 

The comments CMS received were fully 

supportive of CMS’s proposal to amend 

CMS’s regulatory definition of 

‘‘physician’’ at § 422.220, which 

pertains to private contracts between 

providers and Medicare Advantage 

enrollees, to align with the 

corresponding statutory definition of 

‘‘physician’’ under section 1802(b)(6)(B) 

of the Act. CMS also received full 

support from these commenters in 

regard to CMS’s proposal to amend 

§ 422.220 to clarify that the restrictions 

on payments to opt-out providers apply 

only to payments for basic benefits (that 

is, items and services covered under 

Parts A and B). 

Response: We thank the commenters 

for their remarks, and believe that in 

finalizing these proposals we better 

align our regulations with the statutes 

from which they originated. 

We received no additional comments 

on this proposal. After consideration of 

the comments and for the reasons 

outlined in the proposed rule and our 

response to comments, we are finalizing 

these proposed changes to § 422.220 

without modification. 

B. Disclosure Requirements for 

Explanation of Benefits (§ 422.111) 

In a final rule titled, ‘‘Medicare 

Program; Changes to the Medicare 

Advantage and the Medicare 

Prescription Drug Benefit Programs for 

Contract Year 2012 and Other Changes; 

Final Rule’’ (73 FR 21504) (hereinafter 

referred to as the April 2011 final rule), 

we finalized a regulation at 

§ 422.111(b)(12) that requires an MA 

organization to furnish directly to 

enrollees, in the manner specified by 

CMS and in a form easily 

understandable to such enrollees, a 

written explanation of benefits, when 

benefits are provided under this part. 

Following the finalization of this 

regulation, CMS tested model 

Explanation of Benefits (EOB) 

templates, and, based on public 

comments solicited via HPMS memo 

and in 77 FR 70445, November 26, 2012, 

made final revisions to the EOB 

templates and issued guidance about the 

Part C EOBs. Subsequently, the 


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requirement for MA organizations to 

furnish Part C EOBs to their enrollees 

applied beginning April 1, 2014. 

In the February 2020 proposed rule, 

we sought to clarify and codify existing 

requirements for the Part C EOB. First, 

we sought to change where this 

requirement appears in § 422.111(b) 

because paragraph (b) specifies general 

information about the MA plan that 

must be disclosed to each enrollee at the 

time of enrollment and annually, which 

is not when the EOB should be sent. We 

also proposed to clarify that the 

requirement to send the Part C EOB is 

permanently in effect. To achieve this, 

we proposed to move the substance of 

the regulation from (b)(12) to a new 

paragraph (k), with a minor change to 

delete the phrase ‘‘CMS may require’’ 

and to add the word ‘‘must’’ after ‘‘MA 

organizations.’’ We received no 

comments in regard to these two 

proposed changes. 

We also proposed to codify the 

existing content requirements of the Part 

C EOB in new § 422.111(k)(1), (k)(2) and 

(k)(3). For each Part A and Part B 

covered item and service, mandatory 

supplemental benefit, and optional 

supplemental benefit furnished during 

the reporting period, we proposed that 

an MA organization must include a 

corresponding descriptor, billing code, 

and amount billed; total cost approved 

for reimbursement, share of the total 

cost paid by the plan; and the share of 

the total cost for which the enrollee is 

liable. We also proposed that MA 

organizations must include the most 

current year-to-date totals in the EOB: 

the cumulative amount billed by all 

providers, the cumulative total costs 

approved by the plan, the cumulative 

share of total cost paid for by the plan, 

the cumulative share of total cost for 

which the enrollee is liable, the amount 

an enrollee has incurred toward the 

MOOP limit (as applicable), and the 

amount an enrollee has incurred toward 

the deductible (as applicable). We also 

proposed that MA organizations must 

provide clear contact information for 

enrollee customer service, instructions 

on how to report fraud, and for any EOB 

that includes one or more denied 

claims, the EOB must include a clear 

identification of the claim(s) denied as 

well as information about the denial and 

the enrollee’s appeal rights. Our 

proposed regulation directed that this 

information about denied claims in the 

EOB would not replace the notice for 

adverse coverage decisions required by 

§§ 422.568 and 422.570. 

We also proposed to codify the time 

frame choices available for MA 

organizations in sending the EOB. 

Proposed § 422.111(k)(4) would require 

an MA organization to choose to either 

send EOBs on a monthly basis or 

quarterly basis with per-claim 

notification. Consistent with our current 

policy, we proposed that MA 

organizations that send EOBs monthly 

must send them before the end of each 

month that follows the month a claim 

was filed and that a per-claim notice 

must be sent on the same cycle as a 

monthly EOB, which is before the end 

of each month that follows the month a 

claim was filed; MA organizations that 

choose to send per-claim notices must 

also send quarterly summary EOBs. 

Consistent with our current policy, we 

also proposed that MA organizations 

that choose to send EOBs on a quarterly 

basis must send an EOB no later than 

the end of each month following the 

quarter a claim was filed. 

We summarize the comments 

received on our proposal and our 

responses follow. 

Comment: A commenter asked CMS 

to clarify the term ‘‘filed’’ as it is used 

in paragraph (k)(4) to require the 

monthly EOB to be sent before the end 

of the month after the month in which 

a claim is filed and the quarterly EOB 

to be sent before the end of each month 

that follows the quarter in which a 

claim was filed. 

Response: We clarify that we consider 

a claim to be filed when it has been 

received by an MA organization. This is 

consistent with our current policy. 

Comment: Although CMS did not 

specifically discuss the existing policy 

that exempts MA organizations from 

sending EOBs to dual-eligible enrollees, 

one commenter asked CMS whether or 

not D–SNPs must send EOBs to their 

enrollees as a result of this rule. 

Response: Currently, MA 

organizations are not required to send 

EOBs to dual-eligible enrollees, which 

would necessarily include any enrollee 

of a D–SNP, because dual-eligible 

enrollees generally do not pay any outof-pocket costs. In the April 2011 final 

rule, we discussed the comments we 

solicited on this matter, and determined 

we would study the issue of 

applicability to dual-eligible enrollees 

(including those enrolled in D–SNPs) 

further under our pilot program. (76 FR 

21507). At the conclusion of our pilot 

program, and after reviewing additional 

public comments solicited via a Health 

Plan Management System (HPMS) 

memo release with a 30-day comment 

period, as well as a November 26, 2012 

Federal Register notice (77 FR 70445), 

the policy that exempts MA 

organizations from sending EOBs to 

dual-eligible enrollees was finalized. As 

we did not intend to make changes to 

Part C EOB policy in our proposal 

during this current round of rulemaking, 

we are finalizing this exception at 

§ 422.111(k)(5). 

Comment: A commenter, an MA 

organization, suggested that CMS no 

longer require MA plans and Part D 

sponsors to send Part C and Part D EOBs 

on a monthly basis. The MA 

organization stated that their enrollees 

experience confusion in regard to their 

EOBs which unnecessarily leads to 

complaints to their customer service 

department and to CMS. The MAO 

stated that their consumer research 

found that enrollees often did not read 

or did not know how to interpret their 

EOBs because the documents are 

lengthy and complex. They also found 

that their enrollees had a tendency to be 

interested in seeing how their cost 

sharing applied toward their deductible 

and maximum-out-of-pocket costs, and 

less interested in information that 

involves complex claims details or 

medical terminology. The MAO also 

stated that enrollees often complain 

about receiving EOBs on a monthly 

basis. The MAO recommended that 

CMS modify existing EOB guidance to 

permit MA plans and Part D sponsors to 

send quarterly statements to enrollees 

that include EOB totals related to cost 

sharing only, rather than the full EOB. 

Response: The current Part C EOB 

was designed to ensure that MA 

enrollees have all of the information 

necessary to make important decisions 

about their health care, and its content 

was informed by input from MA 

organizations, patient advocacy groups, 

and other stakeholders. After 

publication of the April 2011 final rule, 

we engaged MA organizations, industry 

and advocacy groups, and enrollees in 

listening sessions to gather their 

feedback; using the feedback we 

collected, we then designed and tested 

models through a small pilot program 

with a volunteer MA organization in CY 

2012. After the conclusion of this 

process, we sought additional public 

comments on the models through a 

Health Plan Management System 

(HPMS) memo release with a 30-day 

comment period. Based on public 

comment we received on the HPMS 

memo and a November 26, 2012 Federal 

Register notice, we finalized the current 

models for the Part C EOB. While an 

enrollee may not always need the 

entirety of the information stated in 

their EOB, some circumstances (for 

example, appeals) may arise when the 

enrollee needs more information than 

just their updated cost-sharing totals. At 

this time, CMS will not be changing the 

content requirements of the EOB; 

however, we acknowledge the 

importance of providing easily 


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understandable information to enrollees 

and may consider limiting the content 

requirements in future rulemaking. We 

are finalizing the proposed option for 

MA organizations to use a quarterly 

cycle for furnishing the EOBs. We note 

that the regulation text does not require 

that the MA organization use the same 

cycle for every enrollee, so an MA 

organization may elect to provide an 

option for enrollees to select the 

monthly or quarterly cycle, provided 

that the applicable content and timing 

requirements are met. Finally, the Part 

D EOB notice is outside the scope of this 

rulemaking. 

Comment: Some commenters asked 

that CMS reconsider the requirement to 

send enrollees hard copies of their 

EOBs. An MA organization suggested 

that rather that mail paper EOBs, plans 

should be permitted to instead send 

enrollees a paper disclosure notice 

instructing them to contact customer 

service to obtain a hardcopy, or go 

online to view an electronic copy. The 

same MA organization stated that plans 

should continue to mail hard copies of 

the Integrated Denial Notice (IDN). 

Another commenter suggested that CMS 

consider changing the default 

requirement to electronic EOBs with 

paper opt-in, and stated that savings on 

paper, printing, and mailing could be 

used toward enhanced care and 

benefits. 

Response: While CMS continues to 

drive innovation with respect to 

electronic health data access, we also 

recognize that a default electronic 

format could create disparity for 

enrollees who do not have the skills or 

equipment to obtain their claims data 

digitally. In order to help ensure that all 

enrollees are able to access their EOBs, 

CMS does not support a change in 

policy that would permit MA 

organizations to send EOBs 

electronically by default at this time. 

With respect to paper and electronic 

EOBs, CMS is not changing the 

requirement (finalized in section V.E of 

this rule) that MA organizations mail 

required materials in hard copy or 

provide them electronically following 

the requirements set forth in 

§ 422.2267(d). CMS notes that in order 

to send an EOB to an enrollee 

electronically, the MA organization 

must obtain prior consent from the 

enrollee, provide instructions on how 

and when the enrollee can access the 

EOB, have a process in place through 

which an enrollee can request hard 

copies be mailed, and have a process for 

automatic mailing of hard copies when 

electronic versions are undeliverable, 

consistent with the requirements 

outlined at § 422.2267(d)(2)(ii). 

Comment: An MA organization 

recommended that CMS provide more 

flexibility with regard to the frequency 

that an EOB can be sent to enrollees. 

Specifically, the MA organization 

suggested that CMS allow health plans 

to send the EOB every two weeks. 

Response: Under our current policy 

and the regulation being finalized here 

at § 422.111(k), an MA organization 

must deliver the EOB at least on a 

monthly or quarterly basis, complying 

with the applicable content 

requirements. While CMS currently 

permits these two different frequency 

cycles, plans may still communicate 

information to their enrollees on a more 

frequent basis as long as the 

requirements of either the monthly or 

quarterly cycle continue to be met. At 

this time, CMS will not be making 

changes to the EOB frequency cycles or 

their respective requirements. 

After consideration of the comments 

and for the reasons outlined in the 

proposed rule and our responses to 

comments, we are finalizing our 

proposal for § 422.111(k), with one 

substantive modification to provide that 

MA organizations are not required to 

send the explanation of benefits to dualeligible enrollees. 

C. Special Requirements During a 

Disaster or Emergency (§ 422.100) 

Section 422.100(m)(5)(iii) currently 

requires an MA organization to provide 

the information described in paragraphs 

(m)(1), (2), (3), and (4)(i) on its website, 

but § 422.100(m) does not have a 

paragraph (m)(4)(i) and paragraph (m)(4) 

requires a notice to CMS regarding the 

MA organization’s ability to resume 

normal operations; rather, paragraph 

(m)(5)(i) describes the terms and 

conditions of payment during a public 

health emergency or disaster for noncontracted providers furnishing benefits 

to plan enrollees residing in the state-ofdisaster area, which is the information 

we intended to be posted by the MA 

organization. As noted in the proposed 

rule, the final rule that adopted 

§ 422.100(m), titled ‘‘Medicare Program 

Contract Year 2016 Policy and 

Technical Changes to the Medicare 

Advantage and the Medicare 

Prescription Drug Benefit Programs’’ (80 

FR 7912), was clear that the requirement 

at 422.100(m)(5)(iii) was to post the 

disaster and emergency policies in order 

to facilitate enrollee access to needed 

services while normal care delivery is 

unavailable, which would enable 

enrollees and providers to know the 

payment policies for out-of-network 

services provided during disasters. 

We proposed to amend 

§ 422.100(m)(5)(iii) to correct the text, 

replacing the reference to paragraph 

(m)(4)(i) to paragraph (m)(5)(i). We also 

proposed to update the regulation text 

to use ‘‘website’’ rather than ‘‘Web site’’ 

since the non-hyphenated noncapitalized term ‘‘website’’ is now 

commonly used and more consistent 

with other regulations in part 422. 

We received no comments on this 

proposal and are finalizing the proposed 

technical amendments to 

§ 422.100(m)(5) for the reasons outlined 

in the proposed rule. 

D. Effective Date for Exclusion of 

Coverage for Kidney Acquisitions From 

Basic Benefits (§ 422.100) 

Section 1852(a)(1)(B)(i) of the Act 

defines the term ‘‘benefits under the 

original Medicare Fee-for-Service 

program option’’ for purposes of the 

requirement in subparagraph (a)(1)(A) 

that each MA organization provide these 

benefits to MA enrollees. Section 

17006(c)(1) of the Cures Act amended 

section 1852(a)(1)(B)(i) of the Act by 

inserting ‘‘or coverage for organ 

acquisitions for kidney transplants, 

including as covered under section 

1881(d)’’ after ‘‘hospice care.’’ Per 

section 17006(c)(3) of the Cures Act, this 

amendment applies with respect to plan 

years beginning on or after January 1, 

2021. Thus, effective January 1, 2021, 

MA plans will no longer cover organ 

acquisitions for kidney transplants. 

In the April 2019 final rule, we 

amended the definition of ‘‘basic 

benefits’’ at § 422.100(c)(1) to include 

‘‘additional telehealth benefits,’’ and in 

doing so, we also amended 

§ 422.100(c)(1) to note the new 

exclusion of coverage for organ 

acquisitions for kidney transplants (in 

addition to the existing exclusion for 

hospice care). However, we 

inadvertently omitted the identification 

of the 2021 effective date for this change 

set forth in the Cures Act. 

In the proposed rule, we proposed a 

technical correction that would add the 

2021 effective date to § 422.100(c)(1) for 

the exclusion of original Medicare 

coverage for organ acquisitions for 

kidney transplants. Specifically, we 

proposed to correct the phrase ‘‘(other 

than hospice care or coverage for organ 

acquisitions for kidney transplants)’’ to 

read: ‘‘(other than hospice care or, 

beginning in 2021, coverage for organ 

acquisitions for kidney transplants).’’ 

This provision is technical and, as 

stated in the proposed rule, is therefore 

not expected to have economic impact 

beyond current operating expenses. 

We received no comments on this 

proposal and are finalizing the proposed 

amendments to § 422.100(c)(1) without 


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modification for the reasons outlined in 

the proposed rule. 

E. Add Back Cost Plan Related Sections 

From Previous Final Regulation 

(§ 422.503) 

In the Medicare Program; Contract 

Year 2015 Policy and Technical 

Changes to the Medicare Advantage and 

Medicare Prescription Drug Benefit 

Programs; Final Rule (hereinafter 

referred to as the May 2014 final rule), 

we finalized regulations affecting the 

cost plan non-renewal-related 

requirements (79 FR 29850 through 

29851, 29959). The final regulation 

inadvertently identified the nonrenewal section as 

§ 422.503(b)(4)(vi)(G)(5)(i) and (ii) when 

instead the revisions should have been 

specified as revising § 422.503(b)(5)(i) 

and (ii). Although the regulatory text for 

the provision was published in the May 

2014 final rule, it was not correctly 

codified in the CFR. In the February 

2020 proposed rule, we proposed to 

designate the provision in the correct 

paragraph of § 422.503. 

The rule we adopted in 2014 provides 

that an entity seeking to offer an MA 

organization may not accept new 

enrollees under a section 1876 

reasonable cost contract in any area in 

which it seeks to offer an MA plan. In 

the February 2020 proposed rule, we 

proposed to codify a policy adopted in 

the May 2014 final rule that prohibits an 

organization from offering and accepting 

enrollment in both an MA plan and a 

cost plan in the same service area; that 

policy applied to when the MA 

organization and the cost plan 

organization were the same legal entity 

or corporate affiliates. The proposed 

rule explained the redesignation: 

• In new § 422.503(b)(5)(i), we specify 

that an entity seeking to contract as an 

MA organization must not accept, or 

share a corporate parent organization 

owning a controlling interest in an 

entity that accepts, new enrollees under 

a section 1876 reasonable cost contract 

in any area in which it seeks to offer an 

MA plan. 

• In new § 422.503(b)(5)(ii), we 

specify that an entity seeking to offer an 

MA organization must not accept, or be 

either the parent organization owning a 

controlling interest of or subsidiary of, 

an entity that accepts, new enrollees 

under a section 1876 reasonable cost 

contract in any area in which it seeks to 

offer an MA plan. 

We also proposed minor technical 

corrections to the regulation text 

described in the May 2014 final rule to 

improve the flow of the regulation text. 

CMS received comments from two 

healthcare organizations and a trade 

association. 

Comment: The commenters requested 

that the provision not be finalized, 

stating that it was not necessary. They 

commented that should CMS finalize 

the proposal, that it not be applied to 

entities that have both a cost plan and 

dual eligible special needs plan (D– 

SNP) or EGWPs, as the likelihood of an 

organization moving enrollees from one 

of these plans to another was especially 

low. In addition, the commenters 

requested that we revise our current 

understanding of the service area 

affected by the provision to determine 

whether there is an overlap between a 

cost plan and an MA plan on a countyby-county basis. 

Response: The proposal in this rule is 

to restore, with minor technical and 

grammatical changes, language from a 

rule published in the Federal Register 

on May 23, 2014, that was not included 

in the Code of Federal Regulations. As 

such, we are proposing a technical 

change and the comments are outside 

the scope of this rule. Similar comments 

regarding the scope of the policy and 

whether it should apply to D–SNPs 

were submitted and addressed in that 

earlier rulemaking. For public 

comments and CMS responses to policy 

questions on the provision, as well as 

additional discussion of this provision, 

see the May 23, 2014 final rule (79 FR 

29850–29851; 29944; 29959). 

After considering the comments and 

for the reasons outlined in the proposed 

rule and our responses to comments, we 

are finalizing the amendment to 

§ 422.503(b)(5) as proposed with minor 

grammatical changes. 

F. Definition of ‘‘Institutionalized’’ 

(§ 422.2) 

Section 1859(b)(6)(B)(i) of the Act 

permitted the Secretary to define the 

term institutionalized for the purposes 

of establishing eligibility criteria for 

Medicare Advantage (MA) special needs 

plans for individuals who are 

institutionalized (I–SNPs). In addition, 

section 1851(e)(2)(D) of the Act 

permitted the Secretary to define the 

term for purposes of eligibility for a 

continuous open enrollment period to 

enroll or change enrollment in an MA 

plan, except for MA MSA plans. CMS 

codified the current definition of 

institutionalized at § 422.2 in the 

January 2005 final rule (70 FR 4588) as 

an MA eligible individual who 

continuously resides or is expected to 

continuously reside for 90 days or 

longer in a long-term care (LTC) facility 

which is a skilled nursing facility (SNF) 

nursing facility (NF); SNF/NF; an 

intermediate care facility for individuals 

with intellectual disabilities (ICF/IID); 

or an inpatient psychiatric facility. This 

definition is used in the MA regulations 

(42 CFR part 422) to establish eligibility 

for I–SNPs and eligibility for continuous 

open enrollment. 

We proposed to revise the definition 

of institutionalized in § 422.2 to expand 

the list of facilities and to add a 

standard to use to identify additional 

facilities where an institutionalized 

individual may reside in order to 

provide necessary flexibility to the 

regulation. Under our proposal, an 

institutionalized individual would be an 

individual who continuously resides or 

is expected to continuously reside for 90 

days or longer in one of the following 

long-term care facility settings: 

(1) Skilled nursing facility (SNF) as 

defined in section 1819 of the Act 

(Medicare); 

(2) Nursing facility (NF) as defined in 

section 1919 of the Act (Medicaid); 

(3) Intermediate care facility for 

individuals with intellectual and 

developmental disabilities as defined in 

section 1905(d) of the Act; 

(4) Psychiatric hospital or unit as 

defined in section 1861(f) of the Act; 

(5) Rehabilitation hospital or unit as 

defined in section 1886(d)(1)(B) of the 

Act; 

(6) Long-term care hospital as defined 

in section 1886(d)(1)(B) of the Act; 

(7) Hospital which has an agreement 

under section 1883 of the Act (a swing 

bed hospital); and, 

(8) Subject to CMS approval, a facility 

that is not listed in paragraphs (1) 

through (7) but meets both of the 

following: (i) Furnishes similar longterm, healthcare services that are 

covered under Medicare Part A, 

Medicare Part B, or Medicaid; and (ii) 

whose residents have similar needs and 

healthcare status as residents of one or 

more facilities listed in paragraphs (1) 

through (7). 

We explained in the proposed rule 

our concern that the current definition 

is too limited in scope given the array 

of institution and facility types in place 

today. We noted how our current 

subregulatory guidance identifies 

additional facilities and that the 

proposed changes to the definition 

would align the regulatory text with 

existing operational practice and current 

guidance, clarify our policy for MA 

organizations, and promote the 

expansion of I–SNP offerings under the 

MA program. Our guidance (Chapter 

16b of the Medicare Managed Care 

Manual (MMCM) and the MA 

Enrollment and Disenrollment 


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83Chapter 16b of the MMCM can be found here: 

https://www.cms.gov/Regulations-and-Guidance/ 

Guidance/Manuals/Downloads/mc86c16b.pdf; and 

the MA Enrollment and Disenrollment Guidance 

document can be found here: https://www.cms.gov/ 

Medicare/Eligibility-and-Enrollment/MedicareMang

CareEligEnrol/Downloads/CY_2019_MA_

Enrollment_and_Disenrollment_Guidance.pdf. 

Guidance 83) taken together list the five 

types of institutions in the current 

definition and other institutions that are 

identified in some way in Titles XVIII 

or XIX of the Act in connection with the 

Medicare and Medicaid programs. We 

also explained the need for a standard 

that we could use to identify additional 

facility types, without having to go 

through future rulemaking, that we 

believed would be appropriate to use for 

defining when an individual is 

institutionalized. We explained how, 

under our proposal and using this new 

standard, CMS could permit an MA 

organization to offer an I–SNP to serve 

beneficiaries that continuously reside in 

facilities that meet this new standard 

but are not listed in the definition, 

provided the plan meets the remaining 

criteria for I–SNPs. We explained how 

our proposed new definition, as a 

whole, could lead to additional types of 

I–SNPs and provide more options to 

Medicare beneficiaries for special needs 

plans targeted to the needs of 

individuals who are institutionalized. 

In the proposed rule, we 

acknowledged that the proposed 

definition would not fully align with 

§ 423.772, which defines 

‘‘institutionalized individual’’ as a fullbenefit dual eligible individual who is 

an inpatient in a medical institution or 

nursing facility for which payment is 

made under Medicaid throughout a 

month, as defined under section 

1902(q)(1)(B) of the Act. We explained 

that we did not believe alignment was 

necessary because the definition in 

§ 423.772 serves a different purpose 

than the definition we proposed for 

§ 422.2 and that differences between the 

two definitions had been in place since 

2005, reflecting these different 

purposes. (85 FR 9145) 

Finally, we discussed why we did not 

propose to change the definition of 

‘‘institutionalized-equivalent’’ even 

though that term is also used to 

establish I–SNPs and eligibility for I– 

SNPs. 

We received the following comments 

related to our proposals, and our 

responses follow: 

Comment: A commenter stated that 

the proposed rule disqualifies Medicare 

Advantage enrollees with advanced 

cancer disease residing in a neoplastic 

disease care hospital by implementing a 

time requirement of 90 days, and that 

current subregulatory guidance in 

section 30.3 of Chapter 2 to the 

Managed Care Manual and regulations 

at 42 CFR 422.62(a)(4) do not require the 

90-day time requirement for an 

institutionalized stay. 

Response: As proposed and finalized, 

the revised definition of the term 

institutionalized aligns with current 

CMS guidance and expands the 

definition of institutionalized in § 422.2 

to reflect the evolution of institutions 

over time and the current landscape of 

institutional health care today. The 

current definition of institutionalized in 

§ 422.2 includes, and has included since 

the definition was adopted in 2005 (70 

FR 4596, 4714), the criterion that the 

MA eligible individual continuously 

resides or is expected to continuously 

reside for 90 days or longer in a longterm care (LTC) facility. Our guidance in 

Chapter 2 of the Medicare Managed Care 

Manual, regarding enrollment and 

disenrollment, might not specifically 

address the requirement in the 

definition in § 422.2 that an individual 

reside or be expected to reside in a long 

term care facility of the type listed but 

that does not change the regulation. 

Because the definition includes 

individuals who are expected to reside 

in facility for a 90-day or longer 

continuous period, enrollment into an 

I–SNP may precede the 90-day point 

based on an appropriate assessment that 

the regulatory standards are met, as 

CMS explained in the preamble to the 

2005 final rule. (70 FR 4596). The new 

definition of institutionalized maintains 

this criterion and identifies seven 

specific types of long-term care facilities 

rather than the original five institution 

types listed in the definition. 

In addition, the definition in the final 

rule specifies that CMS may approve 

additional facilities that are not listed 

previously, but: (i) Furnish similar longterm, healthcare services that are 

covered under Medicare Part A or Part 

B or Medicaid; and (ii) whose residents 

have similar needs and healthcare status 

as residents of one or more facilities 

previously listed. In implementing this 

final rule, CMS will establish a review 

process to determine whether a 

particular different institution type 

meets these standards for designation 

under this definition and therefore 

permit an MA organization to offer an 

I–SNP to serve beneficiaries that 

continuously reside in (or are expected 

to continuously reside for 90 days or 

longer in) such designated facilities, 

provided the plan meets the remaining 

qualifying criteria for I–SNPs. This new 

authority to identify non-listed facilities 

for purposes of determining if an 

individual is institutionalized is 

applicable for the contract and coverage 

year beginning January 1, 2022 and we 

intend to review requests from MA 

organizations and others to meet that 

timeframe for identifying facilities that 

meet this standard. In addition, 

individuals residing in institutions that 

qualify under this part of the definition 

will also be eligible for the continuous 

open enrollment under § 422.62(a)(4). 

Comment: Another comment stated 

that the proposed rule would expand 

use of the definition by making it also 

applicable to the open enrollment 

period for institutionalized individuals. 

They note that this would have the 

effect of expanding a 90-day length of 

stay requirement to individuals for 

purposes of their qualification for the 

open enrollment period for 

institutionalized individuals (OEPI). 

Response: The existing requirements 

establishing qualifications for the open 

enrollment period for institutionalized 

individuals (OEPI) are established in 42 

CFR 422.62(a)(4), which provides that 

an individual who is eligible to elect an 

MA plan and who is institutionalized, 

as defined in § 422.2, is not limited 

(except with regard to MA MSA plans) 

in the number of elections or changes he 

or she may make. The use of the 

definition in § 422.2 to identify 

individuals who are eligible for this 

OEPI was adopted in a revision of 

§ 422.62(a)(4) in the April 2018 final 

rule (83 FR 16616 through 16618, 

16723). This final rule does not amend 

§ 422.62(a)(4), so the revised definition 

of institutionalized at § 422.2 will apply 

to identify who is eligible for the OEPI. 

The revised definition expands the list 

of qualifying institutions and provides 

an opportunity for similar institutions to 

qualify. We disagree with the 

commenter, however, that the definition 

of institutionalized, as finalized under 

this rule, changes the previous 

requirement that an MA eligible 

individual must continuously reside or 

is expected to continuously reside for 90 

days or longer in a long-term care (LTC) 

facility to meet the definition or to be 

eligible for the OEPI. Because the 

definition includes individuals who are 

expected to reside in facility for a 90 

day or longer continuous period, 

enrollment into an I–SNP may precede 

the 90 day point based on an 

appropriate assessment. 

Comment: Another commenter 

supported the proposed rule but had 

concerns that the change may hinder 

state Medicaid agency efforts to 

integrate Medicare and Medicaid 

programs on behalf of dual eligible 

beneficiaries through FIDE SNPs. First, 

the commenter believes that expanding 

the list of facilities and adding a 


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standard to use to identify additional 

facilities where an institutionalized 

individual may reside could result in a 

managed care plan’s ability to offer I– 

SNPs that do not meet the requirements 

to be D–SNPs to a largely dual eligible 

beneficiary population, and thus, the 

MA plan would be able operate outside 

of the State Medicaid Agency Contract 

(SMAC) requirement in section 1859 of 

the Act (added by the MIPPA). The 

commenter noted that the change in the 

definition of institutionalized creates 

concerns similar to the recent growth of 

D–SNP lookalike MA plans that CMS 

has sought to regulate. Second, the 

commenter stated that definitional 

change of institutionalized could 

potentially confuse dual eligible 

beneficiaries when selecting the best 

SNP for the beneficiary’s specific needs. 

The commenter advised CMS and state 

Medicaid agencies to coordinate 

implementation if CMS adopted the 

proposed changes. 

Response: We thank the commenter 

for their remarks, but do not share the 

same concerns that aligning the 

definition of institutionalized in § 422.2 

with current CMS guidance and adding 

a standard to recognize facilities that are 

not listed in the definition, but serve the 

same function for individuals with 

similar needs, would adversely impact 

integration of Medicare and Medicaid 

services for dually eligible beneficiaries. 

First, with regard to the specifically 

listed facilities in the definition, this 

final rule is consolidating current CMS 

guidance regarding I–SNP and OEPI 

enrollment policies and is not a 

significant break from them. The final 

rule will also provide additional 

flexibility to account for changes in the 

types of institutions that could 

potentially be used for I–SNPs that are 

not covered by the current definition of 

institutionalized. As we stated in the 

proposed rule, we are creating criteria 

that would accommodate changes in 

forms of institutional care within 

American healthcare without 

fundamentally changing or conflicting 

with other regulatory and statutory 

provisions surrounding I–SNPs. Under 

the finalized rule, the definition of 

institutionalized could include, subject 

to CMS approval, an additional facility 

that is not listed previously but (i) 

furnishes similar long-term, healthcare 

services that are covered under 

Medicare Part A or Part B or Medicaid 

and (ii) whose residents have similar 

needs and healthcare status as residents 

of one or more facilities previously 

listed. Therefore, CMS could permit an 

MA organization to offer an I–SNP to 

serve beneficiaries that continuously 

reside in facilities that meet this new 

standard but are not listed in the 

definition, provided the plan meets the 

remaining criteria for I–SNPs. In 

addition, any I–SNP application 

containing newly authorized 

institutions will still need to meet the 

remaining review standards to gain 

approval. 

Second, we recognize that a portion of 

I–SNP enrollees are dually eligible for 

Medicare and Medicaid, and that is also 

true for many Medicare beneficiaries 

requiring a nursing level of care; 

however, this overlap of eligible 

populations is not complete. This 

change in the definition of 

institutionalized does not change the 

current requirements that establish the 

process for I–SNP application approval 

such as meeting the care management 

requirements for all SNPs, required by 

section 1859(f)(5) of the Act. Given that 

an MA organization would need to meet 

a separate set of standards, we believe 

there is limited incentive for an MA 

organization to establish an I–SNP as 

opposed to a D–SNP as a means to 

circumvent the requirement for a 

contract between a state and MA 

organization, which is limited to D– 

SNPs under section 1859(f)(3)(D) of the 

Act and § 422.107. Finally, while we 

appreciate that having several plan 

options available for a beneficiary 

requires the beneficiary to think through 

his or her needs carefully and compare 

those to the specific benefits and costs 

of each plan, we do not believe that 

permitting I–SNPs to enroll individuals 

who continuously reside in (or are 

expected to continuously reside) for 90 

days or longer in a facility that meets 

the new standard we are adopting 

creates unnecessary confusion or 

burden for beneficiaries. Having a 

number of plan choices will allow 

beneficiaries to choose among plans 

with potentially different plan 

networks, levels of out-of-pocket costs, 

and extra benefits like vision, hearing, 

and dental. We believe this ultimately 

increases the likelihood that 

beneficiaries will be able to find a 

satisfactory MA plan that fits their 

healthcare needs. 

Comment: Another commenter 

supported the proposal, but 

recommended a clarification that a 

‘‘facility that furnishes similar long term 

healthcare services that are covered 

under Part A or Part B or Medicaid 

. . . .’’ includes facilities/settings 

where the services may be furnished by 

external healthcare entities that are 

overseen by the facility. 

Response: We do not believe the 

proposed rule will prohibit services 

from being furnished by external 

healthcare entities as long as all other 

requirements are met by the I–SNP and 

contracted facility under the plan. 

Therefore, we are not making the 

recommended revision. 

After consideration of the comments 

and for the reasons outlined in the 

proposed rule and our responses to 

comments, we are finalizing the revised 

definition of institutionalized at § 422.2 

as proposed. In reviewing our proposal 

to amend the definition of 

institutionalized, we realized that the 

definition of ‘‘special needs individual’’ 

in § 422.2 refers to an individual who is 

institutionalized but not to an 

individual who is institutionalizedequivalent. In the final rule published in 

the Federal Register on January 12, 

2009 (74 FR 1495 through 1496), we 

first clarified that that I–SNPs can enroll 

individuals who are institutionalizedequivalent. In that rule, we noted that 

section 164 of MIPPA amended section 

1859(f) of the Act, allowing institutional 

SNPs to enroll a special needs 

individual who is living in the 

community but requires an institutional 

level of care (LOC) (that is, an 

‘‘institutional-equivalent individual’’). 

In connection with that statutory 

amendment, we added the definition for 

the term ‘‘institutionalized equivalent’’ 

to § 422.2 but failed to amend the 

definition of ‘‘special needs individual’’ 

to include individuals who meet the 

standard of being institutionalizedequivalent. In order to address this 

oversight, we are finalizing here a 

technical change in the definition of 

‘‘special needs individual’’ to add that 

an individual who is institutionalizedequivalent is also a special needs 

individual, which is consistent with 

that prior final rule and our current 

practice. 

G. Medicare Electronic Complaint Form 

(§§ 422.504 and 423.505) 

On April 15, 2011, CMS amended 

§§ 422.504 and 423.505 to add a new 

§§ 422.504(a)(15) and 423.505(b)(22) 

requiring MA and Part D plans to 

address and resolve complaints received 

through CMS’ complaint tracking 

system and to provide a direct link on 

their main web page to the Medicare.gov 

electronic complaint form. We are 

finalizing our proposal to modify 

§§ 422.504(a)(15) and 423.505(b)(22) by 

removing §§ 422.504(a)(15)(ii) and 

423.505(b)(22)(ii) and recodifying the 

substance (requiring plans to display a 

link to the electronic complaint form on 

the Medicare.gov internet website on 

the plan’s main web page) to subpart V, 

Communication requirements. Sections 

422.111(h)(2) and 423.128(d)(2) require 

MA and Part D plans to maintain a 


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84We cited § 405.840 in the proposed rule but 

provide the correct citations here. 

website. In section VI.H. of this final 

rule, we are adding new §§ 422.2265 

and 423.2265, which provide 

requirements for MA and Part D plan 

websites. Specifically, in §§ 422.2265(b) 

and 423.2265(b), we identify the 

required content for websites, including 

a link to the Medicare.gov electronic 

complaint form. We believe the 

requirement for a direct link is more 

appropriately addressed in CMS’ 

website requirements rather than in 

§§ 422.504(a)(15) and 423.505(b)(22). 

We are not making any substantive 

changes to §§ 422.504(a)(15) and 

423.505(b)(22) other than minor changes 

in the text to make it clear that plans 

must use the CMS complaint tracking 

system to address and resolve 

complaints received by CMS against the 

plan. In connection with removing 

§§ 422.504(a)(15)(ii) and 

423.505(b)(22)(ii), we are redesignating 

the substance of §§ 422.504(a)(15)(i) and 

423.505(b)(22)(i) as §§ 422.504(a)(15) 

and 423.505(b)(22). 

We received no comments on this 

proposal and are finalizing the proposed 

technical amendments to 

§§ 422.504(a)(15) and 423.505(b)(22) 

without modification for the reasons 

outlined in the proposed rule. 

H. General Requirements for Applicable 

Integrated Plans and Continuation of 

Benefits (§§ 422.629 and 422.632) 

We proposed technical changes to 

§ 422.629(k)(4)(ii) to correct four 

technical errors from the April 2019 

final rule. Paragraph (k)(4)(ii) references 

Medicare coverage criteria, however 

Medicaid coverage criteria are also 

applicable during the unified appeals 

process described in this section. 

Therefore, we proposed to add the 

phrase ‘‘and Medicaid’’ following 

‘‘knowledge of Medicare’’ in 

§ 422.629(k)(4)(ii). 

Also in paragraph (k)(4)(ii) of this 

section, there is an incorrect reference to 

the MA organization. We proposed to 

replace ‘‘MA organization’’ with the 

correct term, ‘‘applicable integrated 

plan’’. Also, we proposed to add the 

word ‘‘integrated’’ before ‘‘organization 

determination decision’’ to conform to 

the terminology used elsewhere in 

§ 422.629(k). Lastly, we proposed to 

remove the comma between the words 

‘‘expertise’’ and ‘‘in’’ in the regulation 

text to clarify that the required expertise 

is in the topics identified in the text. 

In § 422.632(b)(1), we proposed to 

change the citation from § 422.633(e) to 

(d). Section 422.632(b)(1) reflects the 

requirement that the enrollee file a 

request for an integrated appeal in a 

timely manner, with a cross reference to 

the regulation that sets the timeframe for 

such appeals. Paragraph (d) of § 422.633 

sets that timeframe while paragraph (e) 

addresses the requirements for 

expedited integrated reconsiderations. 

We therefore proposed to amend 

§ 422.632(b)(1) to use the correct crossreference. 

We received no comments on this 

proposal and are finalizing the proposed 

technical amendments to 

§§ 422.629(k)(4)(ii) and 422.632(b)(1) 

without modification for the reasons 

outlined in the proposed rule. 

I. Representatives in Part D Appeals 

(§§ 423.560, 423.566, 423.578, 423.2014, 

and 423.2036) 

The regulations for Medicare fee-forservice (Part A and Part B) claims and 

entitlement appeals at part 405, subpart 

I, reference two types of 

representatives—authorized and 

appointed. Section 405.902 defines an 

authorized representative as an 

individual authorized under state or 

other applicable law to act on behalf of 

a beneficiary or other party involved in 

an appeal, and separately defines an 

appointed representative as an 

individual appointed by a party to 

represent the party in a Medicare claim 

or claim appeal. Similarly, for appeals 

of Medicare Part C organization 

determinations, § 422.561 defines 

‘‘representative’’ as an individual 

appointed by an enrollee or other party, 

or authorized under state or other 

applicable law, to act on behalf of an 

enrollee or other party involved in the 

grievance or appeal. For appeals of 

Medicare Part D coverage 

determinations, however, § 423.560 

defines ‘‘appointed representative’’ as 

meaning either an individual appointed 

by an enrollee or authorized under state 

or other applicable law to act on behalf 

of the enrollee. 

For consistency in the use of these 

terms across Medicare programs, we 

proposed to replace the definition of 

‘‘appointed representative’’ in § 423.560 

with a definition of ‘‘representative.’’ 

We also proposed to replace references 

to appointed representatives in 

§§ 423.566(c)(2), 423.578(b)(4), 

423.2014(a)(1)(ii), and 423.2036(c) and 

(d) with references to representatives. 

We summarize the comment we 

received on this proposal and respond 

as follows. 

Comment: We received one comment 

in support of the proposal to replace the 

definition of ‘‘appointed representative’’ 

in § 423.560 with a definition of 

‘‘representative.’’ The commenter 

requested that sufficient time be built in 

for the implementation of this provision 

to allow affected enrollee 

communications documents to be 

modified to reflect this change. 

Response: We appreciate the 

commenter’s support for this proposal. 

Given that we are enhancing 

consistency in the use of the term 

‘‘representative’’ across the Medicare 

program and not substantively altering 

the concept of who may be a 

representative in the grievance and 

appeals processes, we believe the 

effective date of this rule affords plans 

ample opportunity to make any 

necessary changes to enrollee 

communications. 

After consideration of the comments 

and for the reasons outlined in the 

proposed rule and our responses to 

comments, we are finalizing, without 

modification, the proposed amendments 

to §§ 423.560, 423.566, 423.578, 

423.2014, and 423.2036 to clarify and 

streamline references to 

‘‘representatives’’ in the Part D appeal 

regulations. 

J. Copayments and Coinsurance in 

Amount in Controversy Calculations 

(§§ 422.600 and 423.2006) 

We proposed amendments to 

§§ 422.600 and 423.2006 to clarify how 

the amount in controversy (AIC) is 

calculated for appeals for MA plans, 

section 1876 cost plans, section 1833 

health care prepayment plans and Part 

D plans. The regulations applicable to 

cost plans and healthcare prepayment 

plans, §§ 417.600 and 417.840 

respectively, require those plans to also 

use the MA appeal regulations.84

We explained in the proposed rule the 

statutory background for using the same 

rules for calculating the AIC as used for 

the Medicare FFS program for MA 

appeals. The regulations at part 405, 

subpart I, specifically § 405.1006(d), 

provide the methodology for calculating 

the amount in controversy (AIC) in 

Medicare fee-for-service (Part A and Part 

B) claims and entitlement appeals. In 

general, and subject to the exceptions 

listed in §§ 405.1006(d)(2) through (6), 

§ 405.1006(d)(1) provides that the AIC is 

computed as the amount that the 

provider or supplier bills (‘‘the actual 

amount charged the individual’’) for the 

items and services in the disputed 

claim, reduced by any Medicare 

payments already made or awarded for 

the items or services, and further 

reduced by ‘‘any deductible and/or 

coinsurance amounts that may be 

collected for the items or services.’’ 

For Medicare Part C appeals under 

part 422, subpart M, § 422.600(b) 

provides that the AIC is computed in 


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85For appeals in which the amount of payment 

is an issue before the ALJ or attorney adjudicator, 

§ 405.1038(c) further provides that the written or 

oral statement must agree to the amount of payment 

the parties believe should be made. 

accordance with the part 405 rules 

(concerning appeals of initial 

determinations under original (fee-forservice) Medicare). However, we stated 

in the proposed rule that while original 

Medicare uses deductibles and 

coinsurance (where the beneficiary pays 

a percentage of the cost for an item or 

service) as forms of cost sharing, MA 

plans may also use copayments (where 

the enrollee pays a flat fee for an item 

or service) as a form of cost sharing. We 

stated in the proposed rule that because 

§ 405.1006(d)(1) provides that the AIC 

excludes ‘‘any deductibles and/or 

coinsurance amounts that may be 

collected for the items or services,’’ 

questions have arisen regarding whether 

it is also appropriate to exclude any 

copayment amounts that may be 

collected for the items or services when 

applying the part 405 rules to appeals of 

Part C organization determinations 

made under part 422, subpart M. To 

resolve ambiguity on the proper 

calculation of the AIC and to help 

ensure that the AIC in Part C appeals is 

reflective of the actual amount at issue 

for the enrollee, we proposed to revise 

§ 422.600(b) to clarify that the AIC, 

which can include any combination of 

Part A and Part B services, is computed 

in accordance with part 405, and that 

any references to coinsurance in the part 

405 regulations, for purposes of 

computing the AIC under § 422.600, 

should be read to include both 

coinsurance and copayment amounts. 

We also proposed a revision to the 

regulations for appeals of Part D plan 

sponsor coverage determinations and atrisk determinations made under part 

423, subpart M. The AIC for these 

appeals is addressed in § 423.2006, 

which does not reference cost-sharing 

amounts. To clarify the AIC calculation 

for Part D appeals and help ensure that 

the AIC in Part D appeals is reflective 

of the actual amount at issue for the 

enrollee, we proposed to redesignate 

paragraphs § 423.2006(c)(1) and (2) to 

(2) and (3), and to amend (c)(1) to 

provide general AIC calculation 

provisions for Part D appeals, specifying 

that the AIC calculation would be 

reduced by any cost-sharing amounts, 

including deductible, coinsurance, or 

copayment amounts, that may be 

collected from the enrollee for the Part 

D drug(s). 

We received no comments on these 

proposals and are finalizing 

amendments to §§ 422.600 and 423.2006 

without modification to clarify 

application of the AIC rules to Part C 

and Part D appeals, for the reasons 

outlined in the proposed rule. 

K. Stipulated Decisions in Part C 

(§ 422.562) 

The regulations for Medicare fee-forservice (FFS) (Part A and Part B) claims 

and entitlement appeals at part 405, 

subpart I provide for stipulated 

decisions at § 405.1038(c). This 

provision permits Office of Medicare 

Hearings and Appeals (OMHA) 

adjudicators to issue abbreviated, 

stipulated decisions if CMS or one of its 

contractors submits a written statement 

or makes an oral statement at a hearing 

indicating the item or service should be 

covered or payment may be made.85 In 

this situation, an ALJ or attorney 

adjudicator may issue a stipulated 

decision finding in favor of the 

appellant or other liable parties on the 

basis of the written or oral statement 

and without making findings of fact, 

conclusions of law, or further 

explaining the reasons for the decision. 

The MA appeal regulations at 

§ 422.562(d) provide that the FFS 

appeals procedures in part 405, subpart 

I apply to appeals of Part C organization 

determinations to the extent they are 

appropriate and identifies specific part 

405 regulations that are not appropriate 

to apply to MA appeals. We explained 

in the proposed rule that because MA 

organizations are not generally included 

within the definition of ‘‘contractors’’ in 

§ 405.902, it was not readily apparent 

that the rules for stipulated decisions at 

§ 405.1038(c) apply to MA appeals. For 

consistency with the Part D regulations 

(which allow stipulations to be made by 

Part D plan sponsors under 

§ 423.2038(c)), and to afford OMHA 

adjudicators the same flexibilities in 

Part C cases where the MA organization 

that issued the organization 

determination and plan reconsideration 

no longer disputes that an item or 

service should be covered or that 

payment should be made, we proposed 

to revise § 422.562 by adding new 

paragraph (d)(3) to clarify that, for the 

sole purpose of applying the regulations 

at § 405.1038(c) to Part C appeals under 

part 422, subpart M, an MA organization 

is included in the § 405.902 definition 

of ‘‘contractors’’ as that definition 

relates to stipulated decisions issued by 

ALJs and attorney adjudicators. As we 

stated in the proposed rule, we believe 

this revision will permit OMHA 

adjudicators to more efficiently issue 

decisions where there is no longer any 

material issue in dispute, which would 

ultimately benefit MA enrollees because 

these decisions could potentially be 

issued, and effectuated by the MA 

organization, sooner. 

We received no comments on this 

proposal and therefore are finalizing the 

proposed changes to § 422.562 without 

modification for the reasons provided in 

the proposed rule. 

L. Beneficiaries With Sickle Cell Disease 

(SCD) (§ 423.100) 

Section 1860D–4(c)(5)(C)(ii) of the Act 

contains exemptions from DMPs for 

certain beneficiaries, and provides the 

Secretary with the authority to elect to 

treat other beneficiaries as an exempted 

individual. As currently codified at 

§ 423.100, exempted beneficiaries 

include those receiving hospice or endof-life care, residents of a long-term care 

facility, or those being treated for active 

cancer-related pain. 

Consistent with the statutory 

authority and current clinical literature 

detailed in the preamble of the proposed 

rule, CMS proposed to add beneficiaries 

with SCD to the categories of exempted 

beneficiaries in § 423.100. 

Comment: CMS received a number of 

comments on this proposal, which were 

unanimously supportive of adding 

beneficiaries with SCD to the list of 

individuals exempted from DMPs. 

Response: CMS thanks the 

commenters for their support. 

Comment: Several commenters 

suggested that individuals with other 

disease states also should be exempt 

from DMPs, including: Chronic pain in 

cancer survivors, any chronic pain, 

complex regional pain syndrome, 

fibromyalgia, rare chronic pain diseases, 

Ehlers Danlos syndrome, degenerative 

disc disease, osteoarthritis, rheumatoid 

arthritis, ankylosing spondylitis, 

common variable immunodeficiency, 

and non-pain syndromes for which 

opioids are utilized, such as dyskinesias 

and autoimmune conditions affecting 

the excretory system. 

Response: CMS appreciates these 

suggestions but disagrees that additional 

exemptions from DMPs are warranted at 

this time. In the April 2018 final rule 

establishing DMPs (83 FR 16454), CMS 

stated that if exemptions are crafted too 

broadly or are too numerous, they 

would risk undermining the purpose of 

DMPs, which serve as a patient safety 

tool for beneficiaries who use opioids. 

CMS believes it is appropriate to 

narrowly tailor exemptions, distinguish 

between different clinical scenarios, and 

account for differences in coordinating 

care in distinct patient populations. The 

clinical presentation of SCD is such that 

individuals with this condition 

regularly require access to opioid pain 

medications when experiencing acute 


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Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 6051 

86 James, CV and Wilson-Frederick, SM. The 

Invisible Crisis: Understanding Pain Management in 

Medicare Beneficiaries with Sickle Cell Disease. 

CMS Office of Minority Health Data Highlight, No. 

12. Baltimore, MD. 2018. Available from: https://

www.cms.gov/About-CMS/Agency-Information/ 

OMH/Downloads/CMS-OMH-September2018- 

Sickle-Cell-Data-Highlight.pdf. 

87https://www.cms.gov/Medicare/PrescriptionDrug-Coverage/PrescriptionDrugCovContra/ 

Downloads/2019-Part-D-Drug-ManagementProgram-Policy-Guidance-Memo-November-20- 

2018-.pdf. 

crises in addition to treatment for 

chronic pain and are more likely to have 

additional prescribers due to frequent 

visits to emergency rooms.86 These 

factors lead to beneficiaries with SCD 

being identified as PARBs by OMS 

criteria while case management, care 

coordination, and DMP coverage 

limitations are less practicable for them. 

Thus, while CMS appreciates 

commenters’ feedback on additional 

disease states to be considered for 

exemption from DMPs, at this time CMS 

does not have sufficient data to 

demonstrate that the clinical 

presentation and factors affecting care 

coordination for the other disease states 

mentioned in comments make DMP 

activities of similarly limited value. 

However, CMS will continue to evaluate 

OMS response data, other available data 

sources, and medical literature for 

consideration in future policy 

development. In addition, CMS 

monitors DMPs to ensure they are 

functioning in the positive ways CMS 

anticipates will support appropriate 

pain management. 

Comment: A commenter stated that 

disease-specific exemptions are 

discriminatory against beneficiaries 

with other diseases that involve pain 

and may require opioid therapy, such as 

inherited autoimmune disorders like 

ankylosing spondylitis and rheumatoid 

arthritis and generalized osteoarthritis. 

Response: CMS disagrees that the 

sickle cell disease exemption we 

proposed is discriminatory. As 

background, section 1860D–4(c)(5)(C)(ii) 

of the Act defines an exempted 

individual as one who (I) receives 

hospice care, (II) is a resident of a longterm care facility, of a facility described 

in section 1905(d), or of another facility 

for which frequently abused drugs are 

dispensed for residents through a 

contract with a single pharmacy, or (III) 

the Secretary elects to treat as an 

exempted individual. While the first 

two exemptions are required under 

CARA, CMS previously exercised the 

authority in section 1860D– 

4(c)(5)(C)(ii)(III) of the Act to establish 

the exemption for a beneficiary who is 

being treated for active cancer-related 

pain and is exercising that authority in 

this rule to exempt beneficiaries with 

SCD. These discretionary exemptions 

are not discriminatory toward 

beneficiaries with other diseases that 

may require opioid therapy because 

inclusion in a DMP is not a punitive 

step. Inclusion means that a 

beneficiary’s opioid use will be 

reviewed during case management for 

medical necessity and safety, and DMPs 

do not dictate the amount or length of 

opioid use for a beneficiary that is 

deemed medically necessary. 

Additionally, CMS adopts discretionary 

exemptions as part of our ongoing 

efforts to minimize identification of 

‘‘false positives,’’ that is, beneficiaries 

are exempted who may meet OMS 

criteria but are unlikely to need case 

management for their safety and 

medical necessity review. 

Comment: A few commenters 

requested additional flexibilities to 

include SCD patients in DMPs if case 

management suggested intervention 

would benefit them or if they were 

previously identified as an ARB and a 

coverage limitation was applied. 

Response: Plan sponsors are not 

permitted to include exempted 

individuals in their DMPs. Based on the 

statutory language at section 1860D– 

4(c)(5)(C) of the Act, current CMS 

guidance 87 states that: (1) Exempted 

beneficiaries cannot be placed in a Part 

D sponsor’s DMP, (2) a sponsor must 

remove an exempted beneficiary from a 

DMP as soon as it reliably learns that 

the beneficiary is exempt, whether that 

be via the beneficiary, the facility, a 

pharmacy, a prescriber, or an internal or 

external report, and (3) a beneficiary’s 

identification as an ARB terminates as 

soon as a sponsor discovers that the 

beneficiary is exempted. Other than 

adding individuals with SCD to the 

existing exemptions starting January 1, 

2022, this final rule does not change 

existing policy with respect to exempted 

individuals. 

Comment: A few commenters 

requested that CMS update OMS 

technical elements (for example, 

response codes) consistent with the 

final provision. 

Response: CMS appreciates this 

comment and intends to update OMS 

response forms and technical guidance 

accordingly. 

After consideration of the comments 

received and for the reasons provided in 

the proposed rule and preceding 

responses to comments, CMS is 

finalizing the exemption for 

beneficiaries with SCD as proposed with 

one modification to clarify that this 

definition is applicable starting in plan 

year 2022 instead of plan year 2021. 

M. Drug Management Programs (DMPs): 

Additional Requirements (§§ 423.100 

and 423.153) 

In order to improve the clarity of the 

DMP regulations, CMS proposed a 

number of technical wording and 

reference changes. CMS received no 

comments on these proposed revisions 

and are finalizing them without 

modification for the reasons given in the 

proposed rule. In response to a 

comment received on the provision to 

include beneficiaries with a history of 

opioid-related overdose in DMPs in 

section III.B., CMS is making an 

additional technical change to add 

‘‘who is not an exempted beneficiary’’ to 

the PARB definition at § 423.100. This 

change makes the definitions for PARB 

and ARB consistent and codifies 

existing guidance that once a PARB is 

determined to be an exempt beneficiary, 

they are no longer to be included in 

DMPs. CMS also noticed a grammatical 

error at § 423.153(f)(15)(ii)(D). In order 

to improve the clarity of the statement 

at this citation, CMS is changing the two 

occurrences of ‘‘no later than 7 days of 

the date’’ to ‘‘no later than 7 days from 

the date’’ in this statement. 

VIII. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995 (PRA) (44 U.S.C. 3501 et seq.), 

we are required to provide 60-day notice 

in the Federal Register and solicit 

public comment before a ‘‘collection of 

information,’’ as defined under 5 CFR 

1320.3(c) of the PRA’s implementing 

regulations, is submitted to the Office of 

Management and Budget (OMB) for 

review and approval. In order to fairly 

evaluate whether an information 

collection requirement should be 

approved by OMB, section 3506(c)(2)(A) 

of the PRA requires that we solicit 

comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

Our February 2020 proposed rule 

solicited public comment on our 

proposed information collection 

requirements, burden, and assumptions. 

Summaries of the public comments on 

the proposed information collection 

requirements, burden, and assumptions 

for the policies being implemented in 

this final rule are included in this 


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section with our responses under: (1) 

ICRs Regarding Information on the Safe 

Disposal of Prescription Drugs 

(§ 422.111), (2) ICRs Regarding 

Eligibility for Medication Therapy 

Management Programs (MTMPs) 

(§ 423.153), (3) ICRs Regarding 

Beneficiaries’ Education on Opioid 

Risks and Alternative Treatments 

(§ 423.128), (3) ICRs Regarding 

Establishing Pharmacy Performance 

Measure Reporting Requirements 

(§ 423.514), and (4) ICRs Regarding 

PACE. 

We did not receive PRA-related 

comments pertaining to: (1) ICRs 

Regarding Improvements to Care 

Management Requirements for Special 

Needs Plans (SNPs) (§ 422.101), (2) ICRs 

Regarding Mandatory Drug Management 

Programs (DMPs) (§ 423.153), (3) ICRs 

Regarding Beneficiaries with History of 

Opioid-Related Overdose Included in 

Drug Management Programs (DMPs) 

(§ 423.153), (4) ICRs Regarding 

Information on the Safe Disposal of 

Prescription Drugs (§ 422.111), (5) ICRs 

Regarding Suspension of Pharmacy 

Payments Pending Investigations of 

Credible Allegations of Fraud and 

Program Integrity Transparency 

Measures (§§ 405.370, 422.500, 422.503, 

423.4, 423.504, and 455.2), (6) ICRs 

Regarding Beneficiary Real Time Benefit 

Tool (RTBT) (§ 423.128), and (7) ICRs 

Regarding Stipulated Decisions in Part C 

(§ 422.562). 

The following provisions of the 

February 2020 proposed rule were 

finalized in our June 2020 final rule (85 

FR 33796) and are thereby excluded 

from this final rule: (1) ICRs Regarding 

Special Supplemental Benefits for the 

Chronically Ill (SSBCI) (§ 422.102), (2) 

ICRs Regarding Contracting Standards 

for Dual Eligible Special Needs Plan (D– 

SNP) Look-Alikes (§ 422.514), (3) ICRs 

Regarding Medicare Advantage (MA) 

Plan Options for End-Stage Renal 

Disease (ESRD) Beneficiaries (§§ 422.50, 

422.52, and 422.110), (4) ICRs Regarding 

Medical Loss Ratio (MLR) (§ 422.2440), 

and (5) ICRs Regarding Special Election 

Periods (SEPs) for Exceptional 

Conditions (§§ 422.62 and 423.38). 

A. Wage Data 

To derive mean costs, we are using 

data from the most current U.S. Bureau 

of Labor Statistics’ (BLS’s) National 

Occupational Employment and Wage 

Estimates for all salary estimates (http:// 

www.bls.gov/oes/current/oes_nat.htm), 

which, at the time of publication of this 

rule, provides May 2019 wages. In this 

regard, Table H1 presents the mean 

hourly wage, the cost of fringe benefits 

and overhead (calculated at 100 percent 

of salary), and the adjusted hourly wage. 

TABLE H1—NATIONAL OCCUPATIONAL EMPLOYMENT AND WAGE ESTIMATES

Occupation title Occupation 

code 

Mean 

hourly 

wage 

($/hr) 

Fringe 

benefits 

and 

overhead 

($/hr) 

Adjusted 

hourly 

wage 

($/hr) 

Compliance Officer .......................................................................................... 13–1041 35.03 35.03 70.06 

Computer Programmers .................................................................................. 15–1251 44.53 44.53 89.06

Computer Systems Analysts ............................................................................ 15–1211 46.23 46.23 92.46 

Dietician ........................................................................................................... 29–1031 29.97 29.97 59.94 

General Operations Manager .......................................................................... 11–1021 59.15 59.15 118.30 

Health Technician, All Other ............................................................................ 29–9098 28.17 28.17 56.34 

Healthcare Social Workers .............................................................................. 21–1022 28.51 28.51 57.02 

Management Analyst ....................................................................................... 13–1111 45.94 45.94 91.88 

Occupational Therapist .................................................................................... 29–1122 41.45 41.45 82.90 

Office and Administrative Support ................................................................... 43–9199 18.41 18.41 36.82 

Medical and Health Services Managers (PACE Center Manager) ................. 11–9111 55.37 55.37 110.74 

Passenger Vehicle Driver ................................................................................ 53–3058 15.97 15.97 31.94 

Personal Care Aides ........................................................................................ 31–1120 12.71 12.71 25.42 

Pharmacist ....................................................................................................... 29–1051 60.34 60.34 120.68 

Physical Therapist ........................................................................................... 29–1123 43.35 43.35 86.70 

Physician .......................................................................................................... 29–1216 96.85 96.85 193.70 

Recreational Therapist ..................................................................................... 29–1125 24.58 24.58 49.16 

Registered Nurse ............................................................................................. 29–1141 37.24 37.24 74.48 

As indicated, we are adjusting our 

employee hourly wage estimates by a 

factor of 100 percent. This is necessarily 

a rough adjustment, both because fringe 

benefits and overhead costs vary 

significantly from employer to employer 

and because methods of estimating 

these costs vary widely from study to 

study. We believe that doubling the 

hourly wage to estimate total cost is a 

reasonably accurate estimation method. 

Revised Wage and Cost Estimates: 

While our proposed rule’s costs were 

based on BLS’s May 2018 wage 

estimates, this final rule uses BLS’s 

more recent May 2019 wage estimates. 

Changes to the wage estimates represent 

shifts in average wages of occupations 

between 2018 and 2019 and are 

presented in Table H2. The table also 

reflects occupation titles used in both 

the proposed rule and this final rule 

with corresponding changes in wages 

and changes in occupation codes. 

TABLE H2—COMPARISON OF PROPOSED AND FINAL RULE WAGE DATA

Occupation title 

CMS–4190–P: 

Occupation code 

(BLS: May 2018) 

CMS–4190–F2 

Occupation code 

(BLS: May 2019) 

CMS–4190–P: 

(BLS: May 

2018 ($/hr)) 

CMS–4190– 

F2: 

(BLS: May 

2019 ($/hr)) 

Difference 

($/hr) 

Compliance Officer .................................................. 13–1041 No change 69.72 70.06 +0.34 

Computer Programmers .......................................... 15–1131 15–1251 86.14 89.06 +2.92 

Computer Systems Analysts .................................... 15–1121 15–1211 90.02 92.46 +2.44 

Dietician ................................................................... 29–1031 No change 58.86 59.94 +1.08 


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TABLE H2—COMPARISON OF PROPOSED AND FINAL RULE WAGE DATA—Continued 

Occupation title 

CMS–4190–P: 

Occupation code 

(BLS: May 2018) 

CMS–4190–F2 

Occupation code 

(BLS: May 2019) 

CMS–4190–P: 

(BLS: May 

2018 ($/hr)) 

CMS–4190– 

F2: 

(BLS: May 

2019 ($/hr)) 

Difference 

($/hr) 

General Operations Manager .................................. 11–1021 No change 119.12 118.30 ¥0.82 

Healthcare Social Workers ...................................... 21–1022 No change 56.22 57.02 +0.80 

Management Analyst ............................................... 13–1111 No change 90.76 91.88 +1.12 

Occupational Therapist ............................................ 29–1122 No change 82.08 82.90 +0.82 

Office and Administrative Support ........................... 43–9199 No change 36.04 36.82 +0.78 

Medical and Health Services Managers (PACE 

Center Manager) .................................................. 11–9111 No change 109.36 110.74 +1.38 

Personal Care Aides ................................................ 31–1011 31–1120 24.36 25.42 +1.06 

Pharmacist ............................................................... 29–1051 No change 118.90 120.68 +1.78 

Physical Therapist .................................................... 29–1123 No change 85.46 86.70 +1.24 

Physician .................................................................. 29–1069 29–1216 196.04 193.70 ¥2.34 

Recreational Therapist ............................................. 29–1125 No change 48.68 49.16 +0.48 

Registered Nurse ..................................................... 29–1141 No change 72.60 74.48 +1.88 

B. Information Collection Requirements 

(ICRs) 

The following ICRs are listed in the 

order of appearance within the 

preamble (see sections II through VII) of 

this final rule. 

1. ICRs Regarding Improvements to Care 

Management Requirements for Special 

Needs Plans (SNPs) (§ 422.101) 

The following changes will be 

submitted to OMB for approval under 

control number 0938–1296 (CMS– 

10565). Subject to renewal, the control 

number is currently set to expire on 

June 30, 2022. It was last approved on 

June 30, 2019 and remains active. 

This rule amends § 422.101(f) to 

implement the new requirements 

legislated by the BBA of 2018 to section 

1859(f) of the Act for C–SNPs and to 

extend them to all SNP types. 

Specifically, we are adding the 

following new regulations to account for 

new requirements governing SNP 

enrollee care management and SNP 

MOC submissions. The new regulations 

impacting MA SNP MOCs consist of the 

following: 

• We are amending the end of 

§ 422.101(f)(1)(i) by adding the 

following language: ‘‘. . . and ensure 

that results from the initial and annual 

reassessment conducted for each 

individual enrolled in the plan are 

addressed in the individual’s 

individualized care plan as required 

under paragraph (f)(1)(ii) of this 

section.’’ To comply with this provision, 

MA SNPs will have to provide the 

necessary guidance to SNP plan staff 

and develop related internal processes 

for employees of the SNP that are 

responsible for incorporating this 

requirement into their MOC. 

• New § 422.101(f)(3)(ii)(A) through 

(C) will implement the requirement that: 

As part of the evaluation and approval 

of the SNP MOC, NCQA must evaluate 

whether goals were fulfilled from the 

previous MOC; plans must provide 

relevant information pertaining to the 

MOC’s goals as well as appropriate data 

pertaining to the fulfillment the 

previous MOC’s goals; plans submitting 

an initial MOC must provide relevant 

information pertaining to the MOC’s 

goals for review and approval; and if the 

SNP MOC did not fulfill the previous 

MOC’s goals, the plan must indicate in 

the MOC submission how it will 

achieve or revise the goals for the plan’s 

next MOC. Under this change, each 

plan’s MOC must provide relevant 

information pertaining to the MOC’s 

goals as well as appropriate data 

pertaining to the fulfillment the 

previous MOC’s goals. Note, all SNPs 

are currently required to identify and 

clearly define measurable goals and 

health outcomes as part of their MOC 

under MOC 4, Element B: Measurable 

Goals and Health Outcomes for the 

MOC. 

• Lastly, new § 422.101(f)(3)(iii) will 

implement the requirements that each 

SNP MOC submitted to CMS will be 

evaluated by NCQA based on a 

minimum benchmark (of 50 percent) for 

each of the existing four elements. 

At the time SNP applications are due, 

MA organizations wishing to offer a new 

SNP will submit a MOC with their SNP 

application in the Application module 

in HPMS for NCQA review and 

approval. MA organizations wishing to 

renew their current SNP will submit a 

MOC in the MOC module in HPMS for 

NCQA review and approval. Based on 

their MOC scores, I–SNPs and D–SNPs 

receive an approval for a period of 1, 2, 

or 3 years. C–SNPs must renew their 

MOCs annually per section 

1859(b)(6)(B)(iii) of the Act. For 

calendar year 2020, CMS received 273 

SNP MOCs during the annual 

submission process and received 11 offcycle submissions during the following 

time period. We believe these figures are 

representative of future SNP MOC 

submission totals going forward. 

The burden related to these new 

requirements for SNP MOCs reflect the 

time and effort needed to adhere to the 

new requirements under the 

amendments to § 422.101(f), and as 

listed in the bullets in this section, and 

collect the information as previously 

described, as well as all other MOC 

data, and report this information to 

CMS. To derive average costs, we 

selected the position of registered nurse 

because the SNP nurse usually develops 

and submits the MOC to CMS and 

typically interacts with the health plan 

quality registered nurse in matters 

related to the MOC after it is submitted 

to CMS. 

As is current practice, the MA 

organization/SNP will click on the 

Application or MOC module in HPMS 

and download the SNP MOC Matrix 

document. The SNP will complete the 

document, and then upload its MOC 

matrix document with the MOC 

narrative. The SNP MOC Matrix upload 

document outlines the CMS SNP MOC 

standards and elements that must be 

addressed in the MOC narrative. The 

document also serves as a table of 

contents for the MOC narrative. 

Training to use the MOC module will 

be minimal at 3 hours annually, and 

training materials and non-mandatory 

webinar sessions are provided by CMS 

at no cost to the SNPs except for the 

time (and cost) to participate. While the 

training is not mandatory, SNP 

personnel (we believe this is a SNP 

compliance officer at $70.06/hr) 

normally attend the full 3-hour session. 

In aggregate, we estimate an ongoing 

annual burden of 819 hours (273 SNPs 


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88CMS currently designates both opioids and 

benzodiazepines as ‘‘Frequently Abused Drugs’’ for 

purposes of DMPs. See ‘‘Part D Drug Management 

Program Policy Guidance’’, November 20, 2018, p. 

6; https://www.cms.gov/Medicare/PrescriptionDrug-Coverage/PrescriptionDrugCovContra/ 

Downloads/2019-Part-D-Drug-ManagementProgram-Policy-Guidance-Memo-November-20- 

2018-.pdf. 

* 3 hr) at a cost of $57,379 (819 hr * 

$70.06/hr). 

Using HPMS contract year 2020 

submission data, for annual submissions 

under 42 CFR 422.101(f)(3) we estimate 

that each year 273 SNPs will submit 

MOCs. Note, this calculation is based on 

estimates that include annual MOC 

submissions for C–SNPs and semiannual submissions for I–SNPs and D– 

SNPs. I–SNPs and D–SNPs submitting a 

MOC can receive MOC approval for one, 

two, or three year terms. For each SNP, 

we assume an additional 6 hours at 

$74.48/hr for a registered nurse. In 

aggregate, we estimate an ongoing 

annual burden of 1,638 hours (273 SNPs 

× 6 hr) at a cost of $121,998 (1,638 hr 

× $74.48/hr). 

For plans seeking to revise their MOC 

based on qualifying events during the 

off-cycle season, we estimate that 

approximately 11 SNPs (D–SNPs/I– 

SNPs) will submit off-cycle MOC 

changes based on historical submission 

rates. For each SNP submitting off-cycle 

MOC changes, we assume an additional 

4 hours at $74.48/hr for a registered 

nurse. In aggregate, we estimate an 

ongoing annual burden of 44 hours (11 

SNPs × 4 hr) at a cost of $3,277 (44 hr 

× $74.48/hr). 

Since § 422.101(f)(3)(iii) sets a 

minimum benchmark for each MOC 

element, we anticipate that there will be 

some impact to the number of MOC 

submissions that will not pass NCQA’s 

initial MOC review. Looking at data for 

contract year 2020, our element 

benchmark of 50 percent would have 

impacted 20 of the 273 MOCs 

submitted, or 7.3 percent. For contract 

year 2020, 7 plans required submitting 

their MOCs for revision based on the 

current scoring system and an 

additional 7 plans decided to withdraw 

their MOCs before the revision process 

for a total of 14 MOCs. The 14 SNPs 

must resubmit, taking 3 hours, or half 

the full 6-hour estimate. In aggregate, we 

estimate an added ongoing annual 

burden of 42 hours (14 SNPs * 3 hr) at 

a cost of $3,128 (42 hr * $74.48/hr). 

For the aforementioned MOC 

requirements under the amended 42 

CFR 422.101(f)(3), we estimate an added 

annual burden of 2,543 hours (819 hr for 

training to use the MOC module + 1,638 

hr for MOC submissions + 44 hr for 

MOC revisions + 42 hr for MOC 

resubmissions) at a cost of $185,782 

($57,379 + $121,998 + $3,277 + $3,128, 

respectively). 

Separate from the MOC process, 

newly added § 422.101(f)(1)(iv) will 

implement a new requirement that 

plans provide face-to-face encounters 

with consenting individuals enrolled in 

the plan not less frequently than on an 

annual basis. The new regulation 

requires an annual face-to-face visit, that 

is, in-person or by visual, real-time, 

interactive telehealth technology, to 

occur starting within the first 12 months 

of enrollment within the plan. CMS will 

consider a visit to or by employed and/ 

or contracted staff that perform clinical 

functions, such as direct enrollee care, 

as a qualifying encounter. Such 

activities may include, but are not 

limited to, annual wellness visits and/ 

or physicals, HRA completion, meeting 

with the interdisciplinary team (IDT), 

care plan review, health-related 

education, and care coordination 

activities. It is also the expectation that 

any concerns related to physical, 

mental/behavioral health, and overall 

health status, including functional 

status, are addressed and any 

appropriate referrals, follow-up, and 

care coordination activities are provided 

or scheduled as necessary. 

We believe that most, if not all, SNP 

enrollees will have a qualifying face-toface encounter under § 422.101(f)(1)(iv) 

through an initial or annual HRA, a 

qualifying encounter with an IDT 

member, or an annual wellness visit. We 

estimate that approximately 734 SNPs 

that have at least 11 members will need 

to track face-to-face encounters for their 

enrollees annually. For each SNP 

tracking face-to-face encounters, we 

assume 4 hours of work by SNP 

personnel, typically a registered nurse. 

In aggregate, we estimate 2,936 hours 

(734 SNPs × 4 hr) at a cost of $ 218,673 

(2,936 hr × $74.48/hr). 

Section 422.101(f)(1)(iii) will also 

require that MA organizations offering a 

SNP must provide each enrollee with an 

IDT in the management of care that 

includes a team of providers with 

demonstrated expertise, including 

training in an applicable specialty, in 

treating individuals similar to the 

targeted population of the plan. Plans 

must develop and implement this 

requirement into their MOC 

components to assure an effective 

management structure. We believe this 

requirement is consistent with currently 

approved information tracking practices 

for all existing SNPs, and thus, does not 

impose any new or revised requirements 

and/or burden beyond what is currently 

approved by OMB under the 

aforementioned control number. 

The remaining changes under 

§ 422.101(f)(2) and (3), will codify 

current guidance governing SNP MOC 

submission practices, which is captured 

under our active information collection 

request. 

We received no comments on our 

proposed burden estimates. 

Consequently, we are finalizing them 

without modification. 

2. ICRs Regarding Mandatory Drug 

Management Programs (DMPs) 

(§ 423.153) 

The following changes will be 

submitted to OMB for approval under 

control number 0938–0964 (CMS– 

10141). Subject to renewal, the control 

number is currently set to expire on 

November 30, 2021. 

As discussed in section III.A. of this 

final rule, we are codifying the 

requirement under section 2004 of the 

SUPPORT Act that Part D plan sponsors 

establish DMPs by 2022 at § 423.153(a). 

For context, in general, the required 

elements of a DMP are codified at 

§ 423.153(f). The provisions require Part 

D sponsors to conduct case management 

of PARBs identified by OMS through 

contact with their prescribers to 

determine if a beneficiary is at-risk for 

abuse or misuse of opioids and 

benzodiazepines.88 After case 

management is completed, if a plan 

sponsor intends to limit a beneficiary’s 

access to coverage of opioids and 

benzodiazepines, the sponsor must 

provide an initial written notice to the 

beneficiary. After the beneficiary has a 

30-day time period to respond, the plan 

sponsor sends a second notice to the 

beneficiary, if the sponsor determines 

the beneficiary is an at-risk beneficiary 

(ARB), that the sponsor is implementing 

a coverage limitation on opioids and/or 

benzodiazepines, or an alternative 

second notice if the plan sponsor 

determines that the beneficiary is not an 

ARB. Thus, every beneficiary who 

receives an initial notice receives a 

second or alternate second notice. 

In 2019, a CMS internal analysis 

found that a majority of Part D contracts 

(669 of 779, or 85.9 percent) voluntarily 

included a DMP. Our requirement that 

sponsors adopt DMPs would only affect 

the remaining minority of sponsors 

currently not offering such programs. 

There are 111 contracts (plan sponsors) 

run by 79 parent organizations that 

would be involved. Furthermore, we 

estimate that only 158 additional PARBs 

will be identified by these 111 contracts 

due to meeting the minimum OMS 

criteria. We estimate burden at the 

parent organization level because we 

believe that is a closer reflection of the 


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number of systems that will need to be 

updated versus the contract level. 

The estimated reporting burden to 

these sponsors has four aspects. Under 

§ 423.153(f), sponsors must: (1) Design a 

DMP; (2) conduct case management, 

which includes sending written 

information about PARBs to prescribers; 

(3) program and issue written notices to 

PARBs and ARBs; and (4) report data to 

CMS about the outcome of case 

management via OMS and about any 

coverage limitation information into 

MARx. 

For one-time initial development, we 

estimate it would take each parent 

organization without a DMP 80 hours 

for a team of four clinical and nonclinical staff to design its DMP. Thus the 

burden for one parent organization is 

320 hours (80 hr × 4 staff). Therefore, 

the aggregate burden for the 79 

remaining parent organizations to 

develop DMPs consistent with the 

requirements of § 423.153(f) is 25,280 

hours (79 parent organizations × 320 hr). 

With regard to costs, we estimate that 

development, as just indicated, will 

require a development team consisting 

of four staff, two pharmacists (working 

at $120.68/hr) and two general 

operation managers (working at 

$118.30/hr) per organization. Thus, the 

average hourly wage for the 

organization’s development team is 

$119.49/hr ($477.96/hr/4 staff). The 

rates for the development team are 

summarized in Table H3. Consequently, 

the aggregate cost to develop the DMPs 

is $3,020,707 ($119.49/hr * 25,280 hr) or 

$38,237 per parent organization 

($3,020,707/79 organizations). 

TABLE H3—LABOR RATES FOR THE DEVELOPMENT TEAM

Occupation Hourly wage 

($/hr) 

Number of 

staff 

Total wages 

($/hr) 

General operations manager ....................................................................................................... 118.30 2 236.60 

Pharmacist ................................................................................................................................... 120.68 2 241.36 

Total (for hourly wage and total wages) .............................................................................. * 119.49 4 477.96 

* Note: 119.49 is the average wage per hour (477.96/4) and equals total wages for four staff (477.96) divided by total staff (4). The 119.49 is a 

weighted average representing the hourly wage of the team; that is a team of four working on average at $119.49/hr. incur a total cost of 

$477.96. The reason an average is taken is because not all four members are working all the time. This number is important since it enters the 

summary table and is the only number that when multiplied by number of hours (4 staff * 1 hr) will give the correct total wage. Since this number 

is not a total, the ‘‘Totals’’ row header has been clarified to indicate that totals only apply ‘‘hourly wage’’ and ‘‘total wages’’. This is a standard 

practice. 

The 79 Part D parent organizations 

affected by this requirement also will 

have to upload beneficiary notices into 

their internal claims systems before they 

can issue them. We estimate that it will 

take each organization, on average, 5 

hours at $89.06/hr for a computer 

programmer to upload all of the notices 

into their claims systems (note, this is 

an estimate to upload all of the 

documents in total, not per document). 

In aggregate, we estimated a one-time 

burden of 395 hours (5 hr * 79 sponsors) 

at a cost of $35,179 (395 hr * $89.06/hr). 

Once a DMP is developed and in 

place, the primary operations for 

impacted sponsors will involve case 

management by the sponsor to assess 

those enrollees reported as PARBs by 

CMS’s OMS. The 111 contracts run by 

79 parent organizations that did not 

voluntarily establish a DMP are 

generally smaller plans that in some 

cases offered alternative means of 

managing comprehensive beneficiary 

care, such as through PACE. They enroll 

only 410,000 Part D beneficiaries (less 

than 1 percent of total Part D enrollment 

in 2019). Accordingly, based on internal 

analysis of the first 3 quarters (January– 

March, April–June, and July–September 

of 2019) of the OMS report data, we 

found that only 127 beneficiaries (about 

0.7 percent) who met the minimum 

OMS criteria were not reported thus far 

in 2019 by CMS to the sponsors, 

because the sponsors did not have a 

DMP. Using this estimate of 0.7 percent 

of beneficiaries extrapolated over the 

entire year, CMS can project that 

annually that about 158 beneficiaries 

would not be reported to their plan 

sponsors due to not having a DMP until 

DMPs become mandatory no later than 

January 1, 2022. 

Once required DMP policies are 

developed and operational, sponsors 

would have to case-manage their PARBs 

(as outlined in § 423.153(f)(2)). The case 

management requirement includes a 

requirement that sponsors send written 

information to prescribers about PARBs. 

The burden for sending this 

information, which may be 

accomplished by any of several means 

(such as mail or fax), is already included 

in the case management burden 

estimates provided earlier in this 

section and does not need to be 

separately accounted for. 

The case management team would 

consist of a pharmacist (such as initial 

review of medication profiles, 

utilization, etc.) working 2 hours at 

$120.68/hr; one health technician 

working 2 hours at $56.34/hr; and one 

physician working 1 hour at $193.70/hr 

to work directly with providers on 

discussing available options and 

determining the best course of action. 

The case management team would 

require 5 hours at a cost of $547.74 per 

PARB case managed ([2 hr × $120.68/hr] 

+ [2 hr * $56.34/hr] + [1 hr * $193.70/ 

hr]). Therefore, the case management 

team’s wage is $109.55/hr ($547.74/5 

hr). This is summarized in Table H4. In 

aggregate, we estimate an annual burden 

of 790 hours (5 hr × 158 beneficiaries at 

a cost of $86,545 per year (790 hr × 

$109.55/hr). 

TABLE H4—HOURLY WAGE OF CASE MANAGEMENT TEAM

Occupation Time 

(hours) 

Wages 

($/hr) 

Labor cost 

($) 

Health Technician ........................................................................................................................ 2 56.34 112.68 

Pharmacist ................................................................................................................................... 2 120.68 241.36 

Physician ...................................................................................................................................... 1 193.70 193.70 


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TABLE H4—HOURLY WAGE OF CASE MANAGEMENT TEAM—Continued 

Occupation Time 

(hours) 

Wages 

($/hr) 

Labor cost 

($) 

Totals (For hours and labor cost) ......................................................................................... 5 * 109.55 547.74 

* Note: 109.55 is the average wage per hour (547.74/5) and equals total wages for five staff (547.74) divided by total staff (5). The 109.55 is a 

weighted average representing the hourly wage of the team; that is a team of five working on average at $109.55/hr. incur a total cost of 

$547.74. The reason a weighted average is being used is because not all team members are working at each instant. This number is important 

since it enters the summary table and is the only number that when multiplied by number of hours (5 staff * 1 hr) will give the correct total wage. 

Since this number is not a total, the ‘‘Totals’’ row header has been clarified to indicate that totals only apply ‘‘hours’’ and ‘‘labor cost’’. This is a 

standard practice. 

Since currently 5 percent of PARBs 

receive an initial and second notice (or 

alternate second notice), we estimated 

that 8 beneficiaries (158 beneficiaries * 

0.05) would receive an initial notice and 

8 would receive a second notice (or 

alternate second notice). At most, 8 

sponsors would be responsible for 

sending the notices to these 8 

beneficiaries. CMS estimates it will take 

10 minutes (0.1667 hr) at $56.34/hr for 

a health technician to send two notices 

(each notice would require 5 minutes). 

In aggregate, CMS estimates an annual 

burden for sending notices to 

beneficiaries of 1.3336 hours (8 

beneficiaries × 0.1667 hr) at a cost of 

$75 (1.3336 hr × $56.34/hr). 

Under § 423.153(f)(15), as stated 

earlier, the plan sponsors newly 

impacted by a mandatory DMP policy 

will be required to report to CMS the 

outcome of case management via OMS 

and any associated coverage limitation 

information into MARx. CMS estimates 

that it will take sponsors on average 1 

minute (0.0167 hr) to report this 

information to OMS and MARx. In 

aggregate, we estimate an annual burden 

of 2.6386 hours (158 newly identified 

PARBs annually × 0.0167 hr) at a cost 

of $149 (2.6386 hr × $56.34/hr). 

Table H5 summarizes the burden 

associated with the mandatory DMP 

provision. 

TABLE H5—SUMMARY FOR MANDATORY DMPS

Regulatory citation Subject Number of 

respondents 

Number of 

responses 

Time per 

response 

(hr) 

Total 

time 

(hr) 

Labor 

cost 

($/hr) 

Total cost 

in 1st year 

($) 

Total cost 

in 

subsequent 

years 

($) 

§ 423.153 ................... Creating DMP ............................................. 79 79 320 25,280 119.49 3,020,707 0 

§ 423.153 ................... Upload Model Notices ................................ 79 79 5 395 89.06 35,179 0 

§ 423.153 ................... Conduct Case Management ....................... 79 158 5 790 109.55 86,545 86,545 

§ 423.153 ................... Send Model Notices ................................... 8 8 0.1667 1.3336 56.34 75 75 

§ 423.153 ................... Report to CMS ............................................ 79 158 0.0167 2.6386 56.34 149 149 

Total .................... ..................................................................... 79 482 varies 26,469 varies 3,142,655 86,769 

CMS received no comments on the 

proposed burden estimates and 

assumptions. In the proposed rule, CMS 

had estimated the cost associated with 

case management of PARBs by 

combining the wage for all of the case 

management team members into one 

unit of case management time with the 

associated wage being the total of wages 

for the entire case management team to 

carry out case management ($547.74). 

This was reflected as 1 hour of burden 

in the proposed rule. While this 

intermediate presentation did not 

ultimately affect the estimate of cost 

associated with case management, CMS 

realized that this was not an accurate 

representation of the true time 

associated with case management. Case 

management of each of the 158 PARBs 

requires 5 hours of work (2 from a 

pharmacist, 2 from a health technician 

and 1 from a physician). Therefore, CMS 

is revising the burden calculations for 

case management to reflect 5 hours of 

burden and calculated the case 

management team’s hourly wage, 

prorated according to the number of 

hours contributed by each team member 

($109.55). CMS is revising the number 

of hours from 158 to 790 (158 PARBs × 

5 hr) as this is more accurate. It should 

be noted, however, that the total cost 

estimates associated with case 

management does not change between 

the proposed rule and this final rule. 

CMS is finalizing everything else 

without modification. 

3. ICRs Regarding Beneficiaries With 

History of Opioid-Related Overdose 

Included in Drug Management Programs 

(DMPs) (§ 423.153) 

The following changes will be 

submitted to OMB for approval under 

control number 0938–0964 (CMS– 

10141). Subject to renewal, the control 

number is currently set to expire on 

November 30, 2021. 

In this rule, CMS is finalizing the 

proposed changes to § 423.153(f)(16) to 

identify and report beneficiaries with a 

history of opioid-related overdose 

through OMS to Part D plan sponsors as 

required by section 2006 of the 

SUPPORT Act. As a result of this 

requirement, additional beneficiaries 

will be reported by OMS as PARBs 

meeting CMS’ proposed criteria for 

having a history of opioid-related 

overdose. In producing the estimates 

below, the burden per affected enrollee 

for case management (5 hr/response), 

notification of enrollees (10 min/ 

response), and report to CMS (1 min/ 

response) are identical with those 

estimated in section VIII.B.2. (ICRs 

Regarding Mandatory Drug Management 

Programs (DMPs) (§ 423.153)) of this 

final rule. That is, the overall burden 

associated with management of each 

PARB is the same whether the PARB is 

identified based on the current clinical 

guidelines or the updated clinical 

guidelines which include the criteria for 

identifying PARBs with a history of 

opioid-related overdose. The updated 

clinical guideline criteria to incorporate 

history of opioid-related overdose 

increase the total number of 

beneficiaries identified and included in 

DMPs. The estimates that follow outline 

the burden associated with these 

additional PARBs. 


khammond on DSKJM1Z7X2PROD with RULES9
Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 6057 

89Notice documents available at https://

www.cms.gov/Medicare/Prescription-DrugCoverage/PrescriptionDrugCovContra/Downloads/ 

Part-D-Drug-Management-Program-Notices-.zip. 

90Bohnert KM, Ilgen MA, Louzon S, McCarthy JF, 

Katz IR. Substance use disorders and the risk of 

suicide mortality among men and women in the US 

Veterans Health Administration. Addiction. 2017 

Jul; 11/2(7):1193–1201. doi: 10.1111/add.13774. 

Model beneficiary notices 89 provided 

by CMS, as well as the required written 

information sent by sponsors to 

prescribers of PARBs as part of the case 

management process, will need to be 

revised to incorporate language specific 

to a PARB having a history of opioidrelated overdose. For the model 

beneficiary notices, this includes 

updates to the sections defining DMPs 

and possible justifications for applying 

a coverage limitation. Additionally, 

sponsors may need to update their DMP 

prescriber written communications to 

include history of opioid-related 

overdose as a possible reason for a 

beneficiary meeting the OMS criteria. 

The changes needed to align the model 

beneficiary notices and the written 

communication are expected to be 

minimal. CMS estimates it will take no 

more than 1 hour at $56.34/hr for a 

health technician to draft and 

implement such changes. In aggregate, 

CMS estimates a one-time burden of 288 

hours (288 parent organizations × 1 hr/ 

response) at a cost of $16,226 (288 hr × 

$56.34/hr). 

Based on July 2017 through June 2018 

opioid-related overdose data, CMS’s 

internal analysis estimates that about 

18,268 enrollees meet the criteria of an 

opioid-related overdose and would be 

PARBs. All of these PARBs will require 

case management. Using the wage and 

cost data outlined for the case 

management team in Table H4, in 

aggregate, CMS estimates an annual 

burden of 91,340 hours (5 hr × 18,268 

PARBs) at a cost of $10,006,297 (91,340 

hr × $109.55/hr). 

In order to estimate the number of 

beneficiary notices needed to be sent, 

CMS compared two populations: (1) 

Part D beneficiaries projected to be 

potentially at-risk, by meeting the OMS 

criteria (which CMS estimates as 22,516 

PARBs, based on internal data); and (2) 

beneficiaries with a history of opioidrelated overdose (which CMS estimates 

as 18,268 PARBs, based on internal 

data). CMS believes the population of 

beneficiaries with a history of opioidrelated overdose would have a much 

higher rate of coverage limitations 

imposed by sponsors, due to the history 

of overdose being the risk factor most 

predictive for another overdose or 

suicide-related event.90 CMS estimates 

that about 47.5 percent or 8,677 

beneficiaries (18,268 beneficiaries × 

0.475) of this population will receive an 

initial notice from the plan sponsor, 

informing the beneficiary of the 

sponsor’s intention to limit their access 

to coverage of opioids and/or 

benzodiazepines. Thus, the beneficiary 

will also receive a second or alternate 

second notice informing them whether 

the limitation was in fact implemented. 

CMS estimates it will take 10 minutes 

(0.1667 hr) at $56.34/hr for a health 

technician to send two notices (each 

notice would require 5 minutes). In 

aggregate, CMS estimates an annual 

burden of 1,446 hours (8,677 enrollees 

× 0.1667 hr) at a cost of $81,468 (1,446 

hr × $56.34/hr). Evaluation of the use of 

point-of-sale (POS) claim edits under 

OMS since 2013 does not demonstrate 

a steady increase or decrease in edits. 

The OMS and POS edit reporting 

systems commenced in 2013 and 2014, 

and then between 2015 and 2018 the 

number of beneficiaries with opioid 

POS claim edits only ranged from 1,152 

to 1,351 annually. As such, given that 

the vast majority of Part D enrollees are 

in a plan already offering a DMP, 

including the majority of Part D 

enrollees with a history of opioidrelated overdose, CMS does not 

anticipate major shifts in the baseline 

average number of annual POS edits 

(and related initial notices). This 

stability in the annual number of ARBs 

and related notices to date appears 

largely unaffected by the baseline 

population of identified PARBs. 

However, CMS recognizes that this 

change is projected to approximately 

double the number of beneficiaries CMS 

identifies to sponsors as PARBs. 

With respect to the reporting of DMP 

data to CMS for PARBs identified based 

on history of opioid-related overdose, 

CMS estimates it will take sponsors (on 

average) 1 minute (0.0167 hr) at $56.34/ 

hr for a health technician to report in 

OMS and/or MARx the outcome of case 

management and any applicable 

coverage limitations. In aggregate, CMS 

estimates an annual burden of 305 hours 

(18,268 PARBs × 0.0167 hr) at a cost of 

$17,184 (305 hr × $56.34/hr). 

Table H6 summarizes the burden 

associated with the inclusion of PARBs 

with a history of opioid-related 

overdose in DMPs. 

TABLE H6—SUMMARY FOR IDENTIFICATION OF ADDITIONAL PARBS BASED ON HISTORY OF OPIOID-RELATED OVERDOSE

Regulatory citation Subject Number of 

respondents 

Number of 

responses 

Time per 

response 

(hr) 

Total 

time 

(hr) 

Labor 

cost 

($/hr) 

Total cost 

in 1st year 

($) 

Total cost 

in 

subsequent 

years 

($) 

§ 423.153(f)(16) .......... Revise Model Notices ................................. 288 288 1 288 56.34 16,226 0 

§ 423.153(f)(16) .......... Conduct Case Management ....................... 288 18,268 5 91,340 109.55 10,006,297 10,006,297 

§ 423.153(f)(16) .......... Send Model Notices ................................... 288 8,677 0.1667 1,446 56.34 81,468 81,468 

§ 423.153(f)(16) .......... Reporting to CMS ....................................... 288 18,268 0.0167 305 56.34 17,184 17,184 

Total .................... ..................................................................... 288 45,501 Varies 93,379 Varies 10,121,175 10,104,949 

We received no comments on our 

proposed burden estimates and 

assumptions. In the proposed rule, CMS 

had estimated the cost associated with 

case management of PARBs by 

combining the wage for all of the case 

management team members into one 

unit of case management time with the 

associated wage being the total of wages 

for the entire case management team to 

carry out case management ($547.74). 

This was reflected as 1 hour of burden 

in the proposed rule. While this 

intermediate presentation did not 

ultimately affect the estimate of cost 

associated with case management, CMS 

realized that this was not an accurate 

representation of the true time 

associated with case management. Case 

management of each of the 18,268 

PARBs identified based on the 

definition of opioid-related overdose 

requires 5 hours of work (2 from a 

pharmacist, 2 from a health technician 

and 1 from a physician). Therefore, CMS 

is revising the burden calculations for 

case management to reflect 5 hours of 

burden and calculated the case 

management team’s hourly wage, 

prorated according to the number of 


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6058 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

hours contributed by each team member 

($109.55). CMS is revising the number 

of hours from 18,268 to 91,340 (18,268 

PARBs × 5 hr) as this is more accurate. 

It should be noted, however, that the 

total cost estimates associated with case 

management does not change between 

the proposed rule and this final rule. We 

are finalizing everything else without 

modification. 

4. ICRs Regarding Information on the 

Safe Disposal of Prescription Drugs 

(§ 422.111) 

Section 6103 of the SUPPORT Act 

amended section 1852 of the Act by 

adding a new subsection (n). Section 

1852(n)(1) requires MA plans to provide 

information on the safe disposal of 

prescription drugs when furnishing an 

in-home health risk assessment. Section 

1852(n)(2) requires CMS to establish, 

through rulemaking, criteria that we 

determine appropriate with respect to 

information provided to an individual 

during an in-home health risk 

assessment to ensure that he or she is 

sufficiently educated on the safe 

disposal of prescription drugs that are 

controlled substances. In order to 

implement the requirements of section 

1852(n)(1) for MA plans, CMS revised 

the § 422.111, Disclosure Requirements, 

to add a paragraph (j), which would 

require MA plans that furnish an inhome health risk assessment on or after 

January 1, 2022, to include both verbal 

(when possible) and written information 

on the safe disposal of prescription 

drugs that are controlled substances in 

such assessment. Consistent with 

section 1852(n)(1), we proposed that 

information must include details on 

drug takeback programs and safe inhome disposal methods. 

In educating beneficiaries about the 

safe disposal of medications that are 

controlled substances, we proposed that 

MA plans would communicate to 

beneficiaries in writing and, when 

feasible, verbally. We proposed that MA 

plans must do the following to ensure 

that the individual is sufficiently 

educated on the safe disposal of 

controlled substances: (1) Advise the 

enrollee that unused medications 

should be disposed of as soon as 

possible; (2) advise the enrollee that the 

US Drug Enforcement Administration 

allows unused prescription medications 

to be mailed back to pharmacies or other 

authorized sites using packages made 

available at such pharmacies or other 

authorized sites; (3) advise the enrollee 

that the preferred method of disposing 

of controlled substances is to bring them 

to a drug take back site; (4) identify drug 

take back sites that are within the 

enrollee’s MA plan service area or that 

are nearest to the enrollee’s residence; 

and (5) instruct the enrollee on the safe 

disposal of medications that can be 

discarded in the household trash or 

safely flushed. Although we did not 

propose to require MA plans to provide 

more specific instructions with respect 

to drug disposal, we did propose that 

the communication to enrollees would 

provide the following additional 

guidance: If a drug can be safely 

disposed of in the enrollee’s home, the 

enrollee should conceal or remove any 

personal information, including Rx 

number, on any empty medication 

containers. If a drug can be discarded in 

the trash, the enrollee should mix the 

drugs with an undesirable substance 

such as dirt or used coffee grounds, 

place the mixture in a sealed container 

such as an empty margarine tub, and 

discard in the trash. 

We also proposed that the written 

communication include a web link to 

the information available on the United 

States Department of Health and Human 

Services website identifying methods 

for the safe disposal of drugs available 

at the following address: https://

www.hhs.gov/opioids/prevention/safelydispose-drugs/index.html. We noted in 

our proposed rule that the safe disposal 

of drugs guidance at this website can be 

used for all medications not just 

medications that are controlled 

substances. We stated in our proposed 

rule that we believed that plan 

communications consistent with the 

standard on this website would furnish 

enrollees with sufficient information for 

proper disposal of controlled substances 

in their community. 

The statute specifically limited this 

educational requirement to those 

situations when MA plans elect to 

perform in-home health risk 

assessments (HRAs) of MA enrollees. 

We note that while SNP plans are 

required to perform enrollee health risk 

assessments all other MA plan types are 

not required to perform health risk 

assessments. In addition, SNPs may 

conduct HRAs over the phone. Since the 

performance of in-home heath risk 

assessment is not a specific requirement 

for MA plans we do not track or have 

data on the number of in-home HRAs 

that MA plans elect to perform. As we 

will further discuss while there is a 

burden imposed by the law and our 

regulation MA plans can almost entirely 

avoid this burden by choosing to not 

perform an in-home HRA. As previously 

discussed the burden for an MA plan 

when electing to conduct an in-home 

HRA is that consistent with CMS 

guidelines as previously described it 

must develop written guidance for the 

enrollee and also furnish when possible 

a verbal summary of the main options 

for the safe disposal of unused 

controlled medications. 

5. ICRs Regarding Eligibility for 

Medication Therapy Management 

Programs (MTMPs) (§ 423.153) 

The following changes will be 

submitted to OMB for approval as a 

reinstatement under control number 

0938–10396 (CMS–1154). We received 

one comment in response to our 

proposed changes. A summary of this 

comment, along with our response, is 

provided below. 

In developing the burden estimates 

for this final rule, we removed the 

exclusion of beneficiaries enrolled in 

the Part D Enhanced MTM model 

because it will end before 2022, and the 

deadline for plans to come into 

compliance with the new Part D MTM 

program requirements finalized in this 

rule is January 1, 2022. 

Since the inception of the Medicare 

Part D benefit, the Act has required that 

all Part D plans offer a MTM program to 

eligible beneficiaries. The Act also 

established criteria for targeting 

beneficiaries for MTM program 

enrollment and a minimum set of 

services that must be included in MTM. 

Under § 423.153(d), all MTM 

enrollees must be offered a 

Comprehensive Medication Review 

(CMR) at least annually and Targeted 

Medication Reviews (TMRs) no less 

than quarterly. A CMR is an interactive, 

person-to-person, or telehealth 

consultation performed by a pharmacist 

or other qualified provider that includes 

a review of the individual’s medications 

and may result in the creation of a 

recommended medication action plan. 

An individualized, written summary in 

CMS’s Standardized Format must be 

provided following each CMR. The 

SUPPORT Act expanded the population 

of beneficiaries that must be targeted for 

Part D MTM, and added a requirement 

that information on the safe disposal of 

prescription drugs that are controlled 

substances be furnished to all MTM 

program enrollees. This final rule 

modifies our Part D regulations to 

incorporate those changes to the MTM 

requirements. The new requirements 

will affect the number of beneficiaries 

enrolled in MTM programs and 

potentially some of the content for the 

Standardized Format for the CMR and, 

therefore, the burden. In this regard, we 

are estimating burden for: 

a. The expanded population of 

beneficiaries that must be targeted for 

enrollment in MTM programs; 

b. Mailing safe disposal information 

as part of the CMR summary; and 


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Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 6059 

c. Mailing safe disposal information 

once a year as part of a TMR or other 

MTM correspondence or service. 

a. The Expanded Population of 

Beneficiaries That Must Be Targeted for 

Enrollment in MTM Programs 

We estimate that in 2022 there will be 

50,684,424 beneficiaries enrolled in Part 

D plans with MTM programs (line 1 of 

Table H7). According to internal data, 

we estimate that section 6064 of the 

SUPPORT Act requires targeting 10,366 

ARBs for MTM in 2022 (line 2). Based 

on our experience with the MTM 

program, we estimate that 71.8 percent 

of beneficiaries targeted for MTM under 

the existing requirements will accept 

the offer of a CMR (line 3). This number 

has been updated based on more recent 

data which became available after the 

proposed rule was published. We 

assume this percentage will also apply 

to beneficiaries who will be enrolled in 

MTM programs under the new criteria; 

therefore, 7,443 ARBs (line 4) (10,366 

targeted ARBs × 0.718) are expected to 

accept a CMR under the new provision. 

To estimate the burden on Part D 

plans of furnishing CMRs to the 7,443 

ARBs who would be expected to accept 

the offer of a CMR under the final 

policy, we separately calculate the labor 

cost of preparing the CMR and 

packaging it, and the non-labor cost of 

mailing. 

To estimate the labor cost of preparing 

the CMR, we note that the CMR is a 

clinical consultation service and 

therefore must be administered by a 

pharmacist, physician, nurse 

practitioner, or other qualified provider. 

Currently, 100 percent of MTM 

programs employ pharmacists to 

conduct CMRs, which is the basis of the 

hourly rate estimate. Stakeholder 

comments that were received outside of 

this rulemaking effort and responded to 

in a previous collection of information 

request indicate that an average CMR 

requires 40 minutes or 0.6667 hours 

(line 5) at $120.68/hr (line 7) for a 

pharmacist to complete. This results in 

an annual labor burden of 4,962 hours 

(line 6) (7,443 ARBs × 0.6667 hr) at a 

cost of $598,814 (line 8) (4,962 hr × 

$120.68/hr). 

To estimate the cost of mailing, we 

note that paper costs $2.50 per ream 

(500 sheets) of paper (at $0.005 per 

sheet) and toner costs $50.00 per 

cartridge and lasts for 10,000 sheets (at 

$0.005 per sheet). We estimate that the 

average CMR summary will be 6 pages 

in length based on revisions which 

would streamline the Standardized 

Format; therefore, the paper and 

printing costs for each CMR summary 

will be $0.06. Since CMR summaries 

contain private health information, they 

must be mailed first class, for which 

postage costs $0.70 per mailing. Based 

on industry standards, we assume 

envelopes cost $0.08 each, while folding 

and stuffing costs about $0.08 per 

document. We therefore estimate the 

non-labor cost to print and mail a CMR 

summary in CMS’s Standardized Format 

will be $0.92 per mailing (line 9). This 

results in a cost of $6,848 (line 10) 

($0.92 cost per mailing × 7,443 ARBs). 

Therefore, we estimate that the total 

annual cost of providing CMRs to 7,443 

ARBs is $605,662 (line 11) ($598,814 

labor costs + $6,848 non-labor mailing 

costs). These figures and calculations 

are summarized in Table H7. The Line 

ID column contains identifiers for each 

row following the flow of logic and 

calculations. Where applicable, the 

calculations are described in the 

‘‘Source’’ column. 

TABLE H7—ESTIMATED BURDEN OF TARGETING ARBS FOR MTM 

Line ID Item Number Source 

(1) ................... Part D enrollees in 2022 ................................................................................................ 50,684,424 Internal CMS Data. 

(2) ................... Part D enrollees expected to meet the ARB criteria ..................................................... 10,366 Internal CMS data. 

(3) ................... Percent of enrollees under the existing program targeted for a CMR who accept the 

offer.

71.8% Internal CMS data. 

(4) ................... ARBs targeted for MTM expected to accept CMR offer ............................................... 7,443 (2) * (3). 

(5) ................... 40 minutes is the industry standard for conducting a CMR .......................................... 0.6667 Industry data. 

(6) ................... Number of hours needed to fulfill the preparation of CMRs under the new provision 

including stuffing and mailing.

4,962 (4) * (5). 

(7) ................... Wage for a pharmacist to prepare a CMR .................................................................... $120.68 BLS Wage data. 

(8) ................... Cost to send CMRs to ARBs under the new provision ................................................. $598,814 (6) * (7). 

(9) ................... Non-labor cost of mailing one CMR: 6 pages * ($2.50 * 500 cost per page + $50/ 

10000 cost of toner) + $0.08 stuffing + $0.08 envelope + $0.70 for postage.

$0.92 See narrative. 

(10) ................. Non-labor cost of mailing ............................................................................................... $6,848 (8) * (9). 

(11) ................. Total cost for preparing and mailing the CMR to ARBs ................................................ $605,662 (8) + (10). 

b. Mailing Safe-Disposal Information as 

Part of the CMR Summary 

Under the revisions to § 423.153(d)(1) 

adopted in this final rule, Part D plans 

will be required to provide all MTM 

enrollees with information about safe 

disposal of prescription medications 

that are controlled substances. The 

provision will allow plans to mail the 

newly required safe disposal 

information either as part of the CMR 

summary, a TMR, or other MTM 

correspondence or service. We estimate 

the safe disposal information will take 

one page, may include personal 

information, and can be mailed out as 

a standalone correspondence if not 

included in the annual CMR. 

However, for those enrollees receiving 

a CMR, we believe it will be most 

economical to include the one page with 

the already existing CMR summary. We 

solicited comments regarding this 

assumption, but did not receive any 

feedback. Therefore, we are estimating 

that the cost of mailing one extra page 

per enrollee is $0.01 (line 21 ([1 page × 

$2.50/ream of 500 sheets] + [1 page × 

$50 toner/10,000 sheets]). We note that 

the envelope to mail the CMR is already 

being paid for under current regulations 

(although folding and stuffing of 7 pages 

versus 6 pages might require some extra 

effort, we do not believe this will raise 

the $0.08 current cost estimate and we 

did not receive any comments on this 

assumption); the $0.70 first class 

postage for 2 ounces is sufficient for 7 

pages (there would be no increase in 

postage). 

To estimate total mailing cost, we add 

the estimates of (i) total number of Part 

D enrollees who are not ARBs who will 

receive a CMR under the existing 

criteria and (ii) total number of ARBs 

who will receive a CMR under the new 

criteria we are adopting in this final 

rule. 

As shown in Table H7, lines (1) and 

(2), we estimate that in 2022 there will 

be 50,684,424 Part D enrollees and, as 

previously determined, 10,366 of those 


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will meet the new MTM targeting 

criteria, leaving 50,674,058 Part D 

enrollees (Table H8, line 14) (50,684,424 

Part D enrollees minus 10,366 enrollees 

meeting the ARB criteria) that must be 

targeted for MTM if they meet the 

existing criteria. Our internal data 

shows that 6.54 percent (line 15) of Part 

D enrollees will be targeted for MTM 

programs under the existing criteria. 

Hence, this leaves 3,314,083 Part D 

enrollees (0.0654 * 50,674,058) who will 

be targeted for MTM under the existing 

criteria (line 16). Of the 3,314,083 

targeted enrollees, as stated previously, 

based on internal CMS data, we estimate 

71.8 percent will accept the annual 

CMR offer (line 17). Therefore 2,379,512 

beneficiaries (3,314,083 * 0.718) will 

receive a CMR under the existing 

criteria (line 18). 

Hence, in 2022 a total of 2,386,955 

enrollees will receive a CMR under the 

existing and new criteria (7,443 ARBs 

under the new criteria + 2,379,512 

under the existing criteria) (line 20), at 

a total non-labor mailing cost of $23,870 

(2,386,955 enrollees × $0.01 mailing 

cost per enrollee) to add an additional 

page containing safe disposal 

information to all CMRs (line 22). 

The figures and calculations are 

summarized in Table H8. 

TABLE H8—ESTIMATED BURDEN FOR MAILING SAFE DISPOSAL INFORMATION AS PART OF THE CMR 

Line ID Item Number Source 

(12) ................. Part D enrollees in 2022 ................................................................................................ 50,684,424 (1). 

(13) ................. Enrollees estimated to meet ARB criteria under the new provision ............................. 10,366 (2). 

(14) ................. Part D enrollees who do not meet ARB criteria ............................................................ 50,674,058 (12)¥(13). 

(15) ................. Percentage of Part D enrollees who meet the existing criteria for MTM ...................... 6.54% Internal CMS data. 

(16) ................. Estimated number of Part D enrollees not meeting ARB criteria who are targeted for 

MTM under the existing criteria.

3,314,083 (14) * (15). 

(17) ................. Percent of enrollees under the current program targeted for an MTM who accept the 

offer.

71.8% Internal CMS data. 

(18) ................. Estimated number of Part D enrollees under the existing criteria who will receive a 

CMR.

2,379,512 (16) * (17). 

(19) ................. Estimated number of Part D enrollees under the new provision meeting ARB criteria 

who will elect to receive a CMR.

7,443 (4). 

(20) ................. Total number of Part D enrollees (under the existing and new criteria) who will receive a CMR.2,386,955 (18) + (19). 

(21) ................. Non-labor costs of one extra page (2.50/500) and toner for one page ($50/10000) ... $0.01 See narrative. 

(22) ................. Estimated cost of mailing safe disposal information with a CMR ................................. $23,870 (20) * (21) 

c. Mailing Safe Disposal Information 

Once a Year as Part of a TMR or Other 

MTM Correspondence or Service 

All targeted beneficiaries who have 

not opted out of the MTM program must 

receive TMRs at least quarterly, and we 

are allowing Part D sponsors the 

flexibility of choosing whether to 

include safe disposal information in the 

CMR, through a TMR or other MTM 

correspondence or service at least once 

annually. Since we assume that 71.8 

percent of targeted enrollees accept an 

offer of a CMR (Table H7, line 3), it 

follows that 28.2 percent (100 percent– 

71.8 percent) (Table H9, line 26) of Part 

D enrollees who are targeted for 

enrollment in an MTM program refuse 

the CMR offer but do not opt out of the 

MTM program completely. As discussed 

previously, 10,366 ARBs (Table H7, line 

(2)) under the new criteria and 

3,314,083 enrollees (Table H8, line (16)) 

under the existing criteria, for a total of 

3,324,449 enrollees (3,314,083 + 10,366) 

(line 25) will be targeted to receive a 

CMR. Therefore 937,495 enrollees 

(3,324,449 total enrollees × 0.282 who 

refuse a CMR) would need to be mailed 

the safe disposal information as part of 

a TMR or other MTM correspondence or 

service (line 27). For purposes of 

calculating the burden, we are assuming 

that any safe disposal information that 

is not included in a CMR is either (i) 

being mailed in a TMR, which may be 

as short as one page and may contain 

private health information or (ii) is 

mailed as a stand-alone document 

which does not contain any private 

health information. For purposes of 

impact, (i) if one additional page is 

included in the TMR, then there is no 

additional postage; (ii) if the safe 

disposal information is mailed 

separately, there would be no private 

health information, and the burden 

would be the cost of one page plus bulk 

postage. Due to a lack of data in regard 

to what percentage of safe disposal 

information will be mailed as a CMR, 

TMR, or other MTM correspondence or 

service, we are assuming the maximum 

amount, which is that all safe disposal 

information not sent with a CMR will be 

one page that is mailed separately using 

bulk postage. The cost to mail one page 

of safe disposal information is $0.01095 

per enrollee if the letter does not 

contain private health information and 

thus bulk mailing is used (line 28) [1 

page × $2.50 per ream of paper/500 

sheets] + [1 page × $50 per toner/10,000 

pages] + [$0.19/200 items]). Therefore, 

we estimate that the cost of mailing safe 

disposal information to those MTM 

enrollees who do not receive it in a 

CMR summary is $10,266 (line 29) 

(937,495 enrollees × $0.01095 mailing 

cost per page). 

These calculations are summarized in 

Table H9. 

TABLE H9—BURDEN OF MAILING SAFE DISPOSAL INFORMATION TO ENROLLEES NOT RECEIVING A CMR 

Line ID Item Number Source 

(23) ................. The number of Part D enrollees who meet the existing criteria for MTM ..................... 3,314,083 (16). 

(24) ................. The number of Part D enrollees who meet the criteria for ARB under the new provision.10,366 (2). 

(25) ................. The number of Part D enrollees meeting existing or new criteria for being targeted 

for a CMR.

3,324,449 (23) + (24). 

(26) ................. The percentage of enrollees estimated to refuse the offer of a CMR (100–87%) ....... 28.2% 100%¥(17). 


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TABLE H9—BURDEN OF MAILING SAFE DISPOSAL INFORMATION TO ENROLLEES NOT RECEIVING A CMR—Continued 

Line ID Item Number Source 

(27) ................. Number of enrollees to whom safe disposal information must be mailed even though 

they don’t receive a CMR.

937,495 (25) * (26). 

(28) ................. Non-labor cost of mailing a one page correspondence (at $2.50/500 cost per page + 

$50/10,000 cost of toner for one page + $0.19/200 cost of bulk mailing).

$0.01095 See narrative. 

(29) ................. Cost of mailing safe disposal information to those who do not receive a CMR ........... $10,266 (27) * (28).

d. Summary for Eligibility for MTMPs 

and Information on the Safe Disposal of 

Prescription Drugs 

As discussed in section (b) (Table H8, 

line (22)), we estimate a cost of $23,870 

for mailing safe disposal information to 

those beneficiaries receiving a CMR 

(under the assumption that the plan will 

bundle the safe disposal and CMR). In 

section (c) (Table H9, line 29), we 

estimate a total cost of $10,266 for 

mailing safe disposal information to 

those beneficiaries who do not receive 

a CMR. Thus, the total cost of mailing 

safe disposal information to all Part D 

beneficiaries enrolled in MTM programs 

is estimated to be $34,136. This is 

summarized in Table H10. 

TABLE H10—BURDEN OF MAILING SAFE DISPOSAL INFORMATION TO BENEFICIARIES ENROLLED IN MTM PROGRAMS

Line ID Item Number Source 

(30) ................. Estimated cost of mailing safe disposal items to those receiving a CMR (under assumption that the plan will bundle the safe disposal and CMR).$23,870 (22). 

(31) ................. Cost of mailing safe disposal to those who do not receive a CMR .............................. 10,266 (29). 

(32) ................. Total cost of mailing safe disposal information ............................................................. $34,136 (30) + (31). 

The total additional annual cost for 

288 parent organizations to provide 

CMRs to ARBs and to send information 

on safe disposal of prescription 

medications that are controlled 

substances to all MTM program 

enrollees is $663,668. Table H11 

provides a compact summary of the 

bottom lines of impact by activity. 

TABLE H11—SUMMARY FOR ELIGIBILITY FOR MTMPS (§ 423.153) AND INFORMATION ON THE SAFE DISPOSAL OF

PRESCRIPTION DRUGS

Regulatory 

citation Subject Number of respondents 

Number of 

responses 

Time per 

response 

(hr) 

Total 

annual 

time 

(hr) 

Non 

labor 

cost for 

mailing 

($) 

Labor 

cost 

($/hr) 

Total 

annual 

cost 

($) 

§ 423.153 ................... Targeting ARBs for CMR ............................ 288 7,443 0.6667 4,962 N/A 120.68 598,814 

§ 423.153 ................... Mailing ARBs CMR ..................................... 288 7,443 N/A N/A 6,848 N/A 6,848 

§ 423.153 ................... Safe Disposal Page in CMR ....................... 288 2,386,995 N/A N/A 23,870 N/A 23,870 

§ 423.153 ................... Safe Disposal Page as part of TMR or 

other MTM correspondence or service.

288 937,495 N/A N/A 10,266 N/A 10,266 

Total .................... ..................................................................... 288 3,339,376 Varies 4,962 40,984 Varies 639,798 

As indicated above, one PRA-related 

comment was received. The following 

summarizes the comment and sets out 

our response. 

Comment: CMS received a comment 

stating that the percent of Part D 

enrollees who accept the offer of a CMR 

(87 percent) was overestimated. 

Response: We appreciate the 

comment and have updated our 

estimate based on more recent data. We 

are now estimating the acceptance rate 

of a CMR to be closer to 71.8 percent in 

2022. 

As previously stated, we updated our 

estimates to no longer exclude 

beneficiaries enrolled in the Part D 

Enhanced MTM model because the 

model will end before 2022, and the 

deadline for plans to come into 

compliance with the new Part D MTM 

program requirements finalized in this 

rule is January 1, 2022. We also updated 

the estimates for enrollment and CMR 

rates based on more current data. We 

did not receive any comments in 

response to our estimates regarding the 

cost of mailing a CMR with information 

on safe disposal of prescription drugs, 

nor did stakeholders object to our 

assumption that the distribution of 

information on safe disposal of 

prescription drugs would be most 

economically distributed as part of the 

CMR summary. 

6. ICRs Regarding Beneficiaries’ 

Education on Opioid Risks and 

Alternative Treatments (§ 423.128) 

The following changes will be 

submitted to OMB for approval under 

control number 0938–0964 (CMS– 

10141). Subject to renewal, the control 

number is currently set to expire on 

November 30, 2021. 

With regard to our proposed changes, 

comments were received and are 

responded to below. 

In this rule, § 423.128 will require 

Part D sponsors to disclose, beginning in 

2022, information about the risks of 

prolonged opioid use to enrollees. In 

addition to this information, Part D 

sponsors of MA–PDs must disclose 

coverage of non-pharmacological 

therapies, devices, and non-opioid 

medications under their plans and 

under Medicare Part C. Part D sponsors 

of PDPs must disclose coverage of nonpharmacological therapies, devices, and 

non-opioid medications under their 

plans and under Medicare Parts A and 

B. 

Before Part D sponsors can send this 

information, they would have to create 


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and upload materials into their internal 

systems. Based on 2019 CMS data, there 

are 608 Part D legal entities (sponsors) 

with which CMS contracts, associated 

with 288 parent organizations that these 

contracts identified in their initial 

applications, which is confirmed 

annually. Based on our knowledge of 

the way parent organizations and their 

Part D legal entities are structured, we 

believe it is appropriate to estimate 

burden at the parent organization level, 

as it is a closer reflection of the number 

of systems that will need to be updated 

versus at the contract level. 

We estimate that 288 Part D sponsors 

would be subject to this requirement, 

based on 2019 data. We estimate a onetime burden of 2 hours at $120.68/hr for 

a pharmacist to develop the materials(s) 

to be sent to the beneficiaries. In 

aggregate, we estimate a one-time 

burden of 576 hours (288 parent 

organizations × 2 hr) at a cost of $69,512 

(576 hr × $120.68/hr). Although there 

might be the need for updates in future 

years (if opioid risk and/or coverage 

information changes), we believe the 

burden to making such updates to 

existing materials will be negligible as 

the changes will be minor and may only 

occur in some future years. Hence, the 

more accurate approach adopted here is 

to estimate this as a one-time update. 

We also estimate that it will take on 

average 2 hours at $89.06/hr for a 

computer programmer to upload the 

information into the systems. This 

would result in a one-time burden of 

576 hours (2 hr × 288 parent 

organizations) at a cost of $51,299 (576 

hr × $89.06/hr). Once the information is 

uploaded into the parent organization’s 

database, we anticipate no further 

burden associated with this task, as the 

process will be automated after the 

initial upload with the same 

information on subsequent materials 

that are sent. The automation will 

include the sending of information to 

those enrollees who wish to receive an 

electronic copy. The automation will 

also cover updates in future years as the 

plan enrollment changes. 

We proposed that Part D sponsors be 

permitted to disclose the opioid and 

coverage information in electronic form. 

Some enrollees preferred electronic 

notification and some preferred paper 

mailing. We had no way of estimating 

the proportions for each preference, but 

our experience suggests that most 

enrollees expect a paper mailing. 

Therefore, we assumed 75 percent (the 

average of 50 percent and 100 percent) 

would prefer a paper mailing, while the 

remaining 25 percent would prefer 

electronic notification. 

There are several Part D enrollee 

groups presented in section III.D. of this 

final rule that we suggested could be 

sent the required information and thus, 

several approaches to estimate the 

burden. These enrollee group estimates 

ranged from sending the information to 

2,698,064 to 46,759,911 enrollees. 

In making estimates on the burden of 

sending out notices, we assumed that 

the IT systems of the plan would 

generate and mail the documents once 

a template is produced. Thus, the only 

costs are paper, toner, and postage. We 

also assumed one page per notice. We 

therefore estimate: 

• Cost of paper: Typical wholesale 

costs of paper are approximately $2.50 

for a ream of 500 sheets. The cost for 

one page is $0.005 ($2.50/500). 

• Cost of toner: Toner costs can range 

from $50 to $200 and each toner 

cartridge can last from 4,000 to 10,000 

sheets of paper. In this rule, we assume 

a cost of $50 for 10,000 pages. In that 

regard, the cost per page is $0.005 ($50/ 

10,000 pages). 

• Cost of postage: Currently, the bulk 

postage rates are $0.19 per 200 pages. 

The cost per page is $0.00095 ($0.19/ 

200 pages). 

Thus, the aggregate cost per page is 

$0.01095 ($0.005 for paper + $0.005 for 

toner + $0.00095 for postage). Note that 

mailing costs are annual while the 

programming updates and the 

development of materials are first-year 

costs with minimal or no costs in future 

years. The product of the cost per page 

(at $0.01095) times the number of 

enrollees (35,069,933) plus the one time 

first year costs $120,811 ($51,299 + 

$69,512) equals $504,827 ([$0.01095 × 

35,069,933 enrollees] + $120,811) as 

shown in Table H12. 


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The following summarizes the PRArelated public comments that we 

received and sets out our response to 

those comments. We are finalizing our 

proposed provisions, burden estimates, 

and assumptions without change. 

Comment: We received two comments 

that suggested a specific subset to send 

this information to. The commenters 

also recommended focusing on any 

beneficiary who received an opioid fill 

in the last 7 days, but also appreciated 

the flexibility provided in this rule. 

Response: We thank the commenters 

for their feedback. Although some 

commenters offered their opinion on the 

subset that might be the best group to 

receive the information, there was no 

consensus to inform sponsors’ ultimate 

decisions on a specific enrollee 

population. Because there was no 

consensus, CMS will continue to 

maintain flexibility for plans and 

therefore are not committing to any 

specific approach. 

7. ICRs Regarding Suspension of 

Pharmacy Payments Pending 

Investigations of Credible Allegations of 

Fraud and Program Integrity 

Transparency Measures (§§ 405.370, 

422.500, 422.503, 423.4, 423.504, and 

455.2) 

The following changes will be 

submitted to OMB for approval under 

control number 0938–1383 (CMS– 

10724) for Medicare Advantage Plans 

and 0938–1262 (CMS–10517) for Part D 

Plans. 

Sections 422.503(b)(4)(vi)(G)(4) and 

423.504(b)(4)(vi)(G)(4) will require the 

MA organization or Part D plan sponsor, 

respectively, to have procedures to 

identify and report to CMS or its 

designee: (1) Any payment suspension 

implemented by a plan, pending 

investigation of credible allegations of 

fraud by a pharmacy, which must be 

implemented in the same manner as the 

Secretary does under section 1862(o)(1) 

of the Act; and (2) any information 

related to the inappropriate prescribing 

of opioids and concerning 

investigations, credible evidence of 

suspicious activities of a provider of 

services (including a prescriber) or 

supplier, and other actions taken by the 

plan. 

CMS initiated a reporting pilot 

program in December 2016 with six 

plan sponsors to test the effectiveness of 

mandatory reporting of fraud, waste, 

and abuse. The pilot collected all 

external or internal Medicare 

complaints and referrals submitted to 

the plan’s Special Investigations Unit 

(SIU). The data collected as part of the 

pilot program was time limited, but 

broader than the scope of reporting 

required by sections 2008 and 6063 of 

the SUPPORT Act. The scope of that 

pilot tested the reporting of all types of 

health care fraud, waste, and abuse that 

the plan sponsors could encounter in 

their operations and, therefore, could be 

utilized as a reasonable estimate of 

burden involved with the quarterly plan 

reporting to CMS that CMS will use to 

implement sections 2008 and 6063 of 

the SUPPORT Act. The pilot program 

analyzed information that was reported 

from five of six plan participants on 

time spent collecting three quarterly 

data submissions. Based on the results 

of the pilot study, if every Part C plan 

reported, we estimate it will take 605 

MA plans 149,435 hours (605 plans * 

247 hr/plan) at a cost of $13,730,088 

(149,435 hr * $91.88/hr for a 

management analyst using 2019 BLS 

wage estimates) to fulfill the reporting 

and procedure preparation in the first 

year as shown in Table H13. In 

subsequent years, we estimate an annual 

burden of 94,380 hours (605 plans *156 

hr/plan) at a cost of $8,671,634 (94,380 

hr * $91.88/hr) as shown in Table H13. 

Based on the results of the pilot study, 

if every Part D plan reported, we 

estimate it will take 63 Part D plans 

15,561 hours (63 plans * 247 hr/plan) at 

a cost of $1,429,745 (15,561 hr * $91.88/ 

hr) to fulfill the reporting and procedure 

preparation in the first year as shown in 

Table H14. In subsequent years, we 

estimate an annual burden of 9,828 

hours (63 plans * 156 hr/plan) at cost of 

$902,997 (9,828 hr * $91.88/hr) as 

shown in Table H14. 

The first-year burden consist of the 

time and effort needed to prepare the 

procedures and report the inappropriate 

prescribing information. Subsequent 

effort consists solely of the ongoing time 

and cost to report the inappropriate 

prescribing information to CMS. We 

could not anticipate how many plans 

will need to report any payment 

suspension to pharmacies in the plans’ 

network or information on 

inappropriate opioid prescribing to 

CMS. 


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We received no comments on our 

proposed provisions, burden estimates, 

and assumptions. Consequently, we are 

finalizing without change. 

8. ICRs Regarding Beneficiary Real Time 

Benefit Tool (RTBT) (§ 423.128) 

The following changes will be 

submitted to OMB for approval under 

control number 0938–0763 (CMS–R– 

262). Subject to renewal, the control 

number is currently set to expire on 

April 30, 2022. 

As described in section IV.G. of this 

final rule, the new paragraphs at 

§ 423.128(d)(4) and (5) require each Part 

D plan to implement a beneficiary RTBT 

no later than January 1, 2023. This tool 

will allow enrollees to view the 

information included in the prescriber 

RTBT system which includes complete, 

accurate, timely, and clinically 

appropriate patient-specific real-time 

formulary and benefit information 

(including cost, formulary alternatives, 

and utilization management 

requirements). Plans will be able to use 

existing secure patient portals to fulfill 

this requirement, to develop a new 

portal, or to use a computer application. 

In estimating the cost impact of this 

provision it is important to bear in mind 

that the rewards and incentives are 

optional for each Part D sponsor. 

Additionally, based on our 

conversations with the industry, 

participation on industry workgroups, 

and research, we understand that most 

Part D plans have already created 

beneficiary portals that satisfy existing 

privacy and security requirements. We 

believe that the few plans that have yet 

to create a portal or web application will 

have one in place by January 1, 2023. 

Finally, some Part D Sponsors who wish 

to use such a portal may find it cheaper 

to rent an existing portal from a third 

party vendor. Consequently, the impacts 

below are maximum impacts; they 

overestimate the impact of the provision 

by assuming that all Part D sponsors 

must create a completely new RTBT. 

We estimate it will take 104 hours at 

$89.06/hr for a computer programmer to 

program this information into the 

beneficiary portal and an additional 52 

hours to put this information into a user 

interface that is easily understood by 

enrollees. The time estimates are based 

on consultation with the healthcare 

industry and their IT staff to determine 

the time that it takes for minor changes 

in programming. Thus, the burden for 

implementing RTBT is 44,928 hours 

(288 organizations * 156 hr) at a cost of 

$4,001,288 (44,928 hr * $89.06/hr). 

This is a maximum one-time first year 

cost. We are not estimating ongoing 

maintenance costs because: (1) Many 

plan sponsors already have a beneficiary 

portal and (2) the total maintenance 

costs per plan sponsor tend to be stable 

from year because although there is 

variation in what software needs 

maintenance, some software needs more 

usage, some needs less, and some needs 

routine. The average absorbs and 

stabilizes this variability. Adding one 

more software cost that is not 

excessively above the average would not 

change that average beyond rounding or 

uncertainty error. 

We next estimated the cost of 

implementing the rewards and 

incentives program for use of RTBT. We 

estimated three items: (A) Development 

of policies for the new program, (B) 

updating of systems, and (C) 

maintaining the program. We solicited 

stakeholder feedback on all of our 

proposed assumptions. We informally 

questioned stakeholders who believe 

that only 10 percent of parent part D 

sponsors would create such a program. 

Since there are 288 Part D sponsors we 

expect 29 (288 * 0.10) organizations to 

develop and use a reward and incentive 

program. 

(A) Development of policy: We 

estimate that for each parent 

organization an operations manager and 

compliance officer working together at a 

combined hourly wage of $188.36/hr 

($118.30/hr + $70.06/hr) would take 40 

hours. Therefore, the impact is 1,160 

hours (40 hr * 29 parent organizations) 

at a cost of $218,498 (1,160 hr * 

$188.36/hr). 

(B) Since systems already exist to 

collect enrollee data, they will only 

have to be updated to collect data on 

use of RTBT and most of this work will 

be done when creating the RTBT. We 

therefore estimate, per parent 

organization, an extra 40 hours for a 

computer programmer. Therefore, the 

impact is 1,160 hours (40 hr * 29 

organizations) at a cost of $103,310 

(1,160 hr * $89.06/hr). 

(C) We estimate that 2 administrative 

support workers each working at 

$36.82/hr will take 15 hours every 

month to maintain the program. The 

impact is 10,440 hours (15 hr/month * 

12 months * 2 workers * 29 

organizations) at a cost of $384,401 

(10,440 hr * $36.82/hr). 

The aggregate impact for 

implementing the rewards and 

incentives for RTBT among those Part D 

sponsors who wish to do so is 57,688 

hours (44,928 hr + 1,160 hr + 1,160 hr 


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+ 10,440 hr) at a cost of $4,707,497 

($4,001,288 + $218,498 + $103,310 + 

$384,401). 

Since plans are in the best position to 

estimate their implementation costs, we 

solicited comment on the accuracy of 

this burden estimate and on any 

measures that CMS can take to decrease 

the impact of this provision, while 

maintaining its utility for enrollees. In 

addition, because plans are in the best 

position to estimate any information 

collection implications, since they will 

be the stakeholders implementing this 

provision, we solicited comment on any 

other potential information collection 

implications. We received no comments 

on our proposed provisions and burden 

estimates. Consequently, we are 

finalizing them without change. 

9. ICRs Regarding Establishing 

Pharmacy Performance Measure 

Reporting Requirements (§ 423.514) 

The following changes will be 

submitted to OMB for approval under 

control number 0938–0992 (CMS– 

10185). Subject to renewal, the control 

number is currently set to expire on 

December 31, 2021. It was last approved 

on December 7, 2018, and remains 

active. 

This rule amends § 423.514(a) by 

giving CMS the authority to collect Part 

D sponsors’ pharmacy performance 

measures data that is used to evaluate 

pharmacy performance, as established 

in their network pharmacy agreement. 

Given the growing practice of Part D 

sponsors measuring the performance of 

pharmacies that service Part D 

beneficiaries to determine the final cost 

of a drug under Part D, this reporting 

requirement will enable CMS to monitor 

the impact of these recoupment 

practices. We estimate a collection of 

less than 15 data elements. As noted in 

section IV.G of this final rule, the Part 

D reporting requirements data elements, 

consistent with our standard, will be 

specified through the standard non-rule 

PRA process after publication of this 

final rule. The standard non-rule 

process includes the publication of 60- 

and 30-day Federal Register notices. At 

that time, the data elements, timeline, 

and method of submission will be made 

available for public review and 

comment. 

Although the data elements will be 

made available for public review 

through the standard PRA process, we 

are providing the interested parties with 

an initial projection of the potential 

burden estimates. In this regard there 

are currently 627 contracts that would 

be required to report their pharmacy 

performance measures’ data. Part D 

sponsors currently report 6 sections of 

data to CMS in accordance with the Part 

D reporting requirements. Therefore, 

CMS does not expect compliance to 

these reporting requirements will result 

in additional start-up costs. Anticipated 

staff time spent performing these data 

collection activities would be 30 

minutes for a data analyst and/or IT 

analyst at a rate of $92.46/hr. We will 

require this information to be reported 

at the plan level once annually. 

Reporting at the plan level would 

generate 5,234 responses since there are 

currently 5,234 plans. In aggregate, we 

estimate an annual plan sponsor burden 

of 2,617 hours (5,234 plans × 1 report/ 

year × 0.5 hr/report) at a cost of 

$241,968 (2,617 hr × $92.46/hr). We 

solicited input from stakeholders on the 

accuracy of these estimates and on any 

measures that CMS could take to 

decrease the burden of this provision. 

The following comment was received. 

Comment: We received one comment 

stating that we had underestimated the 

financial burden of Part D plans 

reporting their pharmacy collection 

measures. 

Response: We appreciate the 

comment. However, we believe that 

based on current wages from the Bureau 

of Labor Statistics, and from our long 

current history of collecting other Part D 

plan reporting requirements, that our 

burden estimate is fair and reasonable. 

We did not receive any other 

comments related to the projected 

burden for this provision. As a result, 

we are finalizing our proposed 

provisions and burden without change. 

10. ICRs Regarding PACE 

Subsequent to the publication of the 

proposed rule, we revised the burden 

estimates in this final rule by: (1) 

Incorporating service determination 

request (formerly ‘‘service delivery 

request’’) data from 2019 PACE audits 

which was not available at the time the 

estimates were published in the 

proposed rule, (2) updating enrollment 

data from 40,040 participants to 42,800 

participants based on 2017–2019 

enrollment data from the CMS Office of 

the Actuary (OACT), (3) updating PACE 

organization contract data from 131 

PACE organizations to 133 PACE 

organizations based on data from the 

Health Plans Management System 

(HPMS), and (4) updating wage figures 

based on May 2019 BLS data. 

The following changes in subsections 

10a through 10e will be submitted to 

OMB for approval under control number 

0938–0790 (CMS–R–244). Subject to 

renewal, the control number is currently 

set to expire on December 31, 2023. 

a. ICRs Regarding Service Determination 

Request Processes Under PACE 

(§§ 460.104 and 460.121) 

Section 460.121(i)(2) will require that 

PACE organizations provide written 

notification to participants when the 

interdisciplinary team extends the 

timeframe for processing service 

determination requests. Based on our 

experience with PACE audits during 

2017, 2018, and 2019, during which 

time we reviewed all operating PACE 

organizations at least once, we found a 

total of 30,173 service determination 

requests. The average total PACE 

enrollment during that same period was 

42,800. Thus the average number of 

service determination requests per 1,000 

enrollees was 705 (30,173/42,800). This 

service determination request ratio or 

intensity (705 service determination 

requests per 1,000 enrollees) is used to 

estimate the number of service 

determination requests PACE 

organizations will receive from 2022– 

2024. The service determination request 

ratio is an intuitive way of capturing the 

rate of service determination requests 

per thousand enrollees and is used to 

estimate the burden associated with 

service determination requests for 2022– 

2024. 

Based on the same audit experience 

and data collected, we further estimate 

that: 

• Approximately 10.16 percent of all 

service determination requests currently 

received are extended, and 

• Of those 705 service determination 

requests currently received per 1,000 

enrollees, 77.53 percent are approved 

(546.6 requests per 1,000 enrollees), 

while 22.47 percent are denied (158.4 

requests per 1,000 enrollees). 

With respect to the final service 

determination request requirements in 

the new § 460.121, we estimate that half 

of all approved service determination 

requests (that is, 50 percent of the 546.6 

approved requests per 1,000 enrollees or 

273.3 requests per 1,000 enrollees) 

could be approved in full by an IDT 

member at the time the request is made. 

Because those approval decisions could 

be made immediately, extension 

notifications would not be needed for 

those service determination requests. 

Therefore, the requirement to provide 

written notification when a service 

determination request is extended will 

apply to: 

• The 2.28 percent of service 

determination requests which are 

extended and subsequently denied 

(22.47 percent of service determination 

requests that are denied * 10.16 percent 

of service determination requests that 

are extended); and 


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• The 3.94 percent of service 

determination requests that are 

approved and not routine (that is, a 

member of the IDT cannot approve the 

service determination request in full at 

the time the request is made) and are 

extended (77.53 percent of service 

determination requests that are 

approved * 50 percent of requests that 

are not routine * 10.16 percent of 

requests that are extended). 

Thus the requirement will apply to 

6.22 percent (2.28 percent of denied 

service determination requests and 3.94 

percent of approved service 

determination requests) of all service 

determination requests. Based on OACT 

estimates, the average projected PACE 

enrollment for 2022–2024 is 53,549 per 

year or an increase of 10,749 

enrollments from 2017–2019 

(53,549¥42,800). The multiplication of 

the estimated 2022–2024 PACE 

enrollment (53,549 enrollees) by the 

current service determination request 

intensity of 705 per 1,000 enrollees 

gives a reasonable estimate of the 

number of service determination 

requests PACE organizations will 

receive for 2022–2024. Based on our 

audit experience, we estimate that it 

would take the IDT approximately 1 

hour to prepare and issue notification of 

the extension to a participant or the 

designated representative. 

Consequently, the total annual burden 

for providing written notification to 

participants when the interdisciplinary 

team extends the timeframe for 

processing service determination 

requests in accordance with 

§ 460.121(i)(2) is 2,350 hours (705 

requests per 1,000 enrollees × 53,549 

projected enrollment for 2022–2024 × 

6.22 percent of requests that require 

extensions × 1 hour to process each 

service determination request extension) 

at a cost of $133,997 (2,350 hr × $57.02/ 

hr for a Master’s-level Social Worker 

(MSW) (BLS: Healthcare social worker) 

to process them). 

To meet the notification requirements 

finalized in § 460.121(i)(2), we expect 

most PACE organizations will develop a 

template letter to notify the appropriate 

parties of an extension. We estimate a 

burden of 1 hour at a cost of $70.06/hr 

for a compliance officer (quality 

improvement coordinator) to create an 

extension letter template. 

In addition to the one-time burden 

associated with creating an extension 

letter template, we also anticipate a onetime burden associated with the 

requirements we are finalizing in 

§ 460.121(j)(2), which clarify the 

required content of denial notifications. 

As a result of these requirements, we 

expect that PACE organizations will 

need to revise their denial notification 

letter templates. We estimate a burden 

of 1 hour at a cost of $70.06/hr for a 

compliance officer (quality 

improvement coordinator) to revise any 

existing denial letter templates. 

In aggregate, for the development and 

revision of both the extension 

notification and denial notification, we 

estimate it will take of 2 hours at 

$70.06/hr for a compliance officer 

(quality improvement coordinator) to 

create and revise the materials. We 

estimate a one-time burden of 266 hours 

(133 PACE organizations × 2 hr) at a cost 

of $18,636 (266 hr × $70.06/hr). 

We received no comments on our 

proposed burden estimates in 

§§ 460.121 and 460.104. In this final 

rule, we revised the burden estimate for 

these provisions using updated data 

previously discussed in the introductory 

paragraph to section VIII.B.10. of this 

final rule. The updated data used to 

revise the burden estimates includes: (1) 

Service determination request data from 

2019 PACE audits, (2) 2017–2019 

enrollment data, (3) PACE organization 

contract data, and (4) wage data. Based 

on this updated data, we have revised 

the burden estimate for service 

determination request extension 

notification in new § 460.121(j)(2), 

which resulted in a decrease of 578 

hours (from 2,928 hr to 2,350 hr) and 

$30,615 (from $164,612 to $133,997) 

from the proposed rule. We have also 

revised the burden estimate for service 

determination request denial 

notification requirements in new 

§ 460.121(i)(2), which resulted in an 

increase of 4 hours (from 262 hr to 266 

hr) and $369 (from $18,267 to $18,636) 

from the proposed rule. 

b. ICRs Regarding Appeals 

Requirements Under PACE (§§ 460.122 

and 460.124) 

Section 460.122 currently states the 

requirements for implementing an 

appeals process in PACE. In this rule we 

are finalizing requirements for PACE 

organizations to develop and distribute 

written materials that will explain the 

PACE requirements to the third party 

reviewers that are responsible for 

making appeal determinations. 

Additionally, we are finalizing 

requirements for appeal decision 

notifications, which we expect will 

require PACE organizations to revise 

their current appeal notification 

materials. 

For the development and distribution 

of materials to the third party reviewer, 

we estimate it will take 4 hours at 

$70.06/hr for a compliance officer 

(quality improvement coordinator) at 

each PACE organization to create and 

distribute these materials (3 hr to create 

and 1 hr to distribute). For the revision 

of the written appeal notices, we 

estimate it will take 1 hour at $70.06/ 

hr for a compliance officer (quality 

improvement coordinator) at each PACE 

organization to revise the current 

notices. 

In aggregate, we estimate a one-time 

burden of 665 hours [133 PACE 

organizations * (4 hr + 1 hr)] at a cost 

of $46,590 (665 hr * $70.06/hr). 

We received no comments on our 

proposed burden estimates for this 

provision. In this final rule, we revised 

the burden estimate for developing and 

distributing written materials to third 

party reviewers using updated data 

previously discussed in the introductory 

paragraph to section VIII.B.10. of this 

final rule. The updated data used to 

revise the burden estimate includes: (1) 

2017–2019 enrollment data, (2) PACE 

organization contract data, and (3) wage 

data. Updated service determination 

request data was not utilized to revise 

this burden estimate since the data does 

not impact appeals notifications. Based 

on the updated data, we have revised 

the burden estimate for this provision 

which resulted in an increase of 10 

hours (from 655 hr to 665 hr) and $923 

(from $45,667 to $46,590) from the 

proposed rule. 

c. ICRs Regarding Documenting and 

Tracking the Provision of Services 

Under PACE (§ 460.98) 

As discussed in section VI.D. of this 

final rule, we are amending 

§ 460.98(b)(5) in part to require PACE 

organizations to document, track and 

monitor the provision of services across 

all care settings, regardless of whether 

services are formally incorporated into a 

participant’s plan of care. 

We estimate a one-time burden of 50 

hours at $56.34/hr for technical staff at 

each PACE organization to develop the 

necessary procedures and written 

materials. We estimate a one-time 

burden of 6,650 hours (133 PACE 

organizations * 50 hr) at a cost of 

$374,661 (6,650 hr * $56.34/hr) for the 

first year. Since PACE organizations are 

currently required to document all 

services furnished in the medical record 

in accordance with § 460.210(b)(2), we 

believe the one-time burden of 50 hours 

is a reasonable estimate for developing 

the necessary procedures and written 

materials to document, track, and 

monitor the provision of services. 

We also estimate this provision will 

result in increased ongoing costs to 

PACE organizations. To estimate the 

increased burden, we use the following 

assumptions about the documentation, 

tracking and monitoring of services, 


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based on our experience monitoring and 

auditing PACE organizations. 

As discussed above, PACE 

organizations are already required to 

document services furnished in the 

participant’s medical record; however, 

PACE organizations will need to devote 

time to monitoring and tracking the 

provision of services. We therefore 

estimate a burden of 50 hours at $56.34/ 

hr for technical staff to complete these 

activities, including, when warranted, 

revision of the aforementioned program 

procedures and monitoring measures. 

We estimate an annual burden of 6,650 

hours (133 PACE organizations * 50 hr) 

at a cost of $374,661 (6,650 hr * $56.34/ 

hr). 

In aggregate, we estimate a burden of 

13,300 hours (6,650 hr + 6,650 hr) at a 

cost of $749,322 ($374,661 + $374,661) 

for the first year of implementation. In 

subsequent years, we estimate a burden 

of 6,650 hours at a cost of $374,661 for 

the ongoing documentation, monitoring 

and tracking of services. 

We received the following comments 

on the estimated burden for this 

provision. 

Comment: The majority of 

commenters expressed concern with to 

the use of the term ‘‘track.’’ These 

commenters suggested that requiring a 

PACE organization to track the 

provision of services could imply that 

PACE organizations would be required 

to establish and maintain specific logs, 

universes or data sets, and that such a 

requirement would potentially increase 

burden and conflict with CMS’ Patients 

Over Paperwork initiative. 

Response: As we discussed in greater 

detail in section VI.D. of this final rule, 

we understand from commenters’ 

concerns that the use of the word 

‘‘track’’ could be interpreted to suggest 

that PACE organizations would be 

required to maintain a real time ‘‘log’’ of 

services which could potentially be 

burdensome to implement. As we stated 

in the proposed rule, we believe that 

PACE organizations should document 

that a service has been ordered as well 

as when and how the approved service 

was provided. It was not our intention 

in the proposal to dictate how an 

organization implements this provision, 

and we agree with the commenter that 

PACE organizations should have 

flexibility in how they operationalize 

the requirement to track, monitor and 

document the provision of services. We 

expect that PACE organizations will 

create their own methods for tracking 

and monitoring services. We note that 

while commenters expressed concerns 

regarding the potential burden, no one 

commented on our estimates related to 

the burden. We believe this indicates 

that we were accurate in predicting the 

potential burden associated with this 

provision. 

Therefore, in this final rule, we did 

not revise the estimates based on 

comments received, but revised the 

burden estimate for these provisions 

using updated data previously 

discussed in the introductory paragraph 

to section VIII.B.10. of this final rule. 

The updated data used to revise the 

burden estimates includes: (1) 2017– 

2019 enrollment data, (2) PACE 

organization contract data, and (3) wage 

data. Updated service determination 

request data was not utilized to revise 

this burden estimate since the data does 

not impact documenting and tracking 

the provision of services. Based on the 

updated data, we have revised the first 

year burden estimate for this provision 

which resulted in an increase of 200 

hours (from 13,100 hr to 13,300 hr) and 

$82,532 (from $666,790 to $749,322) 

from the proposed rule. We have also 

revised the ongoing burden estimate for 

this provision which resulted in an 

increase of 100 hours (from 6,550 hr to 

6,650 hr) and $41,266 (from $333,395 to 

$374,661) from the proposed rule. 

d. ICRs Regarding Documentation in 

Medical Records Under PACE 

(§ 460.210) 

Subsequent to the publication of our 

proposed rule and based on public 

comment, this final rule revises the 

proposed requirements in 

§ 460.210(b)(6) to require PACE 

organizations to maintain original 

documentation, or an unaltered 

electronic copy, of any written 

communication the PACE organization 

receives relating to the care, health or 

safety of a participant, in any format (for 

example, emails, faxes, letters, etc.) and 

including, but not limited to the 

following: (i) Communications from the 

participant, his or her designated 

representative, a family member, a 

caregiver, or any other individual who 

provides information pertinent to a 

participant’s health or safety or both and 

(ii) Communications from an advocacy 

or governmental agency such as Adult 

Protective Services. 

Section 460.210 currently sets out the 

requirements relating to medical records 

for PACE participants. This includes the 

minimum content of participant 

medical records. Under § 460.210(b) of 

this final rule, CMS requires PACE 

organizations to maintain additional 

information and documentation in the 

medical record, including 

documentation of all recommendations 

for services made by employees or 

contractors of the PACE organization, 

the reasons for not approving or 

providing any service recommended by 

an employee or contractor of the PACE 

organization, and original 

documentation, or an unaltered 

electronic copy, of any written 

communication the PACE organization 

receives relating to the care, health or 

safety of a participant. 

We expect that PACE organizations 

will have to revise their policies and 

procedures and re-train staff on the new 

requirements. We believe that a 

compliance officer (quality 

improvement coordinator) will be 

responsible for ensuring the necessary 

materials are updated and that staff are 

trained. For revising materials and 

training staff, we estimate a one-time 

burden of 10 hours at $70.06/hr for a 

compliance office (quality improvement 

coordinator) to revise materials and lead 

training. Therefore, the one-time burden 

to implement this provision is 1,330 

hours (133 PACE organizations * 10 hr) 

at a cost of $93,180 (1,330 hr * $70.06/ 

hr). 

We also estimate this provision will 

result in increased ongoing costs to 

PACE organizations. To estimate the 

increased burden, we use the following 

assumptions about medical record 

documentation. These assumptions are 

based on our monitoring and oversight 

experience. 

Each of the new requirements 

discussed above may require the 

involvement of any IDT occupation. 

Therefore, to determine the cost 

associated with this provision, we took 

the wages for the full IDT ($846.48/hr) 

and divided it by the 11 occupations 

included in the IDT (see Table H15) to 

determine an average wage of $76.95/hr 

($846.48/hr/11 occupations). We believe 

this is the most accurate estimate as it 

will be unlikely all occupations will be 

working on the medical record at the 

same time, and we are unable to 

estimate how much any one occupation 

will work in comparison to the other 

occupations. 

In the proposed rule, we estimated 

that the proposed requirement to 

maintain original documentation of any 

written communication the PACE 

organization receives relating to the 

care, health or safety of a participant, 

would not create a significant burden, as 

organizations would only be required to 

store existing documentation within a 

medical record. Therefore, we estimated 

that the burden for this part of the 

provision would be 5 hours per PACE 

organization or 665 total hours (5 hr * 

133 organizations) at a cost of $51,172 

(665 hr * $76.95/hr). 

Following publication of the proposed 

rule, while we did not receive any 

comments specific to our burden 


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estimates for this requirement, we did 

receive general comments that 

expressed concern regarding the 

potential burden associated with storing 

written communications in a 

participant’s medical record. Based on 

these comments, we believe we 

underestimated the burden for this 

provision. In response to comments 

received we revised the requirements at 

§ 460.210(b)(6) to permit PACE 

organizations to maintain original 

documentation, or an unaltered 

electronic copy, of any written 

communication the PACE organization 

receives relating to the care, health or 

safety of a participant. This change 

means that PACE organizations would 

be required to maintain all covered 

written communications in 

§ 460.210(b)(6)(i) and (ii), but that they 

can be maintained in either their 

original form or as an unaltered 

electronic copy. In addition to revising 

the regulatory text to permit PACE 

organizations to maintain unaltered 

electronic copies of affected written 

communications, we are also revising 

our burden estimates for § 460.210(b)(6). 

In this final rule, we estimate that the 

burden for maintaining original 

documentation, or an unaltered 

electronic copy, of any written 

communication the PACE organization 

receives relating to the care, health or 

safety of a participant will be 10 hours 

per PACE organization or 1,330 total 

hours (10 hr * 133 organizations) at a 

cost of $102,344 (1,330 hr * $76.95/hr). 

This burden is an ongoing burden in all 

years. 

This final rule at § 460.210 also 

requires a PACE organization to 

document all recommendations for 

services from employees or contractors 

of the PACE organization, including 

specialists, and require PACE 

organizations to document the reasons a 

service recommended by an employee 

or contractor of the PACE organization 

is not approved or provided .We 

considered several factors when 

determining the burden associated with 

these provisions. First, PACE 

organizations are already required under 

§ 460.104(b)(1) to document the 

rationale for not providing services in 

developing the plan of care; therefore, 

this provision will only apply to 

services recommended following the 

initial development of the plan of care. 

Second, PACE organizations will only 

have to document the rationale under 

§ 460.210(b)(5) when the PACE 

organization does not approve or 

provide a recommended service, so 

there will be no additional burden in 

situations where the PACE organization 

approves or provides a recommended 

service. Considering these two factors, 

we determined that each PACE 

organization will have to spend 

approximately 52 hours (approximately 

1 hr per week) to implement this part 

of the regulation. Therefore, we estimate 

a total of 52 hours per organization per 

year, or a total of 6,916 hours (52 hr * 

133 organizations) at a cost of $532,186 

(6,916 hr * $76.95/hr). 

We therefore estimate the total 

ongoing burden of all aspects of this 

provision at § 460.210 to be 8,246 hours 

(1,330 hr + 6,916 hr) at a cost of 

$634,530 ($102,344 + $532,186). 

TABLE H15—WAGES FOR IDT STAFF MEMBERS

Occupation title Occupation 

code 

Adjusted wage * 

($/hr) 

Dietician ....................................................................................................................................................... 29–1031 59.94 

Driver (Passenger Vehicle Driver) ............................................................................................................... 53–3058 31.94 

Home Care Coordinator (often a RN) ......................................................................................................... 29–1141 74.48 

Masters of Social Work ............................................................................................................................... 21–1022 57.02 

Occupational Therapist ................................................................................................................................ 29–1122 82.90 

PACE Center Manager (Medical and Health Services Manager) ............................................................... 11–9111 110.74 

Personal Care Attendant ............................................................................................................................. 31–1120 25.42 

Physical Therapist ....................................................................................................................................... 29–1123 86.70 

Primary Care Provider ................................................................................................................................. 29–1216 193.70 

Recreational Therapist ................................................................................................................................. 29–1125 49.16 

Registered Nurse ......................................................................................................................................... 29–1141 74.48 

Total ...................................................................................................................................................... .............................. 846.48 

Average IDT Cost Per Hour (846.48/11 occupations) ......................................................................... .............................. 76.95 

* See section VIII.A. of this final rule for additional wage information. 

We received the following comments 

on the estimated burden resulting from 

this provision in the proposed rule. 

Comment: Commenters expressed 

concerns that maintaining original 

documentation of any written 

communication relating to the care, 

health or safety of a participant in any 

format in the medical record would 

increase burden for PACE organizations 

as well as increase burden on providers 

that may be responsible for transferring 

these communications to the medical 

record. As a solution, these commenters 

recommended permitting PACE 

organizations to scan written 

documentation and copy and paste 

communications received via email or 

text into electronic medical records. 

Response: In response to commenters’ 

concerns, we reviewed our initial 

burden estimate and determined that we 

had underestimated the burden for 

maintaining this documentation in its 

original format within the medical 

record. We increased the burden 

estimate in the final rule accordingly. In 

determining what an appropriate 

estimate for this provision would be, we 

considered both that we may have 

underestimated the original burden in 

the proposed rule, as well as the 

additional operational flexibility that we 

are allowing for in the final rule, as 

discussed in greater detail in section 

VI.F. of this final rule. Given these two 

factors, we estimate that the burden for 

maintaining original documentation, or 

an unaltered electronic copy, of any 

written communication the PACE 

organization receives relating to the 

care, health or safety of a participant 

will be 10 hours per PACE organization 

instead of the 5 hours we initially 

proposed. 

In this final rule, we revised the 

burden estimate for these provisions 

using updated data previously 

discussed in the introductory paragraph 

to section VIII.B.10. of this final rule. 

The updated data used to revise the 

burden estimates includes: (1) 2017– 

2019 enrollment data, (2) PACE 

organization contract data, and (3) wage 

data. Updated service determination 

request data was not utilized to revise 

this burden estimate since the data does 


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not impact medical record 

documentation. The estimates were also 

revised to account for additional burden 

for the requirements in § 460.210(b)(6). 

Based on this updated data, we have 

revised the burden estimate for revising 

materials and training related to the 

changes in this provision which 

resulted in an increase of 20 hours (from 

1,310 hr to 1,330 hr) and $1,847 (from 

$91,333 to $93,180) from the proposed 

rule. We have also revised the burden 

estimate for the ongoing implementation 

of this provision which resulted in an 

increase of 910 hours (from 7,336 hr to 

8,246 hr) and $75,453 (from $559,077 to 

$634,530) from the proposed rule. 

e. ICRs Regarding PACE Participant 

Rights: Contact Information and Access 

Requirements (§ 460.112) 

Section 460.112 currently includes 

the specific rights to which PACE 

participants are entitled. As discussed 

above in section VI.G., this final rule 

amends the participant rights to identify 

three additional rights, specifically, the 

participant’s right to have reasonable 

and timely access to specialists as 

indicated by the participant’s health 

condition and consistent with current 

clinical practice guidelines, the right to 

call 1–800–MEDICARE for information 

and assistance, and the right to receive 

necessary care in all care settings, up to 

and including placement in a long-term 

care facility when the PACE 

organization can no longer maintain the 

participant safely in the community. 

PACE organizations are currently 

required to provide a copy of the 

participant rights to participants at the 

time of enrollment and to post a copy 

of the rights in the center. Under this 

rule, PACE organizations will be 

required to revise the current 

participant rights to account for the 

three new requirements and post a copy 

of the revised document. 

We estimate it will take 2 hours at 

$70.06/hr for a compliance officer 

(quality improvement coordinator) to 

update the participant rights 

information included in the enrollment 

information and post the new 

participant rights in the center. In 

aggregate, we estimate a one-time 

burden of 266 hr (133 PACE 

organizations * 2 hr) at a cost of $18,636 

(266 hr * $70.06/hr). 

We did not receive any comments 

related to our projected burden 

estimates for this provision. With the 

exception of the adjusted number of 

organizations, we are finalizing the 

proposed burden without change. 

11. ICRs Regarding Stipulated Decisions 

in Part C (§ 422.562) 

In order to permit OMHA adjudicators 

to more efficiently issue decisions 

where there is no longer any material 

issue in dispute, we are providing in 

§ 422.562(d) that, for the sole purpose of 

applying § 405.1038(c), MA 

organizations are included in the 

definition of ‘‘contractors’’ as that 

definition relates to stipulated decisions 

issued by ALJs and attorney 

adjudicators under § 405.1038. We are 

scoring this impact as negligible for 

several reasons. The total number of 

favorable decisions in MA for contract 

year 2018, the most recent year for 

which we have complete appeals data, 

was 578. The number of these 

overturned denials that were stipulated 

decisions is not currently quantifiable as 

it is not data that existing appeals 

systems are equipped to track, and ALJs 

do not track this data on their own. 

We consulted with OMHA for its 

opinion on stipulated decisions. OMHA 

estimated that the number of contractors 

submitting oral or written statements in 

an ALJ hearing or attorney adjudicator 

review was in the single digits as plans 

typically prefer an alternate, informal 

approach that removes the claim from 

the appeals process altogether: 

Requesting that the beneficiary 

withdraw their appeal and resubmit 

their claim for payment. 

CMS estimates that while this change 

would positively impact beneficiaries 

both in receipt of their items or services, 

and afford beneficiaries due process 

protections in a formalized stipulated 

decisions process, the number of 

beneficiaries that would be affected is 

minimal. Despite this estimation of 

negligible impact, we included this 

change to promote regulatory uniformity 

in OMHA’s approach to stipulated 

decisions as far as Medicare contractors 

are concerned. The submission of a 

written or oral statement seeking a 

stipulated decision is associated with an 

administrative action pertaining to 

specific individuals or entities (5 CFR 

1320.4(a)(2) and (c)). Consequently, the 

burden for preparing and filing the oral 

or written statement for use in the 

appeal is exempt from the requirements 

of the PRA. 

We received no comments on the 

assumptions related to our proposed 

provisions. We are finalizing the burden 

assessment on these provisions without 

modification. 

C. Summary of Information Collection 

Requirements and Associated Burden 

Estimates 


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IX. Regulatory Impact Analysis 

A. Statement of Need 

The provisions in this final rule 

implement specific provisions of the 

BBA of 2018 and the SUPPORT Act. 

The statutory need for these policies is 

clear. However, this rule also contains 

discretionary policies, including 

enhancements to the Programs of AllInclusive Care for the Elderly (PACE) 

requirements, hence we provide 

economic justification for some of these 

noteworthy provisions in the following 

paragraphs. 

Based on industry feedback over the 

course of several years, and our 

experiences auditing PACE 

organizations, we proposed to modify 

certain PACE requirements to enhance 

stakeholders’ understanding of our 

requirements and reduce administrative 

burden. Stakeholders have suggested 

that the existing processes for 

addressing service determination 

requests is burdensome for PACE 

organizations, and can delay 

participants’ access to services. We are 

finalizing several changes to the PACE 

regulations to streamline these 

processes while ensuring that important 

participant protections remain intact. 

We estimate these changes will save 

PACE organizations, as a whole, 

approximately $16.8 million in the first 

year, increasing (due to expected 

increased PACE enrollment), to $21.3 

million in ten years. 

Summaries of the public comments 

that are within the scope of the 

provisions’ proposed regulatory impact 

analyses implemented in this final rule 

are included in this section with our 

responses under the appropriate 

headings. 

B. Overall Impact 

We examined the impact of this final 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (January 18, 

2011), the Regulatory Flexibility Act 

(RFA) (September 19, 1980, Pub. L. 96– 

354), Executive Order 13272 on Proper 

Consideration of Small Entities in 

Agency Rulemaking (August 13, 2002), 

section 1102(b) of the Act, section 202 

of the Unfunded Mandates Reform Act 

of 1995 (UMRA) (March 22, 1995; Pub. 

L. 104–4), Executive Order 13132 on 

Federalism (August 4, 1999), the 

Congressional Review Act (5 U.S.C. 

801–808), and Executive Order 13771 

on Reducing Regulation and Controlling 

Regulatory Costs (January 30, 2017). 

This rule is economically significant 

under Executive Order 12866, as it may 

result in over $100 million in costs, 

benefits, or transfers annually. The 

Office of Information and Regulatory 

Affairs has designated this rule as a 

major rule pursuant to the 

Congressional Review Act, 5 U.S.C. 

804(2). 

Section 202 of UMRA also requires 

that agencies assess anticipated costs 

and benefits before issuing any rule 

whose mandates require spending in 

any 1 year of $100 million in 1995 

dollars, updated annually for inflation. 

In 2020, that threshold is approximately 

$156 million. This final rule is not 

anticipated to have an unfunded effect 

on state, local, or tribal governments, in 

the aggregate, or on the private sector of 

$156 million or more. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a final 

rule that imposes substantial direct 

requirement costs on state and local 

governments, preempts state law, or 

otherwise has federalism implications. 

Since this final rule does not impose 

any substantial costs on state or local 

governments, preempt state law or have 

federalism implications, the 

requirements of Executive Order 13132 

are not applicable. 

If regulations impose administrative 

costs on reviewers, such as the time 

needed to read and interpret this final 

rule, then we should estimate the cost 

associated with regulatory review. There 

are currently 795 contracts (which 

includes MA, MA–PD, and PDP 

contracts), 55 state Medicaid Agencies, 

and 300 Medicaid MCOs. We also 

expect a variety of other organizations to 

review (for example, consumer 

advocacy groups, major Pharmacy 

Benefit Managers). We expect that each 

organization will designate one person 

to review the rule. A reasonable 

maximal number is 2,000 total 

reviewers. We note that other 

assumptions are possible. 

Using the BLS wage information for 

medical and health service managers 

(code 11–9111), we estimate that the 

cost of reviewing this final rule is 

$110.74 per hour, including fringe 

benefits and overhead costs (http://

www.bls.gov/oes/current/oes_nat.htm). 

Assuming an average reading speed, we 

estimate that it will take approximately 

19 hours for each person to review this 

final rule. For each entity that reviews 

the rule, the estimated cost is therefore 

$2,100 (19 hours × $110.74). Therefore, 

we estimate that the maximum total cost 

of reviewing this final rule is $4.2 

million ($2,104 × 2,000 reviewers). 

However, we expect that many 

reviewers, for example pharmaceutical 

companies and PBMs, will not review 

the entire rule but just the sections that 

are relevant to them. We expect that on 

average (with fluctuations) 10 percent of 

the rule will be reviewed by an 

individual reviewer; we therefore 

estimate the total cost of reviewing to be 

$0.4 million. 

Note that this analysis assumed one 

reader per contract. Some alternatives 

include assuming one reader per parent 

organization. Using parent organizations 

instead of contracts will reduce the 

number of reviewers. However, we 

believe it is likely that review will be 

performed by contract. The argument for 

this is that a parent organization might 

have local reviewers assessing potential 

region-specific effects from this final 

rule. 

In accordance with the provisions of 

Executive Order 12866, this final rule 

was reviewed by OMB. 

C. Impact on Small Businesses— 

Regulatory Flexibility Analysis (RFA) 

The RFA, as amended, requires 

agencies to analyze options for 

regulatory relief of small businesses if a 

rule has a significant impact on a 

substantial number of small entities. For 

purposes of the RFA, small entities 

include small businesses, nonprofit 

organizations, and small governmental 

jurisdictions. 

This final rule has several dozen 

provisions. Although several provisions 

are technical or codify existing 

guidance, and therefore are not expected 

to have economic impact beyond 

current operating expenses, there are 

other provisions with paperwork or 

other costs. These provisions are 

analyzed in both this section and in 

section VIII of this final rule. A compact 

summary of burdens by year and 

provision are summarized in Tables H16 

and I14 of this final rule. Also, where 

appropriate the cost burdens and cost 

savings of groups of provisions that are 

related are summarized in this section. 

For example, Table H16 of section VIII 

of this final rule lists eight paperwork 

burdens related to PACE organizations 

which are summarized in Table I7 of 

this section. Table I7 is then used in 

Table I9 to give total savings related to 

PACE organizations, the total savings 

reflecting all costs and savings of the 

various provisions whether paperwork 

or not. 

This rule has several affected 

stakeholders. They include (1) 

insurance companies, including the five 

types of Medicare health plans, MA 

organizations, PDPs, cost plans, PACE 

organizations, and demonstration 

projects, (2) providers, including 

institutional providers, outpatient 

providers, clinical laboratories, and 


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pharmacies, and (3) enrollees. Some 

descriptive data on these stakeholders 

are as follows: 

• Pharmacies and Drug Stores, NAICS 

446110, have a $30 million threshold for 

‘‘small size’’ with 88 percent of 

pharmacies, those with under 20 

employees, considered small. 

• Direct Health and Medical 

Insurance Carriers, NAICS 524114, have 

a $41.5 million threshold for ‘‘small 

size,’’ with 75 percent of insurers having 

under 500 employees meeting the 

definition of small business. 

• Ambulatory Health Care Services, 

NAICS 621, including about 2 dozen 

sub-specialties, including Physician 

Offices, Dentists, Optometrists, Dialysis 

Centers, Medical Laboratories, 

Diagnostic Imaging Centers, have a 

threshold ranging from $8 to $35 

million (Dialysis Centers, NAICD 

621492, have a $41.5 million threshold). 

Almost all firms are big, and this also 

applies to sub-specialties. For example, 

for Physician Offices, NAICS 621111, 

receipts for offices with under 9 

employees exceed $34 million. 

• Hospitals, NAICS 622, including 

General Medical and Surgical Hospitals, 

Psychiatric and Substance Abuse 

Hospitals, Specialty Hospitals have a 

$41.5 million threshold for small size, 

with half of the hospitals (those with 

between 20–500 employees) considered 

small. 

• Skilled Nursing Facilities (SNFs), 

NAICS 623110, have a $30 million 

threshold for small size, with half of the 

SNFs (those with under 100 employees) 

considered small. 

We are certifying that this final rule 

does not have a significant economic 

impact on a substantial number of small 

entities. To defend our position, we first 

describe at a high level the cash flows 

related to the Medicare program. We 

then provide more specific details. 

The high-level underlying idea in 

creating the MA, Medicare cost plan, 

and MA–PD Medicare health insurance 

programs, is to allow private insurers to 

coordinate care, resulting in efficiencies 

of cost. The high-level underlying idea 

in creating the non-governmentmanaged Prescription Drug program 

(PDPs and drug portion of MA–PDs) is 

to allow beneficiaries to obtain 

prescription drugs in a competitive 

market to reduce costs. For MA, MA– 

PD, and cost plans, enrollees obtain the 

same original Medicare Part A and B 

services they would otherwise obtain in 

the original Medicare program, 

generally at reduced cost (however, for 

the small percentage of plans bidding 

above the benchmark, enrollees pay 

more, but this percentage of plans is not 

‘‘significant’’ as defined by the RFA and 

as justified below). 

The savings achieved by the MA and 

the MA–PD plans, the amount of 

reduced cost, can then be used by the 

private insurers in a variety of ways, 

including providing supplemental 

benefits to the required original Part A 

and Part B Medicare services. Some 

examples of these supplemental benefits 

include vision, dental, and hearing; in 

addition, MA plans may provide 

supplemental benefits in the form of 

reductions in cost sharing compared to 

the Medicare FFS program. The cost for 

furnishing these supplemental benefits 

comes from a combination of the 

Medicare Trust Fund and enrollee 

premiums. 

Part D plans submit bids and are paid 

by the Medicare Trust Fund for their 

projected costs in the form of direct 

premium subsidy and reinsurance. For 

any enrolled low-income beneficiaries, 

plans receive and additional lowincome premium subsidy and lowincome cost sharing subsidy. The 

national average monthly bid amount, 

or NAMBA, determines the base 

premium. A plan’s premium is the sum 

of the base premium and the difference 

between its bid amount and the 

NAMBA. 

Thus the cost of providing services by 

these insurers is met by a variety of 

government funding and in some cases 

by enrollee premiums. 

In order to achieve these goals, the 

government pays the MA health plans a 

portion of the funds that would have 

been paid had plan enrollees remained 

in original Medicare. These funds are 

then used to provide additional benefits 

on behalf of the health plans’ enrollees. 

This unique insurance relationship has 

several consequences beneficial to all 

parties: First, the various insurance 

programs are not expected to suffer 

burden or losses since the government 

subsidizes them; second, the 

government often incurs savings 

because health plans, by virtue of 

coordinating care, are furnishing the 

same services, albeit often at a reduced 

cost. This lack of expected burden 

applies to both large and small health 

plans. As a consequence of this design, 

the unique MA regulations, such as 

those in this final rule, are defined so 

that small entities are not expected to 

incur additional burden since the cost of 

complying with any final rule is passed 

on to the government. 

We next examine in detail each of the 

stakeholders and explain how they can 

bear cost. (1) For Pharmacies and Drug 

Stores, NAICS 446110; (2) for 

Ambulatory Health Care Services, 

NAICS 621, including about two dozen 

sub-specialties, including Physician 

Offices, Dentists, Optometrists, Dialysis 

Centers, Medical Laboratories, 

Diagnostic Imaging Centers, and 

Dialysis Centers, NAICD 621492; (3) for 

Hospitals, NAICS 622, including 

General Medical and Surgical Hospitals, 

Psychiatric and Substance Abuse 

Hospitals, and Specialty Hospitals; and 

(4) for SNFs, NAICS 623110: Each of 

these are providers (inpatient, 

outpatient, or pharmacy) that furnish 

plan-covered services to plan enrollees. 

Whether these providers are contracted 

or, in the case of PPOs, PFFS, and MSA, 

not contracted with the MA plan, their 

aggregate payment for services is the 

sum of the enrollee cost sharing and 

plan payments. For non-contracted 

providers, § 422.214 and sections 

1852(k)(1) and 1866(a)(1)(O) of the Act 

require that a non-contracted provider 

accept payment that is at least what they 

would have been paid had the services 

been furnished in a fee-for-service 

setting. For contracted providers, 

§ 422.520 requires that the payment is 

governed by a mutually agreed upon 

contract between the provider and the 

plan. Consequently, for these providers, 

there is no additional cost burden above 

the already existing burden in original 

Medicare. 

For Direct Health and Medical 

Insurance Carriers, NAICS 524114, 

plans estimate their costs for the coming 

year and submit bids and proposed plan 

benefit packages. Upon approval, the 

plan commits to providing the proposed 

benefits, and CMS commits to paying 

the plan either (1) the full amount of the 

bid, if the bid is below the benchmark, 

which is a ceiling on bid payments 

annually calculated from original 

Medicare data; or (2) the benchmark, if 

the bid amount is greater than the 

benchmark. 

Theoretically, there is additional 

burden if plans bid above the 

benchmark. However, consistent with 

the RFA, the number of these plans is 

not substantial. Historically, only 2 

percent of plans bid above the 

benchmark, and they contain roughly 1 

percent of all plan enrollees. Since the 

CMS criteria for a substantial number of 

small entities is 3 to 5 percent, the 

number of plans bidding above the 

benchmark is not substantial. 

The preceding analysis shows that 

meeting the direct cost of this final rule 

does not have a significant economic 

impact on a substantial number of small 

entities, as required by the RFA. There 

are certain indirect consequences of 

these provisions which also create 

impact. We have already explained that 

98 percent of the plans bid below the 

benchmark. Thus, their estimated costs 


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for the coming year are fully paid by the 

government. However, the government 

also pays the plan a ‘‘beneficiary rebate’’ 

amount that is an amount equal to a 

percentage (between 50 and 70 percent 

depending on a plan’s quality rating) 

multiplied by the amount by which the 

benchmark exceeds the bid. The rebate 

is used to provide additional benefits to 

enrollees in the form of reduced cost 

sharing, lower Part B or Part D 

premiums, or supplemental benefits. 

(Supplemental benefits may also 

partially be paid by enrollee premiums 

if the plan chooses to use premiums or 

offers optional supplemental benefits 

that enrollees may elect to purchase.) It 

would follow that if the provisions of 

this final rule cause the bid to increase 

and if the benchmark remains 

unchanged or increases by less than the 

bid does, then the result would be a 

reduced rebate and possibly fewer 

supplemental benefits for the health 

plans’ enrollees. 

CMS has observed that from year to 

year MA organizations prefer to reduce 

their profit margins, rather than 

substantially change their benefit 

package. This is due to marketing forces; 

a plan lowering supplemental benefits 

even for one year may lose its enrollees 

to competing plans that offer these 

supplemental benefits. Thus, it is 

advantageous for the MA Organization 

to temporarily reduce margins, rather 

than reduce benefits. 

We note that we do not have 

definitive data on this. That is, we can 

at most note the way profit margins and 

supplemental benefits vary from year to 

year. The thought processes behind the 

plan are not reported. More specifically, 

when supplemental benefits are 

reduced, we have no way of knowing 

the cause for this reduction, whether it 

be new provisions, market forces, or 

other causes. 

A second indirect impact arises from 

effects on the MLR. More specifically, 

several provisions of this final rule have 

non-benefit, administrative 

classification. For example, the RTBT 

provision is a requirement for plans to 

utilize or create certain software; the 

cost of this creation is classified as 

administrative and hence is entered in 

the bid as a non-benefit expense. 

Similarly, the cost of rewards and 

incentives is being codified at 

§ 422.134(g)(3) as a non-benefit expense 

in the plan bid. Several other 

provisions, including those related to 

models of care, call centers, and 

marketing standards, represent nonbenefit administrative cost. A nonbenefit expense contributes to the 

denominator of the MLR but not the 

numerator. 

If the costs of complying with a 

particular provision are excessive, then 

the MLR could be adversely impacted 

and MLR requirements could possibly 

not be met. For contract year 2014 and 

subsequent contract years, MA 

organizations, Part D sponsors, and cost 

plans are required to report their MLRs 

and are subject to financial and other 

penalties for failure to meet the 

statutory requirement that they have an 

MLR of at least 85 percent (§§ 422.2410 

and 423.2410). The statute imposes 

several levels of sanctions for failure to 

meet the minimum MLR requirement, 

including remittance of funds to CMS, 

a prohibition on enrolling new 

members, and ultimately contract 

termination. 

There are two ways of showing that 

this burden is not substantial for at least 

one provision. As noted in section 

VIII.B.7. of this final rule, the estimated 

cost of creating and maintaining an 

RTBT is $4.7 million. We explicitly 

requested stakeholder impact on this 

specific estimate and received none. 

The experience of OACT is that for 

almost all plans, an extra burden of $0.7 

million is unlikely to affect the MLR. 

Additionally, the RTBT provision 

addresses multiple possibilities of 

implementation, some of them 

significantly less costly than others. 

Plans, in implementing the RTBT have 

the following options: (1) Whether they 

want to develop a new portal, or use an 

existing computer application, (2) 

whether they want to offer rewards and 

incentives to their enrollees who log 

onto the beneficiary RTBT, (3) whether 

they want to exclude certain clinically 

appropriate formulary alternatives from 

the RTBT, and (4) whether they want to 

include the negotiated price. 

By both allowing exclusions from the 

RTBT and also by not requiring that 

plans build their own portals, the RTBT 

cost may be significantly less than $4.7 

million. 

Based on the previous discussion, we 

certify that this final rule does not have 

a significant economic impact on a 

substantial number of small entities. 

D. Anticipated Effects 

Some provisions of this final rule 

have negligible impact either because 

they are technical provisions or are 

provisions that codify existing guidance. 

Other provisions have an impact 

although it cannot be quantified or 

whose estimated impact is zero. 

Throughout the preamble, we have 

noted when we estimated that 

provisions have no impact. 

Additionally, this Regulatory Impact 

Analysis discusses several provisions 

with either zero impact or impact that 

cannot be quantified. The remaining 

provisions are estimated in section VIII 

of this final rule and in this Regulatory 

Impact Analysis. Where appropriate, 

when a group of provisions have both 

paperwork and non-paperwork impact, 

this Regulatory Impact Analysis crossreferences impacts from section VIII of 

this final rule in order to arrive at total 

impact. Additionally, this Regulatory 

Impact Analysis provides pre-statutory 

impact of several provisions whose 

additional current impact is zero 

because their impact has already been 

experienced as a direct result of the 

statute. For further discussion of what is 

estimated in this Regulatory Impact 

Analysis, see Table I13 and the 

discussion afterwards. 

1. Beneficiaries With History of OpioidRelated Overdose Included in Drug 

Management Programs (DMPs) 

(§ 423.153) 

This provision requires that CMS 

identify beneficiaries enrolled in 

Medicare Part D with a history of 

opioid-related overdose (as defined by 

the Secretary) and include such 

individuals as PARBs for prescription 

drug abuse under the Part D sponsor’s 

drug management program. We 

projected a list of approximately 18,000 

beneficiaries that met the criteria for 

this provision between July 2017 and 

June 2018, but did not meet other 

criteria for classification as a potential 

at-risk beneficiary. Under this provision, 

this population is projected to (1) 

increase the population of enrollees 

requiring case management by plan 

sponsors (see section IX.B.3. of this final 

rule), and (2) reduce Part D drug cost. 

We evaluated their Prescription Drug 

Event (PDE) data for the same July 2017 

and June 2018 period to determine the 

effects of this provision. After 

examining the PDE data, we found that 

these beneficiaries had an average gross 

drug cost per beneficiary per year of 

$9,675. Because this amount is high 

relative to the typical Part D spending 

and because they do not meet other atrisk criteria, it is likely that many of 

these beneficiaries have conditions that 

require expensive specialty 

medications. These drugs have complex 

clinical criteria that are difficult to alter 

through utilization management. 

Accordingly, and because there is no 

directly pertinent information available 

on the potential savings for increased 

prescription drug management on this 

segment of the population, we have, 

based on the actuarial judgment of staff 

with pharmaceutical experience as well 

as based on discussions with 

pharmacists, assumed that 5 percent of 

their Part D drug cost would be reduced 


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through additional plan management. 

We note that the we received no 

comments on this estimate as a result of 

its publication in the proposed rule and 

therefore believe it reasonable. Our 

estimated fiscal year federal savings 

rounded to the nearest million are 

shown in Table I1. Since these drugs 

would not be purchased as a result of 

efficient case management, they 

represent reduction in goods consumed 

and are true savings to the Medicare 

Trust Fund. 

Table I2 summarizes the aggregate 

impact of the changes to DMPs. It 

reflects all the estimates related to DMPs 

in section IX of this final rule (which 

incur costs) and the savings due to 

reduction in drug costs discussed in this 

Regulatory Impact Analysis. 

2. Automatic Escalation to External 

Review Under a Medicare Part D Drug 

Management Program (DMP) for At-Risk 

Beneficiaries (§§ 423.153, 423.590, and 

423.600) 

The SUPPORT Act requires automatic 

escalation of drug management program 

appeals to the independent outside 

entity contracted with the Secretary for 

review and resolution. We are finalizing 

our proposal to codify that provision, 

with a modification to permit plan 

sponsors up to 24 hours after the 

expiration of the applicable 

adjudication timeframe to assemble and 

forward the administrative case file to 

the IRE. We do not believe the 

modification reflected in this final rule 

impacts our previous estimate. To 

estimate the impact, we first determined 

how many Part D sponsors had 

implemented drug management plans. 

As of July 9, 2019, we found that 60 Part 

D sponsors had implemented drug 

management plans. Next, we estimated 

of the number of CARA-appeals per 

1,000 enrollees and the percentage of 

plan denials related to CARA. To do 

this, we contacted nine Part D sponsors 

and asked how many CARA related 

appeals they had received from January 

1, 2019 through July 31, 2019. 

Of those nine, eight plans responded 

they had have not received any CARA 

appeals. One Part D sponsor responded 

to say they had received CARA related 

appeals. That plan reported a rate of 

0.014 CARA related appeals per 1000 

enrollees. This accounted for 0.08 

percent of plan denials. Since there are 

about 28,600 appeals per year, therefore 

there are only about 23 cases (0.08 

percent * 28,600) affected by this 

provision. Since most IRE cases are 

judged by a physician at a wage of 

$202.46 and typically an IRE will take 

at most 1 hour to review most cases, the 

total burden is about $4,656.58 (23 cases 


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* $202.46 * 1 hour) which is entered as 

$0.0 million in the summary table since 

regulatory accounting standards impose 

a rounding to the nearest tenth of a 

million. 

3. Suspension of Pharmacy Payments 

Pending Investigations of Credible 

Allegations of Fraud and Program 

Integrity Transparency Measures 

(§§ 405.370, 422.500, 422.503, 423.4, 

423.504, and 455.2) 

We were unable to determine the 

overall impact of implementing sections 

2008 and 6063 of the SUPPORT Act 

because we do not have adequate data 

to support an estimate of the potential 

costs and savings. While we do have 

access to estimates of overall Medicare 

Part D opioid spending, sections 2008 

and 6063 of the SUPPORT ACT are not 

expected to impact all Part D opioid 

prescriptions, nor do we expect that 

they would impact all pharmacies that 

dispense those medications. For 

example, section 2008 of the SUPPORT 

Act requires Part D plan sponsors to 

report to CMS any payment suspension 

pending investigation of credible 

allegations of fraud by a pharmacy, 

which must be implemented in the 

same manner as the Secretary does 

under section 1862(o) of the Act. In 

addition, section 6063 of the SUPPORT 

Act requires MA organizations and Part 

D plan sponsors to report information 

on the investigations, credible evidence 

of suspicious activities of a provider of 

services (including a prescriber) or 

supplier related to fraud, and other 

actions taken by the plan related to 

inappropriate prescribing of opioids. In 

both cases, these provisions would 

directly impact a percentage of all 

opioid prescriptions written by 

prescribers and dispensed by 

pharmacies. While we believe there may 

be savings generated through actions 

taken by Part D plan sponsors that will 

conduct their own due diligence from 

the reporting and sharing of 

administrative actions between CMS, 

MA organizations and Medicare Part D 

plan sponsors (including MA 

organizations offering MA–PD plans), as 

well as additional law enforcement 

actions, we cannot estimate the impact 

at this time. We welcomed comment 

and suggestions for data that could be 

relied upon for this purpose. 

We received no comments on the 

proposed regulatory impact and 

consequently we are finalizing them 

without modification. 

4. Medicare Advantage (MA) and Part D 

Prescription Drug Program Quality 

Rating System (§§ 422.162, 422.164, 

422.166, 422.252, 423.182, 423.184, and 

423.186) 

We are finalizing measure updates, 

clarifying and codifying policies in this 

final rule. These changes are routine 

and are not expected to have an impact 

on the highest ratings of contracts (that 

is, overall rating for MA–PDs, Part C 

summary rating for MA-only contracts, 

and Part D summary rating for PDPs). 

These types of routine changes have 

historically had very little or no impact 

on the highest ratings. Hence, there will 

be no, or negligible, impact on the 

Medicare Trust Fund from the routine 

changes. 

We are also clarifying some of the 

current rules around assigning Quality 

Bonus Payment (QBP) ratings and 

codifying the rules around assigning 

QBP ratings for new contracts under 

existing parent organizations. We are 

not finalizing any changes to our current 

QBP policies, so there will be no impact 

on the Medicare Trust Fund from these 

provisions. 

5. Permitting a Second, ‘‘Preferred,’’ 

Specialty Tier in Part D (§§ 423.104, 

423.560, and 423.578) 

The option for Part D sponsors to offer 

a second, ‘‘preferred’’ specialty tier has 

the potential to impact Part D drug costs 

in at least two ways. First, a Part D 

sponsor may have additional negotiating 

power with brand drug manufacturers 

by offering a preferential tier position 

relative to the current single specialty 

tier. Second, Part D sponsors may 

promote lower-cost biosimilar biological 

products on a preferred specialty tier. 

We consider each of these possibilities 

in the following discussion. 

For a Part D sponsor to be able to 

negotiate better formulary position and 

lower beneficiary cost sharing for a 

particular specialty-tier drug, there must 

be a substantial difference between the 

cost sharing on the preferred specialty 

tier and the higher cost-sharing, 

specialty tier. Because the regulation 

limits the maximum allowable cost 

sharing to the range of 25 to 33 percent, 

Part D sponsors must achieve this 

difference by lowering the cost sharing 

on the preferred specialty tier. For 

example, because of the high cost for 

specialty-tier drugs and the structure of 

the Part D benefit, Part D enrollees and 

prescribers might not significantly alter 

their behavior in response to a five 

percent change in coinsurance. A 

substantial reduction in the cost sharing 

for preferred specialty tier would 

necessitate a substantial increase in cost 

sharing for other tiers to maintain an 

actuarially equivalent benefit, which 

may unfavorably change the competitive 

position of the Part D sponsor’s plan 

offering. In particular, a plan that offers 

lower cost sharing on high-cost 

specialty-tier drugs and higher cost 

sharing on conventional drugs would 

risk adverse selection from Part D 

enrollees. 

In addition, allowing tiering 

exceptions between the preferred 

specialty tier and the higher costsharing, specialty tier creates a risk for 

the Part D sponsor that may exceed the 

benefit of being better able to negotiate 

with respect to brand drugs. A portion 

of the higher cost-sharing, specialty-tier 

drugs may be granted exceptions as the 

clinical criteria for such Part D drugs is 

complex and can lead to different 

prescriptions for beneficiaries with 

similar conditions. These Part D drugs 

are often more complicated chemically 

and apply to complex conditions, such 

as Rheumatoid Arthritis or Multiple 

Sclerosis. This added complexity 

requires greater specialized knowledge 

than a traditional small molecule drug 

would for denying an exception. This 

will be known to manufacturers, who 

will be less inclined to provide 

additional incentives for the preferred 

placement given that a significant 

amount of non-preferred use will limit 

any market share gains from their 

enhanced formulary position. Part D 

sponsors would also face additional 

liability from the difference in cost 

sharing between the preferred and the 

higher cost-sharing, specialty tiers on 

prescriptions that are granted tiering 

exceptions. This dynamic serves as a 

disincentive for Part D sponsors to place 

specialty-tier-eligible drugs on a nonspecialty, non-preferred drug tier under 

current regulation. 

Regarding savings from biosimilar 

biological products that could be 

promoted through a preferred specialty 

tier, some of the same previously 

discussed issues still apply. For 

example, Part D sponsors may expect a 

portion of a non-preferred reference 

biological product’s utilization to be 

given an exception to the preferred tier 

for a biosimilar biological product if 

such biosimilar biological product is not 

licensed for all of the same indications 

as the reference biological product. 

Furthermore, the selection of these 

products is often largely determined by 

the behavior of the prescriber rather 

than the formulary status of the Part D 

sponsor. If the prescriber prefers the 

reference biological product, they are 

more likely to prescribe it rather than 

the biosimilar biological product, 

regardless of the formulary position. 


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This is particularly true for specialtytier drugs, where the differences in total 

drug cost and the cost-sharing 

requirements of the plan are not as 

extreme as the differences between 

conventional brand and generic drugs. 

Finally, it is worth noting that several 

large Part D sponsors do not currently 

promote biosimilar biological products. 

For example, Zarxio®, a biosimilar 

biological product to Neupogen®, is not 

included on the formulary for several 

large Part D plans. 

Our conclusion is that the provisions 

of the final rule to allow Part D sponsors 

to structure their benefits with a second, 

‘‘preferred’’ specialty tier are unlikely to 

have a material impact on Part D costs. 

While it is possible that a small savings 

to the Part D program could result from 

the enhanced flexibility, particularly for 

MA–PD plans with greater prescriber 

integration, broad adoption of a second 

specialty tier is unlikely. Nevertheless, 

we believe there are reasons for a 

second specialty tier. As discussed in 

more detail in section IV.E. of this final 

rule, stakeholders requesting this 

change have posited that it might lead 

to better rebates on certain Part D drugs 

and reduced costs for Part D enrollees 

and CMS. Most importantly, we are 

currently not aware of any major 

adverse effects that could result to Part 

D enrollees by allowing Part D sponsors 

to structure their benefits with a second, 

‘‘preferred’’ specialty tier. For example, 

concern for undue financial burden on 

some Part D enrollees has prompted us 

to retain the current maximum 

allowable cost sharing (that is, 25/33 

percent, as discussed in more detail in 

section IV.E. of this final rule). 

Additionally, we solicited comment 

regarding whether negative 

consequences to Part D enrollees could 

result from this proposal. If there were 

no foreseeable notable harms to Part D 

enrollees, it would seem reasonable to 

provide the requested flexibility to Part 

D sponsors and see if additional benefits 

do result, while monitoring 

implementation for adverse effects and 

responding as necessary. 

As discussed in section IV.E. of this 

final rule, improving Part D enrollee 

access to needed drugs, including 

lowering drug costs, are central goals for 

CMS. While this regulatory impact 

analysis assesses the potential impact 

this policy will have on Part D drug 

costs, we also believe this policy has the 

potential to impact patient access and 

lower drug costs more broadly, by 

providing further incentives for 

manufacturers to develop generic drugs 

and biosimilar and interchangeable 

biological products. Even if notable 

savings for the Part D program were not 

to materialize, individual Part D 

enrollees might save a great deal on 

rebated Part D drugs. Or, the policy 

might result in the benefit of (1) more 

formulary choices, or (2) more choices 

at a lower cost than might have 

otherwise been the case. These, in turn, 

might lead to positive health outcomes 

with associated indirect savings to Part 

D enrollees or the government. We 

solicited comment on any other 

unforeseen benefits that might result. 

And, again, in finalizing this proposal, 

we will closely monitor for any adverse 

effects and take any necessary action 

including warranted changes for future 

rulemaking. 

Comment: Some commenters 

suggested that CMS should conduct 

additional research on the impact of 

specialty tiers on Part D enrollees, 

generally, before enacting this policy. 

Response: In finalizing our proposals 

to permit Part D sponsors to maintain 

up to two specialty tiers, we intend to 

monitor the uptake of the use of a 

second specialty tier. We are unclear 

about, generally, what the commenters 

believe we should research, given the 

Part D enrollee protections we are 

finalizing as part of this final rule. 

Comment: Some commenters 

suggested that the specialty tier(s) serve 

as perverse ‘‘reverse insurance,’’ 

reasoning that the sickest patients who 

need specialty-tier eligible drugs 

subsidize the benefit to keep premiums 

and cost sharing on non-specialty tiers 

lower for the rest of the benefit. 

Some commenters stated that CMS’s 

proposals exacerbate an existing lack of 

transparency and the impact of 

misaligned rebate incentives in the Part 

D program because CMS’s proposal 

provides no incentive or imposes no 

requirement that the rebates on these 

high-cost drugs be passed on to Part D 

enrollees at the point of sale. They 

suggested that these misaligned 

incentives lead to inappropriate tier 

placements as Part D sponsors choose 

higher negotiated prices in exchange for 

higher rebates, and may prefer a drug 

with a higher net cost over a less 

expensive alternative. These 

commenters suggested that CMS’s 

proposals, due to this inappropriate tier 

placement, could increase costs to Part 

D enrollees and the government in two 

ways: First, as Part D enrollees enter 

catastrophic coverage more quickly; and 

second, because Part D enrollees could 

pay more for preferred products, despite 

a lower coinsurance percentage, because 

the coinsurance percent is calculated 

from a higher list price. These 

commenters also suggested that 

misaligned rebate incentives in the Part 

D program will discourage plan use of 

newer market alternatives. 

Response: We disagree with the 

sentiment that the specialty tier(s) serve 

as a perverse, ‘‘reverse insurance’’ 

whereby the sickest patients who need 

specialty-tier eligible drugs subsidize 

the benefit to keep premiums and cost 

sharing on non-specialty tiers lower for 

the rest of the benefit. We believe this 

reasoning is flawed because the 

specialty tier is aligned with the Defined 

Standard benefit, and the Part D plan 

bid requirements also necessitate that 

the benefit structure below the specialty 

tier also be actuarially equivalent to the 

Defined Standard benefit. Therefore, the 

use of specialty-tier eligible drugs has 

no differential impact on lowering the 

premiums and cost sharing on nonspecialty tiers for the rest of the benefit. 

Finally, our proposals would not change 

the role of rebates in the Part D program. 

Comment: Relative to the Part D 

enrollee and governmental impacts of 

CMS’s proposals, some commenters 

urged CMS to ensure premiums do not 

go up, and others expressed concern 

that cost sharing on other (in other 

words, non-specialty) tiers would 

increase as Part D sponsors are required 

to maintain actuarial equivalence. Some 

commenters suggested that plans will 

utilize a second specialty tier to shift 

more risk of financial exposure to Part 

D enrollees, leading to higher 

coinsurance for enrollees who use 

specialty-tier drugs. 

Relative to the Part D sponsor impacts 

of our proposals, some suggested that 

CMS’s proposals would increase costs to 

Part D sponsors due to increases in 

administrative burden from tiering 

exceptions requests. Others disagreed 

with CMS’s assertion that without any 

specialty tiers, plan costs would 

increase, and stated that CMS provided 

no data to suggest that specialty tier 

drugs at lower cost sharing could cause 

increases to premiums or cost sharing 

for non-specialty tiers. 

Some commenters were concerned 

that CMS’s proposals would increase 

costs to Part D enrollees, the 

government, and Part D sponsors. These 

commenters suggested that if the higher 

cost-sharing, specialty tier were kept at 

the current specialty tier cost threshold 

(in other words, 25/33 percent) with no 

changes (in other words, permitting the 

higher cost-sharing, specialty tier to 

have cost sharing greater than 25/33 

percent), the Part D sponsor’s costs for 

specialty drugs would increase, leading, 

in turn, to higher bids, and higher 

premiums and cost sharing for Part D 

enrollees. 

Response: Substantial reductions in 

cost sharing below the 25/33 percent 


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maximum for the preferred specialty tier 

necessitate substantial increases in cost 

sharing for non-specialty tiers in order 

to meet actuarial equivalence 

requirements. Therefore, we recognize 

that, in order for Part D sponsors to offer 

competitive plan benefit designs, Part D 

sponsors may not offer plan benefit 

designs with cost sharing for the 

preferred specialty tier far below the 25/ 

33 percent maximum for the higher 

cost-sharing, specialty tier, and 

consequently, Part D enrollee savings 

for drugs on the preferred specialty tier 

may be limited. However, because 

§ 423.104(d)(2)(iv)(D) maintains the 

existing 25/33 percent maximum 

allowable cost sharing for the specialty 

tiers, Part D enrollees will not pay more 

for specialty-tier drugs under our 

proposals than they do now. Therefore, 

we disagree that our proposals will 

increase Part D enrollees’ cost sharing 

for specialty-tier drugs. 

We do not understand the 

commenter’s assertion that plans will 

utilize a second specialty tier to shift 

more risk of financial exposure to Part 

D enrollees, leading to higher 

coinsurance for enrollees who use 

specialty-tier drugs. While this may be 

the case in the commercial market, 

which does not, as a matter of policy, 

establish or maintain either a specialtytier cost threshold or a maximum 

allowable cost sharing, and thus, may 

have incentives to place more drugs on 

the specialty tier(s), the methodologies 

to establish an increase the specialty-tier 

cost threshold that we are finalizing in 

this rule will serve to limit the specialty 

tier(s) to only the highest-cost Part D 

drugs. We welcome further input on this 

matter. 

Because specialty-tier drugs are 

playing an increasing role in the 

prescription drug marketplace, and we 

have concern about the impact this will 

have on the Part D program, we believe 

that the increase in volume of specialtytier drugs, but not our proposals, could 

increase costs to the government. 

Regarding administrative burden, 

tiering exceptions are requested at a 

much lower volume than formulary 

exception requests and coverage 

determinations in general. Based on 

2019 Part D plan reported data, tiering 

exceptions accounted for only 10.8 

percent of all exception requests 

received at the coverage determination 

level, and 5.6 percent of all coverage 

determination requests. We do not 

anticipate that our proposals to permit 

Part D sponsors to maintain up to two 

specialty tiers will significantly impact 

this volume. 

Although implementation will be 

delayed until coverage year 2022, we are 

finalizing as proposed our proposals to 

permit a second specialty tier, except 

that we are not finalizing our proposal 

to specify a specialty tier threshold of 

$780. Additionally, in response to 

comments, we are finalizing new 

paragraph § 423.104(d)(2)(iv)(A)(6) 

which describes the eligibility for 

placement on the specialty tier of 

newly-FDA-approved Part D drugs. 

To retain the policies in effect before 

coverage year 2022, we are amending 

the definition of specialty tier at 

§ 423.560 by adding paragraph (i) to 

clarify that the existing definition will 

apply before coverage year 2022, and 

paragraph (ii) to cross reference the 

definition which appears in 

§ 423.104(d)(2)(iv), which will apply 

beginning coverage year 2022. 

Additionally, as discussed in section 

IV.E.2. of this final rule, we are 

amending § 423.578(a)(6)(iii) by adding 

paragraph (A) to cross reference the 

definition of specialty tier which will 

apply before coverage year 2022, and 

paragraph (B) to cross reference 

placement of the definition of specialty 

tier at § 423.104(d)(2)(iv) which will 

apply beginning coverage year 2022. 

Additionally, paragraph (A) will remove 

the phrase ‘‘and biological products,’’ 

and paragraph (B) will (1) reflect the 

possibility of a second specialty tier, 

and (2) clarify that Part D sponsors may 

design their exception processes so that 

Part D drugs on the specialty tier(s) are 

not eligible for a tiering exception to 

non-specialty tiers. 

6. Service Determination Request 

Processes Under PACE (§§ 460.104 and 

460.121) 

We have revised the estimated impact 

from that presented in the proposed rule 

in the following ways: (1) We adjusted 

our estimates to account for an increase 

in wages according to the May 2019 

BLS, (2) we included 2019 PACE audit 

data which was not available at the time 

these estimates were published in the 

proposed rule, (3) we updated 

enrollment data based on 2017–2019 

data from the CMS Office of the Actuary 

(OACT) and (4) we updated PACE 

organization contract data based on data 

from the Health Plans Management 

System (HPMS). Based on these 

revisions, we continue to estimate that 

the finalized provisions will result in 

savings to PACE organizations. 

To estimate the savings from the 

revisions we are finalizing to the service 

determination request provisions, we 

rely upon the assumptions described in 

the next section. These assumptions are 

based on our experience monitoring 

PACE organizations’ compliance with 

current service determination request 

requirements and on data collected 

during those monitoring efforts. 

We estimate that under the current 

regulation, the aggregate total annual 

cost to all PACE organizations for 

processing service determination 

requests is approximately $33.2 million. 

We estimated that cost by using the 

following assumptions. First, we 

estimate the wages for each of the 11 

Interdisciplinary team (IDT) members in 

order to better estimate a total cost. The 

eleven disciplines shown are the 

minimum disciplines required to 

compose the IDT under § 460.102(b). 

The occupation codes and wages used 

come from the BLS’s website. The wage 

for each discipline includes the mean 

hourly wage plus 100 percent of the 

mean hourly wage for overhead and 

fringe benefits. Table I3 allows us to 

estimate the mean hourly wage of the 

IDT as a whole. 

TABLE I3—WAGES FOR IDT STAFF MEMBERS

Occupation title Occupation code 

Mean hourly 

wage with 

overhead 

and fringe 

benefits 

($) 

Dietician ...................................................................................... 29–1031 ...................................................................................... 59.94 

Driver .......................................................................................... 53–3058 ...................................................................................... 31.94 

Home Care Coordinator (often an RN) ...................................... 29–1141 ...................................................................................... 74.48 

Masters of Social Work .............................................................. 21–1022 ...................................................................................... 57.02 

Occupational Therapist ............................................................... 29–1122 ...................................................................................... 82.90 

PACE Center Manager ............................................................... 11–9111 ...................................................................................... 110.74 


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TABLE I3—WAGES FOR IDT STAFF MEMBERS—Continued 

Occupation title Occupation code 

Mean hourly 

wage with 

overhead 

and fringe 

benefits 

($) 

Personal Care Attendant ............................................................ 31–1120 ...................................................................................... 25.42 

Physical Therapist ...................................................................... 29–1123 ...................................................................................... 86.70 

Primary Care Provider ................................................................ 29–1216 ...................................................................................... 193.70 

Recreational Therapist ............................................................... 29–1125 ...................................................................................... 49.16 

Registered Nurse ........................................................................ 29–1141 ...................................................................................... 74.48 

Total ..................................................................................... ..................................................................................................... 846.48 

Wages/hr (Total/11) ..................................................... ..................................................................................................... 76.95 

Currently, when processing a service 

determination request, the IDT must 

determine the appropriate discipline(s) 

to conduct a reassessment under 

§ 460.104(d)(2) and is responsible for 

notifying the participant or designated 

representative of its decision to approve 

or deny a request under 

§ 460.104(d)(2)(iii). Based on our 

experiences monitoring PACE 

organizations, we estimate that the IDT 

takes approximately 1 hour to handle 

these responsibilities for each service 

determination request (1 × $846.48 = 

$846.48). 

Reassessments performed in response 

to service determination requests are 

varied and may be done by multiple 

disciplines. For purposes of this 

estimate, we assume a registered nurse 

(RN) and Master’s-level social worker 

(MSW) conduct reassessments, and that 

the total hours for reassessments equals 

1.5 hours per discipline. Therefore, we 

estimate that reassessments would cost 

(1.5 × $74.48 = $111.72) and (1.5 × 

$57.02 = $85.53). This is summarized in 

Table I4. 

TABLE I4—COST PER SERVICE DETERMINATION REQUEST FOR A PACE ORGANIZATION ASSESSMENT

Occupation title Occupation 

code 

Wage/hr 

($) 

Time 

(hr) 

Total cost 

($) 

Masters of Social Work ................................................................................... 21–1022 57.02 1.5 85.53 

Registered Nurse ............................................................................................. 29–1141 74.48 1.5 111.72 

Total Cost ................................................................................................. ........................ ........................ ........................ 197.25 

Additionally, once a decision has 

been rendered, one discipline (usually 

the MSW) notifies the applicable parties 

which we believe takes about 1 hour (1 

× $57.02 = $57.02). This is summarized 

in Table I5. 

TABLE I5—COST PER SERVICE DETERMINATION REQUEST FOR A PACE ORGANIZATION NOTIFICATION

Occupation title Occupation 

code 

Wage/hr 

($) 

Time 

(hr) 

Total cost 

($) 

Masters of Social Work ................................................................................... 21–1022 57.02 1 57.02 

Therefore, the processing of a service 

determination request under current 

regulations is $1,100.75 ($57.02 + 

$846.48 + $197.25) per request. 

Additionally, based on combined 

audit data collected from all PACE 

organizations in 2017, 2018, and 2019 

we estimate there are 705.0 service 

determination requests per 1,000 

enrollees (30,173 total service 

determination requests for 2017, 2018, 

and 2019 divided by 42,800, the average 

enrollment for that time period). 

Consequently, the total cost of 

processing service determination 

requests for 2017–2019 under the 

current regulations was approximately 

$33.2 million (705.0 service 

determination requests/1,000 enrollees 

× 42,800 enrollees × $1,100.75 per 

service determination request) per year. 

We anticipate the changes in 

§ 460.121 of this final rule will reduce 

burden on PACE organizations in the 

following ways. First, the final rule 

establishes a streamlined approval 

process for service determination 

requests when an IDT member can 

approve the request in full at the time 

the request is made, under new 

§ 460.121(e)(2). These approved requests 

will not need to be brought to the full 

IDT for review and will not require the 

IDT to conduct a reassessment. We also 

do not anticipate notification of the 

approval adding an additional burden 

because the IDT member would approve 

the request immediately and 

presumably satisfy the notification 

requirements under § 460.121(j)(1) at the 

time the request is made. As discussed 

in section VIII.B.10. of this final rule, we 

estimate: 

• 22.47 percent of all service 

determination requests are denied, 

while 77.53 percent are approved; and 

• Of the 77.53 percent of service 

determination requests that are 

approved, 50 percent of those are 

routine (that is, can be approved in full 

by an IDT member), while 50 percent 

are not routine. 

Consequently, 


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• 273 service determination requests/ 

1,000 enrollees are routine and 

approved (50 percent routine × 77.5 

percent approved × 705.0 service 

determination requests/1,000 enrollees); 

• 158 service determination requests/ 

1,000 enrollees are denied (22.5 percent 

× 705.0 service determination requests/ 

1,000 enrollees); and 

• 273 service determination requests/ 

1,000 enrollees are approved but not 

routine (77.5 percent approved × 50 

percent not routine × 705.0 service 

determination requests/1,000 enrollees). 

These estimates are summarized in 

Table I6. 

TABLE I6—BREAKOUT OF SERVICE DETERMINATION REQUESTS BY TYPE

Row ID Formula Item Number or 

percentage 

(1) ................. .......................................................... Average enrollment PACE, 2017, 2018, 2019 .......................................... 42,800 

(2) ................. .......................................................... Total unduplicated service determination requests (SDR) 2017–2019 ..... 30,173 

(3) ................. (2)/(1) * 1000 ................................... Number of SDR per 1000 enrollees .......................................................... 705.0 

(4) ................. .......................................................... Percentage of SDR Approved ................................................................... 77.53 

(5) ................. 100%¥(4) ........................................ Percentage of SDR with denial .................................................................. 22.47 

(6) ................. .......................................................... Percentage of approved SDR, easily approved ........................................ 50 

(7) ................. (3) * (4) ............................................ Total approved SDR per 1000 enrollees ................................................... 547 

(8) ................. (3) * (5) ............................................ Total SR with denial per 1000 enrollees ................................................... 158 

(9) ................. (7) * (6) ............................................ Total easily approved SDR per 1000 enrollees ......................................... 273 

(10) ............... (7)¥(9) ............................................. Total not-easily approved SDR per 1000 enrollees .................................. 273 

(11) ............... (8) + (9) + (10) ................................. Aggregate SDR per 1000 enrollees per year ............................................ 705.0 

We are finalizing the relevant PACE 

service determination request proposals 

without substantive modification, and 

our burden estimates for the final 

provisions are based on the following 

assumptions: 

• Service determination requests that 

an IDT member is able to approve in full 

at the time the request is made under 

§ 460.121(e)(2) will not require full IDT 

review, assessment, or a separate 

notification. Although some work is 

involved in such approvals, we are 

estimating the cost as $0 since: (i) No 

reassessment is needed consistent with 

§ 460.121(e)(2)(ii), (ii) no separate 

notification will generally be needed 

under § 460.121(j)(1), (iii) review by the 

full IDT is not required under 

§ 460.121(e)(2)(ii) and (iv) the estimated 

time for an IDT member to approve an 

easily approved service determination 

request in full is small and hence the 

total cost is negligible and can be done 

as a part of the PACE organization’s 

routine day to day activities. 

• Denied service determination 

requests require review by the full IDT 

under § 460.121(f), an in-person 

assessment pursuant to 460.121(h)(1), 

and notification. 

• Service determination requests that 

are approved, but cannot be approved in 

full at the time the request is made, will 

require review by the full IDT under 

§ 460.121(f) and notification pursuant to 

§ 460.121(j)(1) but would not require an 

assessment. 

In section VIII.B. of this final rule, we 

identified eight requirements across five 

provisions anticipated to increase 

burden for PACE organizations. These 

eight requirements, their projected first 

year costs, and their projected annual 

costs after the first year are summarized 

in Table I7. 

TABLE I7—PAPERWORK COSTS ASSOCIATED WITH THIS FINAL RULE

Item 1st year cost * 

Cost for 

years 2–10 if 

applicable 

Extension notification ............................................................................................................................................... 133,997 133,997 

Update for extension notification ............................................................................................................................. 18,636 ........................

Update Appeal Notices ............................................................................................................................................ 46,590 ........................

Develop written materials for tracking ..................................................................................................................... 374,661 ........................

Tracking services ..................................................................................................................................................... 374,661 374,661 

Medical record documentation training ................................................................................................................... 93,180 ........................

Medical record documentation ................................................................................................................................ 634,530 634,530 

Update for patients’ rights ....................................................................................................................................... 18,636 ........................

Totals (in Millions $) ......................................................................................................................................... 1.7 1.1 

To estimate the total savings over 10 

years we proceed as follows: 

• We estimate the total savings 

without additional paperwork for 2017– 

2019 by subtracting the projected cost 

under the proposed provisions from the 

actual cost under the current provisions. 

Table I8 presents these calculations, 

showing a $15.2 million savings, 

without considering paperwork, for 

2017–2019. 

• For any year between 2022 and 

2031, we divide the projected 

enrollment for that year by the actual 

enrollment for 2017–2019. Since costs 

are per 1000 enrollees, this quotient 

when multiplied by 15.2 million will 

give the savings for that year without 

considering paperwork requests. 

• Finally, since paperwork requests 

are an additional burden, we subtract 

paperwork costs from the savings to 

ascertain the projected savings for that 

year. In subtracting paperwork costs, we 

must subtract an annual cost in all years 

and a special one-time first year cost in 

2022. Table I9 presents this 10-year 

projection. 

We illustrate these calculations by 

deriving the $15.2 million savings 

estimated based upon the data 2017 

through 2019, and presented in Table I9. 

That is, if the provisions of this rule had 


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been adopted between 2017 and 2019, 

there would have been a savings of 

$15.2 million. This can be shown as 

follows: 

• Actual Cost (without paperwork) for 

2017–2019: 33.2 million. 

• Cost (without paperwork) if these 

provisions were adopted: 18.0 million. 

• Total savings (Difference of the last 

two rows): 15.2 million. 

As we explained previously, in order 

to arrive at the 33.2 million and the 18.0 

million, we considered the following: 

• $33.2 = 42,800 enrollees * 705.0 

service determination requests/1,000 

enrollees * $1,100.75 (IDT + 

assessment + notification) 

• $18.0 = $10.6 (10.56) + $7.5 (7.44) + 

$0 

• $10.6 = 42,800 enrollees * 273 service 

determination requests/1,000 

enrollees × ($1,100.75¥$197.25) 

• $7.4 = 42,800 enrollees * 158 service 

determination requests/1,000 

enrollees × ($1,100.75) 

• $0 = 42,800 enrollees * 273 service 

determination requests/1,000 

enrollees × $0 

As can be seen, the savings comes 

from the fact that whereas current 

regulations require that all 705.0 service 

determination requests/1,000 enrollees 

be processed by the IDT (at a cost of 

$1,100.75), the draft final regulations 

only require that 431 service 

determination requests (158 service 

determination requests/1,000 enrollees 

that are denied and 273 service 

determination requests/1,000 enrollees 

that are approved but not routine) 

would go to the full IDT for processing, 

but another 273 service determination 

requests would be approved and routine 

and therefore would not impose any 

administrative cost on the PACE 

organization. Additionally, the 273 

approved but not routine requests that 

would go to the IDT would be a reduced 

cost of $1,100.75¥$197.25 since 

assessments would not be done for all 

of those approvals. We anticipate this 

final rule will reduce administrative 

burden on the PACE organization, and 

allow IDT members to focus more time 

on providing participant care. 


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To clarify Table I9, consider the 

following: 

• As noted previously, the actual 

non-paper savings for the base year, had 

this provision been implemented 

between 2017 and 2019, would have 

been $15.2 million for the 42,800 

enrollees. 

• The OACT projects 52,181 PACE 

enrollees for 2022. 

• Since enrollment is projected to 

increase by a factor of 1.2191 (52,181/ 

42,800), and we are estimating service 

determination requests per 1,000 

enrollees, we project the non-paper 

savings for 2022 to be 1.2191 × $15.2 = 

$18.5 million. In other words, the 2017– 

2019 costs under the current regulation 

and proposed regulation would involve 

a product of 2017–2019 enrollment 

(about 42,800) times the number of 

service requests per 1,000. The 2022 

costs use the same formula, however the 

42,800 is replaced by 52,181. It follows 

that multiplying the 2017–2019 savings 

by 52,181/42,800 gives us the correct 

2022 savings. Since the difference 

between the current cost and the 

proposed cost is savings, it follows that 

multiplying this difference by the ratio 

of 52,181/42,800 gives the updated 

savings). 

• However, these are savings without 

paperwork costs. Table I7 indicates an 

ongoing $1.1 million cost in all years. 

The extra cost in the first year $0.6 

million (in addition to the $1.1 ongoing 

cost) is derived from Table I7 as the 

total first year cost of $1.7 million 

minus the ongoing cost in subsequent 

years of $1.1 million. 

• Therefore, the total savings for 2022 

would be $18.5¥(1.1 + 0.6) = $16.8 

million. 

• The other rows are calculated 

similarly. 

Accordingly, the finalized provisions 

streamline the processes for addressing 

service determination requests in PACE 

are projected to save PACE 

organizations $16.8 million in 2022 

with a gradual increase in savings to 

$21.5 million by 2031. The aggregate 

savings from 2022–2031 is $193.8 

million. These savings are to industry 

(PACE organizations) because 

administrative burden is being reduced. 

Additionally, each blank cell in Table I8 

corresponds to a proposal to eliminate 

an unnecessary burden. 

We received no comments regarding 

the impact related to the proposed 

PACE provisions however we have 

revised our estimate in the following 

ways: (1) We updated our projected 

costs for §§ 460.121, 460.122, 460.124, 

460.98, 460.210, and 460.112, (2) we 

adjusted estimates to account for an 

increase in wages according to the May 

2019 BLS, (3) we included 2019 PACE 

audit data which was not available at 

the time these estimates were published 

in the proposed rule, (4) we updated 

enrollment data based on data from 

OACT and (5) we updated PACE 

organization contract data based on data 

from HPMS. 

Specifically, the projected costs for 

documenting and tracking the provision 

of services under PACE (§ 460.98), 

appeals requirements under PACE 

(§ 460.122), and participant rights 

(§ 460.112) provisions were updated to 

account for: (1) An increase in wages 

according to the May 2019 BLS, (2) 

updated enrollment data from OACT, 

and (3) updated PACE organization 


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contract data based on data from HPMS. 

Projected costs and savings associated 

with service determination request 

(§ 460.121) were updated to account for: 

(1) An increase in wages according to 

the May 2019 BLS, (2) updated 

enrollment data based on data from 

OACT, (3) updated PACE organization 

contract data based data from HPMS, 

and (4) updated service determination 

request data from PACE audits 

conducted from 2017 through 2019. As 

a result of comments, we also revised 

costs for documentation in medical 

records under PACE (§ 460.210), which 

accounts for: (1) An increase in wages 

according to the May 2019 BLS, (2) 

updated enrollment data based on data 

from OACT, (3) updated PACE 

organization contract data based on data 

from HPMS, and (4) revisions to the 

proposed requirements for maintaining 

all written communications received 

from a participant or other parties in 

their original form, as discussed in 

section VIII.B.10. of this final rule. 

7. Beneficiaries With Sickle Cell Disease 

(§ 423.100) 

Based on analysis of 2018 data, we 

found that about 683 beneficiaries (1.3 

percent) who met the minimum OMS 

criteria or who had a history of an 

opioid-related overdose had sickle cell 

disease and would be affected by the 

finalized exemption. Since we estimate 

that less than 10 percent of these 683 

beneficiaries would have been targeted 

for case management, the resulting 

savings is $0.0 million (10 percent × 683 

enrollees × $542.46 for each case 

management). 

E. Alternatives Considered 

CMS did not develop Alternatives 

Considered sections for most of the 

provisions in this final rule as they 

generally are direct implementations of 

federal laws or codifications of existing 

policy for the Part C and D programs. In 

this section, CMS includes discussions 

of Alternatives Considered for the 

provisions to which they are applicable. 

1. Beneficiaries With History of OpioidRelated Overdose Included in Drug 

Management Programs (DMPs) 

(§ 423.153) 

As the Medicare Part D program is a 

prescription drug benefit and opioidrelated overdoses can be due to both 

prescription opioids, which may be 

covered under Part D, and illicit 

opioids, this raises a question of how 

CMS should define history of opioidrelated overdose. CMS considered two 

options for defining history of an 

opioid-related overdose plus two 

alternatives. 

Opioid overdose codes (ICD–10) were 

identified using Medicare FFS Claims 

data and Part C Encounter data. When 

considering overdose, we noted that 

prescription opioids can also be 

obtained through illegal or illicit means. 

The available overdose diagnosis codes 

describe the type of drug involved in the 

poisoning but do not specify how the 

drugs were obtained. There is also an 

unspecified opioid overdose code. 

Therefore, assumptions were made to 

classify an overdose code as 

prescription or illicit. For example, code 

40.4 (other synthetic opioids) was 

classified as illicit opioid overdose but 

in some cases fentanyl may have been 

obtained by prescription. Conversely, 

code 40.2 (other opioids) may include 

poisoning due to oxycodone which was 

classified as prescription opioid 

overdose but may have been obtained 

illegally. 

Option 1: Include beneficiaries with 

either prescription or illicit opioidrelated overdoses. This option would 

allow CMS to proactively identify the 

most potential at-risk beneficiaries with 

a history of opioid-related overdoses, 

regardless whether the opioid is 

prescription or illicit, so that they can 

be reported to the Part D sponsor and 

reviewed through a DMP. This option 

represents the largest program size of all 

of the options. Based on data between 

July 2017 and June 2018, CMS estimates 

that there were about 28,891 

beneficiaries with prescription or illicit 

opioid-related overdoses who would 

have been identified and reported as 

potential at-risk beneficiaries through 

the OMS. 

Option 2: The program size for this 

option, as a subset of Option 1, 

decreases by 37 percent to 18,268 if we 

were to identify only those beneficiaries 

reported to have at least one opioid 

prescription drug claim during the 6- 

month OMS measurement period 

(approximately 63 percent had opioid 

Part D claim(s)), which means that they 

have at least one relatively current 

opioid prescriber. 

Option 3: Identify beneficiaries with 

only prescription opioid-related 

overdoses. This approach would utilize 

a 12-month lookback period to identify 

beneficiaries with a history of 

prescription opioid overdoses. Based on 

data between July 2017 and June 2018, 

CMS estimates that there were about 

21,037 beneficiaries with prescription 

opioid-related overdoses who would be 

identified and reported by OMS. 

Option 4: Since about 72 percent of 

beneficiaries had at least one Part D 

opioid claim in the 6-month OMS 

measurement period, this option, as a 

subset of Option 3, decreases the 

program size to 15,217 beneficiaries if 

we were to require beneficiaries 

reported to have at least one opioid 

prescription drug claim, which means 

that they have at least one relatively 

current opioid prescriber. 

As noted, the primary impact will 

result from needing to case manage the 

additional beneficiaries identified as 

meeting the proposed definition. At the 

proposed hour and skill levels defined, 

this introduces a projected cost of 

$547.74 per additional beneficiary 

undergoing case management. The 

various economic impacts for the 

alternatives considered are summarized 

in Table I10. 

TABLE I10—ECONOMIC IMPACT OF ALTERNATIVES CONSIDERED

Alternative 

(criteria) 

Number of 

enrollees 

affected 

Total cost 

(millions $) 

Option 1 ................................................................................................................................................................... 28,891 15.8 

Option 2 (finalized) .................................................................................................................................................. 18,268 10.0 

Option 3 ................................................................................................................................................................... 21,037 11.5 

Option 4 ................................................................................................................................................................... 15,217 8.3 

CMS is finalizing the proposal to 

define history of opioid-related 

overdose as defined in Option 2. This 

option incorporates the risk factor most 

predictive for another overdose or 

suicide-related event and is 

commensurate with the 

Administration’s commitment to 

vigorously address the opioid epidemic. 

However, this approach keeps a clear tie 

between opioid-related overdoses and 

the Part D program by requiring a recent 


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prescription opioid prescriber, which 

simultaneously increases the likelihood 

for successful provider outreach through 

case management by the sponsor. We 

received no comments on this proposal 

and therefore are finalizing this 

provision without modification. 

2. Eligibility for Medication Therapy 

Management Programs (MTMPs) 

(§ 423.153) 

We initially contemplated requiring 

that each plan as part of its MTM 

program develop educational materials 

regarding the safe disposal of 

prescription drugs that are controlled 

substances for its beneficiaries. Though 

each plan would have had a greater cost 

to develop such materials, the 

information might have included more 

local resources specific to individual 

plans. However, for the sake of 

consistency, and to reduce burden on 

MTM programs, we proposed that Part 

D plans would be required to furnish 

materials in their MTM programs that 

meet criteria specified in § 422.111(j) as 

part of a CMR, TMR, or other MTM 

correspondence or service. 

We also considered whether we 

should extend MTM eligibility to 

potential at-risk beneficiaries (PARBs) 

instead of to just those determined to be 

at risk. We believe that providing MTM 

to PARBs might have been beneficial for 

this population. However, the 

SUPPORT Act is clear that the extended 

MTM eligibility criteria should apply 

only to at-risk beneficiaries. 

After careful consideration of all 

comments received, and for the reasons 

set forth in section III.E. of this final 

rule, we are finalizing our proposal to 

add a requirement that Part D sponsors 

target ARBs for enrollment in their 

MTM programs. Part D plan sponsors 

will be required to comply with this 

new requirement by January 1, 2022. We 

are also finalizing the requirement that 

plans furnish information on safe 

disposal of prescription drugs that are 

controlled substances to MTM program 

enrollees at § 423.153(d)(1)(vii)(E), with 

a modification to clarify that plans may 

do so through use of a CMR, TMR or 

other MTM correspondence or service. 

We did not receive any comments on 

our impact analysis. 

3. Beneficiaries’ Education on Opioid 

Risks and Alternative Treatments 

(§ 423.128) 

The provision regarding educating 

MA and Part D beneficiaries on opioid 

risks and alternative treatments is 

discussed in section III.D. of this final 

rule. In section IX.B.6. of this final rule, 

we estimated a maximum impact 

assuming that all plans would want to 

send all Part D enrollees information 

and that 75 percent of enrollees would 

request paper versus electronic 

communication. 

However, we emphasize that the 

SUPPORT Act does not require CMS to 

set a standard as to which enrollees 

receive the required information. As 

indicated in section III.D. of this final 

rule, the SUPPORT Act gives plans 

flexibility to choose which enrollees to 

send the information. To facilitate plan 

choice, we have provided a wide range 

of alternatives in Table I11. The 

alternatives are based on the number of 

days the enrollee has been on opioids, 

the possible gaps in opioid treatment, as 

well as the cause of the opioid 

treatment; we, for example, think it very 

reasonable that sponsors would not 

want to send notices to opioid users in 

hospice or with cancer as this could 

unduly alarm them; therefore, one 

alternative is to carve these populations 

out. Although not a policy alternative, 

we also consider two alternatives for 

paper estimates; a conservative 

approach is that only half (50 percent) 

of enrollees would request paper while 

the more aggressive approach assumes 

75 percent so request. As can be seen, 

despite the wide range of differences, 

costs vary only between $0.1 and $0.5 

million. 


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Comment: A few commenters 

suggested that sponsors send 

information on opioid alternatives to all 

Part D beneficiaries. 

Response: As noted earlier in this 

rule, the SUPPORT Act gives plan 

sponsors flexibility to choose which 

enrollees to send the information and 

sponsors have the most accurate 

beneficiary information and may wish 

to select a specific subset to send this 

information to. 


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We are finalizing this provision with 

modification. As explained in section A 

of this final rule, while the statutory 

requirement begins with coverage year 

2021, this regulation will be applicable 

beginning January 1, 2022 rather than 

January 1, 2021 as initially proposed. 

Although implementation will be 

delayed until coverage year 2022, we are 

finalizing without modification for our 

proposal to permit Part D sponsors to 

send information on opioid alternatives 

to all beneficiaries, or to a specific 

subset as determined by the sponsor. 

4. Permitting a Second, ‘‘Preferred’’, 

Specialty Tier in Part D (§§ 423.104, 

423.560, and 423.578) 

We would allow Part D sponsors to 

have two specialty tiers, under the 

existing policy at § 423.578(c)(3)(ii), Part 

D sponsors would be required to permit 

tiering exceptions between the two 

specialty tiers. We also considered 

permitting Part D sponsors to exempt 

tiering exceptions between the two 

specialty tiers, but we are concerned 

that removing the Part D enrollee 

protection requiring exceptions between 

the two specialty tiers could negate 

benefits that might otherwise have 

accrued to Part D enrollees under a two 

specialty-tier policy when there is a 

therapeutic alternative on the preferred 

specialty tier that a Part D enrollee is 

unable to take. 

Additionally, although we proposed 

to codify at § 423.104(d)(2)(iv)(E) the 

maximum allowable cost sharing under 

current policy, because we note that the 

deductible applies to all tiers and it is 

unclear that we should continue to 

differentiate the specialty tier from other 

tiers on the basis of the deductible, we 

also considered decreasing the 

maximum permissible cost sharing to 

the 25 percent Defined Standard 

coinsurance for Part D plans with 

decreased or no deductibles. As a result, 

we would anticipate that Part D 

sponsors would need to raise cost 

sharing on non-specialty-tier drugs to 

maintain actuarial equivalence. If this 

applies to all plans, then there should 

be no budget impact, as they must still 

return to a basic benefit design that is 

actuarially equivalent to the Defined 

Standard benefit, and there will be no 

adverse selection. Additionally, we do 

not expect impacts from this proposal to 

the private sector, as additional 

specialty tiers already exist in that 

market. Plans with a high proportion of 

dual-eligible enrollees are less likely to 

offer a second specialty tier, because the 

lower cost sharing would be less 

impactful for those beneficiaries. As a 

result, we don’t expect material impacts 

to Medicaid costs. 

Finally, although we proposed at 

§ 423.104(d)(2)(iv)(B) to increase the 

specialty-tier cost threshold for all plan 

years in which CMS determines that no 

less than a ten percent increase in the 

specialty-tier cost threshold, before 

rounding ‘‘to’’ the nearest $10 

increment, in order to reestablish the 1 

percent outlier threshold, CMS is also 

considering a change in this 

methodology such that CMS would 

always round ‘‘up’’ to the nearest $10 

increment. This rounding up 

methodology would: (a) Ensure that the 

new specialty-tier cost threshold 

actually meets the 1 percent outlier 

threshold, and (b) provide more stability 

to the specialty-tier cost threshold. 

Although the $780 30-day equivalent 

ingredient cost we determined to be the 

specialty-tier cost threshold for this 

final rule did not require rounding, had 

we arrived at a 30-day equivalent 

ingredient cost of, for example, $772, 

rounding up to $780 30-day equivalent 

ingredient cost would have an 

insignificant impact on the number of 

drugs meeting the specialty-tier cost 

threshold. 

As noted above, because of conflicting 

forces, we have not estimated a 

quantitative cost to this provision and 

acknowledged at most a possible 

qualitative savings. Similarly, these 

alternatives would not change costs. 

Comment: We did not receive any 

comments regarding the alternative on 

which we solicited comment to always 

round ‘‘up’’ to the nearest $10 

increment. 

Response: Due to the balance of other 

comments, we are not finalizing this 

alternative. 

Comment: Some commenters 

preferred that CMS permit Part D 

sponsors to impose cost sharing on the 

higher-cost sharing, specialty tier higher 

than the current maximum allowable 

cost sharing of 25/33 percent. 

Response: As discussed in section 

IV.E. of this final rule, we continue to 

have concerns that permitting Part D 

sponsors to impose cost sharing on the 

higher-cost sharing, specialty tier higher 

than the current maximum allowable 

cost sharing of 25/33 percent is 

discriminatory. 

Comment: Some commenters 

preferred CMS’s option to permit Part D 

sponsors to exempt both specialty tiers 

from tiering exceptions, even between 

the two tiers. 

Response: As discussed in section 

IV.E. of this final rule, although we 

believe reasonable arguments can be 

made with regard to our statutory 

authority relative to both our proposal 

and the alternative, we are concerned 

that the alternative could make the 

preferred specialty tier vulnerable to 

tiering exceptions to the non-specialty 

tiers, which could impede the ability of 

Part D sponsors to offer actuarially 

equivalent benefit designs. 

Although implementation will be 

delayed until coverage year 2022, we are 

finalizing as proposed our proposals to 

permit a second specialty tier, except 

we are not finalizing our proposal to 

specify a specialty tier threshold of 

$780. Additionally, in response to 

comments, we are finalizing new 

paragraph § 423.104(d)(2)(iv)(A)(6) 

which describes the eligibility for 

placement on the specialty tier of 

newly-FDA-approved Part D drugs. 

To retain the policies in effect before 

coverage year 2022, we are amending 

the definition of specialty tier at 

§ 423.560 by adding paragraph (i) to 

clarify that the existing definition will 

apply before coverage year 2022, and 

paragraph (ii) to cross reference the 

definition which appears in 

§ 423.104(d)(2)(iv), which will apply 

beginning coverage year 2022. 

Additionally, as discussed in section 

IV.E.2. of this final rule, we are 

amending § 423.578(a)(6)(iii) by adding 

paragraph (A) to cross reference the 

definition of specialty tier which will 

apply before coverage year 2022, and 

paragraph (B) to cross reference 

placement of the definition of specialty 

tier at § 423.104(d)(2)(iv) which will 

apply beginning coverage year 2022. 

Additionally, paragraph (A) will remove 

the phrase ‘‘and biological products,’’ 

and paragraph (B) will (1) reflect the 

possibility of a second specialty tier, 

and (2) clarify that Part D sponsors may 

design their exception processes so that 

Part D drugs on the specialty tier(s) are 

not eligible for a tiering exception to 

non-specialty tiers. 

5. Beneficiary Real Time Benefit Tool 

(RTBT) (§ 423.128) 

We are requiring that each Part D plan 

adopt a beneficiary RTBT by January 1, 

2023. We had considered requiring that 

this regulatory action occur by January 

1, 2021 to coincide with the 

requirement of a prescriber RTBT and 

the other regulatory actions in this rule. 

However, we wanted to ensure that 

plans had adequate time to focus on 

implementing the prescriber RTBT by 

the currently mandated January 1, 2021 

deadline. 

This option would probably not 

change the cost impact which, in 

section H8 of this final rule, was 

estimated as $4 million for 

implementation and $0.4 million for 

policy development and ongoing 

maintenance. The major driver of 

change in cost would be changes in 


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wages. We have already updated the 

2018 wages in the NPRM to the current 

2019 wages. The wages for general 

operations manager have decreased 

while the wages for compliance officer 

have increased. If we assume this 

continues for next year there would be 

no change in the $0.4 million estimate. 

Computer programmer wages are 

increased by about 3 percent per year 

which would increase the $4 million 

implementation cost by about $0.1 

million. 

We also considered requiring that 

plans display this information via a 

third party website or web application. 

However, since we discovered that 

plans already have patient portals that 

provide some of the mandated 

information, we believe it would be less 

confusing for beneficiaries to keep this 

information on the plan portal. In 

addition, it would be less of a burden 

on plans for them to put the information 

on the portals, rather than supply the 

information to a third party. 

Another variation that we considered 

was to require that Part D sponsors 

clarify to enrollees that medications 

listed in the beneficiary RTBT are based 

on the formulary and that options may 

exist outside of the formulary. However, 

we ultimately decided that this 

requirement was not necessary, since 

Part D formularies already provide a 

robust array of options for Part D 

enrollees and we believe that Part D 

sponsors are in the best positon to judge 

whether such a statement is necessary. 

As a result, we declined to adopt this 

requirement. 

We received no comments on our 

estimated impacts and are therefore 

finalizing it as proposed. 

6. Service Determination Request 

Processes Under PACE (§ 460.121) 

As we drafted this provision we 

considered several alternatives. 

Alternative 1: First, we considered 

requiring that requests that can be 

immediately approved by a member of 

the IDT would still require a 

reassessment. We rejected this approach 

because the IDT member, based on their 

knowledge of the participant, would 

know quickly that the services were 

appropriate and would therefore not 

need to conduct a reassessment to make 

that determination. 

Alternative 2: Second, we considered 

continuing to require that all requests 

that go to the full IDT would require a 

reassessment even if the service can be 

approved. We also rejected this 

approach because we do not believe it 

would be necessary to require a 

reassessment if the IDT can approve a 

service based on their knowledge of the 

participant. 

The alternatives, the finalized 

approach, as well as the current 

approach are listed in Table I12 with 

total 10-year impact over 10 years. 


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F. Accounting Statement and Table 

The following table summarizes 

savings, costs, and transfers by 

provision. As required by OMB Circular 

A–4 (available at https://

obamawhitehouse.archives.gov/omb/ 

circulars_a004_a-4/), in Table I13, we 

have prepared an accounting statement 

showing the savings and costs 

associated with the provisions of this 

final rule for calendar years 2022 

through 2031. Table I13 is based on 

Tables I14A, I14B, and I14C which lists 

savings and costs by provision. Table 

I13 is expressed in millions of dollars 

with both costs and savings listed as 

positive numbers; aggregate impact is 

expressed as a positive number since 

the aggregate impact is savings. As can 

be seen, the net annualized savings of 

this rule is about $2.9 to $3.4 million 

per year. The net raw savings over 10 

years is $36.9 million. Minor seeming 

discrepancies in totals in Tables I14A, 

I14B, and I14C reflects use of 

underlying spreadsheets, rather than 

intermediate rounded amounts. A 

breakdown of these savings from 

various perspectives may be found in 

Table I14. 

The following Table I14 summarizes 

savings, costs, and transfers by 

provision and forms a basis for the 

accounting table. For reasons of space, 

Table I14 is broken into Table I14A 

(2022 through 2025), Table I14B (2026 

through 2029), and Table I14C (2030 

through 2031, as well as raw totals). In 

these tables, all numbers are positive; 

positive numbers in the savings 

columns indicate actual dollars saved 

while positive numbers in the costs 

columns indicate actual dollars spent; 

the aggregate row indicates savings less 

costs. All numbers are in millions. 

Tables I14A, I14B, and I14C form the 

basis for Table I13. The savings in these 

tables are true savings reflecting 

reduced consumption of services and 

goods. 


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The following information 

supplements Table I14 and also 

identifies how impacts calculated in 

section VIII of this final rule affect the 

calculations of this section and the 

tables. 

• For two provisions, DMP and 

PACE, this Regulatory Impact Analysis 

provides tables summarizing a variety of 

impacts with line items for the 

paperwork burdens of section VIII of 

this final rule. Thus the section VIII 

impacts are reflected both in Table I14 

(summary table) and Table I13 

(monetized table) as well as in special 

tables in this section. 

• For six provisions (MTMP, RTBT, 

SNP MOCs, pharmacy performance 

measures, educating at risk enrollees, 

and Fraud and Abuse), the only impacts 

are calculated in section VIII of this 

final rule. These six provisions have 

those section VIII impacts listed in 

Table I14. 

We received comments on impacts in 

certain individual provisions. These 

comments as well as our responses, 

including changes to impacts, have been 

addressed in the appropriate provision 

sections, with many of these discussions 

presented in section VIII.D. of this final 

rule. Additionally, we did not receive 

any comments on the summary or 

monetized table per se and are therefore 

finalizing these numbers as proposed 

with appropriate adjustments for 

provisions not included in this first 

final rule, the updated impacts, and 

updated wage estimates. 

G. Conclusion 

As indicated in Table I13, we estimate 

that this final rule generates annualized 

cost savings of approximately $3 to $3.5 

million (depending on the discount 

factor used) per year over 2022 through 

2031. 

As indicated in Table I14, the primary 

drivers of savings are (1) revisions to the 

PACE program resulting in greater 

efficiencies and (2) increased vigilance 

for at-risk beneficiaries with a 

consequent reduction in drug costs. 

These savings are offset by costs from 

fraud and abuse efforts and a variety of 

outreach efforts to at-risk beneficiaries. 

The net savings are true savings since 

they reflect reductions in consumption 

of goods and services. These savings by 

plans arising from reduction of services 

and consumptions of goods are 

ultimately passed back to the Medicare 

Trust Fund which reduce the dollar 

spending needed for plans. 


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The savings for the federal 

government are $75.4 million over 10 

years, arising exclusively from DMP 

savings on reduced prescription drug 

spending. Administrative savings such 

as those from the PACE provisions may 

not accrue directly to the Medicare 

Trust Fund. 

H. Reducing Regulation and Controlling 

Regulatory Costs 

Executive Order 13771, titled 

Reducing Regulation and Controlling 

Regulatory Costs, was issued on January 

30, 2017, and requires that the costs 

associated with significant new 

regulations ‘‘shall, to the extent 

permitted by law, be offset by the 

elimination of existing costs associated 

with at least two prior regulations.’’ 

This final rule is a deregulatory action 

under Executive Order 13771. At a 7 

percent rate, this rule is estimated to 

save $3.7 million a year in 2016 dollars 

over an infinite time horizon. 

List of Subjects 

42 CFR Part 405 

Administrative practice and 

procedure, Diseases, Health facilities, 

Health professions, Medical devices, 

Medicare, Reporting and recordkeeping 

requirements, Rural areas, and X-rays. 

42 CFR Part 417 

Administrative practice and 

procedure, Grant programs—health, 

Health care, Health insurance, Health 

maintenance organizations (HMO), Loan 

programs—health, Medicare, and 

Reporting and recordkeeping 

requirements. 

42 CFR Part 422 

Administrative practice and 

procedure, Health facilities, Health 

maintenance organizations (HMO), 

Medicare, Penalties, Privacy, Reporting 

and recordkeeping requirements. 

42 CFR Part 423 

Administrative practice and 

procedure, Emergency medical services, 

Health facilities, Health maintenance 

organizations (HMO), Medicare, 

Penalties, Privacy, Reporting and 

recordkeeping requirements. 

42 CFR Part 455 

Fraud, Grant programs—health, 

Health facilities, Health professions, 

Investigations, Medicaid, Reporting and 

recordkeeping requirements. 

42 CFR Part 460 

Aged, Health care, Health records, 

Medicaid, Medicare, Reporting and 

recordkeeping requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as set forth below: 

PART 405—FEDERAL HEALTH 

INSURANCE FOR THE AGED AND 

DISABLED 

■ 1. The authority citation for part 405 

continues to reads as follows: 

Authority: 42 U.S.C. 263a, 405(a), 1302, 

1320b–12, 1395x, 1395y(a), 1395ff, 1395hh, 

1395kk, 1395rr, and 1395ww(k). 

■ 2. Section 405.370(a) is amended by— 

■ a. Revising paragraph (1) of the 

definition of ‘‘Credible allegation of 

fraud’’; and 

■ b. Adding the definition for ‘‘Fraud 

hotline tip’’ in alphabetical order. 

The revision and addition read as 

follows: 

§ 405.370 Definitions. 

(a) * * * 

Credible allegation of fraud. * * * 

(1) Fraud hotline tips verified by 

further evidence. 

* * * * * 

Fraud hotline tip. A complaint or 

other communications that are 

submitted through a fraud reporting 

phone number or a website intended for 

the same purpose, such as the Federal 

Government’s HHS OIG Hotline or a 

health plan’s fraud hotline. 

* * * * * 

PART 417—HEALTH MAINTENANCE 

ORGANIZATIONS, COMPETITIVE 

MEDICAL PLANS, AND HEALTH CARE 

PREPAYMENT PLANS 

■ 3. The authority citation for part 417 

continues to read as follows: 

Authority: 42 U.S.C. 1302 and 1395hh, 42 

U.S.C. 300e, 300e–5, and 300e–9, and 31 

U.S.C. 9701. 

■ 4. Section 417.496 is added to read as 

follows: 

§ 417.496 Cost plan crosswalk. 

(a) General rules—(1) Definition. 

Crosswalk means the movement of 

enrollees from one plan (or plan benefit 

package (PBP)) to another plan (or PBP) 

under a cost plan contract between the 

CMP or HMO and CMS. To crosswalk 

enrollees from one PBP to another is to 

change the enrollment from the first 

PBP to the second. 

(2) Prohibition. (i) Crosswalks are 

prohibited between different contracts. 

(ii) Crosswalks are prohibited between 

different plan IDs unless the crosswalk 

to a different plan ID meets the 

requirements in paragraph (c)(1)(i) of 

this section. 

(3) Compliance with renewal/ 

nonrenewal rules. The cost plan must 

comply with renewal and nonrenewal 

rules in §§ 417.490 and 417.492 in order 

to complete plan crosswalks. 

(b) Allowable crosswalk types. All 

cost plans may perform a crosswalk in 

the following circumstances: 

(1) Renewal. A plan in the following 

contract year that links to a current 

contract year plan and retains the entire 

service area from the current contract 

year. The following contract year plan 

must retain the same plan ID as the 

current contract year plan. 

(2) Consolidated renewal. A plan in 

the following contract year that 

combines 2 or more PBPs. The plan ID 

for the following contract year must 

retain one of the current contract year 

plan IDs. 

(3) Renewal with a service area 

expansion (SAE). A plan in the 

following contract year plan that links 

to a current contract year plan and 

retains all of its plan service area from 

the current contract year, but also adds 

one or more new counties. The 

following year contract plan must retain 

the same plan ID as the current contract 

year plan. 

(4) Renewal with a service area 

reduction (SAR). A plan in the following 

contract year that links to a current 

contract year plan and only retains a 

portion of its plan service area. The 

following contract year plan must retain 

the same plan ID as the current contract 

year plan. The crosswalk is limited to 

the enrollees in the remaining service 

area. 

(c) Exception. (1) In order to perform 

a crosswalk that is not specified in 

paragraph (b) of this section, a cost 

organization must request an exception. 

CMS reviews requests and may permit 

a crosswalk exception in the following 

circumstance: 

(i) Except as specified in paragraph 

(c)(1)(ii) of this section, terminating cost 

plans offering optional benefits may 

transfer enrollees from one of the PBPs 

under its contract to another PBP under 

its contract, including new PBPs that 

have no optional benefits or optional 

benefits different than those in the 

terminating PBP. 

(ii) A terminating cost plan cannot 

move an enrollee from a PBP that does 

not include Part D to a PBP that does 

include Part D. 

(iii) If the terminated supplemental 

benefit includes Part D and the new PBP 

does not, enrollees must receive written 

notification about the following: 

(A) That they are losing Part D 

coverage; 

(B) The options for obtaining Part D; 

and 


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(C) The implications of not getting 

Part D through some other means. 

(2) [Reserved] 

PART 422—MEDICARE ADVANTAGE 

PROGRAM 

■ 5. The authority citation for part 422 

continues to read as follows: 

Authority: 42 U.S.C. 1302 and 1395hh. 

Section 422.2 is amended by— 

■ a. Revising the definition of 

‘‘Institutionalized’’; 

■ b. Adding the definition of ‘‘Parent 

organization’’ in alphabetical order to 

read; and 

■ c. Revising the definition of ‘‘Special 

needs individual’’. 

The revisions and addition read as 

follows: 

§ 422.2 Definitions. 

* * * * * 

Institutionalized means, for the 

purposes of defining a special needs 

individual and for the open enrollment 

period for institutionalized individuals 

at § 422.62(a)(4), an MA eligible 

individual who continuously resides or 

is expected to continuously reside for 90 

days or longer in one of the following 

long-term care facility settings: 

(1) Skilled nursing facility (SNF) as 

defined in section 1819 of the Act 

(Medicare). 

(2) Nursing facility (NF) as defined in 

section 1919 of the Act (Medicaid). 

(3) Intermediate care facility for 

individuals with intellectual and 

developmental disabilities as defined in 

section 1905(d) of the Act. 

(4) Psychiatric hospital or unit as 

defined in section 1861(f) of the Act. 

(5) Rehabilitation hospital or unit as 

defined in section 1886(d)(1)(B) of the 

Act. 

(6) Long-term care hospital as defined 

in section 1886(d)(1)(B) of the Act. 

(7) Hospital which has an agreement 

under section 1883 of the Act (a swingbed hospital). 

(8) Subject to CMS approval, a facility 

that is not listed in paragraphs (1) 

through (7) of this definition but meets 

both of the following: 

(i) Furnishes similar long-term, 

healthcare services that are covered 

under Medicare Part A, Medicare Part B, 

or Medicaid; and 

(ii) Whose residents have similar 

needs and healthcare status as residents 

of one or more facilities listed in 

paragraphs (1) through (7) of this 

definition. 

* * * * * 

Parent organization means the legal 

entity that exercises a controlling 

interest, through the ownership of 

shares, the power to appoint voting 

board members, or other means, in a 

Part D sponsor or MA organization, 

directly or through a subsidiary or 

subsidiaries, and which is not itself a 

subsidiary of any other legal entity. 

* * * * * 

Special needs individual means an 

MA eligible individual who is 

institutionalized or institutionalizedequivalent, as those terms are defined in 

this section, is entitled to medical 

assistance under a State plan under title 

XIX, or has a severe or disabling chronic 

condition(s) and would benefit from 

enrollment in a specialized MA plan. 

* * * * * 

■ 6. Section 422.100 is amended by— 

■ a. Revising paragraphs (c)(1) and (2); 

■ b. Redesignating paragraph (d)(2) as 

paragraph (d)(2)(i); 

■ c. Adding paragraph (d)(2)(ii); 

■ d. Revising paragraph (m)(5)(iii). 

The revisions and additions read as 

follows: 

§ 422.100 General requirements. 

* * * * * 

(c) * * * 

(1) Basic benefits are all items and 

services (other than hospice care or, 

beginning in 2021, coverage for organ 

acquisitions for kidney transplants) for 

which benefits are available under Parts 

A and B of Medicare, including 

additional telehealth benefits offered 

consistent with the requirements at 

§ 422.135. 

(2) Supplemental benefits are benefits 

offered under § 422.102. 

(i) Supplemental benefits consist of— 

(A) Mandatory supplemental benefits 

are services not covered by Medicare 

that an MA enrollee must purchase as 

part of an MA plan that are paid for in 

full, directly by (or on behalf of) 

Medicare enrollees, in the form of 

premiums or cost sharing. 

(B) Optional supplemental benefits 

are health services not covered by 

Medicare that are purchased at the 

option of the MA enrollee and paid for 

in full, directly by (or on behalf of) the 

Medicare enrollee, in the form of 

premiums or cost sharing. These 

services may be grouped or offered 

individually. 

(ii) Supplemental benefits must meet 

the following requirements: 

(A) Except in the case of special 

supplemental benefit for the chronically 

ill (SSBCI) offered in accordance with 

§ 422.102(f) that are not primarily health 

related, the benefits diagnose, prevent, 

or treat an illness or injury; compensate 

for physical impairments; act to 

ameliorate the functional/psychological 

impact of injuries or health conditions; 

or reduce avoidable emergency and 

health care utilization; 

(B) The MA organization incurs a 

non-zero direct medical cost, except that 

in the case of a SSBCI that is not 

primarily health related that is offered 

in accordance with § 422.102, the MA 

organization may instead incur a nonzero direct non-administrative cost; and 

(C) The benefits are not covered by 

Medicare (This specifically includes 

Medicare Parts A, B, and D). 

(d) * * * 

(2) * * * 

(ii) MA plans may provide 

supplemental benefits (such as specific 

reductions in cost sharing or additional 

services or items) that are tied to disease 

state or health status in a manner that 

ensures that similarly situated 

individuals are treated uniformly; there 

must be some nexus between the health 

status or disease state and the specific 

benefit package designed for enrollees 

meeting that health status or disease 

state. 

* * * * * 

(m) * * * 

(5) * * * 

(iii) Provide the information described 

in paragraphs (m)(1), (2), and (3) and 

(m)(5)(i) of this section on its website. 

■ 7. Section 422.101 by— 

■ a. Revising paragraphs (f)(1) 

introductory text and (f)(1)(i) and (iii); 

and 

■ b. Adding paragraph (f)(1)(iv); 

■ c. Revising paragraph (f)(2) 

introductory text; and 

■ d. Adding paragraph (f)(3). 

The revisions and additions read as 

follows: 

§ 422.101 Requirements relating to basic 

benefits. 

* * * * * 

(f) * * * 

(1) MA organizations offering special 

needs plans (SNP) must implement an 

evidence-based model of care with 

appropriate networks of providers and 

specialists designed to meet the 

specialized needs of the plan’s targeted 

enrollees. The MA organization must, 

with respect to each individual 

enrolled, do all of the following: 

(i) Conduct a comprehensive initial 

health risk assessment of the 

individual’s physical, psychosocial, and 

functional needs as well as annual 

health risk reassessment, using a 

comprehensive risk assessment tool that 

CMS may review during oversight 

activities, and ensure that results from 

the initial assessment and annual 

reassessment conducted for each 

individual enrolled in the plan are 

addressed in the individual’s 


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individualized care plan as required 

under paragraph (f)(1)(ii) of this section. 

* * * * * 

(iii) In the management of care, use an 

interdisciplinary team that includes a 

team of providers with demonstrated 

expertise and training, and, as 

applicable, training in a defined role 

appropriate to their licensure in treating 

individuals similar to the targeted 

population of the plan. 

(iv) Provide, on at least an annual 

basis, beginning within the first 12 

months of enrollment, as feasible and 

with the individual’s consent, for faceto-face encounters for the delivery of 

health care or care management or care 

coordination services and be between 

each enrollee and a member of the 

enrollee’s interdisciplinary team or the 

plan’s case management and 

coordination staff, or contracted plan 

healthcare providers. A face-for-face 

encounter must be either in person or 

through a visual, real-time, interactive 

telehealth encounter. 

(2) MA organizations offering SNPs 

must also develop and implement the 

following model of care components to 

assure an effective care management 

structure: 

* * * * * 

(3)(i) All MA organizations wishing to 

offer or continue to offer a SNP will be 

required to be approved by the National 

Committee for Quality Assurance 

(NCQA) effective January 1, 2012 and 

subsequent years. All SNPs must submit 

their model of care (MOC) to CMS for 

NCQA evaluation and approval in 

accordance with CMS guidance. 

(ii) As part of the evaluation and 

approval of the SNP model of care, 

NCQA must evaluate whether goals 

were fulfilled from the previous model 

of care. 

(A) Plans must provide relevant 

information pertaining to the MOC’s 

goals as well as appropriate data 

pertaining to the fulfillment the 

previous MOC’s goals. 

(B) Plans submitting an initial model 

of care must provide relevant 

information pertaining to the MOC’s 

goals for review and approval. 

(C) If the SNP model of care did not 

fulfill the previous MOC’s goals, the 

plan must indicate in the MOC 

submission how it will achieve or revise 

the goals for the plan’s next MOC. 

(iii) Each element of the model of care 

of a plan must meet a minimum 

benchmark score of 50 percent, and a 

plan’s model of care will only be 

approved if each element of the model 

of care meets the minimum benchmark. 

■ 8. Section 422.102 is amended— 

■ a. In paragraph (a)(4) by removing the 

phrase ‘‘only as a mandatory’’ and 

adding in its place the phrase ‘‘for Part 

A and B benefits only as a mandatory’’; 

and 

■ b. Adding paragraphs (a)(5) and (6). 

The revisions and additions read as 

follows: 

§ 422.102 Supplemental benefits. 

(a) * * * 

(5) An MA plan may reduce the cost 

sharing for items and services that are 

not basic benefits only as a mandatory 

supplemental benefit (reductions or 

payment of cost sharing for Part D drugs 

is not permissible as a Part C 

supplemental benefit). 

(6) An MA plan may offer mandatory 

supplemental benefits in the following 

forms: 

(i) Reductions in cost sharing through 

the use of reimbursement, through a 

debit card or other means, for cost 

sharing paid for covered benefits. 

Reimbursements must be limited to the 

specific plan year. 

(ii) Use of a uniform dollar amount as 

a maximum plan allowance for a 

package of supplemental benefits, 

including reductions in cost sharing or 

coverage of specific items and services, 

available to enrollees on a uniform basis 

for enrollee use for any supplemental 

benefit in the package. Allowance must 

be limited to the specific plan year. 

* * * * * 

■ 9. Section 422.111 is amended by— 

■ a. Removing paragraph (b)(12); 

■ b. Redesignating paragraph (h)(1)(i) as 

paragraph (h)(1)(i)(A); 

■ c. Adding paragraph (h)(1)(i)(B); 

■ d. Adding paragraphs (h)(1)(ii)(A) 

through (C); 

■ e. Redesignating paragraph (h)(1)(iii) 

as (h)(1)(iii)(A); 

■ f. Adding paragraph (h)(1)(iii)(B); 

■ g. Adding paragraphs (h)(1)(iv), (j), 

and (k). 

The revisions and additions read as 

follows: 

§ 422.111 Disclosure requirements. 

* * * * * 

(h) * * * 

(1) * * * 

(i)(A) * * * 

(B) For coverage beginning on and 

after January 1, 2022, is open at least 

from 8:00 a.m. to 8:00 p.m. in all service 

areas served by the Part C plan, with the 

following exceptions: 

(1) From October 1 through March 31 

of the following year, a customer call 

center may be closed on Thanksgiving 

Day and Christmas Day so long as the 

interactive voice response (IVR) system 

or similar technology records messages 

from incoming callers and such 

messages are returned within one (1) 

business day. 

(2) From April 1 through September 

30, a customer call center may be closed 

any Federal holiday, Saturday, or 

Sunday, so long as the interactive voice 

response (IVR) system or similar 

technology records messages from 

incoming callers and such messages are 

returned within one (1) business day. 

(ii) * * * 

(A) For coverage beginning on and 

after January 1, 2022, limits average 

hold time to no longer than 2 minutes. 

The hold time is defined as the time 

spent on hold by callers following the 

interactive voice response (IVR) system, 

touch-tone response system, or recorded 

greeting, before reaching a live person. 

(B) For coverage beginning on and 

after January 1, 2022, answers 80 

percent of incoming calls within 30 

seconds after the interactive voice 

response (IVR), touch-tone response 

system, or recorded greeting interaction. 

(C) For coverage beginning on and 

after January 1, 2022, limits the 

disconnect rate of all incoming calls to 

no higher than 5 percent. The 

disconnect rate is defined as the number 

of calls unexpectedly dropped divided 

by the total number of calls made to the 

customer call center. 

(iii) (A) * * * 

(B) For coverage beginning on and 

after January 1, 2022, interpreters must 

be available for 80 percent of incoming 

calls requiring an interpreter within 8 

minutes of reaching the customer 

service representative and be made 

available at no cost to the caller. 

(iv) At a minimum, for coverage 

beginning on and after January 1, 2022: 

(A) Provides effective real-time 

communication with individuals using 

auxiliary aids and services, including 

TTYs and all forms of Federal 

Communication Commission-approved 

telecommunications relay systems, 

when using automated-attendant 

systems. See 28 CFR 35.161 and 

36.303(d). 

(B) Connects 80 percent of incoming 

calls requiring TTY services to a TTY 

operator within 7 minutes. 

* * * * * 

(j) Safe disposal of certain 

prescription drugs. Information 

regarding the safe disposal of 

prescription drugs that are controlled 

substances and drug takeback programs 

must be provided in the case of an 

individual enrolled under an MA plan 

who is furnished an in-home health risk 

assessment on or after January 1, 2022. 

For purposes of this paragraph (j), a 

health risk assessment furnished to an 

individual who is residing in an 

institutional setting, such as a nursing 

facility, that has the primary 


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responsibility for the disposal of unused 

medications, is not considered an inhome health risk assessment. As part of 

the in-home health risk assessment, the 

enrollee must be furnished written 

supporting materials describing how to 

safely dispose of medications that are 

controlled substances as well as a verbal 

summary of the written information as 

described at paragraphs (j)(1) through 

(6) of this section when possible. The 

written information furnished to 

enrollees about the safe disposal of 

medications and takeback programs 

must include the following information 

for enrollees: 

(1) Unused medications should be 

disposed of as soon as possible. 

(2) The U.S. Drug Enforcement 

Administration (DEA) allows unused 

prescription medications to be mailed 

back to pharmacies and other 

authorized sites using packages made 

available at such pharmacies or other 

authorized sites. Include a web link to 

the information available on the DEA 

website at www.deatakeback.com and 

the web link to the DEA search engine 

which enables beneficiaries to identify 

drug take back sites in their community 

at the following web address: https://

apps2.deadiversion.usdoj.gov/ 

pubdispsearch/spring/ 

main?execution=e2s1. 

(3) Community take back sites are the 

preferred method of disposing of 

unused controlled substances. 

(4) The location of two or more drug 

take back sites that are available in the 

community where the enrollee resides. 

(5) Instructions on how to safely 

dispose of medications in household 

trash or of cases when a medication can 

be safely flushed. Include instructions 

on removing personal identification 

information when disposing of 

prescription containers. If applicable, 

the instructions may also include 

information on the availability of inhome drug deactivation kits in the 

enrollee’s community. 

(6) Include a web link to the 

information available on the United 

States Department of Health and Human 

Services website identifying methods 

for the safe disposal of drugs available 

at the following web address: 

www.hhs.gov/opioids/prevention/safelydispose-drugs/index.html 

(k) Claims information. MA 

organizations must furnish directly to 

enrollees, in the manner specified by 

CMS and in a form easily 

understandable to such enrollees, a 

written explanation of benefits, when 

benefits are provided under this part. 

(1) Information requirements for the 

reporting period. Claims data elements 

presented on the explanation of benefits 

must include all of the following for the 

reporting period: 

(i) The descriptor and billing code for 

the item or service billed by the 

provider, and the corresponding amount 

billed. 

(ii) The total cost approved by the 

plan for reimbursement. 

(iii) The share of total cost paid for by 

the plan. 

(iv) The share of total cost for which 

the enrollee is liable. 

(2) Information requirements for yearto-date totals. Claims data elements 

presented on the explanation of benefits 

must include specific year-to-date totals 

as follows: 

(i) The cumulative amount billed by 

all providers. 

(ii) The cumulative total costs 

approved by the plan. 

(iii) The cumulative share of total cost 

paid for by the plan. 

(iv) The cumulative share of total cost 

for which the enrollee is liable. 

(v) The amount an enrollee has 

incurred toward the MOOP limit, as 

applicable. 

(vi) The amount an enrollee has 

incurred toward the deductible, as 

applicable. 

(3) Additional information 

requirements. (i) Each explanation of 

benefits must include clear contact 

information for enrollee customer 

service. 

(ii) Each explanation of benefits must 

include instructions on how to report 

fraud. 

(iii) Each EOB that includes a denied 

claim must clearly identify the denied 

claim and provide information about 

enrollee appeal rights, but the EOB does 

not replace the notice required by 

§§ 422.568 and 422.570. 

(4) Reporting cycles for explanation of 

benefits. MA organizations must send 

an explanation of benefits on either a 

monthly cycle or a quarterly cycle with 

per-claim notifications. 

(i) A monthly explanation of benefits 

must include all claims processed in the 

prior month and, for each claim, the 

information in paragraphs (k)(1) and (2) 

of this section as of the last day of the 

prior month. 

(A) The monthly explanation of 

benefits must be sent before the end of 

each month that follows the month a 

claim was filed. 

(B) [Reserved] 

(ii) A quarterly explanation of benefits 

must include all claims processed in the 

quarter and, for each claim, the 

information in paragraphs (k)(1) and (2) 

of this section as of the last day of the 

quarter; a per-claim notification must 

include all claims processed in the prior 

month and, for each claim, the 

information specified in paragraph 

(k)(1) of this section as of the last day 

of the prior month. 

(A) MA organizations that send the 

explanation of benefits on a quarterly 

cycle with per-claim notifications must 

send the quarterly explanation of 

benefits before the end of each month 

that follows the quarter in which a 

claim was filed. 

(B) MA organizations that send the 

explanation of benefits on a quarterly 

cycle with per-claim notifications must 

send the per-claim notification before 

the end of each month that follows the 

month in which a claim was filed. 

(5) Exceptions. MA organizations are 

not required to send the explanation of 

benefits to dual-eligible enrollees. 

■ 10. Section 422.134 is revised to read 

as follows: 

§ 422.134 Reward and incentive programs. 

(a) Definitions. As used in this 

section, the following definitions are 

applicable: 

Incentive item means the same things 

as reward item. 

Incentive(s) program, reward(s) 

program, and R&I program mean the 

same thing as rewards and incentives 

program. 

Incentive(s), R&I, and rewards and 

incentives mean the same things as 

reward(s). 

Qualifying individual in the context of 

a plan-covered health benefit means any 

plan enrollee who would qualify for 

coverage of the benefit. In the context of 

a non-plan-covered health benefit, 

qualifying individual means any plan 

enrollee. 

Reward and incentive program is a 

program offered by an MA plan to 

qualifying individuals to voluntarily 

perform specified target activities in 

exchange for reward items. 

Reward item (or incentive item) 

means the item furnished to a qualifying 

individual who performs a target 

activity as specified by the plan in the 

reward program. 

Target activity means the activity for 

which the reward is provided to the 

qualifying individual by the MA plan. 

(b) Offering an R&I program. An MA 

plan may offer R&I program(s) 

consistent with the requirements of this 

section. 

(c) Target activities. (1) A target 

activity in an R&I program must meet all 

of the following: 

(i) Directly involve the qualifying 

individual and performance by the 

qualifying individual. 

(ii) Be specified, in detail, as to the 

level of completion needed in order to 

qualify for the reward item. 

(iii) Be health-related by doing at least 

one of the following: 


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(A) Promoting improved health. 

(B) Preventing injuries and illness, 

(C) Promoting the efficient use of 

health care resources. 

(iv) Uniformly offer any qualifying 

individual the opportunity to 

participate in the target activity. 

(v) Be provided with accommodations 

consistent with the goal of the target 

activity to otherwise qualifying 

individuals who are unable to perform 

the target activity in a manner that 

satisfies the intended goal of the target 

activity. 

(2) The target activity in an R&I 

program must not do any of the 

following: 

(i) Be related to Part D benefits. 

(ii) Discriminate against enrollees. To 

ensure that anti-discrimination 

requirements are met, an MA 

organization, in providing a rewards 

and incentives program, must comply 

with paragraph (g)(1) of this section and 

must not design a program based on the 

achievement of a health status 

measurement. 

(d) Reward items. (1) The reward item 

for a target activity must meet all of the 

following: 

(i) Be offered identically to any 

qualifying individual who performs the 

target activity. 

(ii) Be a direct tangible benefit to the 

qualifying individual who performs the 

target activity. 

(iii) Be provided, to the enrollee, such 

as through transfer of ownership or 

delivery, for a target activity completed 

in the contract year during which this 

R&I program was offered, regardless if 

the enrollee is likely to use the reward 

item after the contract year. 

(2) The reward item for a target 

activity must not: 

(i) Be offered in the form of cash, cash 

equivalents, or other monetary rebates 

(including reduced cost sharing or 

premiums). An item is classified as a 

cash equivalent if it either: 

(A) Is convertible to cash (such as a 

check); or 

(B) Can be used like cash (such as a 

general purpose debit card). 

(ii) Have a value that exceeds the 

value of the target activity itself. 

(iii) Involve elements of chance. 

(3) Permissible reward items for a 

target activity may be reward items that: 

(i) Consist of ‘‘points’’ or ‘‘tokens’’ 

that can be used to acquire tangible 

items. 

(ii) Are offered in the form of a gift 

card that can be redeemed only at 

specific retailers or retail chains or for 

a specific category of items or services. 

(e) Marketing and communication 

requirements. An MA organization that 

offers an R&I program must comply with 

all marketing and communications 

requirements in subpart V of this part. 

(f) R&I disclosure. MA organization 

must make information available to 

CMS upon request about the form and 

manner of any rewards and incentives 

programs it offers and any evaluations 

of the effectiveness of such programs. 

(g) Miscellaneous. (1) The MA 

organization’s reward and incentive 

program must comply with all relevant 

fraud and abuse laws, including, when 

applicable, the anti-kickback statute and 

civil monetary penalty prohibiting 

inducements to beneficiaries. 

Additionally, all MA program antidiscrimination prohibitions continue to 

apply. The R&I program may not 

discriminate against enrollees based on 

race, color, national origin, including 

limited English proficiency, sex, age, 

disability, chronic disease, whether a 

person resides or receives services in an 

institutional setting, frailty, health 

status, or other prohibited basis. 

(2) Failure to comply with R&I 

program requirements may result in a 

violation of one or more of the basis for 

sanction at § 422.752(a). 

(3) The reward and incentive program 

is classified as a non-benefit expense in 

the plan bid. 

(i) If offering a reward and incentive 

program, the MA organization must 

include all costs associated with the 

reward and incentive program as an 

administrative cost and non-benefit 

expense in the bid for the year in which 

the reward and incentive program 

operates. 

(ii) Disputes on rewards and 

incentives must be treated as a 

grievance under § 422.564. 

■ 11. Section 422.162 is amended— 

■ a. By revising paragraphs (b)(3)(iv)(A) 

and (B); and 

■ b. By adding paragraph (b)(4). 

The additions and revisions read as 

follows: 

§ 422.162 Medicare Advantage Quality 

Rating System. 

* * * * * 

(b) * * * 

(3) * * * 

(iv) * * * 

(A)(1) For the first year after 

consolidation, CMS uses enrollmentweighted measure scores using the July 

enrollment of the measurement period 

of the consumed and surviving contracts 

for all measures, except survey-based 

measures and call center measures. The 

survey-based measures would use 

enrollment of the surviving and 

consumed contracts at the time the 

sample is pulled for the rating year. The 

call center measures would use average 

enrollment during the study period. 

(2) For contract consolidations 

approved on or after January 1, 2022, if 

a measure score for a consumed or 

surviving contract is missing due to a 

data integrity issue as described in 

§ 422.164(g)(1)(i) and (ii), CMS assigns a 

score of zero for the missing measure 

score in the calculation of the 

enrollment-weighted measure score. 

(B)(1) For the second year after 

consolidation, CMS uses the 

enrollment-weighted measure scores 

using the July enrollment of the 

measurement year of the consumed and 

surviving contracts for all measures 

except for HEDIS, CAHPS, and HOS. 

HEDIS and HOS measure data are 

scored as reported. CMS ensures that 

the CAHPS survey sample includes 

enrollees in the sample frame from both 

the surviving and consumed contracts. 

(2) For contract consolidations 

approved on or after January 1, 2022, for 

all measures except HEDIS, CAHPS, and 

HOS if a measure score for a consumed 

or surviving contract is missing due to 

a data integrity issue as described in 

§ 422.164(g)(1)(i) and (ii), CMS assigns a 

score of zero for the missing measure 

score in the calculation of the 

enrollment-weighted measure score. 

* * * * * 

(4) Quality bonus payment ratings. (i) 

For contracts that receive a numeric Star 

Rating, the final quality bonus payment 

(QBP) rating for the contract is released 

in April of each year for the following 

contract year. The QBP rating is the 

contract’s highest rating from the Star 

Ratings published by CMS in October of 

the calendar year that is 2 years before 

the contract year to which the QBP 

rating applies. 

(ii) The contract QBP rating is applied 

to each plan benefit package offered 

under the contract. 

* * * * * 

■ 12. Section 422.164 is amended by 

revising paragraph (g)(1)(iii)(A) to read 

as follows: 

§ 422.164 Adding, updating, and removing 

measures. 

* * * * * 

(g) * * * 

(1) * * * 

(iii) * * * 

(A)(1) The data submitted for the 

Timeliness Monitoring Project (TMP) or 

audit that aligns with the Star Ratings 

year measurement period is used to 

determine the scaled reduction. 

(2) For contract consolidations 

approved on or after January 1, 2022, if 

there is a contract consolidation as 

described at § 422.162(b)(3), the TMP or 

audit data are combined for the 

consumed and surviving contracts 


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before the methodology provided in 

paragraphs (g)(1)(iii)(B) through (O) of 

this section is applied. 

* * * * * 

■ 13. Section 422.166 is amended— 

■ a. By adding paragraph (d)(2)(vi); and 

■ b. By adding a sentence to the end of 

paragraph (i)(8). 

The additions read as follows: 

§ 422.166 Calculation of Star Ratings. 

* * * * * 

(d) * * * 

(2) * * * 

(vi) The QBP ratings for contracts that 

do not have sufficient data to calculate 

and assign ratings and do not meet the 

definition of low enrollment or new MA 

plans at § 422.252 are assigned as 

follows: 

(A) For a new contract under an 

existing parent organization that has 

other MA contract(s) with numeric Star 

Ratings in November when the 

preliminary QBP ratings are calculated 

for the contract year that begins 14 

months later, the QBP rating assigned is 

the enrollment-weighted average highest 

rating of the parent organization’s other 

MA contract(s) that are active as of the 

April when the final QBP ratings are 

released under § 422.162(b)(4). The Star 

Ratings used in this calculation are the 

rounded stars (to the whole or half star) 

that are publicly displayed on 

www.medicare.gov. The enrollment 

figures used in the enrollment-weighted 

calculations are the November 

enrollment in the year the Star Ratings 

are released. 

(B) For a new contract under a parent 

organization that does not have other 

MA contract(s) with numeric Star 

Ratings in November when the 

preliminary QBP ratings are calculated 

for the contract year that begins 14 

months later, the MA Star Ratings for 

the previous 3 years are used and the 

QBP rating is the enrollment-weighted 

average of the MA contract(s)’s highest 

ratings from the most recent year rated 

for that parent organization. 

(1) The Star Ratings had to be publicly 

reported on www.medicare.gov. 

(2) The Star Ratings used in this 

calculation are rounded to the whole or 

half star. 

(C) The enrollment figures used in the 

enrollment-weighted calculations are 

the November enrollment in the year the 

Star Ratings are released. 

(D) The QBP ratings are updated for 

any changes in a contract’s parent 

organization that are reflected in CMS 

records prior to the release of the final 

QBP ratings in April of each year. 

(E) Once the QBP ratings are finalized 

in April of each year for the following 

contract year, no additional parent 

organization changes are used for 

purposes of assigning QBP ratings. 

* * * * * 

(i) * * * 

(8) * * * Missing data includes data 

where there is a data integrity issue as 

defined at § 422.164(g)(1). 

* * * * * 

■ 14. Section 422.220 is revised to read 

as follows: 

§ 422.220 Exclusion of payment for basic 

benefits furnished under a private contract. 

(a) Unless otherwise authorized in 

paragraph (b) or (c) of this section, an 

MA organization may not pay, directly 

or indirectly, on any basis, for basic 

benefits furnished to a Medicare 

enrollee by a physician (as defined in 

paragraphs (1), (2), (3), and (4) of section 

1861(r) of the Act) or other practitioner 

(as defined in section 1842(b)(18)(C) of 

the Act) who has filed with the 

Medicare contractor an affidavit 

promising to furnish Medicare-covered 

services to Medicare beneficiaries only 

through private contracts under section 

1802(b) of the Act with the 

beneficiaries. 

(b) An MA organization must pay for 

emergency or urgently needed services 

furnished by a physician or practitioner 

described in paragraph (a) of this 

section who has not signed a private 

contract with the beneficiary. 

(c) An MA organization may make 

payment to a physician or practitioner 

described in paragraph (a) of this 

section for services that are not basic 

benefits but are provided to a 

beneficiary as a supplemental benefit 

consistent with § 422.102. 

■ 15. Section 422.252 is amended by 

revising the definition of ‘‘New MA 

plan’’ to read as follows: 

§ 422.252 Terminology. 

* * * * * 

New MA plan means a plan that meets 

the following: 

(1) Offered under a new MA contract. 

(2) Offered under an MA contract that 

is held by a parent organization defined 

at § 422.2 that has not had an MA 

contract in the prior 3 years. For 

purposes of this definition, the parent 

organization is identified as of April of 

the calendar year before the payment 

year to which the final QBP rating 

applies, and contracts associated with 

that parent organization are also 

evaluated using contracts in existence as 

of April of the 3 calendar years before 

the payment year to which the final 

QBP rating applies. For purposes of 

2022 quality bonus payments based on 

2021 Star Ratings only, new MA plan 

means an MA contract offered by a 

parent organization that has not had 

another MA contract in the previous 4 

years. 

* * * * * 

■ 16. Section 422.500 is amended in 

paragraph (b) by adding the definitions 

of ‘‘Fraud hotline tip’’, ‘‘Inappropriate 

prescribing’’, and ‘‘Substantiated or 

suspicious activities of fraud, waste, or 

abuse’’ in alphabetical order to read as 

follows: 

§ 422.500 Scope and definitions. 

* * * * * 

(b) * * * 

Fraud hotline tip is a complaint or 

other communications that are 

submitted through a fraud reporting 

phone number or a website intended for 

the same purpose, such as the Federal 

Government’s HHS OIG Hotline or a 

health plan’s fraud hotline. 

* * * * * 

Inappropriate prescribing means that, 

after consideration of all the facts and 

circumstances of a particular situation 

identified through investigation or other 

information or actions taken by MA 

organizations and Part D plan sponsors, 

there is an established pattern of 

potential fraud, waste, and abuse related 

to prescribing of opioids, as reported by 

the plan sponsors. Beneficiaries with 

cancer and sickle-cell disease, as well as 

those patients receiving hospice and 

long term care (LTC) services are 

excluded, when determining 

inappropriate prescribing. Plan sponsors 

may consider any number of factors 

including, but not limited to the 

following: 

(1) Documentation of a patient’s 

medical condition. 

(2) Identified instances of patient 

harm or death. 

(3) Medical records, including claims 

(if available). 

(4) Concurrent prescribing of opioids 

with an opioid potentiator in a manner 

that increases risk of serious patient 

harm. 

(5) Levels of morphine milligram 

equivalent (MME) dosages prescribed. 

(6) Absent clinical indication or 

documentation in the care management 

plan or in a manner that may indicate 

diversion. 

(7) State-level prescription drug 

monitoring program (PDMP) data. 

(8) Geography, time, and distance 

between a prescriber and the patient. 

(9) Refill frequency and factors 

associated with increased risk of opioid 

overdose. 

* * * * * 

Substantiated or suspicious activities 

of fraud, waste, or abuse means and 


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includes, but is not limited to, 

allegations that a provider of services 

(including a prescriber) or supplier— 

(1) Engaged in a pattern of improper 

billing; 

(2) Submitted improper claims with 

suspected knowledge of their falsity; 

(3) Submitted improper claims with 

reckless disregard or deliberate 

ignorance of their truth or falsity; or 

(4) Is the subject of a fraud hotline tip 

verified by further evidence. 

■ 17. Section 422.502 is amended by 

adding paragraphs (b)(1)(i) and (ii) to 

read as follows: 

§ 422.502 Evaluation and determination 

procedures. 

* * * * * 

(b) * * * 

(1) * * * 

(i) An applicant may be considered to 

have failed to comply with a contract for 

purposes of an application denial under 

paragraph (b)(1) if during the applicable 

review period the applicant does any of 

the following: 

(A) Was subject to the imposition of 

an intermediate sanction under subpart 

O of this part, with the exception of a 

sanction imposed under § 422.752(d) or 

a determination by CMS to prohibit the 

enrollment of new enrollees pursuant to 

§ 422.2410(c). 

(B) Failed to maintain a fiscally sound 

operation consistent with the 

requirements of § 422.504(b)(14). 

(ii) CMS may deny an application 

submitted by an organization that does 

not hold a Part C contract at the time of 

the submission when the applicant’s 

parent organization or another 

subsidiary of the parent organization 

meets the criteria for denial stated in 

paragraph (b)(1)(i) of this section. This 

paragraph does not apply when the 

parent organization completed the 

acquisition of the subsidiary that meets 

the criteria within the 24 months 

preceding the application submission 

deadline. 

* * * * * 

■ 18. Section 422.503 is amended by 

adding paragraphs (b)(4)(vi)(G)(4) 

through (7) and (b)(5)(i) and (ii) to read 

as follows: 

§ 422.503 General provisions. 

* * * * * 

(b) * * * 

(4) * * * 

(vi) * * * 

(G) * * * 

(4) The MA organization must have 

procedures to identify, and must report 

to CMS or its designee either of the 

following, in the manner described in 

paragraphs (b)(4)(vi)(G)(4) through (6) of 

this section: 

(i) Any payment suspension 

implemented by a plan, pending 

investigation of credible allegations of 

fraud by a pharmacy, which must be 

implemented in the same manner as the 

Secretary does under section 1862(o)(1) 

of the Act. 

(ii) Any information concerning 

investigations, credible evidence of 

suspicious activities of a provider of 

services (including a prescriber) or 

supplier, and other actions taken by the 

plan related to the inappropriate 

prescribing of opioids. 

(5) The MA organization must submit 

data, as specified in this section, in the 

program integrity portal when reporting 

payment suspensions pending 

investigations of credible allegations of 

fraud by pharmacies; information 

related to the inappropriate prescribing 

of opioids and concerning investigations 

and credible evidence of suspicious 

activities of a provider of services 

(including a prescriber) or supplier, and 

other actions taken by the MA 

organization; or if the plan reports a 

referral, through the portal, of 

substantiated or suspicious activities of 

a provider of services (including a 

prescriber) or a supplier related to fraud, 

waste, or abuse to initiate or assist with 

investigations conducted by CMS, or its 

designee, a Medicare program integrity 

contractor, or law enforcement partners. 

The data categories, as applicable, 

include referral information and actions 

taken by the MA organization on the 

referral. 

(6)(i) The MA organization is required 

to notify the Secretary, or its designee, 

of a payment suspension described in 

paragraph (b)(4)(vi)(G)(4)(i) of this 

section 7 days prior to implementation 

of the payment suspension. The MA 

organization may request an exception 

to the 7-day prior notification to the 

Secretary, or its designee, if 

circumstances warrant a reduced 

reporting time frame, such as potential 

beneficiary harm. 

(ii) The MA organization is required 

to submit the information described in 

paragraph (b)(4)(vi)(G)(4)(ii) of this 

section no later than January 30, April 

30, July 30, and October 30 of each year 

for the preceding periods, respectively, 

of October 1 through December 31, 

January 1 through March 31, April 1 

through June 30, and July 1 through 

September 30. For the first reporting 

period (January 30, 2022), the reporting 

will reflect the data gathered and 

analyzed for the previous quarter in the 

calendar year (October 1–December 31). 

(7)(i) CMS will provide MA 

organizations with data report(s) or 

links to the information described in 

paragraphs (b)(4)(vi)(G)(4)(i) and (ii) of 

this section no later than April 15, July 

15, October 15, and January 15 of each 

year based on the information in the 

portal, respectively, as of the preceding 

October 1 through December 31, January 

1 through March 31, April 1 through 

June 30, and July 1 through September 

30. 

(ii) Include administrative actions, 

pertinent information related to opioid 

overprescribing, and other data 

determined appropriate by the Secretary 

in consultation with stakeholders. 

(iii) Are anonymized information 

submitted by plans without identifying 

the source of such information. 

(iv) For the first quarterly report 

(April 15, 2022), that the report reflect 

the data gathered and analyzed for the 

previous quarter submitted by the plan 

sponsors on January 30, 2022. 

(5) * * * 

(i) Not accept, or share a corporate 

parent organization owning a 

controlling interest in an entity that 

accepts, new enrollees under a section 

1876 reasonable cost contract in any 

area in which it seeks to offer an MA 

plan. 

(ii) Not accept, or be either the parent 

organization owning a controlling 

interest of or subsidiary of an entity that 

accepts, new enrollees under a section 

1876 reasonable cost contract in any 

area in which it seeks to offer an MA 

plan. 

* * * * * 

■ 19. Section 422.504 is amended by 

revising paragraph (a)(15) to read as 

follows: 

§ 422.504 Contract provisions. 

* * * * * 

(a) * * * 

(15) Through the CMS complaint 

tracking system, to address and resolve 

complaints received by CMS against the 

MA organization. 

* * * * * 

■ 20. Section 422.530 is added to 

subpart K to read as follows: 

§ 422.530 Plan crosswalks. 

(a) General rules—(1) Definition of 

crosswalk. A crosswalk is the movement 

of enrollees from one plan (or plan 

benefit package (PBP)) to another plan 

(or PBP) under a contract between the 

MA organization and CMS. To 

crosswalk enrollees from one PBP to 

another is to change the enrollment 

from the first PBP to the second. 

(2) Prohibitions. Except as described 

in paragraph (c) of this section, 

crosswalks are prohibited between 

different contracts or different plan 

types (for example, HMO to PPO). 

(3) Compliance with renewal/ 

nonrenewal rules. The MA organization 


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must comply with renewal and 

nonrenewal rules in §§ 422.505 and 

422.506 in order to complete plan 

crosswalks. 

(4) Eligibility. Enrollees must be 

eligible for enrollment under §§ 422.50 

through 422.54 in order to be moved 

from one PBP to another PBP. 

(5) Types of MA plans. For purposes 

of crosswalk policy in this section, CMS 

considers the following plans as 

different plan types: 

(i) Health maintenance organizations 

coordinated care plans. 

(ii) Provider-sponsored organizations 

coordinated care plans. 

(iii) Regional or local preferred 

provider organizations coordinated care 

plans. 

(iv) Special needs plans. 

(v) Private Fee-for-service plans. 

(vi) MSA plans. 

(b) Allowable crosswalk types—(1) All 

MA plans. An MA organization may 

perform a crosswalk in the following 

circumstances: 

(i) Renewal. A plan in the following 

contract year that links to a current 

contract year plan and retains the entire 

service area from the current contract 

year. The following contract year plan 

must retain the same plan ID as the 

current contract year plan. 

(ii) Consolidated renewal. A plan in 

the following contract year that 

combines 2 or more complete current 

contract year plans of the same plan 

type but not including when a current 

PBP is split among more than one PBP 

for the following contract year. The plan 

ID for the following contract year must 

be the same as one of the current 

contract year plan IDs. 

(iii) Renewal with a service area 

expansion (SAE). A plan in the 

following contract year that links to a 

current contract year plan and retains 

all of its plan service area from the 

current contract year, but also adds one 

or more new counties. The following 

year contract plan must retain the same 

plan ID as the current contract year 

plan. 

(iv) Renewal with a service area 

reduction (SAR). (A) A plan in the 

following contract year that links to a 

current contract year plan and only 

retains a portion of its plan service area. 

The following contract year plan must 

retain the same plan ID as the current 

contract year plan. The crosswalk is 

limited to the enrollees in the remaining 

service area. 

(B) While the MA organization may 

not affirmatively crosswalk enrollees in 

the locations that will no longer be part 

of the service area, the MA organization 

may offer those affected enrollees in the 

reduced portion of the service area a 

continuation in accordance with 

§ 422.74(b)(3)(ii), provided that there are 

no other MA plan options in the 

reduced service area. 

(C) If the MA organization offers 

another PBP in the locations that will no 

longer be part of the service area, 

current enrollees in the locations that 

will no longer be part of the service area 

must be disenrolled and the MA 

organization must send a non-renewal 

notice that includes notification of a 

special enrollment period under 

§ 422.62 and, for applicable enrollees, 

Medigap guaranteed issue rights. 

(D) The MA organization may offer 

current enrollees in the locations that 

will no longer be part of the service area 

the option of enrolling in the other 

plan(s) the MA organization offers in the 

location that is no longer part of the 

service area, however, no specific plan 

information for the following contract 

year may be shared with any 

beneficiaries prior to the plan marketing 

period for the next contract year, 

consistent with 42 CFR 422.2263 and 

423.2263. 

(2) Special needs plans (SNPs). In 

addition to those described in paragraph 

(b)(1) of this section, SNPs may also 

perform the following types of 

crosswalks: 

(i) Chronic SNPs (C–SNPs). (A) 

Renewing C–SNP with one chronic 

condition that transitions eligible 

enrollees into another C–SNP with a 

grouping that contains that same 

chronic condition. 

(B) Non-renewing C–SNP with one 

chronic condition that transitions 

eligible enrollees into another C–SNP 

with a grouping that contains that same 

chronic condition. 

(C) Non-renewing C–SNP with a 

grouping that is transitioning eligible 

enrollees into a different grouping C– 

SNP if the new grouping contains at 

least one condition that the prior C–SNP 

contained. 

(ii) Institutional SNP. (A) Renewing 

Institutional SNP that transitions 

enrollees to an Institutional/ 

Institutional Equivalent SNP. 

(B) Renewing Institutional Equivalent 

SNP that transitions enrollees to an 

Institutional/Institutional Equivalent 

SNP. 

(C) Renewing Institutional/ 

Institutional Equivalent SNP that 

transitions eligible enrollees to an 

Institutional SNP. 

(D) Renewing Institutional/ 

Institutional Equivalent SNP that 

transitions eligible enrollees to an 

Institutional Equivalent SNP. 

(E) Non-renewing Institutional/ 

Institutional Equivalent SNP that 

transitions eligible enrollees to another 

Institutional/Institutional Equivalent 

SNP. 

(c) Exceptions. In order to perform a 

crosswalk that is not specified in 

paragraph (b) of this section, an MA 

organization must request an exception. 

Crosswalk exceptions are prohibited 

between different plan types. CMS 

reviews exception requests and may 

permit a crosswalk exception in the 

following circumstances: 

(1) When a non-network or partial 

network Private Fee-For-Service (PFFS) 

plan changes to either a partial network 

or to a full network PFFS plan, enrollees 

may be moved to the new plan when 

CMS determines it is in the interest of 

beneficiaries, considering whether the 

risks to enrollees are such that they 

would be better served by remaining in 

the plan, whether there are other 

suitable managed care plans available, 

and whether the enrollees are 

particularly medically vulnerable, such 

as institutionalized enrollees. 

Crosswalks from a network based PFFS 

plan to a non-network or partial 

network PFFS plan will not be 

permitted. 

(2) When MA contracts offered by two 

different MA organizations that share 

the same parent organization are 

consolidated such that the separate 

contracts are consolidated under one 

surviving contract, the enrollees from 

the consolidating contracts may be 

crosswalked to an MA plan under the 

surviving contract. 

(3) When a renewing D–SNP with a 

multi-state service area reduces its 

service area or, in the case of a D–SNP 

in an MA regional plan contract, 

nonrenews and creates state-specific 

local preferred provider organization 

plans in its place to accommodate state 

contracting efforts in the service area, 

enrollees who are no longer in the 

service area may be moved into one or 

more new or renewing D–SNPs, offered 

under the same parent organization 

(even if the D–SNPs are offered by two 

different MA organizations), and for 

which the enrollees are eligible, as CMS 

determines is necessary to accommodate 

changes to the contracts between the 

state and D–SNP under § 422.107. For 

this crosswalk exception, CMS will 

permit enrollees to be moved between 

different contracts. 

(4) When a renewing D–SNP has 

another new or renewing D–SNP, and 

the two D–SNPs are offered to different 

populations, enrollees who are no 

longer eligible for their current D–SNP 

may be moved into the other new or 

renewing D–SNP offered by the same 

MA organization if they meet the 

eligibility criteria for the new or 

renewing D–SNP and CMS determines it 


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is in the best interest of the enrollees to 

move to the new or renewing D–SNP in 

order to promote access to and 

continuity of care for enrollees relative 

to the absence of a crosswalk exception. 

For this crosswalk exception, CMS will 

not permit enrollees to be moved 

between different contracts. 

(5) Renewing C–SNP with a grouping 

of multiple conditions that is 

transitioning eligible enrollees into 

another C–SNP with one of the chronic 

conditions from that grouping. 

(d) Procedures. (1) An MA 

organization must submit all crosswalks 

in paragraph (b) of this section in 

writing through the bid submission 

process in HPMS by the bid submission 

deadline announced by CMS. 

(2) An MA organization must submit 

all crosswalk exception requests in 

paragraph (c)(1) of this section in 

writing through the crosswalk 

exceptions process in HPMS by the 

crosswalk exception request deadline 

announced by CMS annually. CMS 

verifies the requests and notifies 

requesting MA organizations of the 

approval or denial after the crosswalk 

exception request deadline. 

■ 21. Section 422.550 is amended by 

adding paragraph (f) to read as follows: 

§ 422.550 General provisions. 

* * * * * 

(f) Sale of beneficiaries not permitted. 

(1) CMS only recognizes the sale or 

transfer of an organization’s entire MA 

line of business, consisting of all MA 

contracts held by the MA organization 

with the exception of the sale or transfer 

of a full contract between wholly owned 

subsidiaries of the same parent 

organization, which is permitted. 

(2) CMS does not recognize or allow 

a sale or transfer that consists solely of 

the sale or transfer of individual 

beneficiaries or groups of beneficiaries 

enrolled in a plan benefit package. 

■ 22. Section 422.562 is amended by 

adding paragraph (d)(3) to read as 

follows: 

§ 422.562 General provisions. 

* * * * * 

(d) * * * 

(3) For the sole purpose of applying 

the regulations at § 405.1038(c) of this 

chapter, an MA organization is included 

in the definition of ‘‘contractors’’ as it 

relates to stipulated decisions. 

■ 23. Section 422.568 is amended by 

adding paragraphs (g) through (k) to 

read as follows: 

§ 422.568 Standard timeframes and notice 

requirements for organization 

determinations. 

* * * * * 

(g) Dismissing a request. The MA 

organization dismisses an organization 

determination request, either entirely or 

as to any stated issue, under any of the 

following circumstances: 

(1) The individual or entity making 

the request is not permitted to request 

an organization determination under 

§ 422.566(c). 

(2) The MA organization determines 

the party failed to make out a valid 

request for an organization 

determination that substantially 

complies with paragraph (a) of this 

section. 

(3) An enrollee or the enrollee’s 

representative files a request for an 

organization determination, but the 

enrollee dies while the request is 

pending, and both of the following 

apply: 

(i) The enrollee’s surviving spouse or 

estate has no remaining financial 

interest in the case. 

(ii) No other individual or entity with 

a financial interest in the case wishes to 

pursue the organization determination. 

(4) A party filing the organization 

determination request submits a timely 

request for withdrawal of their request 

for an organization determination with 

the MA organization. 

(h) Notice of dismissal. The MA 

organization must mail or otherwise 

transmit a written notice of the 

dismissal of the organization 

determination request to the parties. 

The notice must state all of the 

following: 

(1) The reason for the dismissal. 

(2) The right to request that the MA 

organization vacate the dismissal action. 

(3) The right to request 

reconsideration of the dismissal. 

(i) Vacating a dismissal. If good cause 

is established, the MA organization may 

vacate its dismissal of a request for an 

organization determination within 6 

months from the date of the notice of 

dismissal. 

(j) Effect of dismissal. The dismissal 

of a request for an organization 

determination is binding unless it is 

modified or reversed by the MA 

organization upon reconsideration or 

vacated under paragraph (i) of this 

section. 

(k) Withdrawing a request. A party 

that requests an organization 

determination may withdraw its request 

at any time before the decision is issued 

by filing a request with the MA 

organization. 

■ 24. Section 422.570 is amended by 

adding paragraph (g) to read as follows: 

§ 422.570 Expediting certain organization 

determinations. 

* * * * * 

(g) Dismissing a request. The MA 

organization dismisses an expedited 

organization request in accordance with 

§ 422.568. 

■ 25. Section 422.582 is amended— 

■ a. In paragraph (e) by removing the 

word ‘‘written’’; and 

■ b. By adding paragraphs (f) through 

(i). 

The additions to read as follows: 

§ 422.582 Request for a standard 

reconsideration. 

* * * * * 

(f) Dismissing a request. The MA 

organization dismisses a reconsideration 

request, either entirely or as to any 

stated issue, under any of the following 

circumstances: 

(1) The person or entity requesting a 

reconsideration is not a proper party 

under § 422.578. 

(2) The MA organization determines 

the party failed to make a valid request 

for a reconsideration that substantially 

complies with paragraph (a) of this 

section. 

(3) The party fails to file the 

reconsideration request within the 

proper filing time frame in accordance 

with paragraph (b) of this section. 

(4) The enrollee or the enrollee’s 

representative files a request for a 

reconsideration, but the enrollee dies 

while the request is pending, and both 

of the following criteria apply: 

(i) The enrollee’s surviving spouse or 

estate has no remaining financial 

interest in the case. 

(ii) No other individual or entity with 

a financial interest in the case wishes to 

pursue the reconsideration. 

(5) A party filing the reconsideration 

request submits a timely request for 

withdrawal of the request for a 

reconsideration with the MA 

organization. 

(g) Notice of dismissal. The MA 

organization must mail or otherwise 

transmit a written notice of the 

dismissal of the reconsideration request 

to the parties. The notice must state all 

of the following: 

(1) The reason for the dismissal. 

(2) The right to request that the MA 

organization vacate the dismissal action. 

(3) The right to request review of the 

dismissal by the independent entity. 

(h) Vacating a dismissal. If good cause 

is established, the MA organization may 

vacate its dismissal of a request for 

reconsideration within 6 months from 

the date of the notice of dismissal. 

(i) Effect of dismissal. The MA 

organization’s dismissal is binding 

unless the enrollee or other party 

requests review by the independent 

entity in accordance with § 422.590(h) 

or the decision is vacated under 

paragraph (h) of this section. 


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■ 26. Section 422.584 is amended by 

adding paragraph (g) to read as follows: 

§ 422.584 Expediting certain 

reconsiderations. 

* * * * * 

(g) Dismissing a request. The MA 

organization dismisses an expedited 

reconsideration request in accordance 

with § 422.582(f) through (i). 

■ 27. Section 422.590 is amended by 

adding paragraph (i) to read as follows: 

§ 422.590 Timeframes and responsibility 

for reconsiderations. 

* * * * * 

(i) Requests for review of a dismissal 

by the independent entity. If the MA 

organization dismisses a request for a 

reconsideration in accordance with 

§§ 422.582(f) and 422.584(g), the 

enrollee or other proper party under 

§ 422.578 has the right to request review 

of the dismissal by the independent 

entity. A request for review of a 

dismissal must be filed in writing with 

the independent entity within 60 

calendar days from the date of the MA 

organization’s dismissal notice. 

■ 28. Section 422.592 is amended— 

■ a. In paragraph (a) by adding a 

sentence at the end of the paragraph; 

and 

■ b. By adding paragraphs (d) through 

(i). 

The additions to read as follows: 

§ 422.592 Reconsideration by an 

independent entity. 

(a) * * * In accordance with 

§ 422.590(i), the independent entity is 

responsible for reviewing MA 

organization dismissals of 

reconsideration requests. 

* * * * * 

(d) The independent entity dismisses 

a reconsideration request, either entirely 

or as to any stated issue, under any of 

the following circumstances: 

(1) The person or entity requesting a 

reconsideration is not a proper party 

under § 422.578. 

(2) The independent entity 

determines the party failed to make out 

a valid request for a reconsideration that 

substantially complies with § 422.582(a) 

or (b). 

(3) The enrollee or the enrollee’s 

representative files a request for a 

reconsideration, but the enrollee dies 

while the request is pending, and both 

of the following criteria apply: 

(i) The enrollee’s surviving spouse or 

estate has no remaining financial 

interest in the case. 

(ii) No other individual or entity with 

a financial interest in the case wishes to 

pursue the reconsideration. 

(4) The party filing the 

reconsideration request submits with 

the independent review entity a timely 

request for withdrawal of the request for 

reconsideration. 

(e) The independent entity mails or 

otherwise transmits a written notice of 

the dismissal of the reconsideration 

request to the parties. The notice must 

state the following: 

(1) The reason for the dismissal. 

(2) That there is a right to request that 

the independent entity vacate the 

dismissal action. 

(3) The right to a review of the 

dismissal under §§ 422.600 and 422.602. 

(f) If good cause is established, the 

independent entity may vacate its 

dismissal of a request for 

reconsideration within 6 months from 

the date of the notice of dismissal. 

(g) The independent entity’s dismissal 

is binding and not subject to further 

review unless a party meets the 

requirements in § 422.600 and files a 

proper and timely request under 

§ 422.602 or the dismissal is vacated 

under paragraph (f) of this section. 

(h) The party or physician acting on 

behalf of an enrollee who files a request 

for reconsideration may withdraw the 

request by filing a request for 

withdrawal with the independent 

entity. 

(i) If the independent entity 

determines that the MA organization’s 

dismissal was in error, the independent 

entity vacates the dismissal and 

remands the case to the plan for 

reconsideration consistent with 

§ 422.590. The independent entity’s 

decision regarding an MA organization’s 

dismissal, including a decision to deny 

a request for review of a dismissal, is 

binding and not subject to further 

review. 

■ 29. Section 422.600 is amended in 

paragraph (b) by adding a new sentence 

at the end of the paragraph to read as 

follows: 

§ 422.600 Right to a hearing. 

* * * * * 

(b) * * * For purposes of calculating 

the amount remaining in controversy 

under this section, references to 

coinsurance in § 405.1006(d) of this 

chapter should be read to include 

coinsurance and copayment amounts. 

* * * * * 

■ 30. Section 422.629 is amended by 

revising paragraph (k)(4)(ii) to read as 

follows: 

§ 422.629 General requirements for 

applicable integrated plans. 

* * * * * 

(k) * * * 

(4) * * * 

(ii) If deciding an appeal of a denial 

that is based on lack of medical 

necessity (or any substantively 

equivalent term used to describe the 

concept of medical necessity), are a 

physician or other appropriate health 

care professional who have the 

appropriate clinical expertise in treating 

the enrollee’s condition or disease, and 

knowledge of Medicare and Medicaid 

coverage criteria, before the applicable 

integrated plan issues the integrated 

organization determination decision. 

* * * * * 

■ 31. Section 422.631 is amended by 

adding paragraphs (e) through (i) to read 

as follows: 

§ 422.631 Integrated organization 

determinations. 

* * * * * 

(e) Dismissing a request. The 

applicable integrated plan dismisses a 

standard or expedited integrated 

organization determination request, 

either entirely or as to any stated issue, 

under any of the following 

circumstances: 

(1) The individual or entity making 

the request is not permitted to request 

an integrated organization 

determination under § 422.629(l). 

(2) The applicable integrated plan 

determines the party failed to make out 

a valid request for an integrated 

organization determination that 

substantially complies with paragraph 

(b) of this section. 

(3) An enrollee or the enrollee’s 

representative files a request for an 

integrated organization determination, 

but the enrollee dies while the request 

is pending, and both of the following 

apply: 

(i) The enrollee’s surviving spouse or 

estate has no remaining financial 

interest in the case. 

(ii) No other individual or entity with 

a financial interest in the case wishes to 

pursue the integrated organization 

determination. 

(4) A party filing the integrated 

organization determination request 

submits a timely request for withdrawal 

of their request for an integrated 

organization determination with the 

applicable integrated plan. 

(f) Notice of dismissal. The applicable 

integrated plan must mail or otherwise 

transmit a written notice of the 

dismissal of the integrated organization 

determination request to the parties. 

The notice must state all of the 

following: 

(1) The reason for the dismissal. 

(2) The right to request that the 

applicable integrated plan vacate the 

dismissal action. 

(3) The right to request 

reconsideration of the dismissal. 


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(g) Vacating a dismissal. If good cause 

is established, the applicable integrated 

plan may vacate its dismissal of a 

request for an integrated organization 

determination within 6 months from the 

date of the notice of dismissal. 

(h) Effect of dismissal. The dismissal 

of a request for an integrated 

organization determination is binding 

unless it is modified or reversed by the 

applicable integrated plan or vacated 

under paragraph (g) of this section. 

(i) Withdrawing a request. A party 

that requests an integrated organization 

determination may withdraw its request 

at any time before the decision is issued 

by filing a request with the applicable 

integrated plan. 

■ 32. Section 422.632 is amended in 

paragraph (b)(1) by removing the 

reference ‘‘§ 422.633(e)’’ and adding in 

its place the reference ‘‘§ 422.633(d)’’. 

§ 422.632 [Amended] 

■ 33. Section 422.633 is amended by 

adding paragraphs (g) through (k) to 

read as follows: 

§ 422.633 Integrated reconsideration. 

* * * * * 

(g) Withdrawing a request. The party 

or physician acting on behalf of an 

enrollee who files a request for 

integrated reconsideration may 

withdraw it by filing a request for 

withdrawal with the applicable 

integrated plan. 

(h) Dismissing a request. The 

applicable integrated plan dismisses an 

expedited or standard integrated 

reconsideration request, either entirely 

or as to any stated issue, under any of 

the following circumstances: 

(1) The person or entity requesting an 

integrated reconsideration is not a 

proper party to request an integrated 

reconsideration under § 422.629(l). 

(2) The applicable integrated plan 

determines the party failed to make a 

valid request for an integrated 

reconsideration that substantially 

complies with § 422.629(l) of this 

section. 

(3) The party fails to file the 

integrated reconsideration request 

within the proper filing timeframe in 

accordance with paragraph (d) of this 

section. 

(4) The enrollee or the enrollee’s 

representative files a request for an 

integrated reconsideration, but the 

enrollee dies while the request is 

pending, and both of the following 

criteria apply: 

(i) The enrollee’s surviving spouse or 

estate has no remaining financial 

interest in the case. 

(ii) No other individual or entity with 

a financial interest in the case wishes to 

pursue the integrated reconsideration. 

(5) A party filing the reconsideration 

request submits a timely request for 

withdrawal of their request for an 

integrated reconsideration with the 

applicable integrated plan. 

(i) Notice of dismissal. The applicable 

integrated plan must mail or otherwise 

transmit a written notice of the 

dismissal of the integrated 

reconsideration request to the parties. 

The notice must state all of the 

following: 

(1) The reason for the dismissal. 

(2) The right to request that the 

applicable integrated plan vacate the 

dismissal action. 

(3) The right to request review of the 

dismissal by the independent entity. 

(j) Vacating a dismissal. If good cause 

is established, the applicable integrated 

plan may vacate its dismissal of a 

request for integrated reconsideration 

within 6 months from the date of the 

notice of dismissal. 

(k) Effect of dismissal. The applicable 

integrated plan’s dismissal is binding 

unless the enrollee or other party 

requests review by the independent 

entity in accordance with § 422.590(h) 

or the dismissal is vacated under 

paragraph (j) of this section. 

■ 34. Section 422.760 is amended by 

redesignating paragraphs (b)(3) and (4) 

as paragraphs (b)(4) and (5), 

respectively, and adding a new 

paragraph (b)(3) to read as follows: 

§ 422.760 Determinations regarding the 

amount of civil money penalties and 

assessment imposed by CMS. 

* * * * * 

(b) * * * 

(3) CMS calculates the minimum 

penalty amounts under paragraphs 

(b)(1) and (2) of this section using the 

following criteria: 

(i) Definitions for calculating penalty 

amounts—(A) Per determination. The 

penalty amounts calculated under 

paragraph (b)(1) of this section. 

(B) Per enrollee. The penalty amounts 

calculated under paragraph (b)(2) of this 

section. 

(C) Standard minimum penalty. The 

per enrollee or per determination 

penalty amount that is dependent on the 

type of adverse impact that occurred. 

(D) Aggravating factor(s). Specific 

penalty amounts that may increase the 

per enrollee or per determination 

standard minimum penalty and are 

determined based on criteria under 

paragraph (a) of this section. 

(E) Cost-of-living multiplier. The 

percent change between each year’s 

published October consumer price 

index for all urban consumers (United 

States city average), which is released 

by The Office of Management and 

Budget (OMB) annually. 

(ii) Calculation of minimum penalty 

amounts. (A) Per determination and per 

enrollee minimum penalty amounts 

increases by multiplying the current 

standard minimum penalty and 

aggravating factor amounts by the costof-living multiplier. 

(B) The minimum penalty and 

aggravating factor amounts is updated 

no more often than every 3 years. 

(C) CMS does the following: 

(1) Tracks the calculation and accrual 

of the standard minimum penalty and 

aggravating factor amounts. 

(2) Announces the penalties and 

amounts described in paragraph (b) of 

this section on an annual basis. 

* * * * * 

■ 35. Section 422.2260 is revised to read 

as follows: 

§ 422.2260 Definitions. 

The definitions in this section apply 

for this subpart unless the context 

indicates otherwise. 

Advertisement (Ad) means a read, 

written, visual, oral, watched, or heard 

bid for, or call to attention. 

Advertisements can be considered 

communications or marketing based on 

the intent and content of the message. 

Alternate format means a format used 

to convey information to individuals 

with visual, speech, physical, hearing, 

and intellectual disabilities (for 

example, braille, large print, audio). 

Banner means a type of advertisement 

feature typically used in television ads 

that is intended to be brief, and flashes 

limited information across a screen for 

the sole purpose of enticing a 

prospective enrollee to contact the MA 

plan (for example, obtain more 

information) or to alert the viewer that 

information is forthcoming. 

Banner-like advertisement is an 

advertisement that uses a banner-like 

feature, that is typically found in some 

media other than television (for 

example, outdoors and on the internet). 

Communications means activities and 

use of materials created or administered 

by the MA organization or any 

downstream entity to provide 

information to current and prospective 

enrollees. Marketing is a subset of 

communications. 

Marketing means communications 

materials and activities that meet both 

the following standards for intent and 

content: 

(1) Intended, as determined under 

paragraph (1)(ii) of this definition, to do 

any of the following: 


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(i)(A) Draw a beneficiary’s attention to 

a MA plan or plans. 

(B) Influence a beneficiary’s decisionmaking process when making a MA 

plan selection. 

(C) Influence a beneficiary’s decision 

to stay enrolled in a plan (that is, 

retention-based marketing). 

(ii) In evaluating the intent of an 

activity or material, CMS will consider 

objective information including, but not 

limited to, the audience of the activity 

or material, other information 

communicated by the activity or 

material, timing, and other context of 

the activity or material and is not 

limited to the MA organization’s stated 

intent. 

(2) Include or address content 

regarding any of the following: 

(i) The plan’s benefits, benefits 

structure, premiums, or cost sharing. 

(ii) Measuring or ranking standards 

(for example, Star Ratings or plan 

comparisons). 

(iii) Rewards and incentives as 

defined under § 422.134(a). 

Outdoor advertising (ODA) means 

outdoor material intended to capture the 

attention of a passing audience (for 

example, billboards, signs attached to 

transportation vehicles). ODA may be 

communications or marketing material. 

■ 36. Section 422.2261 is added to read 

as follows: 

§ 422.2261 Submission, review, and 

distribution of materials. 

(a) General requirements. MA 

organizations must submit all marketing 

materials, all election forms, and certain 

designated communications materials 

for CMS review. 

(1) The Health Plan Management 

System (HPMS) Marketing Module is 

the primary system of record for the 

collection, review, and storage of 

materials that must be submitted for 

review. 

(2) Materials must be submitted to the 

HPMS Marketing Module by the MA 

organization. 

(3) Unless specified by CMS, third 

party and downstream entities are not 

permitted to submit materials directly to 

CMS. 

(b) CMS review of marketing materials 

and election forms. MA organizations 

may not distribute or otherwise make 

available any marketing materials or 

election forms unless one of the 

following occurs: 

(1) CMS has reviewed and approved 

the material. 

(2) The material has been deemed 

approved; that is, CMS has not rendered 

a disposition for the material within 45 

days (or 10 days if using CMS model or 

standardized marketing materials as 

outlined in § 422.2267(e) of this chapter) 

of submission to CMS; or 

(3) The material has been accepted 

under File and Use, as follows: 

(i) The MA organization may 

distribute certain types of marketing 

materials, designated by CMS based on 

the material’s content, audience, and 

intended use, as they apply to potential 

risk to the beneficiary, 5 days following 

the submission. 

(ii) The MA organization must certify 

that the material meets all applicable 

CMS communications and marketing 

requirements in §§ 422.2260 through 

422.2267. 

(c) CMS review of non-marketing 

communications materials. CMS does 

not require submission, or submission 

and approval, of communications 

materials prior to use, other than the 

following exceptions. 

(1) Certain designated 

communications materials that are 

critical to beneficiaries understanding or 

accessing their benefits (for example, 

the Evidence of Coverage (EOC). 

(2) Communications materials that, 

based on feedback such as complaints or 

data gathered through reviews, warrant 

additional oversight as determined by 

CMS, to ensure the information being 

received by beneficiaries is accurate. 

(d) Standards for CMS review. CMS 

reviews materials to ensure the 

following: 

(1) Compliance with all applicable 

requirements under §§ 422.2260 through 

422.2267. 

(2) Benefit and cost information is an 

accurate reflection of what is contained 

in the MA organization’s bid. 

(3) CMS may determine, upon review 

of such materials, that the materials 

must be modified, or may no longer be 

used. 

■ 37. Section 422.2262 is revised to read 

as follows: 

§ 422.2262 General communications 

materials and activities requirements. 

MA organizations may not mislead, 

confuse, or provide materially 

inaccurate information to current or 

potential enrollees. 

(a) General rules. MA organizations 

must ensure their statements and the 

terminology used in communications 

activities and materials adhere to the 

following requirements: 

(1) MA organizations may not do any 

of the following: 

(i) Provide information that is 

inaccurate or misleading. 

(ii) Make unsubstantiated statements, 

except when used in logos or taglines. 

(iii) Engage in activities that could 

mislead or confuse Medicare 

beneficiaries, or misrepresent the MA 

organization. 

(iv) Engage in any discriminatory 

activity such as attempting to recruit 

Medicare beneficiaries from higher 

income areas without making 

comparable efforts to enroll Medicare 

beneficiaries from lower income areas, 

or vice versa. 

(v) Target potential enrollees based on 

income levels, unless it is a dual eligible 

special needs plan or comparable plan 

as determined by the Secretary. 

(vi) Target potential enrollees based 

on health status, unless it is a special 

needs plan or comparable plan as 

determined by the Secretary. 

(vii) State or imply plans are only 

available to seniors rather than to all 

Medicare beneficiaries. 

(viii) Employ MA plan names that 

suggest that a plan is not available to all 

Medicare beneficiaries, unless it is a 

special needs plan or comparable plan 

as determined by the Secretary. This 

prohibition does not apply to MA plan 

names in effect prior to July 31, 2000. 

(ix) Display the names or logos or 

both of co-branded network providers 

on the organization’s member 

identification card, unless the provider 

names or logos or both are related to the 

member selection of specific provider 

organizations (for example, physicians 

or hospitals). 

(x) Use a plan name that does not 

include the plan type. The plan type 

should be included at the end of the 

plan name, for example, ‘‘Super 

Medicare Advantage (HMO).’’ MA 

organizations are not required to repeat 

the plan type when the plan name is 

used multiple times in the same 

material. 

(xi) Claim they are recommended or 

endorsed by CMS, Medicare, the 

Secretary, or HHS. 

(xii) Convey that a failure to pay 

premium will not result in 

disenrollment, except for factually 

accurate descriptions of the MA 

organization’s policies adopted in 

accordance with § 422.74(b)(1) and 

(d)(1) of this chapter. 

(xiii) Use the term ‘‘free’’ to describe 

a $0 premium, any type of reduction in 

premium, reduction in deductibles or 

cost sharing, low-income subsidy, or 

cost sharing pertaining to dual eligible 

individuals. 

(xiv) Imply that the plan operates as 

a supplement to Medicare. 

(xv) State or imply a plan is available 

only to or is designed for beneficiaries 

who are dually eligible for Medicare and 

Medicaid, unless it is a dual-eligible 

special needs plan or comparable plan 

as determined by the Secretary. 

(xvi) Market a non-dual eligible 

special needs plan as if it were a dualeligible special needs plan. 


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(xvii) Target marketing efforts 

primarily to dual eligible individuals, 

unless the plan is a dual eligible special 

needs plan or comparable plan as 

determined by the Secretary. 

(xviii) Claim a relationship with the 

state Medicaid agency, unless a contract 

to coordinate Medicaid services for 

enrollees in that plan is in place. 

(2) MA organizations may do the 

following: 

(i) State that the MA organization is 

approved to participate in Medicare 

programs or is contracted to administer 

Medicare benefits or both. 

(ii) Use the term ‘‘Medicareapproved’’ to describe benefits or 

services in materials or both. 

(iii) Use the term ‘‘free’’ in 

conjunction with mandatory, 

supplemental, and preventative benefits 

provided at a zero cost share for all 

enrollees. 

(b) Product endorsements and 

testimonials. (1) Product endorsements 

and testimonials may take any of the 

following forms: 

(i) Television or video ads. 

(ii) Radio ads. 

(iii) Print ads. 

(iv) Social media ads. In cases of 

social media, the use of a previous post, 

whether or not associated with or 

originated by the MA organization, is 

considered a product endorsement or 

testimonial. 

(v) Other types of ads. 

(2) MA organizations may use 

individuals to endorse the MA 

organization’s product provided the 

endorsement or testimonial adheres to 

the following requirements: 

(i) The speaker must identify the MA 

organization’s product or company by 

name. 

(ii) Medicare beneficiaries endorsing 

or promoting the MA organization must 

have been an enrollee at the time the 

endorsement or testimonial was created. 

(iii) The endorsement or testimonial 

must clearly state that the individual 

was paid for the endorsement or 

testimonial, if applicable. 

(iv) If an individual is used (for 

example, an actor) to portray a real or 

fictitious situation, the endorsement or 

testimonial must state that it is an actor 

portrayal. 

(c) Requirements when including 

certain telephone numbers in materials. 

(1) MA organizations must adhere to the 

following requirements for including 

certain telephone numbers in materials: 

(i) When a MA organization includes 

its customer service number, the hours 

of operation must be prominently 

included at least once. 

(ii) When a MA organization includes 

its customer service number, it must 

provide a toll-free TTY number in 

conjunction with the customer service 

number in the same font size. 

(iii) On every material where 1–800– 

MEDICARE or Medicare TTY appears, 

the MA organization must prominently 

include, at least once, the hours and 

days of operation for 1–800–MEDICARE 

(that is, 24 hours a day/7 days a week). 

(2) The following advertisement types 

are exempt from these requirements: 

(i) Outdoor advertising. 

(ii) Banners or banner-like ads. 

(iii) Radio advertisements and 

sponsorships. 

(d) Standardized material 

identification (SMID). (1) MA 

organizations must use a standardized 

method of identification for oversight 

and tracking of materials received by 

beneficiaries. 

(2) The SMID consists of the following 

three parts: 

(i) The MA organization contract or 

Multi-Contract Entity (MCE) number 

(that is, ‘‘H’’ for MA or Section 1876 

Cost Plans, ‘‘R’’ for Regional PPO plans 

(RPPOs), or ‘‘Y’’ for MCE, a means of 

identification available for Plans/Part D 

sponsors that have multiple MA 

contracts) followed by an underscore, 

except that the SMID for multi-plan 

marketing materials must begin with the 

word ‘‘MULTI–PLAN’’ instead of the 

MA organization’s contract number (for 

example, H1234_abc123_C or MULTI– 

PLAN_efg456_M). 

(ii) A series of alpha numeric 

characters (chosen at the MA 

organization’s discretion) unique to the 

material followed by an underscore. 

(iii) An uppercase ‘‘C’’ for 

communications materials or an 

uppercase ‘‘M’’ for marketing materials 

(for example, H1234_abc123_C or 

H5678_efg456_M). 

(3) The SMID is required on all 

materials except the following: 

(i) Membership ID card. 

(ii) Envelopes, radio ads, outdoor 

advertisements, banners, banner-like 

ads, and social media comments and 

posts. 

(iii) OMB-approved forms/documents, 

except those materials specified in 

§ 422.2267. 

(iv) Corporate notices or forms (that 

is, not MA/Part D specific) meeting the 

definition of communications (see 

§ 422.2260) such as privacy notices and 

authorization to disclose protected 

health information (PHI). 

(v) Agent-developed communications 

materials that are not marketing. 

(4) Non-English and alternate format 

materials, based on previously created 

materials, may have the same SMID as 

the material on which they are based. 

■ 38. Section 422.2263 is added to read 

as follows: 

§ 422.2263 General marketing 

requirements. 

Marketing is a subset of 

communications and therefore must 

follow the requirements outlined in 

§ 422.2262 as well as this section. 

Marketing (as defined in § 422.2260) 

must additionally meet the following 

requirements: 

(a) MA organizations may begin 

marketing prospective plan year 

offerings on October 1 of each year for 

the following contract year. MA 

organizations may market the current 

and prospective year simultaneously 

provided materials clearly indicate what 

year is being discussed. 

(b) In marketing, MA organizations 

may not do any of the following: 

(1) Provide cash or other monetary 

rebates as an inducement for enrollment 

or otherwise. 

(2) Offer gifts to beneficiaries, unless 

the gifts are of nominal value (as 

governed by guidance published by the 

HHS OIG), are offered to similarly 

situated beneficiaries without regard to 

whether or not the beneficiary enrolls, 

and are not in the form of cash or other 

monetary rebates. 

(3) Provide meals to potential 

enrollees regardless of value. 

(4) Market non-health care related 

products to prospective enrollees during 

any MA sales activity or presentation. 

This is considered cross-selling and is 

prohibited. 

(5) Compare their plan to other plans, 

unless the information is accurate, not 

misleading, and can be supported by the 

MA organization making the 

comparison. 

(6) Display the names or logos or both 

of provider co-branding partners on 

marketing materials, unless the 

materials clearly indicate via a 

disclaimer or in the body that ‘‘Other 

providers are available in the network.’’ 

(7) Knowingly target or send 

unsolicited marketing materials to any 

MA enrollee during the Open 

Enrollment Period (OEP). 

(i) During the OEP, an MA 

organization may do any of the 

following: 

(A) Conduct marketing activities that 

focus on other enrollment opportunities, 

including but not limited to marketing 

to age-ins (who have not yet made an 

enrollment decision), marketing by 5- 

star plans regarding their continuous 

enrollment special election period 

(SEP), and marketing to dual-eligible 

and LIS beneficiaries who, in general, 

may make changes once per calendar 

quarter during the first 9 months of the 

year; 


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(B) Send marketing materials when a 

beneficiary makes a proactive request; 

(C) At the beneficiary’s request, have 

one-on-one meetings with a sales agent; 

(D) At the beneficiary’s request, 

provide information on the OEP through 

the call center; and 

(E) Include educational information, 

excluding marketing, on the MA 

organization’s website about the 

existence of OEP. 

(ii) During the OEP, an MA 

organization may not: 

(A) Send unsolicited materials 

advertising the ability or opportunity to 

make an additional enrollment change 

or referencing the OEP; 

(B) Specifically target beneficiaries 

who are in the OEP because they made 

a choice during Annual Enrollment 

Period (AEP) by purchase of mailing 

lists or other means of identification; 

(C) Engage in or promote agent or 

broker activities that intend to target the 

OEP as an opportunity to make further 

sales; or 

(D) Call or otherwise contact former 

enrollees who have selected a new plan 

during the AEP. 

(c) The following requirements apply 

to how MA organizations must display 

CMS-issued Star Ratings: 

(1) References to individual Star 

Rating measure(s) must also include 

references to the overall Star Rating for 

MA–PDs and the summary rating for 

MA-only plans. 

(2) May not use an individual 

underlying category, domain, or 

measure rating to imply overall higher 

Star Ratings. 

(3) Must be clear that the rating is out 

of 5 stars. 

(4) Must clearly identify the Star 

Ratings contract year. 

(5) May only market the Star Ratings 

in the service area(s) for which the Star 

Rating is applicable, unless using Star 

Ratings to convey overall MA 

organization performance (for example, 

‘‘Plan X has achieved 4.5 stars in 

Montgomery, Chester, and Delaware 

Counties), in which case the MA 

organization must do so in a way that 

is not confusing or misleading. 

(6) The following requirements apply 

to all 5 Star MA contracts: 

(i) May not market the 5-star special 

enrollment period, as defined in 

§ 422.62(b)(15), after November 30 of 

each year if the contract has not 

received an overall 5 star for the next 

contract year. 

(ii) May use CMS’ 5-star icon or may 

create their own icon. 

(7) The following requirements apply 

to all Low Performing MA contracts: 

(i) The Low Performing Icon must be 

included on all materials about or 

referencing the specific contract’s Star 

Ratings. 

(ii) Must state the Low Performing 

Icon means that the MA organization’s 

contract received a summary rating of 

2.5 stars or below in Part C or Part D or 

both for the last 3 years. 

(iii) May not attempt to refute or 

minimize Low Performing Status. 

■ 39. Section 422.2264 is revised to read 

as follows: 

§ 422.2264 Beneficiary contact. 

For the purpose of this section, 

beneficiary contact means any outreach 

activities to a beneficiary or a 

beneficiary’s caregivers by the MA 

organization or its agents and brokers. 

(a) Unsolicited contact. Subject to the 

rules for contact for plan business in 

paragraph (b) of this section, the 

following rules apply when materials or 

activities are given or supplied to a 

beneficiary or their caregiver without 

prior request: 

(1) MA organizations may make 

unsolicited direct contact by 

conventional mail and other print media 

(for example, advertisements and direct 

mail) or email (provided every email 

contains an opt-out option). 

(2) MA organizations may not do any 

of the following if unsolicited: 

(i) Use door to door solicitation, 

including leaving information of any 

kind, except that information may be 

left when an appointment is prescheduled but the beneficiary is not 

home. 

(ii) Approach enrollees in common 

areas such as parking lots, hallways, and 

lobbies. 

(iii) Send direct messages from social 

media platforms. 

(iv) Use telephone solicitation (that is, 

cold calling), robocalls, text messages, 

or voicemail messages, including, but 

not limited to, the following: 

(A) Calls based on referrals. 

(B) Calls to former enrollees who have 

disenrolled or those in the process of 

disenrolling, except to conduct 

disenrollment surveys for quality 

improvement purposes. 

(C) Calls to beneficiaries who 

attended a sales event, unless the 

beneficiary gave express permission to 

be contacted. 

(D) Calls to prospective enrollees to 

confirm receipt of mailed information. 

(3) Calls are not considered 

unsolicited if the beneficiary provides 

consent or initiates contact with the 

plan. For example, returning phone 

calls or calling an individual who has 

completed a business reply card 

requesting contact is not considered 

unsolicited. 

(b) Contact for plan business. MA 

organizations may contact current, and 

to a more limited extent, former 

members, including those enrolled in 

other products offered by the parent 

organization, to discuss plan business, 

in accordance with the following 

requirements: 

(1) An MA organization may conduct 

the following activities as plan business: 

(i) Call current enrollees, including 

those in non-Medicare products, to 

discuss Medicare products. Examples of 

such calls include, but are not limited 

to the following: 

(A) Enrollees aging into Medicare 

from commercial products. 

(B) Existing enrollees, including 

Medicaid enrollees, to discuss other 

Medicare products or plan benefits. 

(C) Members in a Part D plan to 

discuss other Medicare products. 

(ii) Call beneficiaries who submit 

enrollment applications to conduct 

business related to enrollment. 

(iii) With prior CMS approval, call LIS 

enrollees that a plan is prospectively 

losing due to reassignment. CMS 

decisions to approve calls are for 

limited circumstances based on the 

following: 

(A) The proximity of cost of the losing 

plan as compared to the national 

benchmark; and 

(B) The selection of plans in the 

service area that are below the 

benchmark. 

(iv) Agents/brokers calling clients 

who are enrolled in other products they 

may sell, such as automotive or home 

insurance. 

(v) MA organizations may not make 

unsolicited calls about other lines of 

business as a means of generating leads 

for Medicare plans. 

(2) When reaching out to a beneficiary 

regarding plan business, as outlined in 

this section, MA organizations must 

offer the beneficiary the ability to opt 

out of future calls regarding plan 

business. 

(c) Events with beneficiaries. MA 

organizations and their agents or brokers 

may hold educational events, marketing 

or sales events, and personal marketing 

appointments to meet with Medicare 

beneficiaries, either face-to-face or 

virtually. The requirements for each 

type of event are as follows: 

(1) Educational events must be 

advertised as such and be designed to 

generally inform beneficiaries about 

Medicare, including Medicare 

Advantage, Prescription Drug programs, 

or any other Medicare program. 

(i) At educational events, MA 

organizations and agents/brokers may 

not market specific MA plans or 

benefits. 

(ii) MA organizations holding or 

participating in educational events may 

do any of the following: 


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(A) Distribute communications 

materials. 

(B) Answer beneficiary-initiated 

questions pertaining to MA plans. 

(C) Set up future personal marketing 

appointments. 

(D) Distribute business cards. 

(E) Obtain beneficiary contact 

information, including Scope of 

Appointment forms. 

(iii) MA organizations holding or 

participating in educational events may 

not conduct sales or marketing 

presentations or distribute or accept 

plan applications. 

(iv) MA organizations may schedule 

appointments with residents of longterm care facilities (for example, nursing 

homes, assisted living facilities, board 

and care homes) upon a resident’s 

request. If a resident did not request an 

appointment, any visit by an agent or 

broker is prohibited as unsolicited doorto-door marketing. 

(2) Marketing or sales events are 

group events that fall within the 

definition of marketing at § 422.2260. 

(i) If a marketing event directly 

follows an educational event, the 

beneficiary must be made aware of the 

change and given the opportunity to 

leave prior to the marketing event 

beginning. 

(ii) MA organizations holding or 

participating in marketing events may 

do any of the following: 

(A) Provide marketing materials. 

(B) Distribute and accept plan 

applications. 

(C) Collect Scope of Appointment 

forms for future personal marketing 

appointments. 

(D) Conduct marketing presentations. 

(iii) MA organizations holding or 

participating in marketing events may 

not do any of the following: 

(A) Require sign-in sheets or require 

attendees to provide contact information 

as a prerequisite for attending an event. 

(B) Conduct activities, including 

health screenings, health surveys, or 

other activities that are used for or could 

be viewed as being used to target a 

subset of members (that is, ‘‘cherrypicking’’). 

(C) Use information collected for 

raffles or drawings for any purpose 

other than raffles or drawings. 

(3) Personal marketing appointments 

are those appointments that are tailored 

to an individual or small group (for 

example, a married couple). Personal 

marketing appointments are not defined 

by the location. 

(i) Prior to the personal marketing 

appointment beginning, the MA plan (or 

agent or broker, as applicable) must 

agree upon and record the Scope of 

Appointment with the beneficiary(ies). 

(ii) MA organizations holding a 

personal marketing appointment may do 

any of the following: 

(A) Provide marketing materials. 

(B) Distribute and accept plan 

applications. 

(C) Conduct marketing presentations. 

(D) Review the individual needs of 

the beneficiary including, but not 

limited to, health care needs and 

history, commonly used medications, 

and financial concerns. 

(iii) MA organizations holding a 

personal marketing appointment may 

not do any of the following: 

(A) Market any health care related 

product during a marketing 

appointment beyond the scope agreed 

upon by the beneficiary, and 

documented by the plan, prior to the 

appointment. 

(B) Market additional health related 

lines of plan business not identified 

prior to an individual appointment 

without a separate Scope of 

Appointment identifying the additional 

lines of business to be discussed. 

(C) Market non-health related 

products, such as annuities. 

■ 40. Section 422.2265 is added to read 

as follows: 

§ 422.2265 Websites. 

As required under § 422.111(h)(2), 

MA organizations must have a website. 

(a) General website requirements. (1) 

MA organization websites must meet all 

of the following requirements: 

(i) Maintain current year contract 

content through December 31 of each 

year. 

(ii) Notify users when they will leave 

the MA organization’s Medicare site. 

(iii) Include or provide access to (for 

example, through a hyperlink) 

applicable notices, statements, 

disclosures, or disclaimers with 

corresponding content. Overarching 

disclaimers, such as the Federal 

Contracting Statement, are not required 

on every page. 

(iv) Reflect the most current 

information within 30 days of any 

material change. 

(v) Keep MA content separate and 

distinct from other lines of business, 

including Medicare Supplemental 

Plans. 

(2) MA organization websites may not 

do any of the following: 

(i) Require beneficiaries to enter any 

information other than zip code, county, 

or state for access to non-beneficiaryspecific website content. 

(ii) Provide links to foreign drug sales, 

including advertising links. 

(iii) State that the MA organization is 

not responsible for the content of their 

social media pages or the website of any 

first tier, downstream, or related entity 

that provides information on behalf of 

the MA organization. 

(b) Required content. MA 

organization’s websites must include 

the following content: 

(1) A toll-free customer service 

number, TTY number, and days and 

hours of operation. 

(2) A physical or Post Office Box 

address. 

(3) A PDF or copy of a printable 

provider directory. 

(4) A searchable provider directory. 

(5) When applicable, a searchable 

pharmacy directory combined with a 

provider directory. 

(6) Information on enrollees’ and MA 

organizations’ rights and responsibilities 

upon disenrollment. MA organizations 

may either post this information or 

provide specific information on where it 

is located in the Evidence of Coverage 

together with a link to that document. 

(7) A description of and information 

on how to file a grievance, request an 

organization determination, and an 

appeal. 

(8) Prominently displayed link to the 

Medicare.gov electronic complaint form. 

(9) Disaster and emergency policy 

consistent with § 422.100(m)(5)(iii). 

(10) A Notice of Privacy Practices as 

required under the HIPAA Privacy Rule 

(45 CFR 164.520). 

(11) For PFFS plans, a link to the 

PFFS Terms and Conditions of Payment. 

(12) For MSA plans, the following 

statements: 

(i) ‘‘You must file Form 1040, ‘US 

Individual Income Tax Return,’ along 

with Form 8853, ‘Archer MSA and 

Long-Term Care Insurance Contracts’ 

with the Internal Revenue Service (IRS) 

for any distributions made from your 

Medicare MSA account to ensure you 

aren’t taxed on your MSA account 

withdrawals. You must file these tax 

forms for any year in which an MSA 

account withdrawal is made, even if you 

have no taxable income or other reason 

for filing a Form 1040. MSA account 

withdrawals for qualified medical 

expenses are tax free, while account 

withdrawals for non-medical expenses 

are subject to both income tax and a fifty 

(50) percent tax penalty.’’ 

(ii) ‘‘Tax publications are available on 

the IRS website at http://www.irs.gov or 

from 1–800–TAX–FORM (1–800–829– 

3676).’’ 

(c) Required posted materials. MA 

organization’s website must provide 

access to the following materials, in a 

printable format, within the timeframes 

specified in paragraphs (c)(1) and (2) of 

this section. 

(1) The following materials for each 

plan year must be posted on the website 


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by October 15 prior to the beginning of 

the plan year: 

(i) Evidence of Coverage. 

(ii) Annual Notice of Change (for 

renewing plans). 

(iii) Summary of Benefits. 

(iv) Provider Directory. 

(v) Provider/Pharmacy Directory. 

(2) The following materials must be 

posted on the website throughout the 

year and be updated as required: 

(i) Prior Authorization Forms for 

physicians and enrollees. 

(ii) When applicable, Part D Model 

Coverage Determination and 

Redetermination Request Forms. 

(iii) Exception request forms for 

physicians (which must be posted by 

January 1 for new plans). 

(iv) CMS Star Ratings document, 

which must be posted within 21 days 

after its release on the Medicare Plan 

Finder. 

■ 41. Section 422.2266 is added to read 

as follows: 

§ 422.2266 Activities with healthcare 

providers or in the healthcare setting. 

(a) Where marketing is prohibited. 

The requirements in paragraphs (c) 

through (e) of this section apply to 

activities in the health care setting. 

Marketing activities and materials are 

not permitted in areas where care is 

being administered, including but not 

limited to the following: 

(1) Exam rooms. 

(2) Hospital patient rooms. 

(3) Treatment areas where patients 

interact with a provider and clinical 

team (including such areas in dialysis 

treatment facilities). 

(4) Pharmacy counter areas. 

(b) Where marketing is permitted. 

Marketing activities and materials are 

permitted in common areas within the 

health care setting, including the 

following: 

(1) Common entryways. 

(2) Vestibules. 

(3) Waiting rooms. 

(4) Hospital or nursing home 

cafeterias. 

(5) Community, recreational, or 

conference rooms. 

(c) Provider-initiated activities. 

Provider-initiated activities are 

activities conducted by a provider at the 

request of the patient, or as a matter of 

a course of treatment, and occur when 

meeting with the patient as part of the 

professional relationship between the 

provider and patient. Provider-initiated 

activities do not include activities 

conducted at the request of the MA 

organization or pursuant to the network 

participation agreement between the 

MA organization and the provider. 

Provider-initiated activities that meet 

the definition in this paragraph (c) fall 

outside of the definition of marketing in 

§ 422.2260. Permissible providerinitiated activities include: 

(1) Distributing unaltered, printed 

materials created by CMS, such as 

reports from Medicare Plan Finder, the 

‘‘Medicare & You’’ handbook, or 

‘‘Medicare Options Compare’’ (from 

https://www.medicare.gov), including in 

areas where care is delivered. 

(2) Providing the names of MA 

organizations with which they contract 

or participate or both. 

(3) Answering questions or discussing 

the merits of a MA plan or plans, 

including cost sharing and benefit 

information, including in areas where 

care is delivered. 

(4) Referring patients to other sources 

of information, such as State Health 

Insurance Assistance Program (SHIP) 

representatives, plan marketing 

representatives, State Medicaid Office, 

local Social Security Offices, CMS’ 

website at https://www.medicare.gov, or 

1–800–MEDICARE. 

(5) Referring patients to MA plan 

marketing materials available in 

common areas; 

(6) Providing information and 

assistance in applying for the LIS. 

(7) Announcing new or continuing 

affiliations with MA organizations, once 

a contractual agreement is signed. 

Announcements may be made through 

any means of distribution. 

(d) Plan-initiated provider activities. 

Plan-initiated provider activities are 

those activities conducted by a provider 

at the request of an MA organization. 

During a plan-initiated provider 

activity, the provider is acting on behalf 

of the MA organization. For the purpose 

of plan-initiated activities, the MA 

organization is responsible for 

compliance with all applicable 

regulatory requirements. 

(1) During plan-initiated provider 

activities, MA organizations must 

ensure that the provider does not: 

(i) Accept or collect Scope of 

Appointment forms. 

(ii) Accept Medicare enrollment 

applications. 

(iii) Make phone calls or direct, urge, 

or attempt to persuade their patients to 

enroll in a specific plan based on 

financial or any other interests of the 

provider. 

(iv) Mail marketing materials on 

behalf of the MA organization. 

(v) Offer inducements to persuade 

patients to enroll in a particular MA 

plan or organization. 

(vi) Conduct health screenings as a 

marketing activity. 

(vii) Distribute marketing materials or 

enrollment forms in areas where care is 

being delivered. 

(viii) Offer anything of value to 

induce enrollees to select the provider. 

(ix) Accept compensation from the 

MA organization for any marketing or 

enrollment activities performed on 

behalf of the MA organization. 

(2) During plan-initiated provider 

activities, the provider may do any of 

the following: 

(i) Make available, distribute, and 

display communications materials, 

including in areas where care is being 

delivered. 

(ii) Provide or make available 

marketing materials and enrollment 

forms in common areas. 

(e) MA organization activities in the 

health care setting. MA organization 

activities in the health care setting are 

those activities, including marketing 

activities that are conducted by MA 

organization staff or on behalf of the MA 

organization, or by any downstream 

entity, but not by a provider. All 

marketing must comply with the 

requirements in paragraphs (a) and (b) 

of this section. However, during MA 

organization activities, the following is 

permitted: 

(1) Accepting and collect Scope of 

Appointment forms. 

(2) Accepting enrollment forms. 

(3) Making available, distributing, and 

displaying communications materials, 

including in areas where care is being 

delivered. 

(f) Activities of Institutional Special 

Needs Plans (I–SNPs) Serving LongTerm Care Facility Residents (1) 

Depending on the context of a given 

situation, I–SNP contracted with a longterm care facility can be viewed as both 

a provider and a plan. 

(2) I–SNPs may use staff operating in 

a social worker capacity to provide 

information, including marketing 

materials (excluding enrollment forms), 

to residents of a long term care facility. 

(3) Social workers of the I–SNP 

(whether employees, agents, or 

contracted providers) may not accept or 

collect a scope of appointment or 

enrollment form on behalf of the I–SNP. 

(4) Unless the beneficiary or the 

beneficiary’s authorized representative 

initiates additional contact with or by 

the plan, all other marketing and 

outreach activities in the beneficiary’s 

room must follow the requirements for 

beneficiary contact under § 422.2264 

(5) All other activities with healthcare 

providers or in the healthcare setting 

must comply with §§ 422.2266(a), (b), 

(c), (d), and (e). 

■ 42. Section 422.2267 is added to read 

as follows: 


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§ 422.2267 Required materials and 

content. 

For information CMS deems to be 

vital to the beneficiary, including 

information related to enrollment, 

benefits, health, and rights, the agency 

may develop materials or content that 

are either standardized or provided in a 

model form. Such materials and content 

are collectively referred to as required. 

(a) Standards for required materials 

and content. All required materials and 

content, regardless of categorization as 

standardized in paragraph (b) of this 

section or model in paragraph (c) of this 

section, must meet the following: 

(1) Be in a 12pt font, Times New 

Roman or equivalent. 

(2) For markets with a significant nonEnglish speaking population, be in the 

language of these individuals. 

Specifically, MA organizations must 

translate required materials into any 

non-English language that is the primary 

language of at least 5 percent of the 

individuals in a plan benefit package 

(PBP) service area. 

(3) Be provided to the beneficiary 

within CMS’s specified timeframes. 

(b) Standardized materials. 

Standardized materials and content are 

required materials and content that 

must be used in the form and manner 

provided by CMS. 

(1) When CMS issues standardized 

material or content, an MA organization 

must use the document without 

alteration except for the following: 

(i) Populating variable fields. 

(ii) Correcting grammatical errors. 

(iii) Adding customer service phone 

numbers. 

(iv) Adding plan name, logo, or both. 

(v) Deleting content that does not 

pertain to the plan type (for example, 

removing Part D language for a MA-only 

plan). 

(vi) Adding the SMID. 

(vii) A Notice of Privacy Practices as 

required under the HIPAA Privacy Rule 

(45 CFR 164.520). 

(2) The MA organization may develop 

accompanying language for 

standardized material or content, 

provided that language does not conflict 

with the standardized material or 

content. For example, CMS may issue 

standardized content associated with an 

appeal notification and MA 

organizations may draft a letter that 

includes the standardized content in the 

body of the letter; the remaining 

language in the letter is at the plan’s 

discretion, provided it does not conflict 

with the standardized content or other 

regulatory standards. 

(c) Model materials. Model materials 

and content are those required materials 

and content created by CMS as an 

example of how to convey beneficiary 

information. When drafting required 

materials or content based on CMS 

models, MA organizations: 

(1) Must accurately convey the vital 

information in the required material or 

content to the beneficiary, although the 

MA organization is not required to use 

CMS model materials or content 

verbatim; and 

(2) Must follow CMS’s specified order 

of content, when specified. 

(d) Delivery of required materials. MA 

organizations must mail required 

materials in hard copy or provide them 

electronically, following the 

requirements in paragraphs (d)(1) and 

(2) of this section. 

(1) For hard copy mailed materials, 

each enrollee must receive his or her 

own copy, except in cases of nonbeneficiary-specific material(s) where 

the MA organization has determined 

multiple enrollees are living in the same 

household and it has reason to believe 

the enrollees are related. In that case, 

the MA organization may mail one copy 

to the household. The MA organization 

must provide all enrollees an opt-out 

process so the enrollees can each 

receive his or her own copy, instead of 

a copy to the household. Materials 

specific to an individual beneficiary 

must always be mailed to that 

individual. 

(2) Materials may be delivered 

electronically following the 

requirements in paragraphs (d)(2)(i) and 

(ii) of this section. 

(i) Without prior authorization from 

the enrollee, MA organizations may 

mail new and current enrollees a notice 

informing enrollees how to 

electronically access the following 

required materials: the Evidence of 

Coverage, Provider and Pharmacy 

Directories, and Formulary. The 

following requirements apply: 

(A) The MA organization may mail 

one notice for all materials or multiple 

notices. 

(B) Notices for prospective year 

materials may not be mailed prior to 

September 1 of each year, but must be 

sent in time for an enrollee to access the 

specified materials by October 15 of 

each year. 

(C) The MA organization may send 

the notice throughout the year to new 

enrollees. 

(D) The notice must include the 

website address to access the materials, 

the date the materials will be available 

if not currently available, and a phone 

number to request that hard-copy 

materials be mailed. 

(E) The notice must provide the 

enrollee with the option to request 

hardcopy materials. Requests may be 

material specific, and must have the 

option of a one-time request or a 

permanent request that must stay in 

place until the enrollee chooses to 

receive electronic materials again. 

(F) Hard copies of requested materials 

must be sent within three business days 

of the request. 

(ii) With prior authorization from the 

enrollee, MA organizations may provide 

any required material or content 

electronically. To do so, MA 

organizations must: 

(A) Obtain prior consent from the 

enrollee. The consent must specify both 

the media type and the specific 

materials being provided in that media 

type. 

(B) Provide instructions on how and 

when enrollees can access the materials. 

(C) Have a process through which an 

enrollee can request hard copies be 

mailed, providing the beneficiary with 

the option of a one-time request or a 

permanent request (which must stay in 

place until the enrollee chooses to 

receive electronic materials again), and 

with the option of requesting hard 

copies for all or a subset of materials. 

Hard copies must be mailed within 

three business days of the request. 

(D) Have a process for automatic 

mailing of hard copies when electronic 

versions or the chosen media type is 

undeliverable. 

(e) CMS required materials and 

content. The following are required 

materials that must be provided to 

current and prospective enrollees, as 

applicable, in the form and manner 

outlined in this section. Unless 

otherwise noted or instructed by CMS 

and subject to § 422.2263(a) of this 

chapter, required materials may be sent 

once a fully executed contract is in 

place, but no later than the due dates 

listed for each material in this section. 

(1) Evidence of Coverage (EOC). The 

EOC is a standardized communications 

material through which certain required 

information (under § 422.111(b)) must 

be provided annually and must be 

provided: 

(i) To current enrollees of the plan by 

October 15, prior to the year to which 

the EOC applies. 

(ii) To new enrollees within 10 

calendars days from receipt of CMS 

confirmation of enrollment or by last 

day of month prior to effective date, 

whichever is later. 

(2) Part C explanation of benefits 

(EOB). The EOB is a model 

communications material through 

which plans must provide the 

information required under 

§ 422.111(k). MA organizations may 

send this monthly or per claim with a 

quarterly summary. 


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(3) Annual notice of change (ANOC). 

The ANOC is a standardized marketing 

material through which plans must 

provide the information required under 

§ 422.111(d)(2) annually. 

(i) Must send for enrollee receipt no 

later than September 30 of each year. 

(ii) Enrollees with an October 1, 

November 1, or December 1 effective 

date must receive within 10 calendar 

days from receipt of CMS confirmation 

of enrollment or by last day of month 

prior to effective date, whichever is 

later. 

(4) Pre-Enrollment checklist (PECL). 

The PECL is a standardized 

communications material that plans 

must provide to prospective enrollees 

with the enrollment form, so that the 

enrollees understand important plan 

benefits and rules. It references 

information on the following: 

(i) The EOC. 

(ii) Provider directory. 

(iii) Pharmacy directory. 

(iv) Formulary. 

(v) Premiums/copayments/ 

coinsurance. 

(vi) Emergency/urgent coverage. 

(vii) Plan-type rules. 

(5) Summary of Benefits (SB). MA 

organizations must disseminate a 

summary of highly utilized coverage 

that include benefits and cost sharing to 

prospective enrollees, known as the SB. 

The SB is a model marketing material. 

It must be in a clear and accurate form. 

(i) The SB must be provided with an 

enrollment form as follows: 

(A) In hard copy with a paper 

enrollment form. 

(B) For online enrollment, the SB 

must be made available electronically 

(for example, via a link) prior to the 

completion and submission of 

enrollment request. 

(C) For telephonic enrollment, the 

beneficiary must be verbally told where 

the SB can be accessed. 

(ii) The SB must include the following 

information: 

(A) Information on medical benefits, 

including: 

(1) Monthly Plan Premium. 

(2) Deductible/Out-of-pocket limits. 

(3) Inpatient/Outpatient Hospital 

coverage. 

(4) Ambulatory Surgical Center (ASC). 

(5) Doctor Visits (Primary Care 

Providers and Specialists). 

(6) Preventive Care. 

(7) Emergency Care/Urgently Needed 

Services. 

(8) Diagnostic Services/Labs/Imaging. 

(9) Hearing Services/Dental Services/ 

Vision Services. 

(10) Mental Health Services. 

(B) Information on prescription drug 

expenses, including: 

(1) Deductible, the initial coverage 

phase, coverage gap, and catastrophic 

coverage. 

(2) A statement that costs may differ 

based on pharmacy type or status (for 

example, preferred/non-preferred, mail 

order, long-term care (LTC) or home 

infusion, and 30-or 90-day supply), 

when applicable. 

(C) For Medicare Medical Savings 

Account Plans (MSAs), the SB must 

include the following: 

(1) The amount Medicare deposits 

into the beneficiaries MSA account. 

(2) A statement that the beneficiary 

pays nothing once the deductible is met. 

(D) For dual eligible special needs 

plan (D–SNP)s, the SB must identify or 

describe the Medicaid benefits to 

prospective enrollees. This may be done 

by either of the following: 

(1) Including the Medicaid benefits in 

the SB. 

(2) Providing a separate document 

identifying the Medicaid benefits that 

accompanies the SB. 

(E) For D–SNPs open to dually 

eligible enrollees with differing levels of 

cost, the SB must: 

(1) State how cost sharing and 

benefits differ depending on the level of 

Medicaid eligibility. 

(2) Describe the Medicaid benefits, if 

any, provided by the plan. 

(F) Fully integrated dual eligible SNPs 

(FIDE SNPs) and highly integrated D– 

SNPs, as defined in § 422.2, that provide 

Medicaid benefits have the option to 

display integrated Medicare and 

Medicaid benefits in the SB. 

(G) MA organizations may describe or 

identify other health related benefits in 

the SB. 

(6) Enrollment/Election form. This is 

a model communications material 

through which plans must provide the 

information required under § 422.60(c). 

(7) Enrollment Notice. This is a model 

communications material through 

which plans must provide the 

information required under 

§ 422.60(e)(3). 

(8) Disenrollment Notice. This is a 

model communications material 

through which plans must provide the 

information required under § 422.74(b). 

(9) Mid-Year Change Notification. 

This is a model communications 

material through which plans must 

provide a notice to enrollees when there 

is a mid-year change in benefits or plan 

rules, under the following timelines: 

(i) Notices of changes in plan rules, 

unless otherwise addressed elsewhere 

in this part, must be provided 30 days 

in advance. 

(ii) For National Coverage 

Determination (NCD) changes 

announced or finalized less than 30 

days before their effective date, a 

notification is required as soon as 

possible. 

(iii) Mid-year NCD or legislative 

changes must be provided no later than 

30 days after the NCD is announced or 

the legislative change is effective. 

(A) Plans may include the change in 

next plan mass mailing (for example, 

newsletter), provided it is within 30 

days. 

(B) The notice must also appear on 

the MA organization’s website. 

(10) Non-renewal Notice. This is a 

model communications material 

through which plans must provide the 

information required under § 422.506. 

(i) The Non-renewal Notice must be 

provided at least 90 calendar days 

before the date on which the 

nonrenewal is effective. For contracts 

ending on December 31, the notice must 

be dated October 2 to ensure national 

consistency in the application of 

Medigap Guaranteed Issue (GI) rights to 

all enrollees, except for those enrollees 

in special needs plans (SNPs). 

Information about non-renewals or 

service area reductions may not be 

released to the public, including the 

Non-renewal Notice, until CMS 

provides notification to the plan. 

(ii) The Non-renewal Notice must do 

all of the following: 

(A) Inform the enrollee that the plan 

will no longer be offered and the date 

the plan will end. 

(B) Provide information about any 

applicable open enrollment periods or 

special election periods or both (for 

example, Medicare open enrollment, 

non-renewal special election period), 

including the last day the enrollee has 

to make a Medicare health plan 

selection. 

(C) Explain what the enrollee must do 

to continue receiving Medicare coverage 

and what will happen if the enrollee 

chooses to do nothing. 

(D) As required under 

§ 422.506(a)(2)(ii)(A), provide a CMSapproved written description of 

alternative MA plan, MA–PD plan, and 

PDP options available for obtaining 

qualified Medicare services within the 

beneficiary’s’ region in the enrollee’s 

notice. 

(E) Specify when coverage will start 

after a new Medicare plan is chosen. 

(F) List 1–800–MEDICARE contact 

information together with other 

organizations that may be able to assist 

with comparing plans (for example, 

SHIPs). 

(G) Explain Medigap to applicable 

enrollees and the special right to buy a 

Medigap policy, and include a Medigap 

fact sheet with the non-renewal notice 

that explains Medigap coverage, policy, 


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options to compare Medigap policies, 

and options to buy a Medigap policy. 

(H) Include the MA organization’s call 

center telephone number, TTY number, 

and hours and days of operation. 

(11) Provider Directory. This is a 

model communications material 

through which plans must provide the 

information under § 422.111(b)(3). The 

Provider Directory must: 

(i) Be provided to current enrollees of 

the plan by October 15 of the year prior 

to the applicable year. 

(ii) Be provided to new enrollees 

within 10 calendar days from receipt of 

CMS confirmation of enrollment or by 

last day of month prior to effective date, 

whichever is later. 

(iii) Be provided to current enrollees 

upon request, within three business 

days of the request. 

(iv) Be updated any time the MA 

organization becomes aware of changes. 

(A) Updates to the online provider 

directories must be completed within 30 

days of receiving information requiring 

update. 

(B)(1) Updates to hardcopy provider 

directories must be completed within 30 

days. 

(2) Hard copy directories that include 

separate updates via addenda are 

considered up-to-date. 

(12) Provider Termination Notice. 

This is a model communications 

material through which plans must 

provide the information required under 

§ 422.111(e). The provider termination 

notice must be both of the following: 

(i) Provided in hard copy. 

(ii) Sent via U.S. mail (first class 

postage is recommended, but not 

required). 

(13) Star Ratings Document. This is a 

standardized marketing material 

through which Star Ratings information 

is conveyed to prospective enrollees. 

(i) The Star Ratings Document is 

generated through HPMS. 

(ii) The Star Ratings Document must 

be provided with an enrollment form, as 

follows: 

(A) In hard copy with a paper 

enrollment form. 

(B) For online enrollment, made 

available electronically (for example, via 

a link) prior to the completion and 

submission of enrollment request. 

(C) For telephonic enrollment, the 

beneficiary must be verbally told where 

they can access the Star Ratings 

Document. 

(iii) New MA organizations that have 

no Star Ratings are not required to 

provide the Star Ratings Document until 

the following contract year. 

(iv) Updated Star Ratings must be 

used within 21 calendar days of release 

of updated information on Medicare 

Plan Finder. 

(v) Updated Star Ratings must not be 

used until CMS releases Star Ratings on 

Medicare Plan Finder. 

(14) Organization Determination 

Notice. This is a model communications 

material through which plans must 

provide the information under 

§ 422.568. 

(15) Excluded Provider Notice. This is 

a model communications material 

through which plans must notify 

enrollees when a provider they visit or 

consult has been excluded from 

participating in the Medicare program 

based on an OIG exclusion or the CMS 

preclusion list. 

(16) Notice of Denial of Medical 

Coverage or Payment (NDMCP) (also 

known as the Integrated Denial Notice 

(IDN)). This is a standardized 

communications material used to 

convey beneficiary appeal rights when a 

plan has denied a service as noncovered or excluded from benefits. 

(17) Notice of Medicare Non-Coverage 

(NOMNC). This is a standardized 

communications material used to 

convey beneficiary appeal rights when a 

plan is terminating previously-approved 

coverage in a Skilled Nursing Facility 

(SNF), Comprehensive Outpatient 

Rehabilitation Facility (CORF), or Home 

Health setting (HHA). 

(18) Detailed Explanation of NonCoverage (DENC). This is a standardized 

communications material used to 

convey to a beneficiary why their 

current Medicare covered SNF, CORF or 

HHA services should end. 

(19) Appointment of Representative 

(AOR). This is a standardized 

communications material used to 

authorize or appoint an individual to act 

on behalf of a beneficiary for the 

purpose of a specific appeal, grievance, 

or organization determination. 

(20) An Important Message From 

Medicare About Your Rights (IM). This 

is a standardized communications 

material used to convey a beneficiary’s 

rights as a hospital inpatient and appeal 

rights when their covered inpatient 

hospital stay is ending. 

(21) Detailed Notice of Discharge 

Form (DND). This is a standardized 

communications material, as required 

under § 422.622(e), used to convey to a 

beneficiary why their current Medicare 

covered inpatient hospital stay should 

end. 

(22) Medicare Outpatient Observation 

Notice (MOON). This is a standardized 

communications material used to 

inform a beneficiary that he or she is an 

outpatient receiving observation 

services. 

(23) Appeal and Grievance Data 

Form. This is a standardized 

communications material used to 

convey organization-specific grievance 

and appeals data. 

(24) Request for Administrative Law 

Judge (ALJ) Hearing. This is a 

standardized communications material 

used to formally request a 

reconsideration of the independent 

review entity’s determination. 

(25) Attorney Adjudicator Review in 

Lieu of ALJ Hearing. This is a 

standardized communications material 

used to request that an attorney 

adjudicator review a previously 

determined decision rather than having 

an ALJ do so. 

(26) Notice of Right to an Expedited 

Grievance. This is a model 

communications material used to 

convey a Medicare enrollee’s rights to 

request that a decision be made on a 

grievance or appeal within a shorter 

timeframe. 

(27) Waiver of Liability Statement. 

This is a model communications 

material used by non-contracted 

providers to waive beneficiary liability 

for payment for denied services while 

utilizing the enrollee appeals process 

under subpart M of part 422. 

(28) Notice of Appeal Status. This is 

a model communications material used 

to inform a beneficiary of the denial of 

an appeal and additional appeal rights. 

(29) Notice of Dismissal of Appeal. 

This is a model communications 

material used to convey the rationale by 

an MA organization to dismiss 

beneficiary’s appeal. 

(30) Federal Contracting Statement. 

This is model content through which 

plans must convey that they have a 

contract with Medicare and that 

enrollment in the plan depends on 

contract renewal. 

(i) The Federal Contracting Statement 

must include all of the following: 

(A) Legal or marketing name of the 

organization. 

(B) Type of plan (for example, HMO, 

HMO SNP, PPO, PFFS, PDP). 

(C) A statement that the organization 

has a contract with Medicare (when 

applicable, MA organizations may 

incorporate a statement that the 

organization has a contract with the 

state/Medicaid program). 

(D) A statement that enrollment 

depends on contract renewal. 

(ii) MA organizations must include 

the Federal Contracting Statement on all 

marketing materials with the exception 

of the following: 

(A) Banners and banner-like 

advertisements. 

(B) Outdoor advertisements. 

(C) Text messages. 

(D) Social media. 

(E) Envelopes 


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(31) Star Ratings Disclaimer. This is 

model content through which plans 

must: 

(i) Convey that MA organizations are 

evaluated yearly by Medicare. 

(ii) Convey that the ratings are based 

on a 5-star rating system. 

(iii) Include the model content in 

disclaimer form or within the material 

whenever Star Ratings are mentioned in 

marketing materials, with the exception 

of when Star Ratings are published on 

small objects (that is, a give-away items 

such as a pens or rulers). 

(32) SSBCI Disclaimer. This is model 

content through which MA 

organizations must: 

(i) Convey the benefits mentioned are 

a part of special supplemental benefits. 

(ii) Convey that not all members will 

qualify. 

(iii) Include the model content in the 

material copy which mentions SSBCI 

benefits. 

(33) Accommodations Disclaimer. 

This is model content through which 

MA organizations must: 

(i) Convey that accommodations for 

persons with special needs are 

available. 

(ii) Provide a telephone number and 

TTY number. 

(iii) Include the model content in 

disclaimer form or within the body of 

the material on any advertisement of 

invitation to all events described under 

§ 422.2264(c). 

(34) Mailing Statements. This is 

standardized content. It consists of 

statements on envelopes that MA 

organizations must include when 

mailing information to current 

members, as follows: 

(i) MA organizations must include the 

following statement when mailing 

information about the enrollee’s current 

plan: ‘‘Important [Insert Plan Name] 

information.’’ 

(ii) MA organizations must include 

the following statement when mailing 

health and wellness information: 

‘‘Health and wellness or prevention 

information.’’ 

(iii) The MA organization must 

include the plan name; however, if the 

plan name is elsewhere on the envelope, 

the plan name does not need to be 

repeated in the disclaimer. 

(iv) Delegated or sub-contracted 

entities and downstream entities that 

conduct mailings on behalf of a multiple 

MA organizations must also comply 

with this requirement; however, they do 

not have to include a plan name. 

(35) Promotional Give-Away 

Disclaimer. This is model content. The 

disclaimer consists of a statement that 

must make clear that there is no 

obligation to enroll in a plan, and must 

be included when offering a 

promotional give-away such as a 

drawing, prizes, or a free gift. 

(36) Provider Co-branded Material 

Disclaimer. This is model content 

through which MA organizations must: 

(i) Convey, as applicable, that other 

pharmacies, physicians or providers are 

available in the plan’s network. 

(ii) Include the model content in 

disclaimer form or within the material 

whenever co-branding relationships 

with network provider are mentioned, 

unless the co-branding is with a 

provider network or health system that 

represents 90 percent or more of the 

network as a whole. 

(37) Out of Network Non-Contracted 

Provider Disclaimer. This is 

standardized content. The disclaimer 

consists of the statement: ‘‘Out-ofnetwork/non-contracted providers are 

under no obligation to treat Plan 

members, except in emergency 

situations. Please call our customer 

service number or see your Evidence of 

Coverage for more information, 

including the cost-sharing that applies 

to out-of-network services,’’ and must be 

included whenever materials reference 

out-of-network/non-contracted 

providers. 

(38) NCQA SNP Approval Statement. 

This is model content and must be used 

by SNPs who have received NCQA 

approval. MA organizations must: 

(i) Convey that MA organization has 

been approved by the National 

Committee for Quality Assurance 

(NCQA) to operate as a Special Needs 

Plan (SNP). 

(ii) Include the last contract year of 

NCQA approval. 

(iii) Convey that the approval is based 

on a review of [insert Plan Name’s] 

Model of Care. 

(iv) Not include numeric SNP 

approval scores. 

§ 422.2268 [Removed] 

■ 43. Section 422.2268 is removed. 

■ 44. Section 422.2274 is revised to read 

as follows: 

§ 422.2274 Agent, broker, and other third 

party requirements. 

If an MA organization uses agents and 

brokers to sell its Medicare plans, the 

requirements in paragraphs (a) through 

(e) of this section are applicable. If an 

MA organization makes payments to 

third parties, the requirements in 

paragraph (f) of this section are 

applicable. 

(a) Definitions. For purposes of this 

section, the following definitions are 

applicable: 

Compensation. (i) Includes monetary 

or non-monetary remuneration of any 

kind relating to the sale or renewal of a 

plan or product offered by an MA 

organization including, but not limited 

to the following: 

(A) Commissions. 

(B) Bonuses. 

(C) Gifts. 

(D) Prizes or Awards. 

(ii) Does not include any of the 

following: 

(A) Payment of fees to comply with 

State appointment laws, training, 

certification, and testing costs. 

(B) Reimbursement for mileage to, and 

from, appointments with beneficiaries. 

(C) Reimbursement for actual costs 

associated with beneficiary sales 

appointments such as venue rent, 

snacks, and materials. 

Fair market value (FMV) means, for 

purposes of evaluating agent or broker 

compensation under the requirements of 

this section only, the amount that CMS 

determines could reasonably be 

expected to be paid for an enrollment or 

continued enrollment into an MA plan. 

Beginning January 1, 2021, the national 

FMV is $539, the FMV for Connecticut, 

Pennsylvania, and the District of 

Columbia is $607, the FMV for 

California and New Jersey is $672, and 

the FMV for Puerto Rico and the U.S. 

Virgin Islands is $370. For subsequent 

years, FMV is calculated by adding the 

current year FMV and the product of the 

current year FMV and MA Growth 

Percentage for aged and disabled 

beneficiaries, which is published for 

each year in the rate announcement 

issued pursuant to § 422.312. 

Initial enrollment year means the first 

year that a beneficiary is enrolled in a 

plan versus subsequent years (c.f., 

renewal year) that a beneficiary remains 

enrolled in a plan. 

Like plan type means one of the 

following: 

(i) PDP replaced with another PDP. 

(ii) MA or MA–PD replaced with 

another MA or MA–PD. 

(iii) Cost plan replaced with another 

cost plan. 

Plan year and enrollment year mean 

the year beginning January 1 and ending 

December 31. 

Renewal year means all years 

following the initial enrollment year in 

the same plan or in different plan that 

is a like plan type. 

Unlike plan type means one of the 

following: 

(i) An MA or, MA–PD plan to a PDP 

or Section 1876 Cost Plan. 

(ii) A PDP to a Section 1876 Cost Plan 

or an MA or MA–PD plan. 

(iii) A Section 1876 Cost Plan to an 

MA or MA–PD plan or PDP. 

(b) Agent/broker requirements. Agents 

and brokers who represent MA 


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organizations must follow the 

requirements in paragraphs (b)(1) 

through (3) of this section. 

Representation includes selling 

products (including Medicare 

Advantage plans, Medicare AdvantagePrescription Drug plans, Medicare 

Prescription Drug plans, and section 

1876 Cost plans) as well as outreach to 

existing or potential beneficiaries and 

answering or potentially answering 

questions from existing or potential 

beneficiaries. 

(1) Be licensed and appointed under 

State law (if required under applicable 

State law). 

(2) Be trained and tested annually as 

required under paragraph (c)(4) of this 

section, and achieve an 85 percent or 

higher on all forms of testing. 

(3) Secure and document a Scope of 

Appointment prior to meeting with 

potential enrollees. 

(c) MA organization oversight. MA 

organizations must oversee first tier, 

downstream, and related entities that 

represent the MA organization to ensure 

agents and brokers abide by all 

applicable State and Federal laws, 

regulations, and requirements. MA 

organizations must do all of the 

following: 

(1) As required under applicable State 

law, employ as marketing 

representatives only individuals who 

are licensed by the State to conduct 

marketing (as defined in this subpart) of 

health insurance in that State, and 

whom the MA organization has 

informed that State it has appointed, 

consistent with the appointment process 

for agents and brokers provided for 

under State law. 

(2) As required under applicable State 

law, report the termination of an agent 

or broker to the State and the reason for 

termination. 

(3) Report to CMS all enrollments 

made by unlicensed agents or brokers 

and for-cause terminations of agents or 

brokers. 

(4) On an annual basis, provide 

training and testing to agents and 

brokers on Medicare rules and 

regulations, the plan products that 

agents and brokers will sell, including 

any details specific to each plan 

product, and relevant State and Federal 

requirements. 

(5) On an annual basis by the last 

Friday in July, report to CMS whether 

the MA organization intends to use 

employed, captive, or independent 

agents or brokers in the upcoming plan 

year and the specific rates or range of 

rates the plan will pay independent 

agents and brokers. Following the 

reporting deadline, MA organizations 

may not change their decisions related 

to agent or broker type, or their 

compensation rates and ranges, until the 

next plan year. 

(6) On an annual basis by October 1, 

have in place full compensation 

structures for the following plan year. 

The structure must include details on 

compensation dissemination, including 

specifying payment amounts for initial 

enrollment year and renewal year 

compensation. 

(7) Submit agent or broker marketing 

materials to CMS through HPMS prior 

to use, following the requirements for 

marketing materials in this subpart. 

(8) Ensure beneficiaries are not 

charged marketing consulting fees when 

considering enrollment in MA plans. 

(9) Establish and maintain a system 

for confirming that: 

(i) Beneficiaries enrolled by agents or 

brokers understand the product, 

including the rules applicable under the 

plan. 

(ii) Agents and brokers appropriately 

complete Scope of Appointment records 

for all marketing appointments 

(including telephonic and walk-in). 

(10) Demonstrate that marketing 

resources are allocated to marketing to 

the disabled Medicare population as 

well as to Medicare beneficiaries age 65 

and over. 

(11) Must comply with State requests 

for information about the performance 

of a licensed agent or broker as part of 

a state investigation into the 

individual’s conduct. CMS will 

establish and maintain a memorandum 

of understanding (MOU) to share 

compliance and oversight information 

with States that agree to the MOU. 

(d) Compensation requirements. MA 

organizations must ensure they meet the 

requirements in paragraphs (d)(1) 

through (5) of this section in order to 

pay compensation. These compensation 

requirements only apply to independent 

agents and brokers. 

(1) General rules. (i) MA organizations 

may only pay agents or brokers who 

meet the requirements in paragraph (b) 

of this section. 

(ii) MA organizations may determine, 

through their contracts, the amount of 

compensation to be paid, provided it 

does not exceed limitations outlined in 

this section. 

(iii) MA organizations may determine 

their payment schedule (for example, 

monthly or quarterly). Payments 

(including payments for AEP 

enrollments) must be made during the 

year of the beneficiary’s enrollment. 

(iv) MA organizations may only pay 

compensation for the number of months 

a member is enrolled. 

(2) Initial enrollment year 

compensation. For each enrollment in 

an initial enrollment year, MA 

organizations may pay compensation at 

or below FMV. 

(i) MA organizations may pay either a 

full or pro-rated initial enrollment year 

compensation for: 

(A) A beneficiary’s first year of 

enrollment in any plan; or 

(B) A beneficiary’s move from an 

employer group plan to a non-employer 

group plan (either within the same 

parent organization or between parent 

organizations). 

(ii) MA organizations must pay prorated initial enrollment year 

compensation for: 

(A) A beneficiary’s plan change(s) 

during their initial enrollment year. 

(B) A beneficiary’s selection of an 

‘‘unlike plan type’’ change. In that case, 

the new plan would only pay the 

months that the beneficiary is enrolled, 

and the previous plan would recoup the 

months that the beneficiary was not in 

the plan. 

(3) Renewal compensation. For each 

enrollment in a renewal year, MA plans 

may pay compensation at an amount up 

to 50 percent of FMV. 

(i) MA plans may pay compensation 

for a renewal year: 

(A) In any year following the initial 

enrollment year the beneficiary remains 

in the same plan; or 

(B) When a beneficiary enrolls in a 

new ‘‘like plan type’’. 

(ii) [Reserved] 

(4) Other compensation scenarios. (i) 

When a beneficiary enrolls in an MA– 

PD, MA organizations may pay only the 

MA compensation (and not 

compensation for Part D enrollment 

under § 423.2274 of this chapter). 

(ii) When a beneficiary enrolls in both 

a section 1876 Cost Plan and a standalone PDP, the 1876 Cost Plan sponsor 

may pay compensation for the cost plan 

enrollment and the Part D sponsor must 

pay compensation for the Part D 

enrollment. 

(iii) When a beneficiary enrolls in a 

MA-only plan and a PDP plan, the MA 

plan sponsor may pay for the MA plan 

enrollment and the Part D plan may pay 

for the PDP plan enrollment. 

(iv) When a beneficiary changes from 

two plans (for example, a MA plan and 

a stand-alone PDP) (dual enrollments) to 

one plan (MA–PD), the MA organization 

may only pay compensation at the 

renewal rate for the MA–PD product. 

(5) Additional compensation, 

payment, and compensation recovery 

requirements (Charge-backs). (i) MA 

organizations must retroactively pay or 

recoup funds for retroactive beneficiary 

changes for the current and previous 

calendar years. MA organizations may 

choose to recoup or pay compensation 


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6114 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

for years prior to the previous calendar 

year, but they must do both (recoup 

amounts owed and pay amounts due) 

during the same year. 

(ii) Compensation recovery is required 

when: 

(A) A beneficiary makes any plan 

change (regardless of the parent 

organization) within the first three 

months of enrollment (known as rapid 

disenrollment), except as provided in 

paragraph (d)(5)(iii) of this section. 

(B) Any other time period a 

beneficiary is not enrolled in a plan, but 

the plan paid compensation based on 

that time period. 

(iii) Rapid disenrollment 

compensation recovery does not apply 

when: 

(A) A beneficiary enrolls effective 

October 1, November 1, or December 1 

and subsequently uses the Annual 

Election Period to change plans for an 

effective date of January 1. 

(B) A beneficiary’s enrollment change 

is not in the best interests of the 

Medicare program, including for the 

following reasons: 

(1) Other creditable coverage (for 

example, an employer plan). 

(2) Moving into or out of an 

institution. 

(3) Gain or loss of employer/union 

sponsored coverage. 

(4) Plan termination, non-renewal, or 

CMS imposed sanction. 

(5) To coordinate with Part D 

enrollment periods or the State 

Pharmaceutical Assistance Program. 

(6) Becoming LIS or dually eligible for 

Medicare and Medicaid. 

(7) Qualifying for another plan based 

on special needs. 

(8) Due to an auto, facilitated, or 

passive enrollment. 

(9) Death. 

(10) Moving out of the service area. 

(11) Non-payment of premium. 

(12) Loss of entitlement or retroactive 

notice of entitlement. 

(13) Moving into a 5-star plan. 

(14) Moving from an LPI plan into a 

plan with three or more stars. 

(iv)(A) When rapid disenrollment 

compensation recovery applies, the 

entire compensation must be recovered. 

(B) For other compensation recovery, 

plans must recover a pro-rated amount 

of compensation (whether paid for an 

initial enrollment year or renewal year) 

from an agent or broker equal to the 

number of months not enrolled. 

(1) If a plan has paid full initial 

compensation, and the enrollee 

disenrolls prior to the end of the 

enrollment year, the total number of 

months not enrolled (including months 

prior to the effective date of enrollment) 

must be recovered from the agent or 

broker. 

(2) Example: A beneficiary enrolls 

upon turning 65 effective April 1 and 

disenrolls September 30 of the same 

year. The plan paid full initial 

enrollment year compensation. 

Recovery is equal to 6/12ths of the 

initial enrollment year compensation 

(for January through March and October 

through December). 

(e) Payments other than 

compensation (administrative 

payments). (1) Payments made for 

services other than enrollment of 

beneficiaries (for example, training, 

customer service, agent recruitment, 

operational overhead, or assistance with 

completion of health risk assessments) 

must not exceed the value of those 

services in the marketplace. 

(2) Administrative payments can be 

based on enrollment provided payments 

are at or below the value of those 

services in the marketplace. 

(f) Payments for referrals. Payments 

may be made to individuals for the 

referral (including a recommendation, 

provision, or other means of referring 

beneficiaries) to an agent, broker or 

other entity for potential enrollment 

into a plan. The payment may not 

exceed $100 for a referral into an MA or 

MA–PD plan and $25 for a referral into 

a PDP plan. 

PART 423—VOLUNTARY MEDICARE 

PRESCRIPTION DRUG BENEFIT 

■ 45. The authority citation for part 423 

continues to read as follows: 

Authority: 42 U.S.C. 1302, 1395w–101 

through 1395w–152, and 1395hh. 

■ 46. Section 423.4 is amended by 

adding definitions for ‘‘Credible 

allegation of fraud’’, ‘‘Fraud hotline 

tip’’, ‘‘Inappropriate prescribing’’, 

‘‘Parent organization’’, and 

‘‘Substantiated or suspicious activities 

of fraud, waste, or abuse’’ in 

alphabetical order to read as follows: 

§ 423.4 Definitions. 

* * * * * 

Credible allegation of fraud means an 

allegation from any source, including 

but not limited to the following: 

(1) Fraud hotline tips verified by 

further evidence. 

(2) Claims data mining. 

(3) Patterns identified through 

provider audits, civil false claims cases, 

and law enforcement investigations. 

Allegations are considered to be 

credible when they have indicia of 

reliability. 

* * * * * 

Fraud hotline tip is a complaint or 

other communications that are 

submitted through a fraud reporting 

phone number or a website intended for 

the same purpose, such as the Federal 

Government’s HHS OIG Hotline or a 

health plan’s fraud hotline. 

* * * * * 

Inappropriate prescribing means that, 

after consideration of all the facts and 

circumstances of a particular situation 

identified through investigation or other 

information or actions taken by 

Medicare Advantage (MA) organizations 

and Part D plan sponsors, there is an 

established pattern of potential fraud, 

waste, and abuse related to prescribing 

of opioids, as reported by the plan 

sponsors. Beneficiaries with cancer and 

sickle-cell disease, as well as those 

patients receiving hospice and long term 

care (LTC) services are excluded, when 

determining inappropriate prescribing. 

Plan sponsors may consider any number 

of factors including, but not limited, to 

the following: 

(1) Documentation of a patient’s 

medical condition. 

(2) Identified instances of patient 

harm or death. 

(3) Medical records, including claims 

(if available). 

(4) Concurrent prescribing of opioids 

with an opioid potentiator in a manner 

that increases risk of serious patient 

harm. 

(5) Levels of morphine milligram 

equivalent (MME) dosages prescribed. 

(6) Absent clinical indication or 

documentation in the care management 

plan or in a manner that may indicate 

diversion. 

(7) State-level prescription drug 

monitoring program (PDMP) data. 

(8) Geography, time, and distance 

between a prescriber and the patient. 

(9) Refill frequency and factors 

associated with increased risk of opioid 

overdose. 

* * * * * 

Parent organization means the legal 

entity that exercises a controlling 

interest, through the ownership of 

shares, the power to appoint voting 

board members, or other means, in a 

Part D sponsor or MA organization, 

directly or through a subsidiary or 

subsidiaries, and which is not itself a 

subsidiary of any other legal entity. 

* * * * * 

Substantiated or suspicious activities 

of fraud, waste, or abuse means and 

includes, but is not limited to, 

allegations that a provider of services 

(including a prescriber) or supplier; 

(1) Engaged in a pattern of improper 

billing; 

(2) Submitted improper claims with 

suspected knowledge of their falsity; 

(3) Submitted improper claims with 

reckless disregard or deliberate 

ignorance of their truth or falsity; or 


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(4) Is the subject of a fraud hotline tip 

verified by further evidence. 

* * * * * 

■ 47. Section 423.100 is amended— 

■ a. In the definition of ‘‘Applicable 

drug’’ by revising paragraph (1)(ii); 

■ b. In the definition of ‘‘Exempted 

beneficiary’’ by: 

■ i. Removing the word ‘‘or’’ at the end 

of paragraph (2); 

■ ii. Removing the period at the end of 

paragraph (3) and adding ‘‘; or’’ in its 

place; and 

■ iii. Adding paragraph (4); and 

■ c. By revising the introductory text in 

the definition of ‘‘Potential at-risk 

beneficiary’’. 

The revisions and addition read as 

follows: 

§ 423.100 Definitions. 

* * * * * 

Applicable drug * * * 

(1) * * * 

(ii) In the case of a biological product, 

licensed under section 351 of the Public 

Health Service Act (other than, with 

respect to a plan year before 2019, a 

product licensed under subsection (k) of 

such section 351); and 

* * * * * 

Exempted beneficiary * * * 

(4) Has sickle cell disease. 

* * * * * 

Potential at-risk beneficiary means a 

Part D eligible individual who is not an 

exempted beneficiary (as defined in this 

section) and— 

* * * * * 

■ 48. Section 423.104 is amended by 

adding paragraph (d)(2)(iv) to read as 

follows: 

§ 423.104 Requirements related to 

qualified prescription drug coverage. 

* * * * * 

(d) * * * 

(2) * * * 

(iv) Specialty tier means a formulary 

cost sharing tier dedicated to high-cost 

Part D drugs with ingredient costs for a 

30-day equivalent supply (as described 

in paragraph (d)(2)(iv)(A)(2) of this 

section) that are greater than the 

specialty tier cost threshold specified in 

paragraph (d)(2)(iv)(A) of this section. 

(A) Specialty-tier cost threshold. CMS 

sets the specialty-tier cost threshold for 

a plan year in accordance with this 

paragraph (d)(2)(iv)(A), using the 

following steps: 

(1) 30-day equivalent ingredient cost. 

Using the PDE data as specified in 

paragraph (d)(2)(iv)(C) of this section, 

CMS uses the ingredient cost reflected 

on the prescription drug event (PDE) to 

determine the ingredient cost in dollars 

for a 30-day equivalent supply of the 

Part D drug. 

(2) 30-day equivalent supply. CMS 

determines the 30-day equivalent 

supply as follows: If the days’ supply 

reported on a PDE is less than or equal 

to 34, the number of 30-day equivalent 

supplies equals one. If the days’ supply 

reported on a PDE is greater than 34, the 

number of 30-day equivalent supplies is 

equal to the number of days’ supply 

reported on each PDE divided by 30. 

(3) Top 1 percent. CMS determines 

the amount that equals the lowest 30- 

day equivalent ingredient cost that is 

within the top 1 percent of all 30-day 

equivalent ingredient costs reflected in 

the PDE data. 

(4) Determination. Except as provided 

in paragraph (d)(2)(iv)(B) of this section, 

the amount determined in paragraph 

(d)(2)(iii) of this section is the specialtytier cost threshold for the plan year. 

(5) Claims history. Except for newly 

FDA-approved Part D drugs only 

recently available on the market for 

which Part D sponsors would have little 

or no claims data, CMS approves 

placement of a Part D drug on a 

specialty tier when that Part D sponsor’s 

claims data from the time period 

specified in paragraph (d)(2)(iv)(C) of 

this section demonstrates that greater 

than 50 percent of the Part D sponsor’s 

PDEs for a given Part D drug, when 

adjusted for 30-day equivalent supplies, 

have ingredient costs for 30-day 

equivalent supplies, as described in 

paragraph (d)(2)(iv)(A)(2) of this section, 

that exceed the specialty-tier cost 

threshold. 

(6) No claims history. For newly FDAapproved Part D drugs only recently 

available on the market for which Part 

D sponsors would have little or no 

claims data, CMS approves placement of 

a Part D drug on a specialty tier when 

that Part D sponsor estimates that 

ingredient cost portion of their 

negotiated prices for a 30-day equivalent 

supply, as defined in subparagraph 

(d)(2)(iv)(A)(2), is anticipated to exceed 

the specialty-tier cost threshold more 

than 50 percent of the time, subject to 

the requirements at § 423.120(b). 

(B) Limit on specialty-tier cost 

threshold adjustment. (1) CMS increases 

the specialty-tier cost threshold for a 

plan year only if the amount determined 

in paragraph (d)(2)(iv)(A)(3) of this 

section for a plan year is at least 10 

percent above the specialty tier cost 

threshold for the prior plan year. 

(2) If an increase is made in 

accordance with this paragraph 

(d)(2)(iv)(B), CMS rounds the amount 

determined in paragraph (d)(2)(iv)(A)(3) 

of this section to the nearest $10, and 

the resulting dollar amount is the 

specialty-tier cost threshold for the plan 

year. 

(C) Data used to determine the 

specialty-tier cost threshold. CMS uses 

PDEs from the plan year that ended 12 

months prior to the applicable plan 

year. 

(D) Maximum number of specialty 

tiers and maximum allowable cost 

sharing. A Part D plan may maintain up 

to two specialty tiers. CMS sets the 

maximum allowable cost sharing for a 

single specialty tier, or, in the case of a 

plan with two specialty tiers, the higher 

cost sharing specialty tier as follows: 

(1) For Part D plans with the full 

deductible provided under the Defined 

Standard benefit, as specified in 

paragraph (d)(1) of this section, 25 

percent coinsurance. 

(2) For Part D plans with no 

deductible, 33 percent coinsurance. 

(3) For Part D plans with a deductible 

that is greater than $0 and less than the 

deductible provided under the Defined 

Standard benefit, a coinsurance 

percentage that is determined by 

subtracting the plan’s deductible from 

33 percent of the initial coverage limit 

(ICL) under section 1860D–2(b)(3) of the 

Act, dividing this difference by the 

difference between the ICL and the 

plan’s deductible, and rounding to the 

nearest 1 percent. 

* * * * * 

■ 49. Section 423.128 is amended by— 

■ a. Revising paragraph (a)(1); 

■ b. Adding paragraph (b)(11); 

■ c. Adding paragraphs (d)(1)(i)(A) and 

(B), and (ii)(A) through (C); 

■ d. Redesignating paragraph (d)(1)(iii) 

as (d)(1)(iii)(A); 

■ e. Adding paragraph (d)(1)(iii)(B); and 

■ f. Adding paragraphs (d)(1)(v) and (vi) 

and (d)(4) and (5). 

The revisions and additions read as 

follows: 

§ 423.128 Dissemination of Part D plan 

information. 

(a) * * * 

(1) To each enrollee of a Part D plan 

offered by the Part D sponsor under this 

part, except as provided in paragraph 

(b)(11)(ii) of this section; 

* * * * * 

(b) * * * 

(11) Opioid information. (i) Beginning 

January 1, 2022, and subject to 

paragraph (b)(11)(ii) of this section, a 

Part D sponsor must disclose to each 

enrollee at least once per year the 

following: 

(A) The risks associated with 

prolonged opioid use. 

(B) Coverage of non-pharmacological 

therapies, devices, and non-opioid 

medications— 

(1) In the case of an MA–PD, under 

such plan; and 


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(2) In the case of a PDP, under such 

plan and Medicare Parts A and B. 

(ii) The Part D sponsor may elect to, 

in lieu of disclosing the information 

described in paragraph (b)(11)(i) of this 

section to each enrollee under each plan 

offered by the Part D sponsor under this 

part, disclose such information to a 

subset of enrollees, such as enrollees 

who have been prescribed an opioid in 

the previous 2-year period. 

* * * * * 

(d) * * * 

(1) * * * 

(i) * * * 

(A) For coverage beginning on and 

after January 1, 2022, is open at least 

from 8:00 a.m. to 8:00 p.m. in all regions 

served by the Part D plan, with the 

following exceptions: 

(1) From October 1 through March 31 

of the following year, a customer call 

center may be closed on Thanksgiving 

Day and Christmas Day so long as the 

interactive voice response (IVR) system 

or similar technology records messages 

from incoming callers and such 

messages are returned within one (1) 

business day. 

(2) From April 1 through September 

30, a customer call center may be closed 

any Federal holiday, Saturday, or 

Sunday, so long as the interactive voice 

response (IVR) system or similar 

technology records messages from 

incoming callers and such messages are 

returned within one (1) business day. 

(B) For coverage beginning on and 

after January 1, 2022, any call center 

serving pharmacists or pharmacies must 

be open so long as any network 

pharmacy in that region is open. 

(ii) * * * 

(A) For coverage beginning on and 

after January 1, 2022, limits average 

hold time to 2 minutes. The hold time 

is defined as the time spent on hold by 

callers following the interactive voice 

response (IVR) system, touch-tone 

response system, or recorded greeting, 

before reaching a live person. 

(B) For coverage beginning on and 

after January 1, 2022, answers 80 

percent of incoming calls within 30 

seconds after the interactive voice 

response (IVR), touch-tone response 

system, or recorded greeting interaction. 

(C) For coverage beginning on and 

after January 1, 2022, limits the 

disconnect rate of all incoming calls to 

5 percent. The disconnect rate is 

defined as the number of calls 

unexpectedly dropped divided by the 

total number of calls made to the 

customer call center. 

(iii)(A) * * *. 

(B) For coverage beginning on and 

after January 1, 2022, interpreters must 

be available for 80 percent of incoming 

calls requiring an interpreter within 8 

minutes of reaching the customer 

service representative and be made 

available at no cost to the caller. 

* * * * * 

(v) At a minimum, for coverage 

beginning on and after January 1, 2022: 

(A) Provides effective real-time 

communication with individuals using 

auxiliary aids and services, including 

TTYs and all forms of Federal 

Communication Commission-approved 

telecommunications relay systems, 

when using automated-attendant 

systems. See 28 CFR 35.161 and 

36.303(d). 

(B) Connects 80 percent of incoming 

calls requiring TTY services to a TTY 

operator within 7 minutes. 

(vi) For coverage beginning on and 

after January 1, 2022, provides the 

information described in paragraph 

(d)(4) of this section to enrollees who 

call the customer service call center. 

* * * * * 

(4) Beginning on January 1, 2023, a 

Part D sponsor must implement, and 

make available directly to enrollees, in 

an easy to understand manner, the 

following complete, accurate, timely, 

clinically appropriate, patient-specific 

formulary and benefit real-time 

information in their beneficiary-specific 

portal or computer application: 

(i) Enrollee cost sharing amounts. 

(ii) Formulary medication alternatives 

for a given condition. 

(iii) Formulary status, including 

utilization management requirements 

applicable to each alternative 

medication, as appropriate for each 

enrollee and medication presented. 

(5) The Part D sponsor may provide 

rewards and incentives to enrollees who 

use the beneficiary real time benefit tool 

(RTBT) described in paragraph (d)(4) of 

this section, provided the rewards and 

incentives comply with the 

requirements in paragraphs (d)(5)(i) 

through (vi) of this section, and the 

rewards and incentives information is 

made available to CMS upon request. 

Use is defined as logging into the RTBT, 

via portal or computer application, or 

calling the customer service call center 

to obtain the information described in 

paragraph (d)(4) of this section. The 

rewards and incentives must meet the 

following: 

(i) Be of reasonable value, both 

individually and in the aggregate. 

(ii) Be designed so that all enrollees 

are eligible to earn rewards and 

incentives, and that there is no 

discrimination based on race, color, 

national origin, including limited 

English proficiency, sex, age, disability, 

chronic disease, health status, or other 

prohibited basis. 

(iii) Not be offered in the form of cash 

or other cash equivalents. 

(iv) Not be used to target potential 

enrollees. 

(v) Be earned solely for logging onto 

the beneficiary RTBT and not for any 

other purpose. 

(vi) Otherwise comply with all 

relevant fraud and abuse laws, 

including, when applicable, the antikickback statute and civil money 

penalty prohibiting inducements to 

beneficiaries. 

* * * * * 

■ 50. Section 423.153 is amended by— 

■ a. Revising the section heading; 

■ b. Revising paragraph (a); 

■ c. By adding paragraphs (d)(1)(vii)(E) 

and (F); 

■ d. By revising paragraph (d)(2); 

■ e. By revising paragraph (f)(1) 

introductory text; 

■ f. In paragraph (f)(3)(ii) introductory 

text by removing the phrase ‘‘paragraphs 

(f)(10) and (11) of this section’’ and 

adding its place the phrase ‘‘paragraphs 

(f)(9) through (13) of this section’’; 

■ g. In paragraph (f)(4)(ii)(A) by 

removing the phrase ‘‘paragraph 

(f)(2)(ii)(B) of this section’’ and adding 

its place the phrase ‘‘paragraph 

(f)(3)(ii)(A) of this section’’; 

■ h. In paragraph (f)(4)(ii)(A) by 

removing the phrase ‘‘paragraph 

(f)(4)(i)(B) of this section’’ and adding in 

its place the phrase ‘‘paragraph 

(f)(2)(i)(B) of this section’’; 

■ i. Revising paragraphs (f)(5)(ii)(C)(3), 

(f)(6)(ii)(C)(4), and (f)(8)(i); 

■ j. In paragraph (f)(15)(ii)(C) by 

removing the phrase ‘‘any potential atrisk beneficiary’’ and adding in its place 

the phrase ‘‘any potential at-risk 

beneficiary or at-risk beneficiary’’ and 

changing ‘‘definition’’ to ‘‘definitions’’; 

■ k. In paragraph (f)(15)(ii)(D) by 

changing ‘‘no later than 7 days of the 

date’’ to ‘‘no later than 7 days from the 

date’’; 

■ l. By revising paragraph (f)(16); and 

■ m. By revising the heading of 

paragraph (g). 

The revisions and additions read as 

follows: 

§ 423.153 Drug utilization management, 

quality assurance, medication therapy 

management programs (MTMPs), drug 

management programs, and access to 

Medicare Parts A and B claims data 

extracts. 

(a) General rule. Each Part D sponsor 

must have established, for covered Part 

D drugs furnished through a Part D plan, 

a drug utilization management program, 

quality assurance measures and 

systems, and an MTMP as described in 


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paragraphs (b), (c), and (d) of this 

section. No later than January 1, 2022, 

a Part D plan sponsor must have 

established a drug management program 

for at-risk beneficiaries enrolled in their 

prescription drug benefit plans to 

address overutilization of frequently 

abused drugs, as described in paragraph 

(f) of this section. 

* * * * * 

(d) * * * 

(1) * * * 

(vii) * * * 

(E) Beginning January 1, 2022, for 

enrollees targeted in paragraph (d)(2) of 

this section, provide at least annually as 

part of the comprehensive medication 

review, a targeted medication review, or 

other MTM correspondence or service, 

information about safe disposal of 

prescription drugs that are controlled 

substances, drug take back programs, inhome disposal and cost-effective means 

to safely dispose of such drugs. 

(F) The information to be provided 

under paragraph (d)(1)(vii)(E) of this 

section must comply with all 

requirements of § 422.111(j) of this 

chapter. 

(2) Targeted beneficiaries. Targeted 

beneficiaries for the MTMP described in 

paragraph (d)(1) of this section are 

enrollees in the sponsor’s Part D plan 

who meet the characteristics of at least 

one of the following two groups: 

(i)(A) Have multiple chronic diseases, 

with three chronic diseases being the 

maximum number a Part D plan sponsor 

may require for targeted enrollment; 

(B) Are taking multiple Part D drugs, 

with eight Part D drugs being the 

maximum number of drugs a Part D 

plan sponsor may require for targeted 

enrollment; and 

(C) Are likely to incur the following 

annual Part D drug costs: 

(1) For 2011, costs for covered Part D 

drugs greater than or equal to $3,000. 

(2) For 2012 and subsequent years, 

costs for covered Part D drugs in an 

amount greater than or equal to $3,000 

increased by the annual percentage 

specified in § 423.104(d)(5)(iv); or 

(ii) Beginning January 1, 2022, are atrisk beneficiaries as defined in 

§ 423.100. 

* * * * * 

(f) * * * 

(1) Written policies and procedures. A 

sponsor must document its drug 

management program in written policies 

and procedures that are approved by the 

applicable P&T committee and reviewed 

and updated as appropriate. In the case 

of a Part D sponsor, including a PACE 

organization, without its own or a 

contracted P&T committee because it 

does not use a formulary, the written 

policies and procedures described in 

this section must be approved by the 

Part D sponsor’s medical director as 

described at § 423.562(a)(5) (or, for a 

PACE organization, at § 460.60(b)) and 

applicable clinical and other staff or 

contractors as determined appropriate 

by the medical director. These policies 

and procedures must address all aspects 

of the sponsor’s drug management 

program, including but not limited to 

the following: 

* * * * * 

(3) * * * 

(ii) In accordance with paragraphs 

(f)(9) through (13) of this section, limit 

an at-risk beneficiary’s access to 

coverage for frequently abused drugs to 

those that are— 

* * * * * 

(4) * * * 

(A) Except as provided in paragraph 

(f)(3)(ii)(A) of this section regarding a 

prescriber limitation, if the sponsor has 

complied with the requirement of 

paragraph (f)(2)(i)(C) of this section 

about attempts to reach prescribers, and 

the prescribers were not responsive after 

3 attempts by the sponsor to contact 

them within 10 business days, then the 

sponsor has met the requirement of 

paragraph (f)(2)(i)(B) of this section for 

eliciting information from the 

prescribers. 

(5) * * * 

(ii) * * * 

(C) * * * 

(3) An explanation of the beneficiary’s 

right to a redetermination if the sponsor 

issues a determination that the 

beneficiary is an at-risk beneficiary and 

the standard and expedited 

redetermination processes described at 

§§ 423.582 and 423.584, including 

notice that if on redetermination the 

plan sponsor affirms its denial, in whole 

or in part, the case must be 

automatically forwarded to the 

independent review entity contracted 

with CMS for review and resolution. 

* * * * * 

(6) * * * 

(ii) * * * 

(C) * * * 

(4) An explanation of the beneficiary’s 

right to a redetermination under 

§ 423.580, including all of the following: 

(i) A description of both the standard 

and expedited redetermination 

processes. 

(ii) The beneficiary’s right to, and 

conditions for, obtaining an expedited 

redetermination. 

(iii) Notice that if on redetermination 

the plan sponsor affirms its denial, in 

whole or in part, the case must be 

automatically forwarded to the 

independent review entity contracted 

with CMS for review and resolution. 

* * * * * 

(8) * * * 

(i) Subject to paragraph (f)(8)(ii) of 

this section, a Part D sponsor must 

provide the second notice described in 

paragraph (f)(6) of this section or the 

alternate second notice described in 

paragraph (f)(7) of this section, as 

applicable, on a date that is not less 

than 30 days after the date of the initial 

notice described in paragraph (f)(5) of 

this section and not more than the 

earlier of the following two dates: 

(A) The date the sponsor makes the 

relevant determination. 

(B) Sixty days after the date of the 

initial notice described in paragraph 

(f)(5) of this section. 

* * * * * 

(15) * * * 

(ii) * * * 

(C) Provide information to CMS about 

any potential at-risk beneficiary or atrisk beneficiary that meets paragraph (2) 

of the definitions in § 423.100 that a 

sponsor identifies within 30 days from 

the date of the most recent CMS report 

identifying potential at-risk 

beneficiaries. 

(D) Provide information to CMS as 

soon as possible but no later than 7 days 

from the date of the initial notice or 

second notice that the sponsor provided 

to a beneficiary, or as soon as possible 

but no later than 7 days from a 

termination date, as applicable, about a 

beneficiary-specific opioid claim edit or 

a limitation on access to coverage for 

frequently abused drugs. 

* * * * * 

(16) Clinical guidelines. Potential atrisk beneficiaries and at-risk 

beneficiaries are identified by CMS or a 

Part D sponsor using clinical guidelines 

that— 

(i) Are developed with stakeholder 

consultation; 

(ii) Are based on: 

(1) The acquisition of frequently 

abused drugs from multiple prescribers, 

multiple pharmacies, the level of 

frequently abused drugs used, or any 

combination of these factors; or 

(2) Beginning January 1, 2022, a 

history of opioid-related overdose as 

determined by at least one recent claim 

that contains a principal diagnosis 

indicating opioid overdose, and at least 

one recent claim for an opioid 

medication other than an opioid used 

for medication assisted therapy (MAT). 

(iii) Are derived from expert opinion 

and an analysis of Medicare data; and 

(iv) Include a program size estimate. 


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(g) Prescription drug plan sponsors’ 

access to Medicare Parts A and B claims 

data extracts— * * * 

* * * * * 

■ 51. Section 423.182 is amended by 

revising paragraphs (b)(3)(ii)(A) and (B) 

to read as follows: 

§ 423.182 Part D Prescription Drug Plan 

Quality Rating System. 

* * * * * 

(b) * * * 

(3) * * * 

(ii) * * * 

(A)(1) For the first year after 

consolidation, CMS uses enrollmentweighted measure scores using the July 

enrollment of the measurement period 

of the consumed and surviving contracts 

for all measures, except survey-based 

measures and call center measures. The 

survey-based measures would use 

enrollment of the surviving and 

consumed contracts at the time the 

sample is pulled for the rating year. The 

call center measures would use average 

enrollment during the study period. 

(2) For contract consolidations 

approved on or after January 1, 2022, if 

a measure score for a consumed or 

surviving contract is missing due to a 

data integrity issue as described in 

§ 423.184(g)(1)(i) and (ii), CMS assigns a 

score of zero for the missing measure 

score in the calculation of the 

enrollment-weighted measure score. 

(B)(1) For the second year after 

consolidation, CMS uses the 

enrollment-weighted measure scores 

using the July enrollment of the 

measurement year of the consumed and 

surviving contracts for all measures 

except for CAHPS. CMS ensures that the 

CAHPS survey sample includes 

enrollees in the sample frame from both 

the surviving and consumed contracts. 

(2) For contract consolidations 

approved on or after January 1, 2022, for 

all measures except CAHPS if a measure 

score for a consumed or surviving 

contract is missing due to a data 

integrity issue as described in 

§ 423.184(g)(1)(i) and (ii), CMS assigns a 

score of zero for the missing measure 

score in the calculation of the 

enrollment-weighted measure score. 

* * * * * 

■ 52. Section 423.184 is amended by 

revising paragraph (g)(1)(ii)(A) to read as 

follows: 

§ 423.184 Adding, updating, and removing 

measures. 

* * * * * 

(g) * * * 

(1) * * * 

(ii) * * * 

(A)(1) The data submitted for the 

Timeliness Monitoring Project (TMP) or 

audit that aligns with the Star Ratings 

year measurement period is used to 

determine the scaled reduction. 

(2) For contract consolidations 

approved on or after January 1, 2022, if 

there is a contract consolidation as 

described at § 423.182(b)(3), the TMP or 

audit data are combined for the 

consumed and surviving contracts 

before the methodology provided in 

paragraphs (g)(1)(ii)(B) through (M) of 

this section is applied. 

* * * * * 

■ 53. Section 423.186 is amended by 

adding a sentence to the end of 

paragraph (i)(6) to read as follows: 

§ 423.186 Calculation of Star Ratings. 

* * * * * 

(i) * * * 

(6) * * * Missing data includes data 

where there is a data integrity issue as 

defined at § 423.184(g)(1). 

* * * * * 

■ 54. Section 423.265 is amended by 

revising paragraph (b)(2) to read as 

follows: 

§ 423.265 Submission of bids and related 

information. 

* * * * * 

(b) * * * 

(2) Limit on number of plan offerings. 

Potential Part D sponsors’ bid 

submissions may include no more than 

three stand-alone prescription drug plan 

offerings in a service area and must 

include only one basic prescription drug 

plan offering. 

* * * * * 

■ 55. Section 423.286 is amended by 

revising paragraph (d)(4)(ii) to read as 

follows: 

§ 423.286 Rules regarding premiums. 

* * * * * 

(d) * * * 

(4) * * * 

(ii) Calculating the income-related 

monthly adjustment amount. The 

income-related monthly adjustment is 

equal to the product of the standard 

base beneficiary premium, as 

determined under paragraph (c) of this 

section, and the ratio of the applicable 

premium percentage specified in 20 

CFR 418.2120, reduced by 25.5 percent; 

divided by 25.5 percent (that is, 

premium percentage¥25.5 percent)/ 

25.5 percent). 

* * * * * 

■ 56. Section 423.503 is amended by 

adding paragraphs (b)(1)(i) and (ii) to 

read as follows: 

§ 423.503 Evaluation and determination 

procedures for applications to be 

determined qualified to act as a sponsor. 

* * * * * 

(b) * * * 

(1) * * * 

(i) An applicant may be considered to 

have failed to comply with a contract for 

purposes of an application denial under 

paragraph (b)(1) of this section if during 

the applicable review period the 

applicant does any of the following: 

(A) Was subject to the imposition of 

an intermediate sanction under to 

subpart O of this part or a determination 

by CMS to prohibit the enrollment of 

new enrollees pursuant to § 423.2410(c). 

(B) Failed to maintain a fiscally sound 

operation consistent with the 

requirements of § 423.505(b)(23). 

(ii) CMS may deny an application 

submitted by an organization that does 

not hold a Part D contract at the time of 

the submission when the applicant’s 

parent organization or another 

subsidiary of the parent organization 

meets the criteria for denial stated in 

paragraph (b)(1)(i) of this section. This 

paragraph does not apply when the 

parent completed the acquisition of the 

subsidiary that meets the criteria within 

the 24 months preceding the application 

submission deadline. 

* * * * * 

■ 57. Section 423.503 is amended by 

revising paragraph (a)(3) to read as 

follows: 

§ 423.503 Evaluation and determination 

procedures for applications to be 

determined qualified to act as a sponsor. 

(a) * * * 

(3) CMS does not approve an 

application when it would result in the 

applicant’s parent organization, directly 

or through its subsidiaries, holding 

more than one PDP sponsor contract in 

the PDP Region for which the applicant 

is seeking qualification as a PDP 

sponsor. 

* * * * * 

■ 58. Section 423.504 is amended by 

adding paragraphs (b)(4)(vi)(G)(4) 

through (7) to read as follows: 

§ 423.504 General provisions. 

* * * * * 

(b) * * * 

(4) * * * 

(vi) * * * 

(G) * * * 

(4) The Part D plan sponsor must have 

procedures to identify, and must report 

to CMS or its designee either of the 

following, in the manner described in 

paragraphs (b)(4)(vi)(G)(4) through (6) of 

this section: 

(i) Any payment suspension 

implemented by a plan, pending 

investigation of credible allegations of 

fraud by a pharmacy, which must be 

implemented in the same manner as the 


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Secretary does under section 1862(o)(1) 

of the Act. 

(ii) Any information concerning 

investigations, credible evidence of 

suspicious activities of a provider of 

services (including a prescriber) or 

supplier, and other actions taken by the 

plan related to the inappropriate 

prescribing of opioids. 

(5) The Part D plan sponsor must 

submit data, as specified in this section, 

in the program integrity portal when 

reporting payment suspensions pending 

investigations of credible allegations of 

fraud by pharmacies; information 

related to the inappropriate prescribing 

of opioids and concerning investigations 

and credible evidence of suspicious 

activities of a provider of services 

(including a prescriber) or supplier, and 

other actions taken by the plan sponsor; 

or if the plan reports a referral, through 

the portal, of substantiated or suspicious 

activities of a provider of services 

(including a prescriber) or a supplier 

related to fraud, waste or abuse to 

initiate or assist with investigations 

conducted by CMS, or its designee, a 

Medicare program integrity contractor, 

or law enforcement partners. The data 

categories, as applicable, include 

referral information and actions taken 

by the Part D plan sponsor on the 

referral. (6)(i) The plan sponsor is 

required to notify the Secretary, or its 

designee, of a payment suspension 

described in paragraph (b)(4)(vi)(G)(4) of 

this section 7 days prior to 

implementation of the payment 

suspension. The MA organization may 

request an exception to the 7day prior 

notification to the Secretary, or its 

designee, if circumstances warrant a 

reduced reporting time frame, such as 

potential beneficiary harm. 

(ii) The plan sponsor is required to 

submit the information described in 

paragraph (b)(4)(vi)(G)(4)(ii) of this 

section no later than January 30, April 

30, July 30, and October 30 of each year 

for the preceding periods, respectively, 

of October 1 through December 31, 

January 1 through March 31, April 1 

through June 30, and July 1 through 

September 30. For the first reporting 

period (January 30, 2022), the reporting 

will reflect the data gathered and 

analyzed for the previous quarter in the 

calendar year (October 1–December 31). 

(7)(i) CMS provides plan sponsors 

with data report(s) or links to the 

information described in paragraphs 

(b)(4)(vi)(G)(4)(i) and (ii) of this section 

no later than April 15, July 15, October 

15, and January 15 of each year based 

on the information in the portal, 

respectively, as of the preceding October 

1 through December 31, January 1 

through March 31, April 1 through June 

30, and July 1 through September 30. 

(ii) Include administrative actions, 

pertinent information related to opioid 

overprescribing, and other data 

determined appropriate by the Secretary 

in consultation with stakeholders. 

(iii) Are anonymized information 

submitted by plans without identifying 

the source of such information. 

(iv) For the first quarterly report 

(April 15, 2022), that the report reflect 

the data gathered and analyzed for the 

previous quarter submitted by the plan 

sponsors on January 30, 2022. 

* * * * * 

■ 59. Section 423.505 is amended by 

revising paragraph (b)(22) to read as 

follows: 

§ 423.505 Contract provisions. 

* * * * * 

(b) * * * 

(22) Through the CMS complaint 

tracking system, address and resolve 

complaints received by CMS against the 

MA organization. 

* * * * * 

■ 60. Section 423.514 is amended by 

redesignating paragraph (a)(5) as 

paragraph (a)(6) and adding a new 

paragraph (a)(5) to read as follows: 

§ 423.514 Validation of Part D reporting 

requirements. 

(a) * * * 

(5) Pharmacy performance measures. 

* * * * * 

■ 61. Section 423.551 is amended by 

revising paragraph (g)(2) to read as 

follows: 

§ 423.551 General provisions. 

* * * * * 

(g) * * * 

(2) CMS does not recognize or allow 

a sale or transfer that consists solely of 

the sale or transfer of individual 

beneficiaries or groups of beneficiaries 

enrolled in a plan benefit package. 

* * * * * 

■ 62. Section 423.560 is amended by— 

■ a. Removing the definition of 

‘‘Appointed representative’’; 

■ b. Adding the definition of 

‘‘Representative’’ in alphabetical order; 

and 

■ c. Revising the definition of 

‘‘Specialty tier’’. 

The addition and revision read as 

follows: 

§ 423.560 Definitions. 

* * * * * 

Representative means an individual 

either appointed by an enrollee or 

authorized under State or other 

applicable law to act on behalf of the 

enrollee in filing a grievance, obtaining 

a coverage determination, or in dealing 

with any of the levels of the appeals 

process. Unless otherwise stated in this 

subpart, the representative has all of the 

rights and responsibilities of an enrollee 

in filing a grievance, obtaining a 

coverage determination, or in dealing 

with any of the levels of the appeals 

process, subject to the rules described in 

part 422, subpart M, of this chapter. 

Specialty tier: (1) Before January 1, 

2022, means a formulary cost-sharing 

tier dedicated to very high cost Part D 

drugs that exceed a cost threshold 

established by the Secretary; and 

(2) Beginning January 1, 2022, has the 

meaning given the term in § 423.104. 

■ 63. Section 423.566 is amended by 

revising paragraph (c)(2) to read as 

follows: 

§ 423.566 Coverage determinations. 

* * * * * 

(c) * * * 

(2) The enrollee’s representative, on 

behalf of the enrollee; or 

* * * * * 

■ 64. Section 423.568 is amended by 

adding paragraphs (i) through (m) to 

read as follows: 

§ 423.568 Standard timeframe and notice 

requirements for coverage determinations. 

* * * * * 

(i) Dismissing a request. The Part D 

plan sponsor dismisses a coverage 

determination request, either entirely or 

as to any stated issue, under any of the 

following circumstances: 

(1) When the individual making the 

request is not permitted to request a 

coverage determination under 

§ 423.566(c). 

(2) When the Part D plan sponsor 

determines the party failed to make out 

a valid request for a coverage 

determination that substantially 

complies with paragraph (a) of this 

section. 

(3) When an enrollee or the enrollee’s 

representative files a request for a 

coverage determination, but the enrollee 

dies while the request is pending, and 

both of the following criteria apply: 

(i) The enrollee’s surviving spouse or 

estate has no remaining financial 

interest in the case. 

(ii) The enrollee’s representative, if 

any, does not wish to pursue the request 

for coverage. 

(4) When a party filing the coverage 

determination request submits a timely 

request for withdrawal of the request for 

a coverage determination with the Part 

D plan sponsor. 

(j) Notice of dismissal. The Part D 

plan must mail or otherwise transmit a 

written notice of the dismissal of the 


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coverage determination request to the 

parties. The notice must state all of the 

following: 

(1) The reason for the dismissal. 

(2) The right to request that the MA 

organization vacate the dismissal action. 

(3) The right to request 

reconsideration of the dismissal. 

(k) Vacating a dismissal. If good cause 

is established, the Part D plan sponsor 

may vacate its dismissal of a request for 

redetermination within 6 months from 

the date of the notice of dismissal. 

(l) Effect of dismissal. The Part D plan 

sponsor’s dismissal is binding unless it 

is modified or reversed by the Part D 

plan sponsor or vacated under 

paragraph (k) of this section. 

(m) Withdrawing a request. A party 

that requests a coverage determination 

may withdraw its request at any time 

before the decision is issued by filing a 

request with the Part D plan sponsor. 

■ 65. Section 423.570 is amended by 

adding paragraph (f) to read as follows: 

§ 423.570 Expediting certain coverage 

determinations. 

* * * * * 

(f) Dismissing a request. The Part D 

plan sponsor dismisses an expedited 

coverage determination in accordance 

with § 423.568. 

■ 66. Section 423.578 is amended— 

■ a. By revising paragraph (a)(6)(iii); and 

■ b. In paragraph (b)(4) by removing the 

phrase ‘‘the enrollee’s appointed 

representative’’ and adding in its place 

the phrase ‘‘the enrollee’s 

representative’’. 

The revision reads as follows: 

§ 423.578 Exceptions process. 

(a) * * * 

(6) * * * 

(iii)(A) Before January 1, 2022, if a 

Part D plan sponsor maintains a 

specialty tier, as defined in § 423.560, 

the Part D sponsor may design its 

exception process so that Part D drugs 

on the specialty tier are not eligible for 

a tiering exception. 

(B) Beginning January 1, 2022, if a 

Part D sponsor maintains one or two 

specialty tiers, as defined in § 423.104, 

the Part D sponsor may design its 

exception process so that Part D drugs 

on the specialty tier(s) are not eligible 

for tiering exception(s) to non-specialty 

tiers. 

* * * * * 

■ 67. Section 423.582 is amended— 

■ a. In paragraph (d) by removing the 

word ‘‘written’’ and 

■ b. By adding paragraphs (e) through 

(h). 

The additions read as follows: 

§ 423.582 Request for a standard 

redetermination. 

* * * * * 

(e) Dismissing a request. A Part D plan 

sponsor dismisses a redetermination 

request, either entirely or as to any 

stated issue, under any of the following 

circumstances: 

(1) When the person or entity 

requesting a redetermination is not a 

proper party under § 423.580. 

(2) When the Part D plan sponsor 

determines the party failed to make out 

a valid request for redetermination that 

substantially complies with paragraph 

(a) of this section. 

(3) When the party fails to file the 

redetermination request within the 

proper filing time frame in accordance 

with paragraph (b) of this section. 

(4) When the enrollee or the enrollee’s 

representative files a request for 

redetermination, but the enrollee dies 

while the request is pending, and both 

of the following criteria apply: 

(i) The enrollee’s surviving spouse or 

estate has no remaining financial 

interest in the case. 

(ii) The enrollee’s representative, if 

any, does not wish to pursue the request 

for coverage. 

(5) When a party filing the 

redetermination request submits a 

timely request for withdrawal of the 

request for a redetermination with the 

Part D plan sponsor. 

(f) Notice of dismissal. The Part D 

plan sponsor must mail or otherwise 

transmit a written notice of the 

dismissal of the redetermination request 

to the parties. The notice must state all 

of the following: 

(1) The reason for the dismissal. 

(2) The right to request that the Part 

D plan sponsor vacate the dismissal 

action. 

(3) The right to request review of the 

dismissal by the independent entity. 

(g) Vacating a dismissal. If good cause 

is established, a Part D sponsor may 

vacate its dismissal of a request for 

redetermination within 6 months from 

the date of the notice of dismissal. 

(h) Effect of dismissal. The dismissal 

of a request for redetermination is 

binding unless the enrollee or other 

party requests review by the IRE or the 

decision is vacated under paragraph (g) 

of this section. 

■ 68. Section 423.584 is amended by 

adding paragraph (f) to read as follows: 

§ 423.584 Expediting certain 

redeterminations. 

* * * * * 

(f) Dismissing a request. The Part D 

plan sponsor dismisses an expedited 

redetermination in accordance with 

§ 423.582. 

■ 69. Section 423.590 is amended by 

adding paragraphs (i) and (j) to read as 

follows: 

§ 423.590 Timeframes and responsibility 

for making redeterminations. 

* * * * * 

(i) Automatic forwarding of 

redeterminations made under a drug 

management program. If on 

redetermination the plan sponsor 

affirms, in whole or in part, its denial 

related to an at-risk determination under 

a drug management program in 

accordance with § 423.153(f), the Part D 

plan sponsor must forward the case to 

the IRE contracted with CMS within 24 

hours of the expiration of the applicable 

adjudication timeframe under paragraph 

(a)(2), (b)(2), or (d)(1) of this section. 

(j) Requests for review of a dismissal 

by the independent entity. If the Part D 

plan sponsor dismisses a request for a 

reconsideration in accordance with 

§ 423.582(e) or § 423.584(f), the enrollee 

or other proper party has the right to 

request review of the dismissal by the 

independent entity. A request for review 

of a dismissal must be filed in writing 

with the independent entity within 60 

calendar days from the date of the Part 

D plan sponsor’s dismissal notice. 

■ 70. Section 423.600 is amended by— 

■ a. Revising paragraph (b); and 

■ b. Adding paragraphs (f) through (k). 

The revision and additions read as 

follows: 

§ 423.600 Reconsideration by an 

independent review entity (IRE). 

* * * * * 

(b) When an enrollee, or an enrollee’s 

prescribing physician or other 

prescriber (acting on behalf of the 

enrollee), files an appeal or a 

determination is forwarded to the IRE 

by a Part D plan sponsor, the IRE is 

required to solicit the views of the 

prescribing physician or other 

prescriber. 

(1) The IRE may solicit the views of 

the prescribing physician or other 

prescriber orally or in writing. 

(2) A written account of the 

prescribing physician’s or other 

prescriber’s views (prepared by either 

the prescribing physician, other 

prescriber, or IRE, as appropriate) must 

be contained in the IRE record. 

* * * * * 

(f) The party who files a request for 

reconsideration may withdraw it by 

filing a request with the IRE. 

(g) The independent entity dismisses 

a reconsideration request, either entirely 

or as to any stated issue, under any of 

the following circumstances: 

(1) When the person or entity 

requesting a reconsideration is not a 


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proper party under paragraph (a) of this 

section. 

(2) When the IRE determines the party 

failed to make out a valid request for 

reconsideration that substantially 

complies with paragraph (a) of this 

section. 

(3) When the party fails to file the 

reconsideration request within the 

proper filing time frame in accordance 

with paragraph (a) of this section. 

(4) When an enrollee or the enrollee’s 

representative files a request for 

reconsideration, but the enrollee dies 

while the request is pending, and both 

of the following criteria apply: 

(i) The enrollee’s surviving spouse or 

estate has no remaining financial 

interest in the case. 

(ii) The enrollee’s representative, if 

any, does not wish to continue the 

appeal. 

(5) When a party filing the 

reconsideration request submits a timely 

request for withdrawal of the request for 

a reconsideration with the IRE. 

(h) The IRE mails or otherwise 

transmits a written notice of the 

dismissal of the reconsideration request 

to the parties. The notice must state all 

of the following: 

(1) The reason for the dismissal. 

(2) That there is a right to request that 

the IRE vacate the dismissal action. 

(3) The right to a review of the 

dismissal in accordance with 

§ 423.2004. 

(i) If good cause is established, the IRE 

may vacate its dismissal of a request for 

redetermination within 6 months from 

the date of the notice of dismissal. 

(j) An enrollee has a right to have an 

IRE’s dismissal reconsidered in 

accordance with § 423.2004. 

(k) If the IRE determines that the Part 

D plan sponsor’s dismissal was in error, 

the IRE vacates the dismissal and 

remands the case to the Part D plan 

sponsor for reconsideration consistent 

with § 423.590. The IRE’s decision 

regarding an Part D plan sponsor’s 

dismissal, including a decision to deny 

a request for review of a dismissal, is 

binding and not subject to further 

review. 

■ 71. Section 423.760 is amended by— 

■ a. Redesignating paragraphs (b)(3) and 

(4) as paragraphs (b)(4) and (5); and 

■ b. Adding a new paragraph (b)(3). 

The addition reads as follows: 

§ 423.760 Determinations regarding the 

amount of civil money penalties and 

assessments imposed by CMS. 

* * * * * 

(b) * * * 

(3) CMS calculates the minimum 

penalty amounts under paragraphs 

(b)(1) and (2) of this section using the 

following criteria: 

(i) Definitions for calculating penalty 

amounts—(A) Per determination. The 

penalty amounts calculated under 

paragraph (b)(1) of this section. 

(B) Per enrollee. The penalty amounts 

calculated under paragraph (b)(2) of this 

section. 

(C) Standard minimum penalty. The 

per enrollee or per determination 

amount that is dependent on the type of 

adverse impact that occurred. 

(D) Aggravating factor(s). Specific 

penalty amounts that may increase the 

per enrollee or per determination 

standard minimum penalty and are 

determined based on criteria under 

paragraph (a) of this section. 

(E) Cost-of-living multiplier. The 

percent change between each year’s 

published October consumer price 

index for all urban consumers (United 

States city average), which is released 

by the Office of Management and 

Budget (OMB) annually. 

(ii) Calculation of penalty amounts. 

(A) Per determination and per enrollee 

penalty amounts are increased by 

multiplying the current standard 

minimum penalty and aggravating factor 

amounts by the cost-of-living multiplier. 

(B) The minimum penalty and 

aggravating factor amounts will be 

updated no more often than every 3 

years. 

(C) CMS tracks the calculation and 

accrual of the standard minimum 

penalty and aggravating factor amounts 

and announce them on an annual basis. 

* * * * * 

■ 72. Section 423.2006 is amended by 

redesignating paragraphs (c)(1) and (2) 

as paragraphs (c)(2) and (3) and adding 

a new paragraph (c)(1) to read as 

follows: 

§ 423.2006 Amount in controversy 

required for an ALJ hearing and judicial 

review. 

* * * * * 

(c) * * * 

(1) The amount remaining in 

controversy is computed as the 

projected value described in paragraph 

(c)(2) or (3) of this section, reduced by 

any cost sharing amounts, including 

deductible, coinsurance, or copayment 

amounts that may be collected from the 

enrollee for the Part D drug(s). 

* * * * * 

§ 423.2014 [Amended] 

■ 73. Section 423.2014 is amended in 

paragraph (a)(1)(ii) by removing the 

phrase ‘‘appointed representative’’ and 

adding in its place the phrase 

‘‘representative’’. 

§ 423.2036 [Amended] 

■ 74. Section 423.2036 is amended in 

paragraphs (c) and (d) by removing the 

phrase ‘‘appointed representative’’ and 

adding in its place the phrase 

‘‘representative’’ each time it appears. 

■ 75. Section 423.2260 is revised to read 

as follows: 

§ 423.2260 Definitions. 

The definitions in this section apply 

for this subpart unless the context 

indicates otherwise. 

Advertisement (Ad) means a read, 

written, visual, oral, watched, or heard 

bid for, or call to attention. 

Advertisements can be considered 

communication or marketing based on 

the intent and content of the message. 

Alternate format means used to 

convey information to individuals with 

visual, speech, physical, hearing, and 

intellectual disabilities (for example, 

braille, large print, audio). 

Banner means a type of advertisement 

feature typically used in television ads 

that is intended to be brief, and flashes 

limited information across a screen for 

the sole purpose of enticing a 

prospective enrollee to contact the Part 

D sponsor (for example, obtain more 

information) or to alert the viewer that 

information is forthcoming. 

Banner-like advertisement is an 

advertisement that uses a banner-like 

feature, that is typically found in some 

media other than television (for 

example, outdoors and on the internet). 

Communications means activities and 

use of materials created or administered 

by the Part D sponsor or any 

downstream entity to provide 

information to current and prospective 

enrollees. Marketing is a subset of 

communications. 

Marketing means communications 

materials and activities that meet both 

the following standards for intent and 

content: 

(1) Intended, as determined under 

paragraph (1)(ii) of this definition, to do 

any of the following: 

(i)(A) Draw a beneficiary’s attention to 

a Part D plan or plans. 

(B) Influence a beneficiary’s decision 

making process when making a Part D 

plan selection. 

(C) Influence a beneficiary’s decision 

to stay enrolled in a Part D plan (that is, 

retention-based marketing). 

(ii) In evaluating the intent of an 

activity or material, CMS will consider 

objective information including, but not 

limited to, the audience of the activity 

or material, other information 

communicated by the activity or 

material, timing, and other context of 

the activity or material and is not 


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limited to the Part D sponsor’s stated 

intent. 

(2) Include or address content 

regarding any of the following: 

(i) The plan’s benefits, benefits 

structure, premiums or cost sharing. 

(ii) Measuring or ranking standards 

(for example, Star Ratings or plan 

comparisons). 

Outdoor advertising (ODA) means 

outdoor material intended to capture the 

attention of a passing audience (for 

example, billboards, signs attached to 

transportation vehicles). ODA may be a 

communication or marketing material. 

■ 76. Section 423.2261 is added to read 

as follows: 

§ 423.2261 Submission, review, and 

distribution of materials. 

(a) General requirements. Part D 

sponsors must submit all marketing 

materials, all election forms, and certain 

designated communications materials 

for CMS review. 

(1) The Health Plan Management 

System (HPMS) Marketing Module is 

the primary system of record for the 

collection, review, and storage of 

materials that must be submitted for 

review. 

(2) Materials must be submitted to the 

HPMS Marketing Module by the Part D 

sponsor. 

(3) Unless specified by CMS, third 

party and downstream entities are not 

permitted to submit materials directly to 

CMS. 

(b) CMS review of marketing materials 

and election forms. Part D sponsors may 

not distribute or otherwise make 

available any marketing materials or 

election forms unless one of the 

following occurs: 

(1) CMS has reviewed and approved 

the material. 

(2) The material has been deemed 

approved; that is, CMS has not rendered 

a disposition for the material within 45 

days (or 10 days if using CMS model or 

standardized marketing materials as 

outlined in § 422.2267(e) of this chapter) 

of submission to CMS. 

(3) The material has been accepted 

under File and Use, as follows: 

(i) The Part D sponsor may distribute 

certain types of marketing materials, 

designated by CMS based on the 

material’s content, audience, and 

intended use, as they apply to potential 

risk to the beneficiary, 5 days following 

the submission. 

(ii) The Part D sponsor must certify 

that the material meets all applicable 

CMS communications and marketing 

requirements in §§ 423.2260 through 

423.2267. 

(c) CMS review of non-marketing 

communications materials. CMS does 

not require submission, or submission 

and approval, of communications 

materials prior to use, other than the 

following exceptions. 

(1) Certain designated 

communications materials that are 

critical to beneficiaries understanding or 

accessing their benefits (for example, 

the Evidence of Coverage (EOC). 

(2) Communications materials that, 

based on feedback such as complaints or 

data gathered through reviews, warrant 

additional oversight as determined by 

CMS, to ensure the information being 

received by beneficiaries is accurate. 

(d) Standards for CMS review. CMS 

reviews materials to ensure the 

following: 

(1) Compliance with all applicable 

requirements under §§ 423.2260 through 

423.2267. 

(2) Benefit and cost information is an 

accurate reflection of what is contained 

in the Part D sponsor’s bid. 

(3) CMS may determine, upon review 

of such materials, that the materials 

must be modified, or may no longer be 

used. 

■ 77. Section 423.2262 is revised to read 

as follows: 

§ 423.2262 General communications 

materials and activity requirements. 

Part D sponsors may not mislead, 

confuse, or provide materially 

inaccurate information to current or 

potential enrollees. 

(a) General rules. Part D sponsors 

must ensure their statements and the 

terminology used in communications 

activities and materials adhere to the 

following requirements: 

(1) Part D sponsors may not do any of 

the following: 

(i) Provide information that is 

inaccurate or misleading. 

(ii) Make unsubstantiated statements 

except when used in logos or taglines. 

(iii) Engage in activities that could 

mislead or confuse Medicare 

beneficiaries, or misrepresent the Part D 

sponsor. 

(iv) Engage in any discriminatory 

activity such as attempting to recruit 

Medicare beneficiaries from higher 

income areas without making 

comparable efforts to enroll Medicare 

beneficiaries from lower income areas, 

or vice versa. 

(v) Target potential enrollees based on 

higher or lower income levels. 

(vi) Target potential enrollees based 

on health status. 

(vii) State or imply plans are only 

available to seniors rather than to all 

Medicare beneficiaries. 

(viii) Employ Part D plan names that 

suggest that a plan is not available to all 

Medicare beneficiaries. 

(ix) Display the names or logos or 

both of co-branded network pharmacies 

on the sponsor’s member identification 

card, unless the pharmacy names or 

logos or both are related to the member 

selection of specific pharmacies. 

(x) Use a plan name that does not 

include the plan type. The plan type 

should be included at the end of the 

plan name, for example, ‘‘Super 

Medicare Drug Plan (PDP)’’. Part D 

sponsors are not required to repeat the 

plan type when the plan name is used 

multiple times in the same material. 

(xi) Claim they are recommended or 

endorsed by CMS, Medicare, the 

Secretary, or HHS. 

(xii) Convey that a failure to pay 

premium will not result in 

disenrollment except for factually 

accurate descriptions of the PDP 

sponsor’s policies adopted in 

accordance with § 423.44(b)(1) and 

(d)(1) of this chapter. 

(xiii) Use the term ‘‘free’’ to describe 

a $0 premium, any type of reduction in 

premium, reduction in deductibles or 

cost sharing, low-income subsidy, or 

cost sharing pertaining to dual eligible 

individuals. 

(xiv) State or imply a plan is available 

only to or is designed for Medicaid 

beneficiaries. 

(xv) Market a Part D plan not designed 

to serve dual eligible beneficiaries as if 

it were a plan designed to serve dual 

eligible beneficiaries. 

(xvi) Target marketing efforts 

primarily to dual eligible individuals. 

(xvii) Claim a relationship with the 

state Medicaid agency, unless a contract 

to coordinate Medicaid services for 

enrollees in that plan is in place. 

(2) Part D sponsors may do the 

following: 

(i) State that the Part D sponsor is 

approved to participate in Medicare 

programs or is contracted to administer 

Medicare benefits or both. 

(ii) Use the term ‘‘Medicareapproved’’ to describe benefits or 

services in materials or both. 

(b) Product endorsements and 

testimonials. (1) Product endorsements 

and testimonials may take any of the 

following forms: 

(i) Television or video ads. 

(ii) Radio ads. 

(iii) Print ads. 

(iv) Social media ads. In cases of 

social media, the use of a previous post, 

whether or not associated with or 

originated by the Part D sponsor, is 

considered a product endorsement or 

testimonial. 

(v) Other types of ads. 

(2) Part D sponsors may use 

individuals to endorse the Part D 

sponsor’s product provided the 


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endorsement or testimonial adheres to 

the following requirements: 

(i) The speaker must identify the Part 

D sponsor’s product or company by 

name. 

(ii) Medicare beneficiaries endorsing 

or promoting the Part D sponsor must 

have been an enrollee at the time the 

endorsement or testimonial was created. 

(iii) The endorsement or testimonial 

must clearly state that the individual 

was paid for the endorsement or 

testimonial, if applicable. 

(iv) If an individual is used (for 

example, an actor) to portray a real or 

fictitious situation, the advertisement 

must state that it is an actor portrayal. 

(c) Requirements when including 

certain telephone numbers in materials. 

(1) Part D sponsors must adhere to the 

following requirements for including 

certain telephone numbers in materials: 

(i) When a Part D sponsor includes its 

customer service number, the hours of 

operation must be prominently included 

at least once. 

(ii) When a Part D sponsor includes 

its customer service number, it must 

provide a toll-free TTY number in 

conjunction with the customer service 

number in the same font size. 

(iii) On every material where 1–800– 

MEDICARE or Medicare TTY appears, 

the Part D sponsor must prominently 

include, at least once, the hours and 

days of operation for 1–800–MEDICARE 

(that is, 24 hours a day/7 days a week). 

(2) The following advertisement types 

are exempt from these requirements: 

(i) Outdoor advertising. 

(ii) Banners or banner-like ads. 

(iii) Radio advertisements and 

sponsorships. 

(d) Standardized material 

identification (SMID). (1) Part D 

sponsors must use a standardized 

method of identification for oversight 

and tracking of materials received by 

beneficiaries. 

(2) The SMID consists of the following 

three parts: 

(i) The Part D sponsor’s contract or 

Multi-Contract Entity (MCE) number, 

(that is, ‘‘S’’ for PDPs, or ‘‘Y’’ for MCE, 

a means of identification available for 

Plans/Part D sponsors that have 

multiple PDP contracts) followed by an 

underscore, except that the SMID for 

multi-plan marketing materials must 

begin with the word ‘‘MULTI-PLAN’’ 

instead of the Part D sponsor’s contract 

number (for example, S1234_abc123_C 

or MULTI-PLAN_efg456_M). 

(ii) A series of alpha numeric 

characters (at the Part D sponsor’s 

discretion) unique to the material 

followed by an underscore. 

(iii) An uppercase ‘‘C’’ for 

communication materials or an 

uppercase ‘‘M’’ for marketing materials 

(for example, S1234_abc123_C or 

S5678_efg456_M). 

(3) The SMID is required on all 

materials except the following: 

(i) Membership ID card. 

(ii) Envelopes, radio ads, outdoor 

advertisements, banners, banner-like 

ads, and social media comments and 

posts. 

(iii) OMB-approved forms/documents, 

except those materials specified in 

§ 423.2267. 

(iv) Corporate notices or forms (that 

is, not Part D-specific) meeting the 

definition of communications such as 

privacy notices and authorization to 

disclose protected health information 

(PHI). 

(v) Agent-developed communications 

materials that are not marketing. 

(4) Non-English and alternate format 

materials, based on previously created 

materials, may have the same SMID as 

the material on which they are based. 

■ 78. Section 423.2263 is added to read 

as follows. 

§ 423.2263 General marketing 

requirements. 

Marketing is a subset of 

communications and therefore must 

follow the requirements outlined in 

§ 423.2262 as well as this section. 

Marketing (as defined in § 423.2260) 

must additionally meet the following 

requirements: 

(a) Part D sponsors may begin 

marketing prospective plan year 

offerings on October 1 of each year for 

the following contract year. Part D 

sponsors may market the current and 

prospective year simultaneously 

provided materials clearly indicate what 

year is being discussed. 

(b) In marketing, Part D sponsors may 

not do any of the following: 

(1) Provide cash or other monetary 

rebates as an inducement for enrollment 

or otherwise. 

(2) Offer gifts to beneficiaries, unless 

the gifts are of nominal value (as 

governed by guidance published by the 

HHS OIG), are offered to similarly 

situated beneficiaries without regard to 

whether or not the beneficiary enrolls, 

and are not in the form of cash or other 

monetary rebates. 

(3) Provide meals to potential 

enrollees regardless of value. 

(4) Market non-health care related 

products to prospective enrollees during 

any Part D sales activity or presentation. 

This is considered cross-selling and is 

prohibited. 

(5) Compare their plan to other plans, 

unless the information is accurate, not 

misleading, and can be supported by the 

Part D sponsor making the comparison. 

(6) Display the names or logos or both 

of pharmacy co-branding partners on 

marketing materials, unless the 

materials clearly indicate via a 

disclaimer or in the body that ‘‘Other 

pharmacies are available in the 

network.’’ 

(7) Knowingly target or send 

unsolicited marketing materials to any 

Part D enrollee during the Open 

Enrollment Period (OEP). 

(i) During the OEP, a Part D sponsors 

may do any of the following: 

(A) Conduct marketing activities that 

focus on other enrollment opportunities, 

including but not limited to marketing 

to age-ins (who have not yet made an 

enrollment decision), marketing by 5- 

star plans regarding their continuous 

enrollment special election period 

(SEP), and marketing to dual-eligible 

and LIS beneficiaries who, in general, 

may make changes once per calendar 

quarter during the first nine months of 

the year; 

(B) Send marketing materials when a 

beneficiary makes a proactive request; 

(C) At the beneficiary’s request, have 

one-on-one meetings with a sales agent; 

(D) At the beneficiary’s request, 

provide information on the OEP through 

the call center; and 

(E) Include educational information, 

excluding marketing, on the Part D 

sponsor’s website about the existence of 

OEP. 

(ii) During the OEP, a Part D sponsors 

may not: 

(A) Send unsolicited materials 

advertising the ability or opportunity to 

make an additional enrollment change 

or referencing the OEP; 

(B) Specifically target beneficiaries 

who are in the OEP because they made 

a choice during Annual Enrollment 

Period (AEP) by purchase of mailing 

lists or other means of identification; 

(C) Engage in or promote agent or 

broker activities that intend to target the 

OEP as an opportunity to make further 

sales; or 

(D) Call or otherwise contact former 

enrollees who have selected a new plan 

during the AEP. 

(c) The following requirements apply 

to how Part D sponsors must display 

CMS-issued Star Ratings: 

(1) References to individual Star 

Rating measure(s) must also include 

references to the overall Star Rating for 

MA–PDs and the summary rating for 

PDP plans. 

(2) May not use an individual 

underlying category, domain, or 

measure rating to imply overall higher 

Star Ratings. 

(3) Must be clear that the rating is out 

of 5 stars. 

(4) Must clearly identify the Star 

Ratings contract year. 


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(5) May only market the Star Ratings 

in the service area(s) for which the Star 

Rating is applicable unless using Star 

Ratings to convey overall Part D sponsor 

performance (for example, ‘‘Plan X has 

achieved 4.5 stars in Montgomery, 

Chester, and Delaware Counties), in 

which case the Part D sponsor must do 

so in a way that is not confusing or 

misleading. 

(6) The following requirements apply 

to all 5 Star PDP contracts: 

(i) May not market the 5-star special 

enrollment period, as defined in 

§ 423.38(c)(20), after November 30 of 

each year if the contract has not 

received an overall 5 star for the next 

contract year. 

(ii) May use CMS’ 5- star icon or may 

create their own icon. 

(7) The following requirements apply 

to all Low Performing MA contracts: 

(i) The Low Performing Icon must be 

included on all materials about or 

referencing the specific contract’s Star 

Ratings. 

(ii) Must state the Low Performing 

Icon means that the Part D sponsor’s 

contract received a summary rating of 

2.5 stars or below in Part D for the last 

3 years. 

(iii) May not attempt to refute or 

minimize Low Performing Status. 

■ 79. Section 423.2264 is revised to read 

as follows: 

§ 423.2264 Beneficiary contact. 

For the purpose of this section, 

beneficiary contact means any outreach 

activities to a beneficiary or a 

beneficiary’s caregivers by the Part D 

sponsor or its agents and brokers. 

(a) Unsolicited contact. Subject to the 

rules for contact for plan business in 

paragraph (b) of this section, the 

following rules apply when materials or 

activities are given or supplied to a 

beneficiary or their caregiver without 

prior request: 

(1) Part D sponsors may make 

unsolicited direct contact by 

conventional mail and other print media 

(for example, advertisements and direct 

mail) or email (provided every email 

contains an opt-out option). 

(2) Part D sponsors may not do any of 

the following if unsolicited: 

(i) Use door to door solicitation, 

including leaving information of any 

kind, except that information may be 

left when an appointment is prescheduled but the beneficiary is not 

home. 

(ii) Approach enrollees in common 

areas such as parking lots, hallways, 

lobbies. 

(iii) Send direct messages from social 

media platforms. 

(iv) Use telephone solicitation (that is, 

cold calling), robocalls, text messages, 

or voicemail messages, including, but 

not limited to, the following: 

(A) Calls based on referrals. 

(B) Calls to former enrollees who have 

disenrolled or those in the process of 

disenrolling, except to conduct 

disenrollment surveys for quality 

improvement purposes. 

(C) Calls to beneficiaries who 

attended a sales event, unless the 

beneficiary gave express permission to 

be contacted. 

(D) Calls to prospective enrollees to 

confirm receipt of mailed information. 

(3) Calls are not considered 

unsolicited if the beneficiary provides 

consent or initiates contact with the 

plan. For example, returning phone 

calls or calling an individual who has 

completed a business reply card 

requesting contact is not considered 

unsolicited. 

(b) Contact for plan business. Part D 

sponsors may contact current, and to a 

more limited extent, former members, 

including those enrolled in other 

products offered by the parent 

organization, to discuss plan business, 

in accordance with the following 

requirements: 

(1) A Part D sponsor may conduct the 

following activities as plan business: 

(i) Call current enrollees, including 

those in non-Medicare products, to 

discuss Medicare products. Examples of 

such calls include, but are not limited 

to the following: 

(A) Enrollees aging into Medicare 

from commercial products. 

(B) Existing enrollees, including 

Medicaid enrollees, to discuss other 

Medicare products or plan benefits. 

(C) Members in an MA or cost plan to 

discuss other Medicare products. 

(ii) Call beneficiaries who submit 

enrollment applications to conduct 

business related to enrollment. 

(iii) With prior CMS approval, call LIS 

enrollees that a plan is prospectively 

losing due to reassignment. CMS 

decisions to approve calls are for 

limited circumstances based on the 

following: 

(A) The proximity of cost of the losing 

plan as compared to the national 

benchmark; and 

(B) The selection of plans in the 

service area that are below the 

benchmark. 

(iv) Agents/brokers calling clients 

who are enrolled in other products they 

may sell, such as automotive or home 

insurance. 

(v) Part D sponsors may not make 

unsolicited calls about other lines of 

business as a means of generating leads 

for Medicare plans. 

(2) When reaching out to a beneficiary 

regarding plan business, as outlined in 

this section, Part D sponsor must offer 

the beneficiary the ability to opt out of 

future calls regarding plan business. 

(c) Events with beneficiaries. Part D 

sponsors and their agent or brokers may 

hold educational events, marketing or 

sales events, and personal marketing 

appointments to meet with Medicare 

beneficiaries, either face-to-face or 

virtually. The requirements for each 

type of event are as follows: 

(1) Educational events must be 

advertised as such and be designed to 

generally inform beneficiaries about 

Medicare, including Medicare 

Advantage, Prescription Drug programs, 

or any other Medicare program. 

(i) At educational events, Part D 

sponsors and agents/brokers may not 

market specific Part D sponsors or 

benefits. 

(ii) Part D sponsors holding or 

participating in educational events may 

do any of the following: 

(A) Distribute communication 

materials. 

(B) Answer beneficiary initiated 

questions pertaining to Part D plans. 

(C) Set up future personal marketing 

appointments. 

(D) Distribute business cards. 

(E) Obtain beneficiary contact 

information, including Scope of 

Appointment forms. 

(iii) Part D sponsors holding or 

participating in educational events may 

not conduct sales or marketing 

presentations or distribute or accept 

plan applications. 

(iv) Part D sponsors may schedule 

appointments with residents of longterm care facilities (for example, nursing 

homes, assisted living facilities, board 

and care homes) upon a resident’s 

request. If a resident did not request an 

appointment, any visit by an agent or 

broker is prohibited as unsolicited doorto-door marketing. 

(2) Marketing or sales events are 

group events that fall within the 

definition of marketing at § 423.2260. 

(i) If a marketing event directly 

follows an educational event, the 

beneficiary must be made aware of the 

change and given the opportunity to 

leave prior to the marketing event 

beginning. 

(ii) Part D sponsors holding or 

participating in marketing events may 

do any of the following: 

(A) Provide marketing materials. 

(B) Distribute and accept plan 

applications. 

(C) Collect Scope of Appointment 

forms for future personal marketing 

appointments. 

(D) Conduct marketing presentations. 

(iii) Part D sponsors holding or 

participating in marketing events may 

not do any of the following: 


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(A) Require sign in sheets or require 

attendees to provide contact information 

as a prerequisite for attending an event. 

(B) Conduct activities, including 

health screenings, health surveys, or 

other activities that are used for or could 

be viewed as being used to target a 

subset of members (that is ‘‘cherrypicking’’). 

(C) Use information collected for 

raffles or drawings for any purpose 

other than raffles or drawings. 

(3) Personal marketing appointments 

are those appointments that are tailored 

to an individual or small group (for 

example, a married couple). Personal 

marketing appointments are not defined 

by the location. 

(i) Prior to the personal marketing 

appointment beginning, the Part D 

sponsor (or the agent or broker, as 

applicable) must agree upon and record 

the Scope of Appointment with the 

beneficiary(ies). 

(ii) Part D sponsors holding a personal 

marketing appointment may do any of 

the following: 

(A) Provide marketing materials. 

(B) Distribute and accept plan 

applications. 

(C) Conduct marketing presentations. 

(D) Review the individual needs of 

the beneficiary including, but not 

limited to, health care needs and 

history, commonly used medications, 

and financial concerns. 

(iii) Part D sponsors holding a 

personal marketing appointment may 

not do any of the following: 

(A) Market any health care related 

product during a marketing 

appointment beyond the scope agreed 

upon by the beneficiary, and 

documented by the plan, prior to the 

appointment. 

(B) Market additional health related 

lines of plan business not identified 

prior to an individual appointment 

without a separate scope of appointment 

identifying the additional lines of 

business to be discussed. 

(C) Market non-health related 

products such as annuities. 

■ 80. Section 423.2265 is added to read 

as follows: 

§ 423.2265 Websites. 

As required under § 423.128(d)(2), 

Part D sponsors must have a website. 

(a) General website requirements. (1) 

Part D sponsor websites must meet all 

of the following requirements: 

(i) Maintain current year contract 

content through December 31 of each 

year. 

(ii) Notify users when they will leave 

the Part D sponsor’s Medicare site. 

(iii) Include or provide access to (for 

example, through a hyperlink) 

applicable notices, statements, 

disclosures, or disclaimers with 

corresponding content. Overarching 

disclaimers, such as the Federal 

Contracting Statement, are not required 

on every page. 

(iv) Reflect the most current 

information within 30 days of any 

material change 

(v) Keep PDP content separate and 

distinct from other lines of business, 

including Medicare Supplemental 

Plans. 

(2) Part D sponsor websites may not 

do any of the following: 

(i) Require beneficiaries to enter any 

information other than zip code, county, 

or state for access to non-beneficiaryspecific website content. 

(ii) Provide links to foreign drug sales, 

including advertising links. 

(iii) State that the Part D sponsor is 

not responsible for the content of their 

social media pages or the website of any 

first tier, downstream, or related entity 

that provides information on behalf of 

the Part D sponsor. 

(b) Required content. A Part D 

sponsor’s websites must include the 

following content: 

(1) A toll-free customer service 

number, TTY number, and days and 

hours of operation. 

(2) A physical or Post Office Box 

address. 

(3) A PDF or copy of a printable 

pharmacy directory. 

(4) A searchable pharmacy directory. 

(5) A searchable formulary. 

(6) Information on enrollees’ and Part 

D sponsors’ rights and responsibilities 

upon disenrollment. Part D sponsors 

may either post this information or 

provide specific information on where it 

is located in the Evidence of Coverage 

together with a link to that document. 

(7) A description of and information 

on how to file a grievance, request an 

organization determination, and an 

appeal. 

(8) Prominently displayed link to the 

Medicare.gov electronic complaint. 

(9) A Notice of Privacy Practices as 

required under the HIPAA Privacy Rule 

(45 CFR 164.520). 

(10) Prescription Drug Transition 

Policy. 

(11) LIS Premium Summary Chart. 

(12) Prescription Drug Transition 

Policy. 

(13) A separate section or page about 

MTM programs providing the following: 

(i) Explanation of MTM program, 

including eligibility requirements, the 

purpose and benefits of MTM, how to 

obtain MTM service documents 

including the Medication list, that the 

service is free, and a summary of 

services. 

(ii) Information on how to obtain 

information about the MTM program, 

including how the member will know 

they are eligible and enrolled into the 

MTM program, the comprehensive 

medication review and targeted 

medication reviews, a description of 

how reviews are conducted and 

delivered, including time commitments 

and materials beneficiaries will receive. 

(c) Required posted materials. A Part 

D sponsor’s website must provide access 

to the following materials, in a printable 

format, within the timeframes specified 

in paragraphs (c)(1) and (2) of this 

section. 

(1) The following materials for each 

plan year must be posted on the website 

by October 15 prior to the beginning of 

the plan year: 

(i) Evidence of Coverage. 

(ii) Annual Notice of Change (for 

renewing plans). 

(iii) Summary of Benefits. 

(iv) Pharmacy Directory. 

(v) Formulary. 

(vi) Utilization Management Forms for 

physicians and enrollees. 

(2) The following materials must be 

posted on the website throughout the 

year and be updated as required: 

(i) Prior Authorization Forms for 

Physicians and Enrollees. 

(ii) Part D Model Coverage 

Determination and Redetermination 

Request Forms. 

(iii) Exception request forms for 

physicians (which must be posted by 

January 1 for new plans). 

(iv) CMS Star Ratings document, 

which must be posted within 21 days 

after its release on the Medicare Plan 

Finder. 

■ 81. Section 423.2266 is added to read 

as follows: 

§ 423.2266 Activities with healthcare 

providers or in the healthcare setting. 

(a) Where marketing is prohibited. 

The requirements in paragraphs (c) 

through (e) of this section apply to 

activities in the health care setting. 

Marketing activities and materials are 

not permitted in areas where care is 

being administered, including but not 

limited to the following: 

(1) Exam rooms. 

(2) Hospital patient rooms. 

(3) Treatment areas where patients 

interact with a provider and his/her 

clinical team and receive treatment 

(including such areas in dialysis 

treatment facilities). 

(4) Pharmacy counter areas. 

(b) Where marketing is permitted. 

Marketing activities and materials are 

permitted in common areas within the 

health care setting, including the 

following: 


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(1) Common entryways. 

(2) Vestibules. 

(3) Waiting rooms. 

(4) Hospital or nursing home 

cafeterias. 

(5) Community, recreational, or 

conference rooms. 

(c) Provider-initiated activities. 

Provider-initiated activities are 

activities conducted by a provider at the 

request of the patient, or as a matter of 

a course of treatment, and occur when 

meeting with the patient as part of the 

professional relationship between the 

provider and patient. Provider-initiated 

activities do not include activities 

conducted at the request of the Part D 

sponsor or pursuant to the network 

participation agreement between the 

Part D sponsor and the provider. 

Provider-initiated activities that meet 

this definition in this paragraph (c) fall 

outside of the definition of marketing in 

§ 423.2260. Permissible providerinitiated activities include: 

(1) Distributing unaltered, printed 

materials created by CMS, such as 

reports from Medicare Plan Finder, the 

‘‘Medicare & You’’ handbook, or 

‘‘Medicare Options Compare’’ (from 

https://www.medicare.gov) including in 

areas where care is delivered. 

(2) Providing the names of Part D 

sponsors with which they contract or 

participate or both. 

(3) Answering questions or discussing 

the merits of a Part D plan or plans, 

including cost sharing and benefit 

information including in areas where 

care is delivered. 

(4) Referring patients to other sources 

of information, such as State Health 

Insurance Assistance Program (SHIP) 

representatives, plan marketing 

representatives, State Medicaid Office, 

local Social Security Offices, CMS’ 

website at https://www.medicare.gov, or 

1–800–MEDICARE. 

(5) Referring patients to Part D 

marketing materials available in 

common areas. 

(6) Providing information and 

assistance in applying for the LIS. 

(7) Announcing new or continuing 

affiliations with Part D sponsors, once a 

contractual agreement is signed. 

Announcements may be made through 

any means of distribution. 

(d) Plan-initiated provider activities. 

Plan-initiated provider activities are 

those activities conducted by a provider 

at the request of a Part D sponsor. 

During a plan-initiated provider 

activity, the provider is acting on behalf 

of the Part D sponsor. For the purpose 

of plan-initiated activities, the Part D 

sponsor is responsible for compliance 

with all applicable regulatory 

requirements. 

(1) During plan-initiated provider 

activities, Part D sponsors must ensure 

that the provider does not: 

(i) Accept/collect scope of 

appointment forms. 

(ii) Accept Medicare enrollment 

applications. 

(iii) Make phone calls or direct, urge, 

or attempt to persuade their patients to 

enroll in a specific plan based on 

financial or any other interests of the 

provider. 

(iv) Mail marketing materials on 

behalf of a Part D sponsor. 

(v) Offer inducements to persuade 

patients to enroll with a particular Part 

D plan or sponsor. 

(vi) Conduct health screenings as a 

marketing activity. 

(vii) Distribute marketing materials or 

enrollment forms in areas where care is 

being delivered. 

(viii) Offer anything of value to 

induce enrollees to select the provider. 

(ix) Accept compensation from the 

Part D sponsor for any marketing or 

enrollment activities performed on 

behalf of the Part D sponsor. 

(2) During plan-initiated provider 

activities, the provider may do any of 

the following: 

(i) Make available, distribute, and 

display communications materials, 

including in areas where care is being 

delivered. 

(ii) Provide or make available 

marketing materials and enrollment 

forms in common areas. 

(e) Part D sponsor activities in the 

healthcare setting. Part D sponsor 

activities in the health care setting are 

those activities, including marketing 

activities that are conducted by Part D 

sponsor or on behalf of the Part D 

sponsor, or by any downstream entity, 

but not by a provider. All marketing 

must comply with the requirements in 

paragraphs (a) and (b) of this section. 

However, during Part D sponsor 

activities, the following is permitted: 

(1) Accepting and collect Scope of 

Appointment forms. 

(2) Accepting enrollment forms. 

(3) Making available, distributing, and 

displaying communications materials, 

including in areas where care is being 

delivered. 

■ 82. Section 423.2267 is added to read 

as follows: 

§ 423.2267 Required materials and 

content. 

For information CMS deems to be 

vital to the beneficiary, including 

information related to enrollment, 

benefits, health, and rights, the agency 

may develop materials or content that 

are either standardized or provided in a 

model form. Such materials and content 

are collectively referred to as required. 

(a) Standards for required materials 

and content. All required materials and 

content, regardless of categorization as 

standardized in paragraph (b) of this 

section or model in paragraph (c) of this 

section, must meet the following: 

(1) Be in a 12pt font, Times New 

Roman or equivalent. 

(2) For markets with a significant nonEnglish speaking population, be in the 

language of these individuals. 

Specifically, Part D sponsors must 

translate required materials into any 

non-English language that is the primary 

language of at least 5 percent of the 

individuals in a plan benefit package 

(PBP) service area. 

(3) Be provided to the beneficiary 

within CMS’s specified timeframes. 

(b) Standardized materials. 

Standardized materials and content are 

required materials and content that 

must be used in the form and manner 

provided by CMS. 

(1) When CMS issues standardized 

material or content, a Part D sponsor 

must use the document without 

alteration except for the following: 

(i) Populating variable fields. 

(ii) Correcting grammatical errors. 

(iii) Adding customer service phone 

numbers. 

(iv) Adding plan name, logo, or both. 

(v) Deleting content that does not 

pertain to the plan type (for example, 

removing MA language for a Part D 

plan). 

(vi) Adding the SMID. 

(vii) A Notice of Privacy Practices as 

required under the HIPAA Privacy Rule 

(45 CFR 164.520). 

(2) When CMS issues standardized 

content, Part D sponsors— 

(3) The Part D sponsor may develop 

accompanying language for 

standardized material or content, 

provided that language does not conflict 

with the standardized material or 

content. For example, CMS may issue 

standardized content associated with an 

appeal notification and Part D sponsor 

may draft a letter that includes the 

standardized content in the body of the 

letter; the remaining language in the 

letter is at the sponsor’s discretion, 

provided it does not conflict with the 

standardized content or other regulatory 

standards. 

(c) Model materials. Model materials 

and content are those required materials 

and content created by CMS as an 

example of how to convey beneficiary 

information. When drafting required 

materials or content based on CMS 

models, Part D sponsors: 

(1) Must accurately convey the vital 

information in the required material or 

content to the beneficiary, although the 

Part D sponsor is not required to use 


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CMS model materials or content 

verbatim; and 

(2) Must follow CMS’s specified order 

of content, when specified. 

(d) Delivery of required materials. Part 

D sponsors must mail required materials 

in hard copy or provide them 

electronically, following the 

requirements in paragraphs (d)(1) and 

(2) of this section. 

(1) For hard copy mailed materials, 

each enrollee must receive his or her 

own copy, except in cases of nonbeneficiary-specific material(s) where 

the Part D sponsor has determined 

multiple enrollees are living in the same 

household and it has reason to believe 

the enrollees are related. In that case, 

the Part D sponsor may mail one copy 

to the household. The Part D sponsor 

must provide all enrollees an opt-out 

process so the enrollees can each 

receive his or her own copy, instead of 

a copy to the household. Materials 

specific to an individual beneficiary 

must always be mailed to that 

individual. 

(2) Materials may be delivered 

electronically following the 

requirements in paragraphs (d)(2)(i) and 

(ii) of this section. 

(i) Without prior authorization from 

the enrollee, Part D sponsors may mail 

new and current enrollees a notice 

informing enrollees how to 

electronically access the following 

required materials: the Evidence of 

Coverage, Provider and Pharmacy 

Directories, and Formulary. The 

following requirements apply: 

(A) The Part D sponsor may mail one 

notice for all materials or multiple 

notices. 

(B) Notices for prospective year 

materials may not be mailed prior to 

September 1 of each year, but must be 

sent in time for an enrollee to access the 

specified materials by October 15 of 

each year. 

(C) The Part D sponsor may send the 

notice throughout the year to new 

enrollees. 

(D) The notice must include the 

website address to access the materials, 

the date the materials will be available 

if not currently available, and a phone 

number to request that hard copy 

materials be mailed. 

(E) The notice must provide the 

enrollee with the option to request 

hardcopy materials. Requests may be 

material specific, and must have the 

option of a one-time request or a 

permanent request that must stay in 

place until the enrollee chooses to 

receive electronic materials again. 

(F) Hard copies of requested materials 

must be sent within three business days 

of the request. 

(ii) With prior authorization from the 

enrollee, the Part D sponsor may 

provide any required material or content 

electronically. To do so, the Part D 

sponsor must do all of the following: 

(A) Obtain prior consent from the 

enrollee. The consent must specify both 

the media type and the specific 

materials being provided in that media 

type. 

(B) Provide instructions on how and 

when enrollees can access the materials. 

(C) Have a process through which an 

enrollee can request hard copies be 

mailed, providing the beneficiary with 

the option of a one-time request or a 

permanent request (which must stay in 

place until the enrollee chooses to 

receive electronic materials again), and 

with the option of requesting hard 

copies for all or a subset of materials. 

Hard copies must be mailed within 

three business days of the request. 

(D) Have a process for automatic 

mailing of hard copies when electronic 

versions or the chosen media type is 

undeliverable. 

(e) CMS required materials and 

content. The following are required 

materials that must be provided to 

current and prospective enrollees, as 

applicable, in the form and manner 

outlined in this section. Unless 

otherwise noted or instructed by CMS 

and subject to § 423.2263(a) of this 

chapter, required materials may be sent 

once a fully executed contract is in 

place, but no later than the due dates 

listed for each material in this section. 

(1) Evidence of Coverage (EOC). The 

EOC is a standardized communications 

material through which certain required 

information (under § 423.128(b)) must 

be provided annually and must be 

provided: 

(i) To current enrollees of plan by 

October 15, prior to the year to which 

the EOC applies. 

(ii) To new enrollees within 10 

calendar days from receipt of CMS 

confirmation of enrollment or by last 

day of month prior to effective date, 

whichever is later. 

(2) Part D explanation of benefits 

(EOB). The EOB is a model 

communications material through 

which plans must provide the 

information required under § 423.128(e). 

Part D sponsors must provide enrollees 

with an EOB no later than the end of the 

month following any month in which 

the enrollee utilized their prescription 

drug benefit. 

(3) Annual Notice of Change (ANOC). 

The ANOC is a standardized marketing 

material through which plans must 

provide the information required under 

§ 423.128(g)(2) annually. 

(i) Must send for enrollee receipt no 

later than September 30 of each year. 

(ii) Enrollees with an October 1, 

November 1, or December 1 effective 

date must receive within 10 calendar 

days from receipt of CMS confirmation 

of enrollment or by last day of month 

prior to effective date, whichever is 

later. 

(4) Pre-Enrollment Checklist (PECL). 

The PECL is a standardized 

communications material that plans 

must provide to prospective enrollees 

with the enrollment form so that the 

enrollees understand important plan 

benefits and rules. The PECL references 

information on the following: 

(i) The EOC. 

(ii) Provider directory. 

(iii) Pharmacy directory. 

(iv) Formulary. 

(v) Premiums/copayments/ 

coinsurance. 

(vi) Emergency/urgent coverage. 

(vii) Plan-type rules. 

(5) Summary of Benefits (SB). Part D 

sponsors must disseminate a summary 

of highly utilized coverage that include 

benefits and cost sharing to prospective 

enrollees, known as the SB. The SB is 

a model marketing material. It must be 

in a clear and accurate format. 

(i) The SB must be provided with an 

enrollment form as follows: 

(A) In hardcopy with a paper 

enrollment form. 

(B) For online enrollment, the SB 

must be made available electronically 

(for example, via a link) prior to the 

completion and submission of 

enrollment request. 

(C) For telephonic enrollment, the 

beneficiary must be verbally told where 

the SB can be accessed. 

(ii) The SB must include the following 

information: 

(A) Information on prescription drug 

expenses, including: 

(1) Monthly plan premium 

(2) Deductible, the initial coverage 

phase, coverage gap, and catastrophic 

coverage. 

(3) A statement that costs may differ 

based on pharmacy type or status (for 

example, preferred/non-preferred, mail 

order, long-term care (LTC) or home 

infusion, and 30- or 90-day supply), 

when applicable. 

(4) For dual eligible enrollees with 

differing levels of cost must state how 

cost sharing and benefits differ 

depending on the level of Medicaid 

eligibility. 

(B) Plan sponsors may describe or 

identify other health related benefits in 

the SB. 

(6) Enrollment/Election form. This is 

the model communications material 

through which plans must provide the 

information required under § 423.32(b). 


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(7) Enrollment Notice. This is a model 

communications material through 

which plans must provide the 

information required under § 423.32(d). 

(8) Disenrollment Notice. This is a 

model communications material 

through which plans must provide the 

information required under 

§ 423.36(b)(2). 

(9) Formulary. This is a model 

communications material through 

which Part D sponsors must provide 

information required under 

§ 423.128(b)(4). 

(i) Must be provided to current 

enrollees of plan by October 15 of each 

year. 

(ii) Must also provide to new 

enrollees within 10 calendar days from 

receipt of CMS confirmation of 

enrollment or by last day of month prior 

to effective date, whichever is later. 

(10) Low Income Subsidy (LIS) Notice. 

This is a model communications 

content through which Part D sponsors 

must notify potential enrollees of what 

their plan premium will be once they 

are eligible for Extra Help and receive 

the low-income subsidy. 

(11) Low Income Subsidy (LIS) Rider. 

This is a model communications 

material provided to all enrollees who 

qualify for Extra Help. In the LIS Rider, 

the Part D sponsors must convey how 

much help the beneficiary will receive 

in the benefit year toward their Part D 

premium, deductible, and copayments 

provide to all beneficiaries who qualify 

for Extra Help. 

(i) The LIS Rider must be provided at 

least once per year by September 30. 

(ii) The LIS Rider must be sent to 

enrollees who qualify for Extra Help or 

have a change in LIS levels within 30 

days of receiving notification from CMS. 

(12) Midyear Change Notification. 

This is a model communications 

material through which plans must 

provide a notice to enrollees when there 

is a midyear change in benefits or plan 

rules, under the following timelines: 

(i) Notices of changes in plan rules, 

unless otherwise addressed elsewhere 

in the regulation, must be provided 30 

days in advance. 

(ii) National Coverage Determination 

(NCD) changes announced or finalized 

less than 30 days before effective date, 

a notification is required as soon as 

possible. 

(iii) Midyear NCD or legislative 

changes must be provided no later than 

30 days after the NCD is announced or 

the legislative change is effective. 

(A) Plans may include the change in 

next plan mass mailing (for example, 

newsletter), provided it is within 30 

days. 

(B) The notice must also appear on 

the MA organization’s website. 

(13) Non-renewal Notice. This is a 

model communications material 

through which plans must provide the 

information required under § 423.507. 

(i) The Non-renewal Notice must be 

provided at least 90 calendar days 

before the date on which the 

nonrenewal is effective. For contracts 

ending on December 31, the notice must 

be dated October 2 to ensure national 

consistency in the application of 

Medigap Guaranteed Issue (GI) rights to 

all enrollees, except for those enrollees 

in Medicare-Medicaid Plans (MMPs) 

and special needs plans (SNPs). 

Information about non-renewals or 

service area reductions may not be 

released to the public, including the 

Non-renewal Notice in this section, 

until CMS provides notification to the 

plan. 

(ii) The Non-renewal Notice must do 

all of the following: 

(A) Inform the enrollee that the plan 

will no longer be offered and the date 

the plan will end. 

(B) Provide information about any 

applicable open enrollment periods or 

special election periods or both (for 

example, Medicare open enrollment, 

non-renewal special election period), 

including the last day the enrollee has 

to make a Medicare prescription drug 

plan selection. 

(C) Explain what the enrollee must do 

to continue receiving Medicare coverage 

and what will happen if the enrollee 

chooses to do nothing. 

(D) As required under 

§ 423.507(a)(2)(ii)(A), provide a CMSapproved written description of 

alternative MA plan, MA–PD plan, and 

PDP options available for obtaining 

qualified Medicare services within the 

beneficiary’s region in the enrollee’s 

notice. 

(E) Specify when coverage will start 

after a new Medicare plan is chosen. 

(F) List 1–800–MEDICARE contact 

information together with other 

organizations that may be able to assist 

with comparing plans (for example, 

SHIPs). 

(H) Include the Part D sponsor’s call 

center telephone number, TTY number, 

and hours and days of operation. 

(14) Part D Transition Letter. This is 

a model communications material that 

must be provided to the beneficiary 

when they receive a transition fill for a 

nonformulary drug. The Part D 

Transition Letter must be sent within 

three days of adjudication of temporary 

transition fill. 

(15) Pharmacy Directory. This is a 

model communications material 

through which Part D sponsors must 

provide the information required under 

§ 423.128. The pharmacy directory must 

meet all of the following: 

(i) Be provided to current enrollees by 

October 15 of the year prior to the 

applicable year. 

(ii) Be provided to new enrollees 

within 10 calendars days from receipt of 

CMS confirmation of enrollment or by 

last day of month prior to effective date, 

whichever is later. 

(iii) Be provided to current enrollees 

upon request, within three business 

days of the request. 

(iv) Be updated any time the Part D 

sponsor becomes aware of changes. 

(A) All updates to the online 

pharmacy directories must be 

completed within 30 days of receiving 

information requiring update. 

(B)(1) Updates to hardcopy provider 

directories must be completed within 30 

days. 

(2) Hardcopy directories that include 

separate updates via addenda are 

considered up-to-date. 

(16) Prescription transfer letter. This 

is a model communications material 

that must be sent when a Part D sponsor 

requests permission from an enrollee to 

fill a prescription at a different network 

pharmacy than the one currently being 

used by enrollee. 

(17) Star Ratings Document. This is a 

standardized marketing material 

through which Star Ratings information 

is conveyed to prospective enrollees. 

(i) The Star Ratings Document is 

generated through HPMS. 

(ii) The Star Ratings Document must 

be provided with an enrollment form as 

follows: 

(A) In hardcopy with a paper 

enrollment form. 

(B) For online enrollment, made 

available electronically (for example, via 

a link) prior to the completion and 

submission of enrollment request. 

(C) For telephonic enrollment, the 

beneficiary must be verbally told where 

they can access the Star Ratings 

Document. 

(iii) New Part D sponsors that have no 

Star Ratings are not required to provide 

the Star Ratings Document until the 

following contract year. 

(iv) Updated Star Ratings must be 

used within 21 calendar days of release 

of updated information on Medicare 

Plan Finder. 

(v) Updated Star Ratings must not be 

used until CMS releases Star Ratings on 

Medicare Plan Finder. 

(18) Coverage Determination Notices. 

This is a model communications 

material through which plans must 

provide the information under 

§ 423.568. 

(19) Excluded Provider Notices. This 

is a model communications material 


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through which plans must notify 

enrollees when a provider they use has 

been excluded from participating in the 

Medicare program based on an OIG 

exclusion or the CMS preclusion list. 

(20) Notice of Denial of Medicare 

Prescription Drug Coverage. This is a 

standardized material used to convey 

detailed descriptions of denied drug 

coverage and appeal rights. 

(21) Medicare Prescription Drug 

Coverage and Your Rights. This is a 

standardized communications material 

used to convey a beneficiary’s appeal 

rights when a drug cannot be filled at 

point-of-sale. 

(22) Medicare Part D Coverage 

Determination Request Form. This is a 

model communications material used to 

collect additional information from a 

prescriber. 

(23) Request for Additional 

Information. This is a standardized 

communications material used by the 

Part D sponsor to request a beneficiary 

obtain additional information from the 

prescriber regarding a beneficiary’s 

exception request. 

(24) Notice of Right to an Expedited 

Grievance. This is a model 

communications material used to 

convey a Medicare beneficiary’s rights 

to request that a decision be made on a 

grievance or appeal within a shorter 

timeframe. 

(25) Notice of Inquiry. This is a model 

communications material from a 

prescription drug plan informing a 

beneficiary if a drug is covered by the 

formulary. 

(26) Notice of Case Status. This is a 

model communications material used to 

inform a beneficiary of the denial of an 

appeal and additional appeal rights. 

(27) Request for Reconsideration of 

Medicare Prescription Drug Denial. This 

is a model communications material 

used to inform the beneficiary of rights 

to an independent review of a Part D 

sponsor’s decision. 

(28) Notice of Redetermination. This 

is a model communications material 

used to convey instructions for 

requesting an appeal of an adverse 

coverage determination. 

(29) LEP Reconsideration Request 

Form. This is a model communication 

used to request an appeal of a decision 

on an LEP by the independent review 

entity. 

(30) Request for Administrative Law 

Judge (ALJ) Hearing or Review of 

Dismissal. This is a model 

communication used by an enrollee to 

request a hearing by the ALJ or a review 

of the IRE dismissal. 

(31) Appointment of Representative 

(AOR). This is a standardized material 

used to assign an individual to act on 

behalf of a beneficiary for the purpose 

of an appeal, grievance, or coverage 

determination. 

(32) Federal Contracting Statement. 

This is model content through which 

plans must convey that they have a 

contract with Medicare and that 

enrollment in the plan depends on 

contract renewal. 

(i) The Federal Contracting Statement 

must include all of the following: 

(A) Legal or marketing name of the 

organization. 

(B) Type of plan (for example PDP). 

(C) A statement that the organization 

has a contract with Medicare (when 

applicable, Part D sponsors may 

incorporate a statement that the 

organization has a contract with the 

State/Medicaid program). 

(D) A statement that enrollment 

depends on contract renewal. 

(ii) Part D sponsors must include the 

Federal Contracting Statement on all 

marketing materials with the exception 

of the following: 

(A) Banner and banner-like 

advertisements. 

(B) Outdoor advertisements. 

(C) Text messages. 

(D) Social media. 

(E) Envelopes 

(33) Star Ratings Disclaimer. This is 

model content through which plans 

must: 

(i) Convey that plan sponsors are 

evaluated yearly by Medicare 

(ii) Convey that the ratings are based 

on a 5-star rating system 

(iii) Include the model content in 

disclaimer form or within the material 

whenever Star Ratings are mentioned in 

marketing materials, with the exception 

of when Star Ratings are published on 

small objects (that is, a give-away items 

such as a pens or rulers). 

(34) Accommodations Disclaimer. 

This is model content through which 

plans must: 

(i) Convey that accommodations for 

persons with special needs is available 

(ii) Provide a telephone number and 

TTY number 

(iii) Include the model content in 

disclaimer form or within the body of 

the material on any advertisement of 

invitation to all events as described 

under § 423.2264(c). 

(35) Mailing Statements. This is 

standardized content. It consists of 

statements on envelopes that Part D 

sponsor must include when mailing 

information to current members, as 

follows: 

(i) Part D sponsors must include the 

following statement when mailing 

information about the enrollee’s current 

plan: ‘‘Important [Insert Plan Name] 

information.’’ 

(ii) Part D sponsors must include the 

following statement when mailing 

health and wellness information 

‘‘Health and wellness or prevention 

information.’’ 

(iii) The Part D sponsor must include 

the plan name; however, if the plan 

name is elsewhere on the envelope, the 

plan name does not need to be repeated 

in the disclaimer. 

(iv) Delegated or sub-contracted 

entities and downstream entities that 

conduct mailings on behalf of a multiple 

Part D sponsors must also comply with 

this requirement, however, they do not 

have to include a plan name. 

(36) Promotional Give-Away 

Disclaimer. This is model content. The 

disclaimer consists of a statement that 

must make clear that there is no 

obligation to enroll in a plan, and must 

be included when offering a 

promotional give-away such as a 

drawing, prizes, or a free gift. 

(37) Provider Co-Branded Material 

Disclaimer. This is model content 

through which Part D sponsors must: 

(i) Convey, as applicable, that other 

pharmacies, physicians or providers are 

available in the plan’s network. 

(ii) Include the model content in 

disclaimer form or within the material 

whenever co-branding relationships 

with network provider are mentioned. 

§ 423.2268 [Removed] 

■ 83. Section 423.2268 is removed. 

■ 84. Section 423.2274 is revised to read 

as follows: 

§ 423.2274 Agent, broker, and other third 

party requirements. 

If a Part D sponsor uses agents and 

brokers to sell its Medicare Part D plans, 

the requirements in paragraphs (a) 

through (e) of this section are 

applicable. If a Part D sponsor makes 

payments to third parties, the 

requirements in paragraph (f) of this 

section are applicable. 

(a) Definitions. For purposes of this 

section, the following definitions are 

applicable: 

Compensation. (i) Includes monetary 

or non-monetary remuneration of any 

kind relating to the sale or renewal of a 

plan or product offered by a Part D 

sponsor including, but not limited to the 

following: 

(A) Commissions. 

(B) Bonuses. 

(C) Gifts. 

(D) Prizes or Awards. 

(ii) Does not include any of the 

following: 

(A) Payment of fees to comply with 

State appointment laws, training, 

certification, and testing costs. 

(B) Reimbursement for mileage to, and 

from, appointments with beneficiaries. 


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(C) Reimbursement for actual costs 

associated with beneficiary sales 

appointments such as venue rent, 

snacks, and materials. 

Fair market value (FMV) means, for 

purposes of evaluating agent/broker 

compensation under the requirements of 

this section only, the amount that CMS 

determines could reasonably be 

expected to be paid for an enrollment or 

continued enrollment into a Part D plan. 

Beginning January 1, 2021, the FMV is 

$81. For subsequent years, FMV is 

calculated by adding the current year 

FMV and the product of the current year 

FMV and the Annual Percentage 

Increase for Part D, which is published 

for each year in the rate announcement 

issued pursuant to § 422.312 of this 

chapter. 

Initial enrollment year means the first 

year that a beneficiary is enrolled in a 

plan versus subsequent years (c.f., 

renewal year) that a beneficiary remains 

enrolled in a plan. 

Like plan type means one of the 

following: 

(i) PDP replaced with another PDP. 

(ii) MA or MA–PD replaced with 

another MA or MA–PD. 

(iii) Cost plan replaced with another 

cost plan. 

Plan year and enrollment year mean 

the year beginning January 1 and ending 

December 31. 

Renewal year means all years 

following the initial enrollment year in 

the same plan or in different plan that 

is a like plan type. 

Unlike plan type means one of the 

following: 

(i) An MA or MA–PD plan to a PDP 

or Section 1876 Cost Plan. 

(ii) A PDP to a Section 1876 Cost Plan 

or an MA or MA–PD plan. 

(iii) A Section 1876 Cost Plan to an 

MA or MA–PD plan or PDP. 

(b) Agent/broker requirements. Agents 

and brokers who represent Part D 

sponsors must follow the requirements 

in paragraphs (b)(1) through (3) of this 

section. Representation includes selling 

products (including Medicare 

Advantage plans, Medicare AdvantagePrescription Drug plans, Medicare 

Prescription Drug plans, and section 

1876 Cost plans) as well as outreach to 

existing or potential beneficiaries and 

answering or potentially answering 

questions from existing or potential 

beneficiaries. 

(1) Be licensed and appointed under 

State law (if required under applicable 

State law). 

(2) Be trained and tested annually as 

required under paragraph (c)(4) of this 

section, and achieve an 85 percent or 

higher on all forms of testing. 

(3) Secure and document a Scope of 

Appointment prior to meeting with 

potential enrollees. 

(c) Part D sponsor oversight. Part D 

sponsors must oversee first tier, 

downstream, and related entities that 

represent Part D sponsor to ensure 

agents and brokers abide by all 

applicable State and Federal laws, 

regulations, and requirements. Part D 

sponsors must do all of the following: 

(1) As required under applicable State 

law, employ as marketing 

representatives only individuals who 

are licensed by the State to conduct 

marketing (as defined in this subpart) of 

health insurance in that State, and 

whom the Part D sponsor has informed 

that State it has appointed, consistent 

with the appointment process for agents 

and brokers provided for under State 

law. 

(2) As required under applicable State 

law, report the termination of an agent 

or broker to the State and the reason for 

termination if required by state law. 

(3) Report to CMS all enrollments 

made by unlicensed agents or brokers 

and for-cause terminations of agents or 

brokers. 

(4) On an annual basis, provide 

training and testing to agents and 

brokers on Medicare rules and 

regulations, the plan products that 

agents and brokers will sell including 

any details specific to each plan 

product, and relevant State and Federal 

requirements. 

(5) On an annual basis by the last 

Friday in July, report to CMS whether 

the Part D sponsor intends to use 

employed, captive, or independent 

agents or brokers in the upcoming plan 

year and the specific rates or range of 

rates the plan will pay independent 

agents and brokers. Following the 

reporting deadline, Part D sponsor may 

not change their decisions related to 

agent or broker type, or their 

compensation rates and ranges, until the 

next plan year. 

(6) On an annual basis by October 1, 

have in place full compensation 

structures for the following plan year. 

The structure must include details on 

compensation dissemination, including 

specifying payment amounts for initial 

enrollment year and renewal year 

compensation. 

(7) Submit agent or broker marketing 

materials to CMS through HPMS prior 

to use, following the requirements for 

marketing materials in this subpart. 

(8) Ensure beneficiaries are not 

charged marketing consulting fees when 

considering enrollment in Part D plans. 

(9) Establish and maintain a system 

for confirming that: 

(i) Beneficiaries enrolled by agents or 

brokers understand the product, 

including the rules applicable under the 

plan. 

(ii) Agents and brokers appropriately 

complete Scope of Appointment records 

for all marketing appointments 

(including telephonic and walk-in). 

(10) Demonstrate that marketing 

resources are allocated to marketing to 

the disabled Medicare population as 

well as to Medicare beneficiaries age 65 

and over. 

(11) Must comply with State requests 

for information about the performance 

of a licensed agent or broker as part of 

a state investigation into the 

individual’s conduct. CMS will 

establish and maintain a memorandum 

of understanding (MOU) to share 

compliance and oversight information 

with States that agree to the MOU. 

(d) Compensation requirements. Part 

D sponsors must ensure they meet the 

requirements in paragraphs (d)(1) 

through (5) of this section in order to 

pay compensation. These compensation 

requirements only apply to independent 

agents and brokers. 

(1) General rules. (i) MA organizations 

may only pay agents or brokers who 

meet the requirements in paragraph (b) 

of this section. 

(ii) Part D sponsors may determine, 

through their contracts, the amount of 

compensation to be paid, provided it 

does not exceed limitations outlined in 

this section. 

(iii) Part D sponsors may determine 

their payment schedule (for example, 

monthly or quarterly). Payments 

(including payments for AEP 

enrollments) must be made during the 

year of the beneficiary’s enrollment. 

(iv) Part D sponsors may only pay 

compensation for the number of months 

a member is enrolled. 

(2) Initial enrollment year 

compensation. For each enrollment in 

an initial enrollment year, Part D 

sponsors may pay compensation at or 

below FMV. 

(i) Part D sponsors may pay either a 

full or pro-rated initial enrollment year 

compensation for: 

(A) A beneficiary’s first year of 

enrollment in any plan; or 

(B) A beneficiary’s move from an 

employer group plan to a non-employer 

group plan (either within the same 

parent organization or between parent 

organizations). 

(ii) Part D sponsors must pay prorated initial enrollment year 

compensation for: 

(A) A beneficiary’s plan change(s) 

during their initial enrollment year. 

(B) A beneficiary’s selection of an 

‘‘unlike plan type’’ change. In that case, 


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the new plan would only pay the 

months that the beneficiary is enrolled, 

and the previous plan would recoup the 

months that the beneficiary was not in 

the plan. 

(3) Renewal compensation. For each 

enrollment in a renewal year, Part D 

sponsors may pay compensation at an 

amount up to 50 percent of FMV. 

(i) Part D sponsors may pay 

compensation for a renewal year: 

(A) In any year following the initial 

enrollment year the beneficiary remains 

in the same plan; or 

(B) When a beneficiary enrolls in a 

new ‘‘like plan type’’. 

(ii) [Reserved] 

(4) Other compensation scenarios. (i) 

When a beneficiary enrolls in a PDP, the 

Part D sponsor may pay only the PDP 

compensation (and not compensation 

for MA enrollment under § 422.2274 of 

this chapter). 

(ii) When a beneficiary enrolls in both 

a section 1876 Cost Plan and a standalone PDP, the 1876 Cost Plan sponsor 

may pay compensation for the cost plan 

enrollment and the Part D sponsor must 

pay compensation for the Part D 

enrollment. 

(iii) When a beneficiary enrolls in a 

MA-only plan and a PDP, the MA plan 

may pay for the MA plan enrollment 

and the Part D sponsor may pay for the 

PDP enrollment. 

(5) Additional compensation, 

payment, and compensation recovery 

requirements (Charge-backs). (i) Part D 

sponsors must retroactively pay or 

recoup funds for retroactive beneficiary 

changes for the current and previous 

calendar years. Part D sponsors may 

choose to recoup or pay compensation 

for years prior to the previous calendar 

year, but they must do both (recoup 

amounts owed and pay amounts due) 

during the same year. 

(ii) Compensation recovery is required 

when: 

(A) A beneficiary makes any plan 

change (regardless of the parent 

organization) within the first three 

months of enrollment (known as rapid 

disenrollment), except as provided in 

paragraph (d)(5)(iii) of this section. 

(B) Any other time period a 

beneficiary is not enrolled in a plan, but 

the plan paid compensation based on 

that time period. 

(iii) Rapid disenrollment 

compensation recovery does not apply 

when: 

(A) A beneficiary enrolls effective 

October 1, November 1, or December 1 

and subsequently uses the Annual 

Election Period to change plans for an 

effective date of January 1. 

(B) A beneficiary’s enrollment change 

is not in the best interests of the 

Medicare program, including for the 

following reasons: 

(1) Other creditable coverage (for 

example, an employer plan). 

(2) Moving into or out of an 

institution. 

(3) Gain or loss of employer/union 

sponsored coverage. 

(4) Plan termination, non-renewal, or 

CMS imposed sanction. 

(5) To coordinate with Part D 

enrollment periods or the State 

Pharmaceutical Assistance Program. 

(6) Becoming LIS or dually eligible for 

Medicare and Medicaid. 

(7) Qualifying for another plan based 

on special needs. 

(8) Due to an auto, facilitated, or 

passive enrollment. 

(9) Death. 

(10) Moving out of the service area. 

(11) Non-payment of premium. 

(12) Loss of entitlement or retroactive 

notice of entitlement. 

(13) Moving into a 5-star plan. 

(14) Moving from an LPI plan into a 

plan with three or more stars. 

(iv)(A) When rapid disenrollment 

compensation recovery applies, the 

entire compensation must be recovered. 

(B) For other compensation recovery, 

plans must recover a pro-rated amount 

of compensation (whether paid for an 

initial enrollment year or renewal year) 

from an agent or broker equal to the 

number of months not enrolled. 

(1) If a plan has paid full initial 

compensation, and the enrollee 

disenrolls prior to the end of the 

enrollment year, the total number of 

months not enrolled (including months 

prior to the effective date of enrollment) 

must be recovered from the agent or 

broker. 

(2) Example: A beneficiary enrolls 

upon turning 65 effective April 1 and 

disenrolls September 30 of the same 

year. The plan paid full initial 

enrollment year compensation. 

Recovery is equal to 6/12ths of the 

initial enrollment year compensation 

(for January through March and October 

through December). 

(e) Payments other than 

compensation (administrative 

payments). (1) Payments made for 

services other than enrollment of 

beneficiaries (for example, training, 

customer service, agent recruitment, 

operational overhead, or assistance with 

completion of health risk assessments) 

must not exceed the value of those 

services in the marketplace. 

(2) Administrative payments can be 

based on enrollment provided payments 

are at or below the value of those 

services in the marketplace. 

(f) Payments for referrals. Payments 

may be made to individuals for the 

referral (including a recommendation, 

provision, or other means of referring 

beneficiaries), recommendation, 

provision, or other means of referring 

beneficiaries to an agent, broker or other 

entity for potential enrollment into a 

plan. The payment may not exceed $100 

for a referral into an MA or MA–PD plan 

and $25 for a referral into a PDP plan. 

■ 85. Section 423.2305 is amended by 

revising the definition for ‘‘Applicable 

discount’’ to read as follows. 

§ 423.2305 Definitions. 

* * * * * 

Applicable discount means 50 percent 

or, with respect to a plan year after plan 

year 2018, 70 percent of the portion of 

the negotiated price (as defined in this 

section) of the applicable drug of a 

manufacturer that falls within the 

coverage gap and that remains after such 

negotiated price is reduced by any 

supplemental benefits that are available. 

* * * * * 

PART 455—PROGRAM INTEGRITY: 

MEDICAID 

■ 86. The authority citation for part 455 

continues to read as follows: 

Authority: 42 U.S.C. 1302. 

■ 87. Section 455.2 is amended by— 

■ a. In the definition of ‘‘Credible 

allegation of fraud,’’ revising paragraph 

(1); and 

■ b. Adding the definition of ‘‘Fraud 

hotline tip’’ in alphabetical order. 

The revision and addition read as 

follows: 

§ 455.2 Definitions. 

* * * * * 

Credible allegation of fraud. * * * 

(1) Fraud hotline tips verified by 

further evidence. 

* * * * * 

Fraud hotline tip. A fraud hotline tip 

is a complaint or other communications 

that are submitted through a fraud 

reporting phone number or a website 

intended for the same purpose, such as 

the Federal Government’s HHS OIG 

Hotline or a health plan’s fraud hotline. 

* * * * * 

PART 460—PROGRAMS OF ALLINCLUSIVE CARE FOR THE ELDERLY 

(PACE) 

■ 88. The authority citation for part 460 

continues to read as follows: 

Authority: 42 U.S.C. 1302, 1395, 

1395eee(f), and 1396u–4(f). 

■ 89. Section 460.6 is amended by 

revising the definition of ‘‘Services’’ to 

read as follows: 


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§ 460.6 Definitions. 

* * * * * 

Service, as used in this part, means all 

services that could be required under 

§ 460.92, including items and drugs. 

* * * * * 

■ 90. Section 460.56 is added to subpart 

D to read as follows: 

§ 460.56 Procedures for imposing 

sanctions and civil money penalties. 

CMS provides notice and a right to 

request a hearing according to the 

procedures set forth in either of the 

following: 

(a) Section 422.756(a) and (b) of this 

chapter if CMS imposes a suspension of 

enrollment or payment under § 460.42 

or § 460.48(b). 

(b) Section 422.756(e)(2)(v) of this 

chapter if CMS imposes civil money 

penalties under § 460.46. 

■ 91. Section 460.92 is revised to read 

as follows: 

§ 460.92 Required services. 

(a) The PACE benefit package for all 

participants, regardless of the source of 

payment, must include the following: 

(1) All Medicare-covered services. 

(2) All Medicaid-covered services, as 

specified in the State’s approved 

Medicaid plan. 

(3) Other services determined 

necessary by the interdisciplinary team 

to improve and maintain the 

participant’s overall health status. 

(b) Decisions by the interdisciplinary 

team to provide or deny services under 

paragraph (a) of this section must be 

based on an evaluation of the 

participant that takes into account: 

(1) The participant’s current medical, 

physical, emotional, and social needs; 

and 

(2) Current clinical practice 

guidelines and professional standards of 

care applicable to the particular service. 

§ 460.96 [Amended] 

■ 92. Section 460.96 is amended by— 

■ a. Removing paragraphs (a) and (b); 

and 

■ b. Redesignating paragraphs (c) 

through (e) as paragraphs (a) through (c). 

■ 93. Section 460.98 is amended by— 

■ a. Revising paragraph (a); 

■ b. Adding a sentence to the end of 

paragraph (b)(1); and 

■ c. Adding paragraphs (b)(4) and (5). 

The revision and additions read as 

follows: 

§ 460.98 Service delivery. 

(a) Access to services. A PACE 

organization is responsible for providing 

care that meets the needs of each 

participant across all care settings, 24 

hours a day, every day of the year, and 

must establish and implement a written 

plan to ensure that care is appropriately 

furnished. 

(b) * * * 

(1) * * * These services must be 

furnished in accordance with 

§ 460.70(a). 

* * * * * 

(4) Services must be provided as 

expeditiously as the participant’s health 

condition requires, taking into account 

the participant’s medical, physical, 

emotional, and social needs. 

(5) The PACE organization must 

document, track and monitor the 

provision of services across all care 

settings in order to ensure the 

interdisciplinary team remains alert to 

the participant’s medical, physical, 

emotional, and social needs regardless 

of whether services are formally 

incorporated into the participant’s plan 

of care. 

* * * * * 

■ 94. Section 460.102 is amended by 

revising paragraphs (d)(1) and (d)(2)(ii) 

to read as follows: 

§ 460.102 Interdisciplinary team. 

* * * * * 

(d) * * * 

(1) The interdisciplinary team is 

responsible for the following: 

(i) The initial assessment, periodic 

reassessments, plan of care, and 

coordination of 24-hour care delivery. 

(ii) Documenting all 

recommendations for care or services 

and the reason(s) for not approving or 

providing recommended care or 

services, if applicable, in accordance 

with § 460.210(b). 

(2) * * * 

(ii) Remaining alert to pertinent input 

from any individual with direct 

knowledge of or contact with the 

participant, including the following: 

(A) Other team members. 

(B) Participants. 

(C) Caregivers. 

(D) Employees. 

(E) Contractors. 

(F) Specialists. 

(G) Designated representatives. 

* * * * * 

■ 95. Section 460.104 is amended by 

revising paragraph (d)(2) to read as 

follows: 

§ 460.104 Participant assessment. 

* * * * * 

(d) * * * 

(2) In response to a service 

determination request. In accordance 

with § 460.121(h), the PACE 

organization must conduct an in-person 

reassessment if it expects to deny or 

partially deny a service determination 

request, and may conduct reassessments 

as determined necessary for approved 

services. 

* * * * * 

■ 96. Section 460.112 is amended by— 

■ a. Adding paragraph (b)(4); 

■ b. Redesignating paragraph (c)(3) as 

paragraph (c)(5); and 

■ c. Adding new paragraphs (c)(3) and 

(4). 

The additions read as follows: 

§ 460.112 Specific rights to which a 

participant is entitled. 

* * * * * 

(b) * * * 

(4) To contact 1–800–MEDICARE for 

information and assistance, including to 

make a complaint related to the quality 

of care or the delivery of a service. 

(c) * * * 

(3) To have reasonable and timely 

access to specialists as indicated by the 

participant’s health condition and 

consistent with current clinical practice 

guidelines. 

(4) To receive necessary care in all 

care settings, up to and including 

placement in a long-term care facility 

when the PACE organization can no 

longer provide the services necessary to 

maintain the participant safely in the 

community. 

* * * * * 

■ 97. Section 460.121 is added to read 

as follows: 

§ 460.121 Service determination process. 

(a) Written procedures. Each PACE 

organization must have formal written 

procedures for identifying and 

processing service determination 

requests in accordance with the 

requirements of this Part. 

(b) What is a service determination 

request—(1) Requests that constitute a 

service determination request. Except as 

provided in paragraph (b)(2) of this 

section, the following requests 

constitute service determination 

requests: 

(i) A request to initiate a service. 

(ii) A request to modify an existing 

service, including to increase, reduce, 

eliminate, or otherwise change a service. 

(iii) A request to continue coverage of 

a service that the PACE organization is 

recommending be discontinued or 

reduced. 

(2) Requests that do not constitute a 

service determination request. Requests 

to initiate, modify, or continue a service 

do not constitute a service 

determination request if the request is 

made prior to completing the 

development of the initial plan of care. 

(c) Who can make a service 

determination request. Any of the 


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following individuals can make a 

service determination request: 

(1) The participant. 

(2) The participant’s designated 

representative. 

(3) The participant’s caregiver. 

(d) Method for making a service 

determination request. An individual 

may make a service determination 

request as follows: 

(1) Either orally or in writing. 

(2) To any employee or contractor of 

the PACE organization that provides 

direct care to a participant in the 

participant’s residence, the PACE 

center, or while transporting 

participants. 

(e) Processing a service determination 

request. (1) Except as provided in 

paragraph (e)(2) of this section, the 

PACE organization must bring a service 

determination request to the 

interdisciplinary team as expeditiously 

as the participant’s condition requires, 

but no later than 3 calendar days from 

the time the request is made. 

(2) If a member of the 

interdisciplinary team is able to approve 

the service determination request in full 

at the time the request is made, the 

PACE organization— 

(i) Must fulfill all of the following: 

(A) Notice of the decision to approve 

a service determination request 

requirements specified in paragraph 

(j)(1) of this section. 

(B) Effectuation requirements 

specified in paragraph (k) of this 

section. 

(C) Recordkeeping requirements 

specified in paragraph (m) of this 

section. 

(ii) Is not required to process the 

service determination request in 

accordance with paragraphs (f) through 

(i), (j)(2), and (l) of this section. 

(f) Who must review a service 

determination request. The full 

interdisciplinary team must review and 

discuss each service determination 

request and decide to approve, deny, or 

partially deny the request based on that 

review. 

(g) Interdisciplinary team decision 

making. The interdisciplinary team 

must consider all relevant information 

when evaluating a service determination 

request, including, but not limited to, 

the findings and results of any 

reassessments required in paragraph (h) 

of this section, as well as the criteria 

specified in § 460.92(b). 

(h) Reassessments in response to a 

service determination request. (1) If the 

interdisciplinary team expects to deny 

or partially deny a service 

determination request, the appropriate 

members of the interdisciplinary team, 

as identified by the interdisciplinary 

team, must conduct an in-person 

reassessment before the 

interdisciplinary team makes a final 

decision. The team members performing 

the reassessment must evaluate whether 

the requested service is necessary to 

meet the participant’s medical, physical, 

emotional, and social needs. 

(2) The interdisciplinary team may 

conduct a reassessment prior to 

approving a service determination 

request, either in-person or through the 

use of remote technology, if the team 

determines that a reassessment is 

necessary. 

(i) Notification timeframe. Except as 

provided in paragraph (i)(1) of this 

section, when the interdisciplinary team 

receives a service determination request, 

it must make its decision and notify the 

participant or their designated 

representative of its decision as 

expeditiously as the participant’s 

condition requires, but no later than 3 

calendar days after the date the 

interdisciplinary team receives the 

request. 

(1) Extensions. The interdisciplinary 

team may extend the timeframe for 

review and notification by up to 5 

calendar days if either of the following 

occur: 

(i) The participant or other requestor 

listed in paragraph (c)(2) or (3) of this 

section requests the extension. 

(ii) The extension is in the 

participant’s interest because the 

interdisciplinary team needs additional 

information from an individual not 

directly employed by the PACE 

organization that may change the 

interdisciplinary team’s decision to 

deny a service. The interdisciplinary 

team must document the circumstances 

that led to the extension and 

demonstrate how the extension is in the 

participant’s best interest. 

(2) Notice of extension. When the 

interdisciplinary team extends the 

timeframe, it must notify the participant 

or their designated representative in 

writing. The notice must explain the 

reason(s) for the delay and must be 

issued as expeditiously as the 

participant’s condition requires, but no 

later than 24 hours after the IDT decides 

to extend the timeframe. 

(j) Notification requirements—(1) 

Notice of decisions to approve a service 

determination request. If the 

interdisciplinary team makes a 

determination to approve a service 

determination request, it must provide 

the participant or the designated 

representative either oral or written 

notice of the determination. Notice of 

any decision to approve a service 

determination request must explain the 

conditions of the approval in 

understandable language, including 

when the participant may expect to 

receive the approved service. 

(2) Notice of decisions to deny a 

service determination request. If the 

interdisciplinary team decides to deny 

or partially deny a service, it must 

provide the participant or the 

designated representative both oral and 

written notice of the determination. 

Notice of any denial must— 

(i) State the specific reason(s) for the 

denial, including why the service is not 

necessary to maintain or improve the 

participant’s overall health status, 

taking into account the participant’s 

medical, physical, emotional, and social 

needs, and the results of the 

reassessment(s) in understandable 

language. 

(ii) Inform the participant or 

designated representative of his or her 

right to appeal the decision under 

§ 460.122. 

(iii) Describe the standard and 

expedited appeals processes, including 

the right to, and conditions for, 

obtaining expedited consideration of an 

appeal of a denial of services as 

specified in § 460.122. 

(iv) For a Medicaid participant, 

inform the participant of both of the 

following, as specified in 

§ 460.122(e)(1): 

(A) His or her right to continue 

receiving disputed services during the 

appeals process until issuance of the 

final determination. 

(B) The conditions for continuing to 

receive disputed services. 

(k) Effectuation requirements. If the 

interdisciplinary team approves a 

service determination request, in whole 

or in part, the PACE organization must 

provide the approved service as 

expeditiously as the participant’s 

condition requires, taking into account 

the participant’s medical, physical, 

emotional, and social needs. The 

interdisciplinary team must explain 

when the participant may expect to 

receive the service in accordance with 

paragraph (j)(1) of this section. 

(l) Effect of failure to meet the 

processing timeframes. If the 

interdisciplinary team fails to provide 

the participant with timely notice of the 

resolution of the request or does not 

furnish the services required by the 

revised plan of care, this failure 

constitutes an adverse decision, and the 

participant’s request must be 

automatically processed by the PACE 

organization as an appeal in accordance 

with § 460.122. 

(m) Recordkeeping. The PACE 

organization must establish and 

implement a process to document, track, 

and maintain records related to all 


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6134 Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations 

processing requirements for service 

determination requests received both 

orally and in writing. These records 

must be available to the 

interdisciplinary team to ensure that all 

members remain alert to pertinent 

participant information. 

■ 98. Section 460.122 is amended by— 

■ a. Revising the introductory text and 

paragraphs (b) and (c)(1), (2), and (4); 

■ b. Redesignating paragraphs (c)(5) and 

(6) as paragraphs (c)(6) and (7), 

respectively; 

■ c. Adding a new paragraph (c)(5); 

■ d. Revising paragraphs (d), (g) and (h); 

The revisions and additions read as 

follows: 

§ 460.122 PACE organization’s appeals 

process. 

For purposes of this section, an 

appeal is a participant’s action taken 

with respect to the PACE organization’s 

noncoverage of, or nonpayment for, a 

service including denials, reductions, or 

termination of services. A request to 

initiate, modify or continue a service 

must first be processed as a service 

determination request under § 460.121 

before the PACE organization can 

process an appeal under this section. 

* * * * * 

(b) Notification of participants. Upon 

enrollment, at least annually thereafter, 

and whenever the interdisciplinary 

team denies a service determination 

request or request for payment, the 

PACE organization must give a 

participant written information on the 

appeals process. 

(c) * * * 

(1) Timely preparation and processing 

of a written denial of coverage or 

payment as provided in §§ 460.121(i) 

and (m). 

(2) How a participant or their 

designated representative files an 

appeal, including procedures for 

accepting oral and written appeal 

requests. 

* * * * * 

(4) Review of an appeal by an 

appropriate third party reviewer or 

committee. An appropriate third party 

reviewer or member of a review 

committee must be an individual who 

meets all of the following: 

(i) Appropriately credentialed in the 

field(s) or discipline(s) related to the 

appeal. 

(ii) An impartial third party who 

meets both of the following: 

(A) Was not involved in the original 

action. 

(B) Does not have a stake in the 

outcome of the appeal. 

(5) The distribution of written or 

electronic materials to the third party 

reviewer or committee that, at a 

minimum, explain all of the following: 

(i) Services must be provided in a 

manner consistent with the 

requirements in §§ 460.92 and 460.98. 

(ii) The need to make decisions in a 

manner consistent with how 

determinations under section 

1862(a)(1)(A) of the Act are made. 

(iii) The rules in § 460.90(a) that 

specify that certain limitations and 

conditions applicable to Medicare or 

Medicaid or both benefits do not apply. 

* * * * * 

(d) Opportunity to submit evidence. A 

PACE organization must give all parties 

involved in the appeal a reasonable 

opportunity to present evidence related 

to the dispute, in person, as well as in 

writing. 

* * * * * 

(g) Notification. A PACE organization 

must give all parties involved in the 

appeal appropriate written notification 

of the decision to approve or deny the 

appeal. 

(1) Notice of a favorable decision. 

Notice of any favorable decision must 

explain the conditions of the approval 

in understandable language. 

(2) Notice of partially or fully adverse 

decisions. (i) Notice of any denial 

must— 

(A) State the specific reason(s) for the 

denial; 

(B) Explain the reason(s) why the 

service would not improve or maintain 

the participant’s overall health status; 

(C) Inform the participant of his or her 

right to appeal the decision; and 

(D) Describe the external appeal rights 

under § 460.124. 

(ii) At the same time the decision is 

made, the PACE organization must also 

notify the following: 

(A) CMS. 

(B) The State administering agency. 

(h) Actions following a favorable 

decision. A PACE organization must 

furnish the disputed service as 

expeditiously as the participant’s health 

condition requires if a determination is 

made in favor of the participant on 

appeal. 

* * * * * 

■ 99. Section 460.124 is revised to read 

as follows: 

§ 460.124 Additional appeal rights under 

Medicare or Medicaid. 

A PACE organization must inform a 

participant in writing of his or her 

appeal rights under Medicare or 

Medicaid managed care, or both, assist 

the participant in choosing which to 

pursue if both are applicable, and 

forward the appeal to the appropriate 

external entity. 

(a) Appeal rights under Medicare. 

Medicare participants have the right to 

a reconsideration by an independent 

review entity. 

(1) A written request for 

reconsideration must be filed with the 

independent review entity within 60 

calendar days from the date of the 

decision by the third party reviewer 

under § 460.122. 

(2) The independent outside entity 

must conduct the review as 

expeditiously as the participant’s health 

condition requires but must not exceed 

the deadlines specified in the contract. 

(3) If the independent review entity 

conducts a reconsideration, the parties 

to the reconsideration are the same 

parties described in § 460.122(c)(2), 

with the addition of the PACE 

organization. 

(b) Appeal rights under Medicaid. 

Medicaid participants have the right to 

a State Fair Hearing as described in part 

431, subpart E, of this chapter. 

(c) Appeal rights for dual eligible 

participants. Participants who are 

eligible for both Medicare and Medicaid 

have the right to external review by 

means of either the Independent Review 

Entity described in paragraph (a) of this 

section or the State Fair Hearing process 

described in paragraph (b) of this 

section. 

■ 100. Section 460.200 is amended by— 

■ a. Redesignating paragraphs (b)(1) 

through (4) as paragraphs (b)(1)(i) 

through (iv), respectively; 

■ b. Adding a new paragraph (b)(2); and 

■ c. Revising paragraph (d). 

The addition and revision read as 

follows: 

§ 460.200 Maintenance of records and 

reporting of data. 

* * * * * 

(b) * * * 

(2) CMS and the State administering 

agency must be able to obtain, examine 

or retrieve the information specified at 

paragraph (b)(1) of this section, which 

may include reviewing information at 

the PACE site or remotely. PACE 

organizations may also be required to 

upload or electronically transmit 

information, or send hard copies of 

required information by mail. 

* * * * * 

(d) Safeguarding data and records. A 

PACE organization must do all of the 

following: 

(1) Establish written policies and 

implement procedures to safeguard all 

data, books, and records against loss, 

destruction, unauthorized use, or 

inappropriate alteration. 

(2) Maintain all written 

communications received from 

participants or other parties in their 


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original form when the communications 

relate to a participant’s care, health, or 

safety in accordance with 

§ 460.210(b)(6). 

* * * * * 

■ 101. Section 460.210 is amended by— 

■ a. Redesignating paragraphs (b)(4) 

through (12) as (b)(7) through (15); and 

■ b. Adding new paragraphs (b)(4) 

through (6). 

The additions read as follows: 

§ 460.210 Medical records. 

* * * * * 

(b) * * * 

(4) All recommendations for services 

made by employees or contractors of the 

PACE organization, including 

specialists. 

(5) If a service recommended by an 

employee or contractor of the PACE 

organization, including a specialist, is 

not approved or provided, the reason(s) 

for not approving or providing that 

service. 

(6) Original documentation, or an 

unaltered electronic copy, of any 

written communication the PACE 

organization receives relating to the 

care, health or safety of a participant, in 

any format (for example, emails, faxes, 

letters, etc.) and including, but not 

limited to the following: 

(i) Communications from the 

participant, his or her designated 

representative, a family member, a 

caregiver, or any other individual who 

provides information pertinent to a 

participant’s health or safety or both. 

(ii) Communications from an 

advocacy or governmental agency such 

as Adult Protective Services. 

* * * * * 

Dated: October 29, 2020. 

Seema Verma, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Dated: January 6, 2021. 

Alex M. Azar II, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2021–00538 Filed 1–15–21; 8:45 am] 

BILLING CODE 4120–01–P 


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