[Federal Register Volume 88, Number 219 (Wednesday, November 15, 2023)]
[Proposed Rules]
[Pages 78476-78630]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-24118]



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Vol. 88

Wednesday,

No. 219

November 15, 2023

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Parts 401, et al.

45 CFR Part 170





Medicare Program; Contract Year 2025 Policy and Technical Changes to 
the Medicare Advantage Program, Medicare Prescription Drug Benefit 
Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care 
for the Elderly; Health Information Technology Standards and 
Implementation Specifications; Proposed Rule

Federal Register / Vol. 88 , No. 219 / Wednesday, November 15, 2023 / 
Proposed Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 401, 405, 417, 422, 423, 455, and 460

Office of the Secretary

45 CFR Part 170

[CMS-4205-P]
RIN 0938-AV24


Medicare Program; Contract Year 2025 Policy and Technical Changes 
to the Medicare Advantage Program, Medicare Prescription Drug Benefit 
Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care 
for the Elderly; Health Information Technology Standards and 
Implementation Specifications

AGENCY: Centers for Medicare & Medicaid Services (CMS), Office of the 
National Coordinator for Health Information Technology (ONC), 
Department of Health and Human Services (HHS).

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise the Medicare Advantage (Part 
C), Medicare Prescription Drug Benefit (Part D), Medicare cost plan, 
and Programs of All-Inclusive Care for the Elderly (PACE) regulations 
to implement changes related to Star Ratings, marketing and 
communications, agent/broker compensation, health equity, dual eligible 
special needs plans (D-SNPs), utilization management, network adequacy, 
and other programmatic areas. This proposed rule also includes 
proposals to codify existing sub-regulatory guidance in the Part C and 
Part D programs.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on January 5, 2024.

ADDRESSES: In commenting, please refer to file code CMS-4205-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission. Comments, including mass comment 
submissions, must be submitted in one of the following three ways 
(please choose only one of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to https://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-4205-P, P.O. Box 8013, 
Baltimore, MD 21244.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-4205-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: 
    Carly Medosch, (410) 786-8633--General Questions.
    Naseem Tarmohamed, (410) 786-0814--Part C and Cost Plan Issues.
    Lucia Patrone, (410) 786-8621--Part D Issues.
    Kristy Nishimoto, (206) 615-2367--Beneficiary Enrollment and Appeal 
Issues.
    Kelley Ordonio, (410) 786-3453--Parts C and D Payment Issues.
    Hunter Coohill, (720) 853-2804--Enforcement Issues.
    Lauren Brandow, (410) 786-9765--PACE Issues.
    Sara Klotz, (410) 786-1984--D-SNP Issues.
    Joe Strazzire, (410) 786-2775--RADV Audit Appeals Issues.
    Alexander Baker, (202) 260-2048--Health IT Standards.
    <a href="/cdn-cgi/l/email-protection#0858697a7c4b69666c4c5b7c697a5a697c61666f7b486b657b2660607b266f677e"><span class="__cf_email__" data-cfemail="46162734320527282202153227341427322f28213506252b35682e2e3568212930">[email protected]</span></a>--Parts C and D Star Ratings 
Issues.

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following 
website as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that website to 
view public comments. CMS will not post on Regulations.gov public 
comments that make threats to individuals or institutions or suggest 
that the commenter will take actions to harm an individual. CMS 
continues to encourage individuals not to submit duplicative comments. 
We will post acceptable comments from multiple unique commenters even 
if the content is identical or nearly identical to other comments.
    Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a 
plain language summary of this proposed rule may be found at https://www.regulations.gov/.

I. Executive Summary

A. Purpose

    The primary purpose of this proposed rule is to amend the 
regulations for the Medicare Advantage (Part C) program, Medicare 
Prescription Drug Benefit (Part D) program, Medicare cost plan program, 
and Programs of All-Inclusive Care for the Elderly (PACE). This 
proposed rule includes a number of new policies that would improve 
these programs beginning with contract year 2025 and proposes to codify 
existing Part C and Part D sub-regulatory guidance. Please note that 
the new marketing and communications policies in this rule are proposed 
to be applicable for all contract year 2025 marketing and 
communications, beginning September 30, 2024. This proposed rule also 
includes revisions to existing regulations in the Risk Adjustment Data 
Validation (RADV) audit appeals process and the appeals process for 
quality bonus payment determination that would take effect and apply 60 
days after publication of a final rule. Revisions to existing 
regulations for the use and release of risk adjustment data would also 
take effect and apply 60 days after publication of a final rule. A 
limited number of the provisions in this rule are proposed to be 
applicable beginning with coverage on and after January 1, 2026.
    Additionally, this proposed rule would implement certain sections 
of the following Federal laws related to the Parts C and D programs:
    <bullet> The Bipartisan Budget Act (BBA) of 2018.
    <bullet> The Consolidated Appropriations Act (CAA), 2023.

B. Summary of the Major Provisions

1. Improving Access to Behavioral Health Care Providers
    We propose regulatory changes that would improve access to 
behavioral health care by adding certain behavioral health provider 
specialties to our MA network adequacy standards. Specifically, we 
propose to add a new facility-specialty type to the existing list of 
facility-specialty types evaluated as part of our network adequacy 
reviews. The new facility-specialty type, ``Outpatient Behavioral 
Health,'' would be included in network adequacy

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evaluations and can include: Marriage and Family Therapists (MFTs), 
Mental Health Counselors (MHCs), Opioid Treatment Program (OTP) 
providers, Community Mental Health Centers or other behavioral health 
and addiction medicine specialists and facilities. MFTs and MHCs will 
be eligible to enroll in Medicare and start billing for services 
beginning January 1, 2024, due to the new statutory benefit category 
established by the Consolidated Appropriations Act (CAA) 2023. We aim 
to strengthen network adequacy requirements and improve beneficiary 
access to behavioral health services and providers by expanding our 
network adequacy requirements for MA organizations.
2. Special Supplemental Benefits for the Chronically Ill (SSBCI)
    We are proposing regulatory changes that would help ensure that 
SSBCI items and services offered are appropriate and improve or 
maintain the health or overall function of chronically ill enrollees. 
First, we are proposing to require that an MA organization must be able 
to demonstrate through relevant acceptable evidence that an item or 
service offered as SSBCI has a reasonable expectation of improving or 
maintain the health or overall function of a chronically ill enrollee, 
and must, by the date on which it submits its bid to CMS, establish a 
bibliography of this evidence. Second, we are proposing to clarify that 
an MA plan must follow its written policies based on objective criteria 
for determining an enrollee's eligibility for an SSBCI when making such 
eligibility determinations. Third, we are proposing to require that the 
MA plan document its denials of SSBCI eligibility rather than its 
approvals. Additionally, we are proposing to codify CMS's authority to 
review and deny approval of an MA organization's bid if the MA 
organization has not demonstrated, through relevant acceptable 
evidence, that its proposed SSBCI has a reasonable expectation of 
improving or maintaining the health or overall function of the 
chronically ill enrollee. Finally, we propose to codify CMS's authority 
to review SSBCI offerings annually for compliance, considering the 
evidence available at the time. These proposals, if implemented, would 
better ensure that the benefits offered as SSBCI are reasonably 
expected to improve health or overall function of the chronically ill 
enrollee while also guarding against the use of MA rebate dollars for 
SSBCI that are not supported by evidence.
    In addition, we are proposing new policies to protect beneficiaries 
and improve transparency regarding SSBCI so that beneficiaries are 
aware that SSBCI are only available to enrollees who meet specific 
eligibility criteria. We propose to modify and strengthen the current 
requirements for the SSBCI disclaimer that MA organizations offering 
SSBCI must use whenever SSBCI are mentioned. Specifically, we propose 
that the SSBCI disclaimer list the relevant chronic condition(s) the 
enrollee must have to be eligible for the SSBCI offered by the MA 
organization. We propose that the MA organization must convey in its 
SSBCI disclaimer that even if the enrollee has a listed chronic 
condition, the enrollee may not receive the benefit because other 
coverage criteria also apply. We also propose to establish specific 
font and reading pace parameters for the SSBCI disclaimer in print, 
television, online, social media, radio, other voice-based ads, and 
outdoor advertising (including billboards). Finally, we propose to 
clarify that MA organizations must include the SSBCI disclaimer in all 
marketing and communications materials that mention SSBCI. We believe 
that imposing these new SSBCI disclaimer requirements will help to 
ensure that the marketing of and communication about these benefits is 
not misleading or potentially confusing to enrollees who rely on these 
materials to make enrollment decisions.
3. Mid-Year Enrollee Notification of Available Supplemental Benefits
    In addition, over the past several years, the number of MA plans 
offering supplemental benefits has increased. The benefits offered are 
broader in scope and variety and we are seeing an increasing amount of 
MA rebate dollars directed towards these benefits. At the same time, 
plans have reported that enrollee utilization of many of these benefits 
is low. It is not clear whether MA plans are actively encouraging 
utilization of these benefits by their enrollees. We propose requiring 
MA plans to notify enrollees mid-year of the unused supplemental 
benefits available to them. The notice would list any supplemental 
benefits not utilized by the beneficiary during the first 6 months of 
the year (1/1 to 6/30). Currently, MA plans are not required to send 
any communication specific to an enrollee's usage of supplemental 
benefits which could be an important part of a plan's overall care 
coordination efforts. This policy aims to educate enrollees on their 
access to supplemental benefits to encourage greater utilization of 
these benefits and ensure MA plans are better stewards of the rebate 
dollars directed towards these benefits.
4. Enhance Guardrails for Agent and Broker Compensation
    Section 1851(j) of the Act requires that CMS develop guidelines to 
ensure that compensation to agents and brokers creates incentives to 
enroll individuals in MA plans that are intended to best meet their 
health care needs. To that end, for many years CMS has set upper limits 
on the amount of compensation agents and brokers can receive for 
enrolling Medicare beneficiaries into MA and PDP plans. We have 
learned, however, that many MA and PDP plans, as well as third-party 
entities with which they contract (such as Field Marketing 
Organizations (FMOs)) have structured payments to agents and brokers 
that have the effect of circumventing compensation caps. We also note 
that that these additional payments appear to be increasing. In this 
rule, we are proposing to generally prohibit contract terms between MA 
organizations and agents, brokers or other third party marketing 
organizations (TPMOs) that may interfere with the agent's or broker's 
ability to objectively assess and recommend the plan that best fits a 
beneficiary's health care needs; set a single compensation rate for all 
plans; revise the scope of items and services included within agent and 
broker compensation; and eliminate the regulatory framework which 
currently allows for separate payment to agents and brokers for 
administrative services. We are also proposing to make conforming edits 
to the Part D agent broker compensation rules at Sec.  423.2274. 
Collectively, we believe the impact of these proposed changes will 
better align with statutory requirements and intent: to ensure that the 
use of compensation creates incentives for agents and brokers to enroll 
individuals in the plan that best fits a beneficiary's health care 
needs. Further, such changes align with the Biden-Harris 
Administration's commitment to promoting fair, open, and competitive 
markets and ensuring beneficiaries can make fully informed choices 
among a robust set of health insurance options.
5. Annual Health Equity Analysis of Utilization Management Policies and 
Procedures
    We are proposing regulatory changes to the composition and 
responsibilities of the Utilization Management (UM) committee. We 
propose to require that a member of the UM committee have expertise in 
health equity. We also propose that the UM committee conduct an annual 
health equity analysis of the use of prior authorization. The proposed

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analysis would examine the impact of prior authorization on enrollees 
with one or more of the following social risk factors (SRFs): (i) 
receipt of the low-income subsidy or being dually eligible for Medicare 
and Medicaid (LIS/DE); or (ii) having a disability. To enable a more 
comprehensive understanding of the impact of prior authorization 
practices on enrollees with the specified SRFs, the proposed analysis 
must compare metrics related to the use of prior authorization for 
enrollees with the specified SRFs to enrollees without the specified 
SRFs. Finally, we propose to require MA organizations to make the 
results of the analysis publicly available on their website in a manner 
that is easily accessible and without barriers.
6. Amendments to Part C and Part D Reporting Requirements
    We are proposing to affirm our authority to collect detailed 
information from MA organizations and Part D plan sponsors under 
current regulations, in keeping with the Biden-Harris administration's 
focus on improving transparency and data in Medicare Advantage and Part 
D. This proposal would lay the groundwork for new data collection to be 
established through the Paperwork Reduction Act (PRA) process, which 
would provide advance notice to interested parties and be subject to 
public comment. An example of increased data collection could be 
service level data for all initial coverage decisions and plan level 
appeals, such as decision rationales for items, services, or diagnosis 
codes to have better line of sight on utilization management and prior 
authorization practices, among many other issues.
7. Enhance Enrollees' Right To Appeal an MA Plan's Decision To 
Terminate Coverage for Non-Hospital Provider Services
    Beneficiaries enrolled in Traditional Medicare and MA plans have 
the right to a fast-track appeal by an Independent Review Entity (IRE) 
when their covered skilled nursing facility (SNF), home health, or 
comprehensive outpatient rehabilitation facility (CORF) services are 
being terminated. Currently, Quality Improvement Organizations (QIO) 
act as the IRE and conduct these reviews. Under current regulations, MA 
enrollees do not have the same access to QIO review of a fast-track 
appeal as Traditional Medicare beneficiaries. We are proposing to (1) 
require the QIO, instead of the MA plan, to review untimely fast-track 
appeals of an MA plan's decision to terminate services in an HHA, CORF, 
or SNF; and (2) fully eliminate provision requiring the forfeiture of 
an enrollee's right to appeal a termination of services decision when 
they leave the facility. These proposals would bring MA regulations in 
line with the parallel reviews available to beneficiaries in 
Traditional Medicare and expand the rights of MA beneficiaries to 
access the fast-track appeals process.
8. Additional Changes to an Approved Formulary--Substituting Biosimilar 
Biological Products
    Under current policy, Part D sponsors must obtain explicit approval 
from CMS prior to making a midyear formulary change that removes a 
reference product and replaces it with a biosimilar biological product 
other than an interchangeable biological product. If such a change is 
approved, the Part D sponsor may apply the change only to enrollees who 
begin therapy after the effective date of the change. In other words, 
enrollees currently taking the reference product can remain on the 
reference product until the end of the plan year without having to 
obtain an exception. To increase access to biosimilar biological 
products, including interchangeable biological products, in the Part D 
program, consistent with the Biden-Harris Administration's commitment 
to competition as outlined in Executive Order (E.O.) 14036: ``Promoting 
Competition in the American Economy,'' we previously proposed to permit 
Part D sponsors either to immediately substitute interchangeable 
biological products for their reference products and/or to treat such 
substitutions as changes applicable to all enrollees following 30 days' 
notice.\1\ As we continue to consider comments received on that 
proposal, we are now also proposing to add substitutions of biosimilar 
biological products other than interchangeable biological products to 
the type of formulary changes that apply to all enrollees (including 
those already taking the reference product prior to the effective date 
of the change) following a 30-day notice. This proposed policy 
regarding formulary substitution of biosimilar biological products 
would parallel our current notice policy for formulary changes that 
cannot take place immediately. Under current Sec.  423.120(b)(5)(i), 
Part D sponsors must give 30 days' advance notice to affected enrollees 
before removing or changing the tiered cost-sharing status of a Part D 
drug, unless, for instance, the formulary change qualifies for an 
immediate substitution. This proposal would not permit immediate 
formulary substitution of biosimilar biological products other than 
interchangeable biological products.
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    \1\ See section III.Q., Changes to an Approved Formulary, of the 
proposed rule titled ``Medicare Program; Contract Year 2024 Policy 
and Technical Changes to the Medicare Advantage Program, Medicare 
Prescription Drug Benefit Program, Medicare Cost Plan Program, 
Medicare Parts A, B, C, and D Overpayment Provisions of the 
Affordable Care Act and Programs of All-Inclusive Care for the 
Elderly; Health Information Technology Standards and Implementation 
Specifications,'' which appeared in the December 27, 2022 Federal 
Register (87 FR 79452) (hereinafter referred to as the December 2022 
proposed rule).
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9. Increasing the Percentage of Dually Eligible Managed Care Enrollees 
Who Receive Medicare and Medicaid Services From the Same Organization
    We are proposing interconnected proposals to (a) replace the 
current quarterly special enrollment period (SEP) with a one-time-per 
month SEP for dually eligible individuals and others enrolled in the 
Part D low-income subsidy program to elect a standalone PDP, (b) create 
a new integrated care SEP to allow dually eligible individuals to elect 
an integrated D-SNP on a monthly basis, (c) limit enrollment in certain 
D-SNPs to those individuals who are also enrolled in an affiliated 
Medicaid managed care organization (MCO), and (d) limit the number of 
D-SNP plan benefit packages an MA organization, its parent 
organization, or entity that shares a parent organization with the MA 
organization, can offer in the same service area as an affiliated 
Medicaid MCO. This proposed rule would increase the percentage of 
dually eligible MA enrollees who are in plans that are also contracted 
to cover Medicaid benefits, thereby expanding access to integrated 
materials, unified appeal processes across Medicare and Medicaid, and 
continued Medicare services during an appeal. It would also reduce the 
number of plans overall that can enroll dually eligible individuals 
outside the annual coordinated election period, thereby reducing the 
number of plans deploying aggressive marketing tactics toward dually 
eligible individuals throughout the year.
10. For D-SNP PPOs, Limit Out-of-Network Cost Sharing
    We are proposing to limit out-of-network cost sharing for D-SNP 
preferred provider organizations (PPOs) for specific services. The 
proposed rule would reduce cost shifting to Medicaid, increase payments 
to safety net providers, expand dually eligible enrollees' access to 
providers, and protect dually eligible enrollees from unaffordable 
costs.

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11. Contracting Standards for Dual Eligible Special Needs Plan Look-
Alikes
    Under existing regulations, CMS does not contract with and will not 
renew the contract of a D-SNP look-alike--that is, an MA plan that is 
not a SNP but in which dually eligible enrollees account for 80 percent 
or more of total enrollment. We are proposing to lower the D-SNP look-
alike threshold from 80 percent to 70 percent for plan year 2025 and 60 
percent for plan year 2026. This proposal would help address the 
continued proliferation of MA plans that are serving high percentages 
of dually eligible individuals without meeting the requirements to be a 
D-SNP.
12. Standardize the Medicare Advantage (MA) Risk Adjustment Data 
Validation Appeals Process
    We propose regulatory language to address gaps and operational 
constraints included in existing RADV appeal regulations. Currently, if 
MA organizations appeal both medical record review determinations and 
payment error calculations resulting from RADV audits, both issues must 
be appealed and move through the appeals process concurrently, which we 
foresee could result in inconsistent appeal adjudications at different 
levels of appeal that impact recalculations of the payment error. This 
has the potential to cause burden, confuse MA organizations, and 
negatively impact the operations and efficiency of CMS's appeals 
processes. This proposal would standardize and simplify the RADV 
appeals process for CMS and MA organizations, as well as address 
operational concerns at all three levels of appeal. We are proposing 
that MA organizations must exhaust all three levels of appeal for 
medical record review determinations before beginning the payment error 
calculation appeals process. This will ensure adjudication of medical 
record review determinations are final before a recalculation of the 
payment error is completed and subject to appeal. We also propose 
several other revisions to our regulatory appeals process to conform 
with these proposed changes to our procedures.

C. Summary of Costs and Benefits

BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C

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

    We established at Sec. Sec.  422.502(b) and 423.503(b) that we may 
deny an application submitted by MA organizations and Part D sponsors 
that failed to comply with the requirements of a previous MA or Part D 
contract, which we refer to as ``past performance.'' We are proposing 
several technical changes to the regulation text related to past 
performance. These changes are intended to clarify the basis for 
application denials due to past performance and to ensure that the 
factors adequately account for financial difficulties that should 
prevent an organization from receiving a new or expanded MA or Part D 
contract.
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    \2\ We previously proposed that would provide Part D sponsors 
(choosing not to or unable to qualify to make immediate 
substitutions as proposed) the option to treat substitutions of 
interchangeable biological products for their reference products as 
changes applicable to all enrollees requiring 30 days' notice for 
those currently taking a related reference product. See section 
III.Q. of the December 2022 proposed rule. These and other proposals 
discussed in section III.Q. of the December 2022 proposed rule have 
not been finalized and remain under consideration.
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    One factor we consider regarding the past performance of MA 
organizations and Part D sponsors is their record of imposition of 
intermediate sanctions, because intermediate sanctions represent 
significant non-compliance with MA or Part D contract requirements. To 
clarify the basis for application denials due to intermediate 
sanctions, at Sec. Sec.  422.502(b)(1)(i)(A) and 423.503(b)(1)(i)(A) we 
propose to

[[Page 78483]]

change ``Was subject to the imposition of an intermediate sanction'' to 
``Was under an intermediate sanction.'' We are proposing this revision 
because MA organizations and Part D sponsors may have a sanction 
imposed in one 12-month past performance review period and effective 
for all or part of the subsequent 12-month review period. For instance, 
CMS could impose a sanction in December 2022 that remains in effect 
until September 2023. The sanction would be in effect for the past 
performance review period that runs from March 2022 through February 
2023 (for Contract Year 2024 MA and Part D applications filed in 
February 2023) and for the past performance review period that runs 
from March 2023 through February 2024 (for Contract Year MA and Part D 
applications filled in February 2024). Our proposal reflects our stated 
intent to deny applications from MA organizations and Part D sponsors 
when an active sanction existed during the relevant 12-month review 
period when we previously codified that intermediate sanctions are a 
basis for denial of an application from an MA organization or Part D 
sponsor in ``Medicare and Medicaid Programs; Contract Year 2022 Policy 
and Technical Changes to the Medicare Advantage Program, Medicare 
Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan 
Program, and Programs of All-Inclusive Care for the Elderly,'' final 
rule which appeared in the Federal Register on January 19, 2021 (86 FR 
5864) hereinafter referred to as the ``January 2021 final rule.'' When 
we codified this requirement, a commenter requested that sanctions 
lifted during the 12 months prior to the application denial be excluded 
from past performance. We responded that ``The applying organization 
will receive credit for resolving the non-compliance that warranted the 
sanction during the next past performance review period, when, 
presumably, the organization will not have an active sanction in place 
at any time during the applicable 12-month review period'' (86 FR 6000 
through 6001). Since an intermediate sanction may be active during 
multiple consecutive review periods, our proposed language clarifies 
that an organization's application may be denied as long as the 
organization is under sanction, not just during the 12-month review 
period when the sanction was imposed.
    An additional factor we consider regarding the past performance of 
MA organizations and Part D sponsors is involvement in bankruptcy 
proceedings. At Sec. Sec.  422.502(b)(1)(i)(C) and 423.503(b)(1)(i)(C) 
we propose to incorporate Federal bankruptcy as a basis for application 
denials due to past performance and to conform the two paragraphs by 
changing the text to ``Filed for or is currently in Federal or State 
bankruptcy proceedings'' from ``Filed for or is currently in State 
bankruptcy proceedings,'' at Sec.  422.502(b)(1)(i)(C) and ``Filed for 
or is currently under State bankruptcy proceedings'' at Sec.  
423.503(b)(1)(i)(C). We codified State bankruptcy as a basis for an 
application denial for the past performance of an MA or Part D Sponsor 
in ``Medicare Program; Contract Year 2023 Policy and Technical Changes 
to the Medicare Advantage and Medicare Prescription Drug Benefit 
Programs; Policy and Regulatory Revisions in Response to the COVID-19 
Public Health Emergency; Additional Policy and Regulatory Revisions in 
Response to the COVID-19 Public Health Emergency'' which appeared in 
the Federal Register on May 9, 2022 (87 FR 27704). We codified that 
requirement because bankruptcy may result in the closure of an 
organization's operations and entering into a new or expanded contract 
with such an organization is not in the best interest of the MA or 
Prescription Drug program or the beneficiaries they serve. This concern 
is equally applicable to both Federal and State bankruptcy, so we 
propose to revise the regulation so that applications from MA 
organizations or Part D sponsors that have filed for or are in State or 
Federal bankruptcy proceedings may be denied on the basis of past 
performance.
    In addition, we are also proposing to correct two technical issues 
identified since the final rule was published in May 2022. At Sec.  
422.502(b)(1)(i)(B), we propose to change the reference to the 
requirement to maintain fiscally sound operations from Sec.  
422.504(b)(14) to the correct reference at Sec.  422.504(a)(14). We 
also propose to remove the duplication of Sec.  422.502(b)(1)(i)(A) and 
(B).

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

A. Expanding Network Adequacy Requirements for Behavioral Health

    Section 1852(d)(1) of the Act allows an MA organization to select 
the providers from which an enrollee may receive covered benefits, 
provided that the MA organization, in addition to meeting other 
requirements, makes such benefits available and accessible in the 
service area with promptness and assures continuity in the provision of 
benefits. Further, our regulation at Sec.  422.112(a), requires that a 
coordinated care plan maintain a network of appropriate providers that 
is sufficient to provide adequate access to covered services to meet 
the needs of the population served. To establish standards for these 
requirements, CMS codified network adequacy criteria and access 
standards in the ``Medicare Program; Contract Year 2021 Policy and 
Technical Changes to the Medicare Advantage Program, Medicare 
Prescription Drug Benefit Program, and Medicare Cost Plan Program'' 
final rule, which appeared in the Federal Register on June 2, 2020 (85 
FR 33796), hereinafter referred to as the ``June 2020 final rule.'' In 
that final rule, we codified, at Sec.  422.116(b), the list of 27 
provider specialty types and 13 facility specialty types subject to CMS 
network adequacy standards. Further, as part of the ``Medicare Program; 
Contract Year 2023 Policy and Technical Changes to the Medicare 
Advantage and Medicare Prescription Drug Benefit Programs'' published 
in the Federal Register January 12, 2022 (87 FR 1842) proposed rule, 
hereinafter referred to as the ``January 2022 proposed rule,'' we 
solicited comments through a Request for Information (RFI), regarding 
challenges in building MA behavioral health networks and opportunities 
for improving access to services. In response to the RFI, stakeholders 
commented on the importance of ensuring adequate access to behavioral 
health services for enrollees and suggested expanding network adequacy 
requirements to include additional behavioral health specialty types. 
As a result, in the ``Medicare Program; Contract Year 2024 Policy and 
Technical Changes to the Medicare Advantage Program, Medicare 
Prescription Drug Benefit Program, Medicare Cost Plan Program, and 
Programs of All-Inclusive Care for the Elderly'' final rule, which 
appeared in the Federal Register on April 12, 2023 (88 FR 22120) 
hereinafter referred to as the ``April 2023 final rule,'' CMS finalized 
the addition of two new specialty types to the provider-specialty types 
list at Sec.  422.116(b)(1), Clinical Psychology and Clinical Social 
Work, to be subject to the specific time and distance and minimum 
provider number requirements used in CMS's network adequacy evaluation.
    While our regulation at Sec.  422.116(b)(3) authorizes the removal 
of a specialty or facility type from the network evaluation criteria 
for a specific year without rulemaking, CMS did not implement a process 
in Sec.  422.116 to add

[[Page 78484]]

new provider types without rulemaking. In a continued effort to address 
access to behavioral health services within MA networks, we are 
proposing to add to the list of provider specialties at Sec.  
422.116(b) and add corresponding time and distance standards at Sec.  
422.116(d)(2).
    In addition to meeting the network adequacy evaluation 
requirements, MA organizations are required at Sec.  422.112(a) to 
maintain and consistently monitor their provider networks to ensure 
they are sufficient to provide adequate access to covered services that 
meet the needs of enrollees. This also helps MA organizations maintain 
a complete and accurate health plan provider directory as required 
under Sec. Sec.  422.111(b)(3) and 422.120(b). The Health Plan 
Management System (HPMS) provides MA organizations with access to the 
``Evaluate my Network'' functionality, which allows MA organizations 
the opportunity to test their provider networks against the evaluation 
standards in Sec.  422.116 outside of a formal network review. The 
``Evaluate my Network'' functionality provides MA organizations the 
ability to test their networks using the standards in Sec.  
422.116(a)(2) in different scenarios, including at the Plan Benefit 
Package (PBP) level, to consistently monitor whether their provider 
networks are meeting the current network adequacy standards. We 
encourage MA organizations to utilize the HPMS ``Evaluate my Network'' 
tool to monitor their PBP-level active provider networks and keep 
abreast of any network issues that could hinder access to care for 
enrollees. We also remind MA organizations to report any compliance 
issues or significant changes in their provider network to their CMS 
Account Manager.
    With the revisions applicable beginning January 1, 2024, MA 
organizations are required to demonstrate that they meet network 
adequacy for four behavioral health specialty types: psychiatry, 
clinical psychology, clinical social work, and inpatient psychiatric 
facility services. The Consolidated Appropriations Act (CAA), 2023 
(Pub. L. 117-328) amended the Act to authorize payment under Medicare 
Part B for services furnished by a Marriage and Family Therapist (MFT) 
and by a Mental Health Counselor (MHC), effective January 1, 2024. 
Specifically, section 4121 of the CAA amends section 1861(s)(2) of the 
Act by adding a new subparagraph (II) that establishes a new benefit 
category under Part B for MFT services (as defined in section 1861(lll) 
of the Act) and MHC services (as defined in section 1861(lll) of the 
Act). MA organizations are required to cover virtually all Part B 
covered services. As such, these new services must be covered as 
defined and furnished, respectively, by MFTs, as defined in section 
1861(lll)(2) of the Act, and MHCs, as defined in section 1861(lll)(4) 
of the Act. As a practical matter, MA organizations need to ensure 
access to these new Medicare-covered services that can only be provided 
by these types of individual providers and therefore must contract with 
these types of providers in order to furnish basic benefits as required 
by section 1852 of the Act (when furnished by different providers, the 
services would be supplemental benefits covered by the MA plan.)
    In addition, we discussed in the April 2023 final rule, that the 
responses CMS received to the January 2022 proposed rule RFI emphasized 
the importance of expanding network adequacy standards to include other 
outpatient behavioral health physicians and health professionals that 
treat substance use disorders (SUDs) to better meet behavioral health 
care needs of enrollees. Medicare fee-for-service claims data for 2020 
shows that Opioid Treatment Program (OTP) providers had the largest 
number of claims for SUD services during that timeframe. At the time of 
publishing our April 2023 final rule, we indicated that while we were 
not able to finalize adding a combined specialty type called 
``Prescribers of Medication for Opioid Use Disorder,'' which included 
OTPs and Medication for Opioid Use Disorder (MOUD) waivered providers 
to the facility-specialty type list in Sec.  422.116(b)(2) as proposed, 
we would consider the appropriateness of setting network adequacy 
standards for OTPs in future rulemaking.
    Considering the statutory changes to section 1861 of the Act as 
mentioned, and our interest in establishing network adequacy standards 
for SUD providers, CMS is proposing to amend the MA network adequacy 
requirements to address the new provider types and SUD provider types 
through a combined behavioral health specialty type to include MFTs, 
MHCs, OTPs, Community Mental Health Centers and other behavioral health 
and addiction medicine specialty providers that will help us enhance 
behavioral health access for enrollees. This is consistent with the 
explanation in our April 2023 final rule that setting a meaningful 
access standard for the OTP specialty type would be possible under a 
combined behavioral health specialty type.
    CMS is committed to improving access to behavioral health care 
services for enrollees in the MA program. The CMS Behavioral Health 
Strategy,\3\ aims to improve access and quality of mental health care 
and services, including, access to substance use disorder prevention 
and treatment services. We propose to extend network adequacy 
requirements to additional behavioral health and substance use disorder 
providers and facilities by adding time and distance and minimum 
provider number requirements for a combined provider category. 
Specifically, we are proposing to add Outpatient Behavioral Health as a 
new type of facility-specialty in Sec.  422.116(b)(2) and to add 
Outpatient Behavioral Health to the time and distance requirements in 
Sec.  422.116(d)(2). For purposes of network adequacy evaluations under 
Sec.  422.116, Outpatient Behavioral Health can include, MFTs (as 
defined in section 1861(lll) of the Act), MHCs (as defined in section 
1861(lll) of the Act), OTPs (as defined in section 1861(jjj) of the 
Act), Community Mental Health Centers (as defined in section 
1861(ff)(3)(B) of the Act), or those of the following who regularly 
furnish or will regularly furnish behavioral health counseling or 
therapy services, including, but not limited to, psychotherapy or 
prescription of medication for substance use disorders: physician 
assistants, nurse practitioners, and clinical nurse specialists (as 
defined in section 1861(aa)(5) of the Act); addiction medicine 
physicians; or outpatient mental health and substance use treatment 
facilities. Per Sec.  422.2, the term ``provider'' means (1) any 
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; and (2) any 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. Although we are not using the 
term ``provider'' specifically here in listing the type of healthcare 
professionals that we expect to be available to furnish services in 
order to count for purposes of the proposed new network evaluation 
standard, all applicable laws about the practice of medicine and 
delivery of health care services must be met and specific healthcare 
professionals must be appropriately licensed or certified to furnish 
the applicable services.
---------------------------------------------------------------------------

    \3\ https://www.cms.gov/cms-behavioral-health-strategy.
---------------------------------------------------------------------------

    We are proposing to add this combined facility-specialty type 
instead

[[Page 78485]]

of adding individual provider-specialty types for a few reasons. First, 
data from the U.S. Department of Labor, Bureau of Labor Statistics show 
that currently MFTs and MHCs are generally providing services in 
outpatient behavioral health settings, such as community mental health 
centers, substance abuse treatment centers, hospitals, and some private 
practices.<SUP>4 5</SUP> These types of clinical settings offer a 
fuller range of services and usually provide access to additional 
providers, such as advanced practice nurses and physician assistants 
who provide counseling and other therapeutic services to individuals 
with behavioral health conditions; our review of the Place of Service 
codes recorded on professional claims for behavioral health services in 
the Medicare FFS program illustrates this. In addition, currently, 
there are a limited number (if any) claims in the Medicare FFS program 
from MFTs and MHCs; combining the MFT and MHC provider types into the 
``Outpatient Behavioral Health'' facility type provides time for CMS to 
develop additional data as FFS claims are submitted by MFTs and MHCs to 
show patterns of access to these provider types across the country. CMS 
needs such claims and utilization data to support the development of 
time and distance standards for these particular provider-specialty 
types. Finally, categorizing these provider specialties as a facility 
type is consistent with our practice, under Sec.  422.116, wherein 
physical therapy (PT), occupational therapy (OT), and speech therapy 
(ST) providers have traditionally been categorized as facility types, 
even though care is typically furnished by individual health care 
providers. These provider types (that is, PT, OT, ST) are reported for 
network adequacy purposes under facility specialty types on Health 
Service Delivery (HSD) tables.
---------------------------------------------------------------------------

    \4\ Bureau of Labor Statistics, U.S. Department of Labor, 
Occupational Outlook Handbook, Marriage and Family Therapists, at 
https://www.bls.gov/ooh/community-and-social-service/marriage-and-family-therapists.htm (visited July 03, 2023).
    \5\ Bureau of Labor Statistics, U.S. Department of Labor, 
Occupational Outlook Handbook, Substance Abuse, Behavioral Disorder, 
and Mental Health Counselors, at https://www.bls.gov/ooh/community-and-social-service/substance-abuse-behavioral-disorder-and-mental-health-counselors.htm (visited July 06, 2023).
---------------------------------------------------------------------------

    As mentioned previously, the statutory change under the CAA will 
allow MFTs and MHCs to bill Medicare directly for services provided 
beginning January 1, 2024. We acknowledge that these provider types may 
not always be located in facilities and provide facility-based 
services. As such, we will continue to monitor the appropriateness of 
maintaining this proposed new behavioral health specialty type as a 
facility-specialty type (that is, under Sec.  422.116(b)(2)) for 
network adequacy review purposes. Similarly, as the list \6\ of OTPs 
enrolled in Medicare continues to expand, we will continue to monitor 
whether network adequacy for OTPs is best measured under a combined 
facility type for the purpose of network adequacy reviews. Thus, we may 
engage in future rulemaking to revise this requirement if the landscape 
of providers changes such that access would be best evaluated 
separately for MFTs, MHCs, or OTPs instead of under the one facility-
specialty type we are proposing in this rule. Any related changes would 
be proposed in future rulemaking. At this time, we are proposing that 
MA organizations are allowed to include on their facility HSD tables 
the following: contracted individual practitioners, group practices, or 
facilities that are applicable under this specialty type. Under this 
proposal, MA organizations may not submit a single provider, for 
purposes of meeting more than one of our provider network requirements, 
for example, they cannot submit a single provider as a psychiatry, 
clinical social work, or clinical psychologist provider specialty and 
also as an Outpatient Behavioral Health facility.
---------------------------------------------------------------------------

    \6\ https://data.cms.gov/provider-characteristics/medicare-provider-supplier-enrollment/opioid-treatment-program-providers.
---------------------------------------------------------------------------

    Our current regulations, at Sec.  422.116(a)(2), specify that an MA 
plan must meet maximum time and distance standards and contract with a 
specified minimum number of each provider and facility-specialty type. 
Therefore, as part of the proposed changes to our list of facility 
specialty types under Sec.  422.116(b)(2), we are proposing base time 
and distance standards in each county type for the new specialty type 
as follows:
[GRAPHIC] [TIFF OMITTED] TP15NO23.009

    In 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) (hereinafter referred to as the 
``February 2020 proposed rule''), we explained how CMS developed the 
base time and distance standards and the minimum provider requirements 
used in Sec.  422.116 (85 FR 9094 through 9103). Further, we explained 
in the February 2020 proposed rule how CMS determines the minimum 
number requirement for all provider and facility specialty types, which 
is now codified in Sec.  422.116(e). We codified at Sec.  
422.116(e)(2)(iii) that all facilities, except for acute inpatient 
hospitals facilities, have a minimum number requirement of one. Because 
we had previously established paragraph (e)(2)(iii) to refer to all 
facility types listed in paragraphs (b)(2)(ii) through (xiv) and are 
proposing to add Outpatient Behavioral Health as a facility type at 
paragraph (b)(2)(xiv), we are not proposing any revisions to paragraph 
(e)(2)(iii). We followed the analysis and methodology described in the 
February 2020 proposed rule to

[[Page 78486]]

develop the time and distance standards that we propose to apply to the 
new behavioral health facility-specialty type described here. However, 
we utilized updated data, including outpatient facility and 
professional Part B claims data from August 1, 2021, through July 31, 
2022, to inform our proposed standard.
    Finally, as we indicated in the April 2023 final rule, Medicare FFS 
claims data shows that telehealth was the second most common place of 
service for claims with a primary behavioral health diagnosis in 2020 
(88 FR 22170). Per Sec.  422.116(d)(5), MA plans may receive a 10-
percentage point credit towards the percentage of beneficiaries that 
reside within published time and distance standards for certain 
providers when the plan includes one or more telehealth providers of 
that specialty type that provide additional telehealth benefits, as 
defined in Sec.  422.135, in its contracted network. Currently, Sec.  
422.116(d)(5) specifies 14 specialty types for which the 10-percentage 
point credit is available. Because we understand from stakeholders who 
commented on our April 2023 final rule that they were supportive of 
usage of the 10-percentage point credit for behavioral health specialty 
types, we also propose to add the new Outpatient Behavioral Health 
facility-specialty type to the list at Sec.  422.116(d)(5) of the 
specialty types that that will receive the credit if the MA 
organization's contracted network of providers includes one or more 
telehealth providers of that specialty type that provide additional 
telehealth benefits, as defined in Sec.  422.135, for covered services.
    We welcome comment on this proposal.

B. Standards for Electronic Prescribing (Sec.  423.160)

1. Legislative Background
    Section 1860D-4(e) of the Act requires the adoption of Part D e-
prescribing standards. Part D sponsors are required to establish 
electronic prescription drug programs that comply with the e-
prescribing standards that are adopted under this authority. For a 
further discussion of the statutory requirements at section 1860D-4(e) 
of the Act, refer to the proposed rule titled ``Medicare Program; E-
Prescribing and the Prescription Drug Program,'' which appeared in the 
February 4, 2005 Federal Register (70 FR 6255). Section 6062 of the 
Substance Use-Disorder Prevention that Promotes Opioid Recovery and 
Treatment for Patients and Communities Act (Pub. L. 115-271), 
hereinafter referred to as the SUPPORT Act, amended section 1860D-
4(e)(2) of the Act to require the electronic transmission of ePA 
requests and responses for the Part D e-prescribing program to ensure 
secure ePA request and response transactions between prescribers and 
Part D sponsors for covered Part D drugs prescribed to Part D-eligible 
individuals. Such electronic transmissions must comply with technical 
standards adopted by the Secretary. There is generally no requirement 
that Part D prescribers or dispensers implement e-prescribing, with the 
exception of required electronic prescribing of Schedule II, III, IV, 
and V controlled substances that are Part D drugs, consistent with 
section 2003 of the SUPPORT Act and as specified at Sec.  
423.160(a)(5). However, prescribers and dispensers who electronically 
transmit and receive prescription and certain other information 
regarding covered Part D drugs prescribed for Medicare Part D eligible 
beneficiaries, directly or through an intermediary, are required to 
comply with any applicable standards that are in effect.
2. Regulatory History
    As specified at Sec.  423.160(a)(1), Part D sponsors are required 
to support the Part D e-prescribing program transaction standards as 
part of their electronic prescription drug programs. Likewise, as 
specified at Sec.  423.160(a)(2), prescribers and dispensers that 
conduct electronic transactions for covered Part D drugs for Part D 
eligible individuals for which a program standard has been adopted must 
do so using the adopted standard. Transaction standards are 
periodically updated to take new knowledge, technology, and other 
considerations into account. As CMS adopted specific versions of the 
standards when it initially adopted the foundation and final e-
prescribing standards, there was a need to establish a process by which 
the standards could be updated or replaced over time to ensure that the 
standards did not hold back progress in the healthcare industry. CMS 
discussed these processes in the final rule titled ``Medicare Program; 
E-Prescribing and the Prescription Drug Program,'' (hereinafter 
referred to as ``the November 2005 final rule'') which appeared in the 
November 7, 2005 Federal Register (70 FR 67579). An account of 
successive adoption of new and retirement of previous versions of 
various e-prescribing standards is described in the final rule titled 
``Medicare Program; Revisions to Payment Policies Under the Physician 
Fee Schedule, Clinical Laboratory Fee Schedule & Other Revisions to 
Part B for CY 2014,'' which appeared in the December 10, 2013 Federal 
Register (78 FR 74229); the proposed rule 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,'' which 
appeared in the November 28, 2017 Federal Register (82 FR 56336); and 
the corresponding final rule (83 FR 16440), which appeared in the April 
16, 2018 Federal Register. The final rule titled ``Medicare Program; 
Secure Electronic Prior Authorization For Medicare Part D,'' which 
appeared in the December 31, 2020 Federal Register (85 FR 86824), 
codified the requirement that Part D sponsors support the use of NCPDP 
SCRIPT standard version 2017071 for certain ePA transactions (85 FR 
86832).
    The final rule titled ``Modernizing Part D and Medicare Advantage 
To Lower Drug Prices and Reduce Out-of-Pocket Expenses,'' which 
appeared in the May 23, 2019 Federal Register (84 FR 23832), codified 
at Sec.  423.160(b)(7) the requirement that Part D sponsors adopt an 
electronic RTBT capable of integrating with at least one prescriber's 
electronic prescribing or electronic health record (EHR) system, but 
did not name a standard since no standard had been identified as the 
industry standard at the time (84 FR 23851). The electronic standards 
for eligibility transactions were codified in the final rule titled 
``Medicare and Medicaid Program; Regulatory Provisions to Promote 
Program Efficiency, Transparency, and Burden Reduction,'' which 
appeared in the May 16, 2012 Federal Register (77 FR 29001), to align 
with the applicable Health Insurance Portability and Accountability Act 
of 1996 (HIPAA) standards.
    The Part D program has historically adopted electronic prescribing 
standards independently of other HHS components that may adopt 
electronic prescribing standards under separate authorities; however, 
past experience has demonstrated that duplicative adoption of health IT 
standards by other agencies within HHS under separate authorities can 
create significant burden on the healthcare industry as well as HHS 
when those standards impact the same technology systems. Notably, 
independent adoption of the NCPDP SCRIPT standard version 2017071 by 
CMS in various subsections of Sec.  423.160 (83 FR 16638) in 2018, 
which required use of the standard beginning in 2020, led to a period 
where ONC had to exercise special enforcement discretion

[[Page 78487]]

in its Health Information Technology (IT) Certification Program until 
the same version was incorporated into regulation at 45 CFR 
170.205(b)(1) through the final rule titled ``21st Century Cures Act: 
Interoperability, Information Blocking, and the ONC Health IT 
Certification Program,'' which appeared in the May 1, 2020 Federal 
Register (85 FR 25679). This resulted in significant impact on both ONC 
and CMS program resources. See section III.C. of this proposed rule for 
additional discussion of ONC's proposal and authority. Similarly, the 
final rule titled ``Medicare and Medicaid Program; Regulatory 
Provisions to Promote Program Efficiency, Transparency, and Burden 
Reduction,'' which appeared in the May 16, 2012 Federal Register (77 FR 
29002), noted that, in instances in which an e-prescribing standard has 
also been adopted as a HIPAA transaction standard in 45 CFR part 162, 
the process for updating the e-prescribing standard would have to be 
coordinated with the maintenance and modification of the applicable 
HIPAA transaction standard (77 FR 29018).
3. Withdrawal of Previous Proposals and Summary of New Proposals
    CMS published a proposed rule, ``Medicare Program; Contract Year 
2024 Policy and Technical Changes to the Medicare Advantage Program, 
Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, 
Medicare Parts A, B, C, and D Overpayment Provisions of the Affordable 
Care Act and Programs of All-Inclusive Care for the Elderly; Health 
Information Technology Standards and Implementation Specifications'' 
(hereinafter referred to as ``the December 2022 proposed rule''), which 
appeared in the Federal Register December 27, 2022 (87 FR 79452), in 
which we proposed updates to the standards to be used by Medicare Part 
D prescription drug plans for electronic prescribing (e-prescribing). 
The proposals in the December 2022 proposed rule included a novel 
approach to updating e-prescribing standards by proposing to cross-
reference Part D requirements with standards adopted by the Office of 
the National Coordinator for Health Information Technology (ONC) and 
the standards adopted by HHS for electronic transactions under HIPAA 
\7\ rather than the historical approach of adopting e-prescribing 
standards in the Part D regulations independently or making conforming 
amendments to the Part D regulations in response to updated HIPAA 
standards for eligibility transactions. We proposed this approach in 
concert with ONC in order to mitigate potential compliance challenges 
for the healthcare industry and enforcement challenges for HHS that 
could result from independent adoption of such standards.\8\
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    \7\ HIPAA mandated the adoption of standards for electronically 
conducting certain health care administrative transactions between 
certain entities. HIPAA administrative requirements are codified at 
45 CFR part 162. See also: https://www.cms.gov/about-cms/what-we-do/administrative-simplification.
    \8\ Due to discrepancies between prior regulatory timelines, 
adoption of the NCPDP SCRIPT standard version 2017071 in different 
rules led to a period where ONC had to exercise special enforcement 
discretion in the ONC Health IT Certification Program. See section 
III.C.5. for additional discussion.
---------------------------------------------------------------------------

    In summary, the proposals in the December 2022 proposed rule 
included the following:
    <bullet> Requiring the National Council for Prescription Drug Plans 
(NCPDP) SCRIPT standard version 2022011, proposed for adoption at 45 
CFR 170.205(b), and retiring the current NCPDP SCRIPT standard version 
2017071, as the e-prescribing standard for transmitting prescriptions 
and prescription-related information, medication history, and 
electronic prior authorization (ePA) transactions using electronic 
media for covered Part D drugs for Part D eligible individuals. This 
proposal included a transition period from July 1, 2023 up to January 
1, 2025, when either version of the NCPDP SCRIPT standard could be 
used. The cross citation to 45 CFR 170.205(b) included an expiration 
date of January 1, 2025 for NCPDP SCRIPT standard version 2017071 
meaning that this version would expire for the purposes of HHS use and 
entities named at Sec.  423.160(a)(1) and (2) could use only NCPDP 
SCRIPT standard version 2022011 as of that date;
    <bullet> Requiring the NCPDP Real-Time Prescription Benefit (RTPB) 
standard version 12, proposed for adoption at 45 CFR 170.205(c), as the 
standard for prescriber real-time benefit tools (RTBTs) supported by 
Part D sponsors beginning January 1, 2025; and
    <bullet> Revising regulatory text referring to standards for 
eligibility transactions (87 FR 79548) to cross reference standards 
adopted for electronic eligibility transactions in the HIPAA 
regulations at 45 CFR 162.1202.
    We received 24 comments related to these proposals by the close of 
the comment period on February 13, 2023. Commenters largely supported 
the proposals; however, several commenters, including NCPDP, 
recommended that CMS require use of NCPDP SCRIPT standard version 
2023011, rather than NCPDP SCRIPT standard version 2022011. Similarly, 
NCPDP and other commenters recommended that CMS require NCPDP RTPB 
standard version 13, rather than NCPDP RTPB standard version 12.
    Several commenters expressed concerns about being able to 
successfully transition to NCPDP SCRIPT standard version 2022011 by 
January 1, 2025, and requested at least 2 years from publication of a 
final rule to sunset NCPDP SCRIPT standard version 2017071. Several 
commenters noted that if the implementation of NCPDP SCRIPT standard 
version 2022011 (or NCPDP SCRIPT standard version 2023011, as 
recommended by some commenters) is delayed, the January 1, 2025 
compliance deadline for electronic prescribing of controlled substances 
(EPCS) in long-term care (LTC) facilities, as codified at Sec.  
423.160(a)(5), should also be delayed accordingly, since the new 
versions of the NCPDP SCRIPT standard permit 3-way communication 
between the prescriber, LTC pharmacy, and LTC facility, enabling EPCS 
to occur reliably in the LTC setting.
    A commenter expressed concern that requiring use of the NCPDP 
SCRIPT standard imposes a financial barrier for independent pharmacies 
since NCPDP membership is required to access standards. CMS's 
requirements at Sec.  423.160(a)(2) do not require that all pharmacies 
transmit, directly or through an intermediary, prescriptions and 
prescription-related information using electronic media for Part D 
drugs for Part D-eligible individuals, but (subject to exemptions in 
Sec.  423.160(a)(3)) Sec.  423.160(a)(2) does require that when 
pharmacies do so, they must comply with the Part D electronic 
prescribing standards. CMS's understanding is that a pharmacy 
management system vendor or software developer is the entity that 
incurs the direct costs associated with accessing the code and 
implementation guide associated with updating standards, not the 
pharmacy itself. We acknowledge that these costs may be passed on 
through license fees that the vendor charges to the pharmacy as normal 
costs of doing business. We are not aware of any open-source standards 
that could replace the NCPDP standards in the Part D program, but we 
invite comments on this topic. We also note in section III.C.10. of 
this proposed rule that interested parties may view materials proposed 
for incorporation by reference for free by following the instructions 
provided.
    CMS has considered these comments, reviewed NCPDP SCRIPT standard

[[Page 78488]]

version 2023011 and NCPDP RTPB standard version 13, and identified 
areas where we can reorganize the regulatory text in Sec.  423.160. 
Consequently, CMS is withdrawing all proposals contained in section 
III.S. Standards for Electronic Prescribing (87 FR 79548) of the 
December 2022 proposed rule. This approach will allow CMS to 
incorporate the feedback we received on prior proposals, seek comment 
on concerns raised in response to prior proposals, add new proposals, 
reorganize and make technical changes to the electronic prescribing 
regulations at Sec.  423.160, and allow the public to comment on all 
Medicare Part D electronic prescribing-related proposals 
simultaneously.
    In sections III.B.4. through III.B.9. of this proposed rule, the 
new proposals related to standards for electronic prescribing that we 
are putting forth encompass the following:
    <bullet> Requiring use of NCPDP SCRIPT standard version 2023011, 
proposed for adoption at 45 CFR 170.205(b)(2), and retiring use of 
NCPDP SCRIPT standard version 2017071 for communication of a 
prescription or prescription-related information supported by Part D 
sponsors. This proposal includes a transition period beginning on the 
effective date of the final rule during which either version of the 
NCPDP SCRIPT standard may be used. The transition period would end on 
January 1, 2027, which is the date that ONC has proposed that NCPDP 
SCRIPT standard version 2017071 would expire for the purposes of HHS 
use, as described in section III.C.8.a. of this proposed rule. If 
finalized as proposed, starting January 1, 2027, NCPDP SCRIPT standard 
version 2023011 would be the only version of the NCPDP SCRIPT standard 
available for HHS use and for purposes of the Medicare Part D 
electronic prescribing program;
    <bullet> Requiring use of NCPDP RTPB standard version 13 for 
prescriber RTBTs implemented by Part D sponsors beginning January 1, 
2027;
    <bullet> Requiring use of NCPDP Formulary and Benefit (F&B) 
standard version 60, proposed for adoption at 45 CFR 170.205(u), and 
retiring use of NCPDP F&B version 3.0 for transmitting formulary and 
benefit information between prescribers and Part D sponsors. This 
proposal includes a transition period beginning on the effective date 
of the final rule and ending January 1, 2027, during which entities 
would be permitted to use either NCPDP F&B version 3.0 (currently named 
in regulation at Sec.  423.160(b)(5)(iii) and proposed to be named at 
Sec.  423.160(b)(3) consistent with the proposed technical changes in 
this rule) or NCPDP F&B standard version 60, proposed for adoption at 
45 CFR 170.205(u). If finalized as proposed, starting January 1, 2027, 
only a version of the standard adopted for HHS use at 45 CFR 170.205(u) 
would be permitted for use in Part D electronic prescription drug 
program, which would be NCPDP F&B standard version 60 if the proposal 
in section III.C.8.c. of this rule is finalized as proposed;
    <bullet> Cross-referencing standards adopted for eligibility 
transactions in HIPAA regulations at 45 CFR 162.1202 for requirements 
related to eligibility inquiries; and
    <bullet> Making multiple technical changes to the regulation text 
throughout Sec.  423.160 by removing requirements and incorporations by 
reference that are no longer applicable, re-organizing existing 
requirements, and correcting a technical error.
    In these proposals, we propose a novel approach to updating e-
prescribing standards by cross-referencing Part D e-prescribing 
requirements with standards, including any expiration dates, adopted by 
ONC, as discussed in section III.C.5. of this proposed rule, and the 
standards adopted by HHS for electronic transactions under HIPAA. This 
approach differs from our historical approach of adopting e-prescribing 
standards in the Part D regulations independently or undertaking 
rulemaking to make conforming amendments to the Part D regulations in 
response to updated HIPAA standards for eligibility transactions.\9\ As 
ONC notes in section III.C.5., independent adoption of the NCPDP SCRIPT 
standard version 2017071 in different rules \10\ led to a period where 
ONC had to exercise special enforcement discretion in the ONC Health IT 
Certification Program. We believe the proposed approach would mitigate 
potential compliance challenges for the healthcare industry and 
enforcement challenges for HHS that could result from independent 
adoption of such standards or asynchronous rulemaking cycles across 
programs. CMS invites comment on all aspects of these proposals. We 
also solicit comment on our proposals to cross-reference ONC 
regulations adopting NCPDP SCRIPT standard version 2023011, NCPDP RTPB 
standard version 13, and NCPDP F&B standard version 60. We solicit 
comment on the effect of the proposals that, taken together, would 
require use of these standards by January 1, 2027, as a result of ONC's 
proposals to adopt these standards and retire previous versions, as 
well as our proposal to require use NCPDP F&B standard version 60 by 
that date.
---------------------------------------------------------------------------

    \9\ HIPAA eligibility transaction standards were updated in 
final rule titled ``Health Insurance Reform; Modifications to the 
Health Insurance Portability and Accountability Act (HIPAA) 
Electronic Transaction Standards,'' which appeared in the January 
16, 2009 Federal Register (74 FR 3296). Conforming amendments to the 
Part D regulation were made in the final rule titled ``Medicare and 
Medicaid Program; Regulatory Provisions to Promote Program 
Efficiency, Transparency, and Burden Reduction,'' which appeared in 
the May 16, 2012 Federal Register (77 FR 29002).
    \10\ 21st Century Cures Act: Interoperability, Information 
Blocking, and the ONC Health IT Certification Program final rule, 
which appeared in the May 1, 2020 Federal Register (85 FR 25642), 
and the 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 final rule, which appeared in the April 16, 2018 
Federal Register (83 FR 16440).
---------------------------------------------------------------------------

    The NCPDP SCRIPT standards are used to exchange information among 
prescribers, dispensers, intermediaries, and Medicare prescription drug 
plans (PDPs). NCPDP has requested that CMS adopt NCPDP SCRIPT standard 
version 2023011 because this version provides a number of enhancements 
to support electronic prescribing and transmission of prescription-
related information.\11\ Accordingly, we propose to update Sec.  
423.160 to specify where transactions for electronic prescribing, 
medication history, and ePA are required to utilize the NCPDP SCRIPT 
standard. The proposal, in conjunction with ONC's proposal as described 
in section III.C.8.a. of this proposed rule, will allow for a 
transition period where either NCPDP SCRIPT standard version 2017071 or 
2023011 can be used, with exclusive use of NCPDP SCRIPT standard 
version 2023011 required by January 1, 2027. As described in section 
III.B.7., we solicit comment on the date by which use of the updated 
version of this and other standards proposed in this proposed rule 
would be required, if finalized as proposed.
---------------------------------------------------------------------------

    \11\ National Council for Prescription Drug Programs (NCPDP) 
SCRIPT Standard, Implementation Guide, Version 2023011, April 2023. 
NCPDP SCRIPT standard implementation guides are available to NCPDP 
members for free and to non-members for a fee at ncpdp.org. The 
NCPDP SCRIPT standard version 2023011 implementation guide proposed 
for incorporation by reference in section III.C.10. of this proposed 
rule can be viewed by interested parties for free by following the 
instructions provided in that section.
---------------------------------------------------------------------------

    The NCPDP RTPB standard enables the real-time exchange of patient-
specific eligibility, product coverage (including any restrictions and 
alternatives), and estimated cost sharing so prescribers have access to 
this information through a RTBT application

[[Page 78489]]

at the point-of-prescribing.<SUP>12 13</SUP> As discussed in section 
III.B.5. of this proposed rule, as currently codified at Sec.  
423.160(b)(7), CMS requires that Part D sponsors implement one or more 
electronic RTBTs that are capable of integrating with at least one 
prescriber's electronic prescribing system or electronic health record, 
as of January 1, 2021; however, at the time CMS established this 
requirement, no single industry RTPB standard was available. NCPDP has 
since developed an RTPB standard. We propose to require the most 
current version, NCPDP RTPB standard version 13, as the standard for 
prescriber RTBTs at Sec.  423.160(b)(5) starting January 1, 2027.
---------------------------------------------------------------------------

    \12\ National Council for Prescription Drug Programs (NCPDP) 
Real-Time Prescription Benefit Standard, Implementation Guide, 
Version 13, July 2023. NCPDP RTPB standard implementation guides are 
available to NCPDP members for free and to non-members for a fee at 
ncpdp.org. The NCPDP RTPB standard version 13 implementation guide 
proposed for incorporation by reference in section III.C.10. of this 
proposed rule can be viewed by interested parties for free by 
following the instructions provided in that section.
    \13\ Bhardwaj S, Miller SD, Bertram A, Smith K, Merrey J, 
Davison A. Implementation and cost validation of a real-time benefit 
tool. Am J Manag Care. 2022 Oct 1;28(10):e363-e369. doi: 10.37765/
ajmc.2022.89254.
---------------------------------------------------------------------------

    The NCPDP F&B standard is a batch standard that provides formulary 
and benefit information at the plan level rather than at the patient 
level. The NCPDP F&B standard complements other standards utilized for 
electronic prescribing, electronic prior authorization, and real-time 
prescription benefit applications.<SUP>14 15</SUP> We propose to 
require use of NCPDP F&B standard version 60, and retire NCPDP F&B 
standard version 3.0, beginning January 1, 2027, and after a transition 
period during which either version may be used.
---------------------------------------------------------------------------

    \14\ National Council for Prescription Drug Programs (NCPDP) 
Formulary and Benefit Standard, Implementation Guide, Version 60, 
April 2023. NCPDP F&B standard implementation guides are available 
to NCPDP members for free and to non-members for a fee at ncpdp.org. 
The NCPDP F&B standard version 60 implementation guide proposed for 
incorporation by reference in section III.C.10. of this proposed 
rule can be viewed by interested parties for free by following the 
instructions provided in that section.
    \15\ Babbrah P, Solomon MR, Stember L, Hill JW, Weiker M. 
Formulary & Benefit and Real-Time Pharmacy Benefit: Electronic 
standards delivering value to prescribers and pharmacists. J Am 
Pharm Assoc. 2023 May-June;63(3):725-730. https://doi.org/10.1016/j.japh.2023.01.016.
---------------------------------------------------------------------------

    Eligibility inquiries utilize the NCPDP Telecommunication standard 
or Accredited Standards Committee X12N 270/271 inquiry and response 
transaction for pharmacy or other health benefits, respectively. The 
Part D program has adopted standards based on the HIPAA electronic 
transaction standards, which have not been updated for more than a 
decade. HHS has proposed updates to the HIPAA electronic transaction 
standards for retail pharmacies (87 FR 67638) in the proposed rule 
titled ``Administrative Simplification: Modifications of Health 
Insurance Portability and Accountability Act of 1996 (HIPAA) National 
Council for Prescription Drug Programs (NCPDP) Retail Pharmacy 
Standards; and Adoption of Pharmacy Subrogation Standard,'' 
(hereinafter referred to as ``the November 2022 Administrative 
Simplification proposed rule''), which appeared in the Federal Register 
November 9, 2022 (87 FR 67634). We propose to update the Part D 
regulation at Sec.  423.160(b)(3) to require that eligibility 
transactions utilize the applicable standard named as the HIPAA 
standard for electronic eligibility transactions at 45 CFR 162.1202. 
Since 45 CFR 162.1202 currently identifies the same standards that are 
named at Sec.  423.160(b)(3)(i) and (ii), we anticipate no immediate 
impact from this proposed change in regulatory language. Our proposal, 
however, would ensure that Part D electronic prescribing requirements 
for eligibility transactions align with the HIPAA standard for 
electronic eligibility transactions should a newer version of the NCPDP 
Telecommunication (or other) standards be adopted as the HIPAA standard 
for these types of electronic transactions, if HHS' proposals in the 
November 2022 Administrative Simplification proposed rule are finalized 
or as a result of any future HHS rules.
4. Requiring NCPDP SCRIPT Standard Version 2023011 as the Part D 
Electronic Prescribing Standard, Retirement of NCPDP SCRIPT Standard 
Version 2017071, and Related Conforming Changes in Sec.  423.160
    The NCPDP SCRIPT standard has been the adopted electronic 
prescribing standard for transmitting prescriptions and prescription-
related information using electronic media for covered Part D drugs for 
Part D eligible individuals since foundation standards were named in 
the final rule titled ``Medicare Program; E-Prescribing and the 
Prescription Drug Program,'' which appeared in the November 7, 2005 
Federal Register (70 FR 67568), at the start of the Part D program. The 
NCPDP SCRIPT standard is used to exchange information among 
prescribers, dispensers, intermediaries, and Medicare prescription drug 
plans. In addition to electronic prescribing, the NCPDP SCRIPT standard 
is used in electronic prior authorization (ePA) and medication history 
transactions.
    Although electronic prescribing is optional for physicians, except 
as to Schedule II, III, IV, and V controlled substances that are Part D 
drugs prescribed under Part D, and pharmacies, the Medicare Part D 
statute and regulations require drug plans participating in the 
prescription benefit to support electronic prescribing, and physicians 
and pharmacies who elect to transmit prescriptions and related 
communications electronically must utilize the adopted standards except 
in limited circumstances, as codified at Sec.  423.160(a)(3).
    NCPDP's standards development process involves a consensus-based 
approach to solve emerging needs of the pharmacy industry or to adapt 
NCPDP standards to changes made by other standards development 
organizations.\16\ Emerging needs of the pharmacy industry may be the 
result of legislative or regulatory changes, health IT innovations, 
patient safety issues, claims processing issues, or electronic 
prescribing-related process automation.\17\ Changes to standards are 
consensus-based and driven by the NCPDP membership, which includes 
broad representation from pharmacies, insurers, pharmacy benefit 
managers, Federal and State government agencies, and vendors serving 
all the stakeholders.<SUP>18 19</SUP>
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    \16\ https://standards.ncpdp.org/Our-Process.aspx.
    \17\ NCPDP University. How Industry Needs Drive Changes in 
Standards. Accessed August 15, 2023, from https://member.ncpdp.org 
(member-only content).
    \18\ NCPDP University. Voting: The Life Cycle of Standards 
Approval. Accessed August 15, 2023, from https://member.ncpdp.org 
(member-only content).
    \19\ https://www.ncpdp.org/Membership-diversity.aspx.
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    In a letter to CMS dated January 14, 2022, NCPDP requested that CMS 
adopt NCPDP SCRIPT standard version 2022011, given the number of 
updates and enhancements that had been added to the standard since 
NCPDP SCRIPT standard version 2017071 was adopted.\20\ NCPDP summarized 
the major enhancements in NCPDP SCRIPT standard version 2022011 
relative to the currently required NCPDP SCRIPT standard version 
2017071. Those summarized enhancements include--
---------------------------------------------------------------------------

    \20\ https://standards.ncpdp.org/Standards/media/pdf/Correspondence/2022/202201NCPDP-SCRIPTNextVersionLetter.pdf.
---------------------------------------------------------------------------

    <bullet> General extensibility; \21\
---------------------------------------------------------------------------

    \21\ Extensibility is a term in software engineering that is 
defined as the quality of being designed to allow the addition of 
new capabilities or functionality. See: Ashaolu B. What is 
Extensibility? Converged. February 17, 2021. Available from: https://converged.propelsoftware.com/blogs/what-is-extensibility.
---------------------------------------------------------------------------

    <bullet> Redesign of the Product/Drug groupings requiring National 
Drug Code

[[Page 78490]]

(NDC) for DrugCoded element, but not for NonDrugCoded element;
    <bullet> Addition of Observation elements to Risk Evaluation and 
Mitigation Strategies (REMS) transactions;
    <bullet> Addition of ProhibitRenewalRequest to RxChangeResponse and 
RxRenewalResponse;
    <bullet> Modification of Structured and Codified Sig Structure 
format; and
    <bullet> Additional support related to dental procedure codes, 
RxBarCode, PatientConditions, patient gender and pronouns, 
TherapeuticSubstitutionIndicator, multi-party communications, and 
withdrawal/retracting of a previous sent message using the 
MessageIndicatorFlag.
    Subsequently, in the December 2022 proposed rule, CMS proposed to 
require NCPDP SCRIPT standard version 2022011 and retire NCPDP SCRIPT 
standard version 2017071, after a transition period, by cross 
referencing the standards as proposed for adoption by ONC. In response 
to this proposal, NCPDP and many other commenters recommended that CMS 
instead adopt the more current NCPDP SCRIPT standard version 2023011. 
NCPDP SCRIPT standard version 2023011, like NCPDP SCRIPT standard 
version 2022011, includes the functionality that supports a 3-way 
transaction (that is, multi-party communication) among prescriber, 
facility, and pharmacy, which will enable EPCS in the LTC setting.\22\ 
In its comments on the December 2022 proposed rule,\23\ NCPDP 
highlighted specific enhancements within NCPDP SCRIPT standard version 
2023011 that are not present in NCPDP SCRIPT standard version 2022011, 
which include:
---------------------------------------------------------------------------

    \22\ National Council for Prescription Drug Programs (NCPDP) 
SCRIPT Standard, Implementation Guide, Version 2023011, April 2023. 
NCPDP SCRIPT standard implementation guides are available to NCPDP 
members for free and to non-members for a fee at ncpdp.org. The 
NCPDP SCRIPT standard version 2023011 implementation guide proposed 
for incorporation by reference in section III.C.10. of this proposed 
rule can be viewed by interested parties for free by following the 
instructions provided in that section.
    \23\ https://standards.ncpdp.org/Standards/media/pdf/Correspondence/2023/20230213_To_CMS_CMS_4201_P_NPRM.pdf.
---------------------------------------------------------------------------

    <bullet> Addition of an optional element in the header for 
OtherReferenceNumber for multi-party communication transactions, such 
as those in LTC;
    <bullet> Addition of a response type of Pending for 
RxChangeResponse and RxRenewalResponse for communicating when to expect 
an approval or denial of the request or delays in approval or denial of 
requests;
    <bullet> Addition of a new RequestExpirationDate element to 
NewRxRequest, RxChangeRequest, and RxRenewalRequest to notify the 
prescriber to not send a response after this date;
    <bullet> Addition of a new a new element NoneChoiceID to 
PASelectType so that a ``none of the above'' answer can be selected by 
the provider and allow branching to the next question in a series;
    <bullet> Addition of a new element for REMSReproductivePotential 
replacing REMSPatientRiskCategory in the prescribed medication element 
group in the NewRx and RxChangeRequest message and in the replace 
medication element group for the RxRenewalResponse;
    <bullet> Addition of a new element group of ReviewingProvider to 
the Resupply and Recertification messages to allow for the reporting of 
the provider who reviewed the chart and certified continued need of a 
specific medication; and
    <bullet> Revised guidance in the SCRIPT Implementation Guide.
    NCPDP SCRIPT standard version 2023011 is fully backwards compatible 
with NCPDP SCRIPT standard version 2017071. This allows for a less 
burdensome implementation process and flexible adoption timeline for 
pharmacies, payers, prescribers, health IT vendors, and intermediaries 
involved in electronic prescribing, since backwards compatibility 
permits a transition period where both versions of the NCPDP SCRIPT 
standards may be used simultaneously without the need for entities 
involved to utilize a translator program.
    Even though we are withdrawing the proposals contained in section 
III.S. Standards for Electronic Prescribing in the December 2022 
proposed rule (87 FR 79548), we have considered comments we received on 
the December 2022 proposed rule when crafting our proposals for this 
proposed rule. For instance, several commenters asked that CMS clearly 
indicate that the proposed version of the NCPDP SCRIPT standard will 
apply to medication history functions. Several commenters noted that 
the regulation text at Sec.  423.160(b)(4)(ii) does not list the NCPDP 
SCRIPT standard-specific medication history transactions. Commenters 
asked that CMS list the corresponding medication history transactions 
(RxHistoryRequest and RxHistoryResponse) in the regulation text so as 
to minimize ambiguity. After considering these comments, we propose to 
list the RxHistoryRequest and RxHistoryResponse transactions at Sec.  
423.160(b)(1)(i)(U) subsequent to our technical reorganization of the 
section proposed in section III.B.9. of this rule, rather than list the 
transactions under Sec.  423.160(b)(4).
    With respect to ePA transactions in the NCPDP SCRIPT standard 
currently listed at Sec.  423.160(b)(8)(i)(A) through (D) 
(PAInitiationRequest, PAInitiationResponse, PARequest, PAResponse, 
PAAppealRequest, PAAppealResponse, PACancelRequest, PACancelResponse) 
and a new ePA transaction (PANotification) available in NCPDP SCRIPT 
standard version 2023011, we propose to list all transactions at Sec.  
423.160(b)(1)(i)(V) through (Z). We are proposing new language at Sec.  
423.160(b)(1) to indicate that the transactions listed must comply with 
a standard in proposed 45 CFR 170.205(b) ``as applicable to the version 
of the standard in use'' since an older version of a standard may not 
support the same transactions as the newer version of the standard. For 
example, during the proposed transition period where either NCPDP 
SCRIPT version 2017071 or NCPDP SCRIPT standard version 2023011 may be 
used, entities that are still using NCPDP SCRIPT standard version 
2017071 would not be expected to use the PANotification transaction 
because the PANotification transaction is only supported in the NCPDP 
SCRIPT standard version 2023011.
    Since the NCPDP SCRIPT standard version 2023011 is fully backwards 
compatible with NCPDP SCRIPT standard version 2017071, the pharmacies, 
payers, prescribers, health IT vendors, and intermediaries involved in 
electronic prescribing can accommodate a transition period when either 
version may be used. That is, during a transition period, transactions 
taking place between entities using different versions of the same 
standard maintain interoperability without the need for entities to 
utilize (that is, purchase) a translator software program. The cross 
reference to proposed 45 CFR 170.205(b) permits a transition period 
starting as of the effective date of a final rule during which either 
NCPDP SCRIPT standard version 2017071 or NCPDP SCRIPT standard version 
2023011 may be used. If finalized as proposed, the transition period 
will end and exclusive use of NCPDP SCRIPT standard version 2023011 
will be required starting January 1, 2027, when NCPDP SCRIPT standard 
version 2017071 will expire for the purposes of HHS use.
    Instead of independently naming the NCPDP SCRIPT standard version 
2023011 and incorporating the corresponding implementation guide by

[[Page 78491]]

reference at Sec.  423.160(c), we propose at Sec.  423.160(b)(1) to 
cross reference a standard in 45 CFR 170.205(b). ONC proposes to adopt 
NCPDP SCRIPT standard version 2023011 in 45 CFR 170.205(b)(2) as 
described in section III.C.8.a. of this proposed rule. The proposed 
approach would enable CMS and ONC to avoid misalignment from 
independent adoption of NCPDP SCRIPT standard version 2023011 for their 
respective programs. Updates to the standard would impact requirements 
for both programs at the same time, ensure consistency, and promote 
alignment for providers, payers, and health IT developers participating 
in and supporting the same prescription transactions. See section 
III.C.5. of this proposed rule for additional discussion of this 
coordination effort.
    In its letter to CMS requesting CMS to adopt NCPDP SCRIPT standard 
version 2022011, NCPDP requested that CMS identify certain transactions 
for prescriptions for which use of the standard is mandatory.\24\ As 
previously mentioned in this preamble, in response to the December 2022 
proposed rule, NCPDP and other commenters requested additional 
transactions be named in regulation. As part of our proposed 
reorganization of Sec.  423.160, we propose to list all transactions 
associated with the NCPDP SCRIPT standard requirements in one place in 
the regulation. We propose the transactions for prescriptions, ePA, and 
medication history for which use of the standard is mandatory at Sec.  
423.160(b)(1)(i)(A) through (Z), as described in Table C-C1.
---------------------------------------------------------------------------

    \24\ https://standards.ncpdp.org/Standards/media/pdf/Correspondence/2022/202201NCPDP-SCRIPTNextVersionLetter.pdf.
---------------------------------------------------------------------------

BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP15NO23.010


[[Page 78492]]


[GRAPHIC] [TIFF OMITTED] TP15NO23.011


[[Page 78493]]


[GRAPHIC] [TIFF OMITTED] TP15NO23.012

BILLING CODE 4120-01-C
    The transactions specific to electronic prescribing remain the same 
as those required for NCPDP SCRIPT standard version 2017071 (currently 
codified at Sec.  423.160(b)(2)(iv)(A) through (Z)), except where 
renamed as noted in Table C-C1. The transactions specific to ePA are 
also the same as those required with NCPDP SCRIPT standard version 
2017071, with one additional transaction (PA Notification), which was 
incorporated into the standard after NCPDP SCRIPT standard version 
2017071. As discussed in section III.C.8.a. of this proposed rule, 
NCPDP SCRIPT standard version 2023011 is proposed for adoption at 45 
CFR 170.205(b)(2), and NCPDP SCRIPT standard version 2017071 is 
proposed to expire January 1, 2027, at 45 CFR 170.205(b)(1). 
Consequently, should we finalize our proposal, use of NCPDP SCRIPT 
standard version 2023011 for the transactions related to electronic 
prescribing, medication history, and ePA (proposed at Sec.  
423.160(b)(1)(i)(A) through (Z)) will be mandatory starting January 1, 
2027, if ONC's proposed adoption of NCPDP SCRIPT version 2023011 and 
proposed expiration date for NCPDP SCRIPT version 2017071 are adopted 
as proposed.
---------------------------------------------------------------------------

    \25\ Section 4. Business Functions, and Section 5. Transactions. 
National Council for Prescription Drug Programs (NCPDP) SCRIPT 
Standard, Implementation Guide, Version 2023011, April 2023. NCPDP 
SCRIPT standard implementation guides are available to NCPDP members 
for free and to non-members for a fee at ncpdp.org. The NCPDP SCRIPT 
standard version 2023011 implementation guide proposed for 
incorporation by reference in section III.C.10. of this proposed 
rule can be viewed by interested parties for free by following the 
instructions provided in that section.
---------------------------------------------------------------------------

    As stated previously, in response to the December 2022 proposed 
rule, several commenters pointed out that if mandatory use of an 
updated version of the NCPDP SCRIPT standard is delayed, then the EPCS 
requirement in LTC facilities should also be delayed accordingly, since 
NCPDP SCRIPT standard version 2017071 lacks appropriate guidance for 
LTC facilities. CMS was aware of this limitation in the NCPDP SCRIPT 
standard version

[[Page 78494]]

2017071, and acknowledged the challenges to EPCS faced by LTC 
facilities in the proposed rule ``Medicare Program; CY 2022 Payment 
Policies Under the Physician Fee Schedule and Other Changes to Part B 
Payment Policies; Medicare Shared Savings Program Requirements; 
Provider Enrollment Regulation Updates; Provider and Supplier 
Prepayment and Post-Payment Medical Review Requirements'' (hereinafter 
referred to as ``the July 2022 proposed rule''), which appeared in the 
Federal Register July 23, 2021 (86 FR 39104). However, in the July 2022 
proposed rule, CMS also stated that we understood that NCPDP was in the 
process of creating specific guidance for LTC facilities within the 
NCPDP SCRIPT standard version 2017071, which would allow willing 
partners to enable 3-way communication between the prescriber, LTC 
facility, and pharmacy to bridge any outstanding gaps that impede 
adoption of the NCPDP SCRIPT standard version 2017071 in the LTC 
setting (86 FR 39329).
    Similarly, in the ``Medicare Program; CY 2022 Payment Policies 
Under the Physician Fee Schedule and Other Changes to Part B Payment 
Policies; Medicare Shared Savings Program Requirements; Provider 
Enrollment Regulation Updates; and Provider and Supplier Prepayment and 
Post-Payment Medical Review Requirements'' final rule (hereinafter 
referred to as ``the November 2021 final rule''), which appeared in the 
Federal Register November 19, 2021 (86 FR 64996), CMS acknowledged that 
although 3-way communication is not as seamless in NCPDP SCRIPT 
standard version 2017071 as it was expected to be in later versions, 
EPCS was still possible with some modifications (86 FR 65364). CMS 
delayed EPCS compliance for prescribers' prescriptions written for 
beneficiaries in a LTC facility from January 1, 2022, to no earlier 
than January 1, 2025, in order to give prescribers additional time to 
make the necessary changes to conduct electronic prescribing of covered 
Part D controlled substance prescriptions for Part D beneficiaries in 
LTC facilities using NCPDP SCRIPT standard version 2017071 (86 FR 
65365). We are not proposing a change in the EPCS compliance date for 
covered Part D controlled substance prescriptions for Part D 
beneficiaries in LTC on the basis of the proposed adoption of NCPDP 
SCRIPT standard version 2023011; however, we invite comment on the 
status of EPCS in LTC and the degree to which LTC facilities have been 
able to implement guidance from NCPDP to meet the EPCS requirement.
    As proposed, Sec.  423.160(b)(1) would require use of the version 
or versions of the NCPDP SCRIPT standard adopted in 45 CFR 170.205(b) 
to carry out the transactions listed in Sec.  423.160(b)(1)(i)(A) 
through (Z). However, it would not require that all transactions be 
utilized if they are not needed or are not relevant to the entity. We 
refer readers to ONC's Interoperability Standards Advisory (ISA) 
website for descriptions and adoption level of transactions in the 
NCPDP SCRIPT standard.\26\ For example, we have been informed that the 
``GetMessage'' transaction described in Table C-C1 is not widely used 
among prescribers. For this reason, we are reiterating guidance \27\ 
that the NCPDP SCRIPT standard transactions named are not themselves 
mandatory, but rather they are to be used as applicable to the entities 
specified at Sec.  423.160(a)(1) and (2) when they are completing or 
supporting the transmission of information related to electronic 
prescriptions, electronic prior authorization, or medication history. 
We believe the pharmacies, payers, prescribers, health IT vendors, and 
intermediaries involved in electronic prescribing have been utilizing 
the standards in this manner, based on discussions with NCPDP.
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    \26\ https://www.healthit.gov/isa/section/pharmacyinteroperability.
    \27\ Supporting Electronic Prescribing Under Medicare Part D. 
September 19, 2008. https://www.hhs.gov/guidance/document/supporting-electronic-prescribing-under-medicare-part-d.
---------------------------------------------------------------------------

    In summary, with respect to changes related to adopting, via cross-
reference to ONC proposals in section III.C.8.a., NCPDP SCRIPT standard 
version 2023011 and retiring NCPDP SCRIPT standard version 2017071, we 
propose a revised paragraph Sec.  423.160(b)(1) to:
    <bullet> Consolidate all transactions for electronic prescribing, 
ePA, and medication history for which use of the NCPDP SCRIPT standard 
is mandatory at Sec.  423.160(b)(1)(i)(A) through (Z); and
    <bullet> Indicate that communication of prescriptions and 
prescription-related transactions listed must comply with a standard in 
45 CFR 170.205(b). In conjunction with ONC proposals in section 
III.C.8.a., this cross-reference would permit a transition period when 
either NCPDP SCRIPT standard versions 2017071 or 2023011 may be used 
beginning as of the effective date of a final rule and ending January 
1, 2027, because, as ONC has proposed at 45 CFR 170.205(b)(1), the 
NCPDP SCRIPT standard version 2017071 would expire January 1, 2027, 
after which only NCPDP SCRIPT standard version 2023011 would be 
available for HHS use.
    We solicit comment on these proposals.
5. Requiring NCPDP Real-Time Prescription Benefit (RTPB) Standard 
Version 13
    In the May 2019 final rule (84 FR 23832), which implemented the 
statutory provision at section 1860D-4(e)(2)(D) of the Act, CMS 
required at Sec.  423.160(b)(7) that Part D plan sponsors implement, by 
January 1, 2021, one or more electronic real-time benefit tools (RTBT) 
capable of integrating with at least one prescriber's e-prescribing 
system or electronic health record (EHR) to provide prescribers with 
complete, accurate, timely, clinically appropriate, patient-specific 
formulary and benefit information. CMS indicated that the formulary and 
benefit information provided by the tool should include cost, 
clinically appropriate formulary alternatives, and utilization 
management requirements because, at that time, an industry standard for 
RTBTs had not been identified (84 FR 23833). NCPDP has since developed 
and tested an RTPB standard for use with RTBT applications. The NCPDP 
RTPB standard enables the real-time exchange of information about 
patient eligibility and patient-specific formulary and benefit 
information. For a submitted drug product, the RTPB standard will 
indicate coverage status, coverage restrictions, and estimated patient 
financial responsibility. ``Estimated'' financial responsibility 
accounts for the fact that the RTPB transaction transmits the patient's 
cost sharing at that particular moment in time, which could later 
change if the claim is processed at a later date or in a different 
sequence relative to other claims (for example, an RTPB transaction 
could show a cost sharing that reflects a deductible or particular 
stage in the Part D benefit which could be different from when the 
prescription claim is actually processed by the pharmacy if other 
claims were processed in the interim). The RTPB standard also supports 
providing information on alternative pharmacies and products. In an 
August 20, 2021 letter to CMS, NCPDP described these features and 
recommended adoption of RTPB standard version 12.\28\ Subsequently, in 
the December 2022 proposed rule, CMS proposed that Part D sponsors' 
RTBTs comply with NCPDP RTPB standard version 12. In response

[[Page 78495]]

to that proposal, NCPDP and many other interested parties provided 
comments to CMS recommending that CMS instead require NCPDP RTPB 
standard version 13. In their comments on the December 2022 proposed 
rule,\29\ NCPDP listed enhancements in NCPDP RTPB standard version 13 
that improve the information communicated between the payer and the 
prescriber. These enhancements include:
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    \28\ https://standards.ncpdp.org/Standards/media/pdf/Correspondence/2021/20210820_To_CMS_RTPBandFandBStandardsAdoptionRequest.pdf.
    \29\ https://standards.ncpdp.org/Standards/media/pdf/Correspondence/2023/20230213_To_CMS_CMS_4201_P_NPRM.pdf.
---------------------------------------------------------------------------

    <bullet> Addition of a Coverage Status Message to enable the payer 
to communicate at the product level additional clarifying coverage 
information which is not codified;
    <bullet> Addition of values to the Coverage Restriction Code and 
data elements to codify information communicated in the Message to 
reduce the number of free text messages on the response;
    <bullet> Addition of a next available fill date to communicate when 
the patient is eligible to receive a prescription refill in a discrete 
field instead of via a free text message;
    <bullet> Addition of fields to communicate formulary status and 
preference level of both submitted and alternative products in order to 
clarify pricing; and
    <bullet> Addition of data elements on the request transaction to 
convey the patient's address, State/province, zip/postal code and 
country to aid in coverage determinations.
    Even though we are withdrawing the proposals contained in section 
III.S. Standards for Electronic Prescribing in the December 2022 
proposed rule (87 FR 79548), we have considered comments we received on 
the December 2022 proposed rule when crafting our proposals related to 
RTBTs for this proposed rule. A commenter on the December 2022 proposed 
rule requested that CMS specify that adoption of the NCPDP RTPB 
standard should not impede what the commenter refers to as the industry 
standard of sending 4 drugs or 4 pharmacies for pricing in a single 
transaction. We understand that each transaction between a prescriber 
EHR and the payer or processor is associated with a degree of latency 
(that is, the amount of time it takes for the RTBT request to travel 
from the electronic prescribing system to the payer or processor and 
return a response with the patient's cost sharing and formulary status 
information for the submitted drug). In order to populate information 
on alterative formulary drugs or alternative pharmacies, if one 
alternative is submitted per transaction, then the latency associated 
with each transaction becomes additive. If the total latency is too 
long, then either the RTBT request may ``time out'' and a response may 
never be presented to the prescriber, or the prescriber may simply not 
wait long enough for the RTBT response before moving on through the 
electronic prescribing process. To illustrate the concept at the center 
of this issue, if each RTBT transaction is associated with 1 second of 
latency, then 1 transaction containing the submitted drug, plus 3 
alternatives should return the patient-specific cost and formulary 
status information for all 4 drugs within 1 second. However, if the 
submitted drug and each alternative are sent as separate transactions, 
then the total time to return the RTBT response becomes 4 seconds (1 
second x 4 transactions). This longer response time increases the 
likelihood that the prescriber will not wait for the information to 
populate or that that EHR system will cause the transaction to time 
out, meaning the patient-specific cost and formulary status information 
are not presented to the prescriber. CMS takes interest in how adoption 
of the proposed NCPDP RTPB standard version 13 could alter 
functionality of RTBTs already in use. CMS created requirements for 
RTBTs in the absence of an industry-wide standard because of their 
potential to increase drug price transparency and lower out-of-pocket 
costs for Medicare Part D enrollees. The impact of RTBTs is contingent 
on prescribers actually receiving the patient-specific information in 
the response from the payer. CMS appreciates that this is relatively 
new technology and that there are multiple factors that contribute to 
the overall impact of RTBTs in real-world settings.<SUP>30 31 32</SUP> 
Nevertheless, we seek comment on the issue raised by the commenter. We 
ask interested parties for their perspective on whether requiring the 
NCPDP RTPB standard version 13 would limit the ability to send more 
than one drug or pharmacy per RTBT transaction, and if so, whether the 
benefit of adopting a standard for prescriber RTBTs in order to enable 
widespread integration across EHRs and payers outweighs such 
limitation.
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    \30\ Everson J, Dusetzina SB. Real-time Prescription Benefit 
Tools--The Promise and Peril. JAMA Intern Med. 2022;182(11):1137-
1138. Doi:10.1001/jamainternmed.2022.3962.
    \31\ Real-Time Benefit Check: Key Insights and Challenges. May 
2021. Accessed January 1, 2023. Available at: https://www.hmpgloballearningnetwork.com/site/frmc/cover-story/real-time-benefit-check-key-insights-and-challenges.
    \32\ American Medical Association. Council on Medical Service. 
Access to Health Plan Information regarding Lower-Cost Prescription 
Options (Resolution 213-NOV-20). Available from https://councilreports.ama-assn.org/councilreports/downloadreport?uri=/councilreports/n21_cms_report_2.pdf.
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    The NCPDP RTPB standard version 13 standard is designed for 
prescriber, not beneficiary (that is, consumer), RTBTs. CMS emphasizes 
that we are not proposing a required standard for beneficiary RTBTs. 
Beneficiary RTBTs are made available directly to Part D plan enrollees 
by the Part D sponsor; therefore, beneficiary RTBT applications do not 
necessarily interface with an electronic prescribing system or EHR, as 
prescriber RTBTs must. Consequently, CMS believes that Part D sponsors 
can retain the flexibility to use beneficiary RTBTs that are based on 
an available standard or a custom application, as long as the 
information presented to enrollees meets CMS's requirements codified at 
Sec.  423.128(d)(4). The requirements for the beneficiary RTBT are 
discussed in the final rule titled ``Medicare and Medicaid Programs; 
Contract Year 2022 Policy and Technical Changes to the Medicare 
Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid 
Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care 
for the Elderly,'' which appeared in the January 19, 2021 Federal 
Register (86 FR 5864). We decline to propose a standard for beneficiary 
RTBTs at this time, however we welcome comments on this topic which we 
may consider for future rulemaking.
    As discussed in section III.C.8.b. of this proposed rule, ONC 
proposes to adopt the NCPDP RTPB standard version 13 at 45 CFR 
170.205(c)(1). We therefore propose at Sec.  423.160(b)(5) to require 
that beginning January 1, 2027, Part D sponsors' prescriber RTBT must 
comply with a standard in 45 CFR 170.205(c).
    We solicit comment on these proposals and the related issues 
raised.
6. Requiring NCPDP Formulary and Benefit Standard Version 60 and 
Retirement of NCPDP Formulary and Benefit Standard Version 3.0
    The NCPDP Formulary and Benefit (F&B) standard provides a uniform 
means for prescription drug plan sponsors to communicate plan-level 
formulary and benefit information to prescribers through electronic 
prescribing/EHR systems. The NCPDP F&B standard transmits, on a batch 
basis, data on the formulary status of drugs, preferred alternatives, 
coverage restrictions (that is, utilization management requirements), 
and cost sharing consistent with the benefit design (for example, cost 
sharing for drugs on a particular tier). The NCPDP

[[Page 78496]]

F&B standard serves as a foundation for other electronic prescribing 
functions including ePA, real-time benefit check, and specialty 
medication eligibility when used in conjunction with other 
standards.\33\ NCPDP F&B standard version 3.0 is required for 
transmitting formulary and benefits information between prescribers and 
Medicare Part D sponsors, consistent with the existing text of Sec.  
423.160(b)(1)(v) and (b)(5)(iii). In an April 4, 2023 letter to CMS, 
NCPDP requested that CMS adopt NCPDP F&B standard version 60 to replace 
NCPDP F&B standard version 3.0.\34\ A detailed change log was attached 
to the letter and is available at the link in the footnote. As 
described in the letter, compared with NCPDP F&B standard version 3.0, 
NCPDP F&B standard version 60 includes all of the following major 
enhancements:
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    \33\ Babbrah P, Solomon MR, Stember LA, Hill JW, Weiker M. 
Formulary & benefit and real-time pharmacy Benefit: Electronic 
standards delivering value to prescribers and pharmacists. J Am 
Pharm Assoc (2003). 2023 May-Jun;63(3):725-730. doi: 10.1016/
j.japh.2023.01.016.
    \34\ https://standards.ncpdp.org/Standards/media/pdf/Correspondence/2023/20230404-to-CMS-Formulary-and-Benefit-V60-Request.pdf.
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    <bullet> Normalization of all files (lists), which allows for 
smaller files and reusability.
    <bullet> All files have expiration dates.
    <bullet> Redesigned alternative and step medication files to reduce 
file sizes and to include support for reason for use (that is, 
diagnosis).
    <bullet> Step medication files support a more complex step 
medication program.
    <bullet> Updated coverage files to include support for electronic 
prior authorization and specialty drugs.
    <bullet> Updated copay files to allow a minimum and maximum copay 
range without a percent copay and to support deductibles and pharmacy 
networks.
    In its letter to CMS, NCPDP requested mandatory use of NCPDP F&B 
version 60 24 months after the effective date of a final rule adopting 
the standard. NCPDP F&B standard version 60 is backwards compatible 
with NCPDP F&B standard version 3.0, permitting a transition period 
where both versions of the NCPDP F&B standard may be used 
simultaneously without the need for entities involved to utilize a 
translator program.
    Following an approach similar to those proposed in sections 
III.B.4. and III.B.5. of this proposed rule, CMS proposes at Sec.  
423.160(b)(3) that transmitting formulary and benefit information 
between prescribers and Medicare Part D sponsors must either utilize 
NCPDP F&B standard version 3.0 or comply with a standard in 45 CFR 
170.205(u), where ONC proposes to adopt, at 45 CFR 170.205(u)(1), NCPDP 
F&B standard version 60 as described in section III.C.8.c. of this 
proposed rule. After January 1, 2027, entities transmitting formulary 
and benefit information would be required to comply with a standard in 
45 CFR 170.205(u) exclusively, if finalized as proposed. Since ONC did 
not previously adopt NCPDP F&B standard version 3.0, we are maintaining 
the incorporation by reference of that version in the Part D regulation 
at Sec.  423.160(c)(1)(i) to permit a transition period where either 
NCPDP F&B standard version 3.0 or NCPDP F&B version 60 could be used 
until January 1, 2027.
    We solicit comment on these proposals.
7. Date for Required Use of NCPDP SCRIPT Standard Version 2023011, 
NCPDP RTPB Standard Version 13, and NCPDP F&B Standard Version 60
    CMS has received feedback on a number of practical considerations 
for determining a realistic timeframe to implement new or update 
existing electronic prescribing standards. We have been informed that 
organizations generally do not budget for new requirements until a 
final rule has been published establishing a particular new requirement 
and, therefore, the timing of when a final rule is finalized relative 
to budget approval cycles can determine if a requirement can be 
accounted for in the organization's next annual budget. The health IT 
industry has indicated to CMS that it requires at least 2 years to 
design, develop, test, and certify software with trading partners; 
perform DEA audits for EPCS compliance; and roll out updated software 
to provider organizations and partners who then must train end users 
before a transition to a new or updated version of a standard is 
complete. This account is consistent with NCPDP's requests for up to 
24-month implementation timeframes for new standards.<SUP>35 36</SUP> A 
commenter on the December 2022 proposed rule requested that CMS either 
permit 3 years from a final rule before requiring use of a new or 
updated version of a standard, or use enforcement discretion if 
requiring use of a new or updated version of a standard less than 3 
years from a final rule. CMS will generally aim to provide entities 
with at least 2 years from when a final rule is finalized; however, we 
qualify that in some cases less time may be provided if determined to 
be necessary.
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    \35\ https://standards.ncpdp.org/Standards/media/pdf/Correspondence/2021/20210820_To_CMS_RTPBandFandBStandardsAdoptionRequest.pdf.
    \36\ https://standards.ncpdp.org/Standards/media/pdf/Correspondence/2022/202201NCPDP-SCRIPTNextVersionLetter.pdf.
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    CMS routinely receives feedback requesting that we do not require 
the use of new or updated electronic prescribing standards starting on 
January 1 due to end-of-year ``code freezes,'' which prohibit updates 
to internal systems and plan enrollment changes that contribute to a 
general high workload at the start of a new plan year. CMS reminds 
entities impacted by the proposed regulatory changes that, consistent 
with Sec.  423.516, CMS is prohibited from imposing new, significant 
regulatory requirements on Part D sponsors midyear. If the approach 
proposed in this proposed rule to align CMS's requirements for certain 
Part D electronic prescribing standards by cross-referencing standards 
adopted in ONC regulations is finalized, CMS and ONC will coordinate to 
establish appropriate timeframes for updating adopted standards and 
expiration dates for prior versions of adopted standards. CMS, working 
with ONC, will consider transition periods longer than 24 months 
following publication of a final rule to permit a sufficient transition 
period prior to January 1. Since a new, significant requirement must be 
effective January 1, a new or updated version of a standard could be 
required January 1 of the year following 24 months after a final rule 
is effective. For example, if a final rule containing a provision to 
update an electronic prescribing standard to a new version were 
effective May 30, 2024, then CMS would anticipate requiring the new 
version of the standard by January 1, 2027. This would allow for a 31-
month transition period during which either version of a required 
standard could be used. Part D sponsors would need to plan accordingly 
to completely transition to the updated version of the standard ahead 
of the January 1 date to meet their internal production calendars. 
Using the prior example, we would assume that to avoid implementing the 
updated version of a standard on January 1, 2027, Part D sponsors would 
transition to the updated version of the standard by approximately May 
30, 2026.
    ONC is proposing January 1, 2027, as the date NCPDP SCRIPT standard 
version 2023011 would be the required version of this standard, as a 
product of the proposed expiration for NCPDP SCRIPT standard version 
2017071 and our proposed cross-reference, in Sec.  423.160(b)(1), to a 
standard in 45 CFR 170.205(b). We are proposing the required use of 
NCPDP F&B standard version 60 and NCPDP RTPB standard version 13 by 
January 1, 2027, in the

[[Page 78497]]

text of Sec.  423.160(b)(3) and (5), respectively, as previously 
discussed. We are also aware that Part D sponsors and the health IT 
industry are awaiting HHS' final rule on the proposals to update the 
NCPDP Telecommunication standard from version D.0 to version F6 (87 FR 
67638), update the equivalent NCPDP Batch Standard version 15 (87 FR 
67639), and implement the NCPDP Batch Standard Pharmacy Subrogation 
version 10 (87 FR 67640) proposed in the November 2022 Administrative 
Simplification proposed rule.
    Taking all of these proposals into consideration, we ask interested 
parties to comment on the proposed January 1, 2027, date for the 
required use of NCPDP SCRIPT standard version 2023011, NCPDP RTPB 
standard version 13, and NCPDP F&B standard version 60. It is expressly 
outside the scope of this proposed rule, and we do not seek comment on, 
the compliance date for the proposals in HHS' November 2022 
Administrative Simplification proposed rule; however, we ask for 
comments on the feasibility of updating multiple standards 
simultaneously.
8. Standards for Eligibility Transactions
    We propose to revise the Part D requirements to indicate that 
eligibility transactions must comply with 45 CFR 162.1202. The 
requirements for eligibility transactions currently codified at Sec.  
423.160(b)(3)(i) and (ii) name the Accredited Standards Committee X12N 
270/271-Health Care Eligibility Benefit Inquiry and Response, Version 
5010, April 2008, ASC X12N/005010x279 and the NCPDP Telecommunication 
Standard Specification, Version D, Release 0 (Version D.0), August 
2007, and equivalent NCPDP Batch Standard Batch Implementation Guide, 
Version 1, Release 2 (Version 1.2), January 2006 supporting 
Telecommunications Standard Implementation Guide, Version D, Release 0 
(Version D.0), August 2007. We adopted these standards to align with 
those adopted at 45 CFR 162.1202, pursuant to the final rule titled 
``Health Insurance Reform; Modifications to the Health Insurance 
Portability and Accountability Act (HIPAA) Electronic Transaction 
Standards,'' which appeared in the January 16, 2009, Federal Register 
(74 FR 3326).
    The November 2022 Administrative Simplification proposed rule 
proposes to update the HIPAA standards used for eligibility 
transactions (87 FR 67638). We therefore propose to update the Part D 
regulation by proposing, at Sec.  423.160(b)(2), that eligibility 
inquiries and responses between the Part D sponsor and prescribers and 
between the Part D sponsor and dispensers must comply with the 
applicable HIPAA regulation in 45 CFR 162.1202, as opposed to naming 
standards independently, which would ensure, should the HIPAA standards 
for eligibility transactions be updated as a result of HHS rulemaking 
or in the future, that the Part D regulation would be synchronized with 
the required HIPAA standards. We foresee no immediate impact of this 
proposed change since the HIPAA regulation at 45 CFR 162.1202 currently 
identifies the same standards as those named in the Part D regulation 
at Sec.  423.160(b)(3)(i) and (ii), but we believe establishing a 
cross-reference would help avoid potential future conflicts and 
mitigate potential compliance challenges for the healthcare industry 
and enforcement challenges for HHS.
    Thus, we propose to delete existing Sec.  423.160(b)(3)(i) and (ii) 
and modify Sec.  423.160(b)(2) (as renumbered per the technical 
proposals in section III.B.9. of this proposed rule) to require that 
eligibility transactions must comply with 45 CFR 162.1202.
    We solicit comment on these proposals.
9. Technical Changes Throughout Sec.  423.160
    In the spirit of alignment with ONC's approach to adopting 
standards, we reviewed Sec.  423.160 in its entirety and identified 
areas where we can reorganize text throughout this section. We do not 
believe we should continue to list historical requirements that are no 
longer relevant and have resulted in repetitive content being added to 
the regulation. We propose removing reference to old effective dates 
(for example, ``After January 1, 2009 . . .'' at Sec.  
423.160(a)(3)(ii)). Additionally, certain exemptions have long since 
expired. For example, at Sec.  423.160(a)(3)(iv), entities transmitting 
prescriptions or prescription-related information where the prescriber 
is required by law to issue a prescription for a patient to a non-
prescribing provider (such as a nursing facility) that in turn forwards 
the prescription to a dispenser have not been exempt from using the 
SCRIPT standard since November 1, 2014.
    We are proposing a correction at Sec.  423.160(a)(3)(iii), where 
regulation text refers to prescriptions and prescription-related 
information transmitted ``internally when the sender and the 
beneficiary are part of the same legal entity.'' The exemption 
currently at Sec.  423.160(a)(3)(iii) was previously codified at Sec.  
423.160(a)(3)(ii) as ``Entities may use either HL7 messages or the 
NCPDP SCRIPT Standard to transmit prescriptions or prescription-related 
information internally when the sender and the recipient are part of 
the same legal entity . . .'' as finalized in the November 2005 final 
rule, which codified the foundation standards for Medicare Part D 
electronic prescription drug programs (70 FR 67594). Section 
423.160(a)(3)(ii) was redesignated as Sec.  423.160(a)(3)(iii) 
subsequent to changes made in the final rule titled ``Medicare Program; 
Revisions to Payment Policies Under the Physician Fee Schedule, and 
Other Part B Payment Policies for CY 2008; Revisions to the Payment 
Policies of Ambulance Services Under the Ambulance Fee Schedule for CY 
2008; and the Amendment of the E-Prescribing Exemption for Computer 
Generated Facsimile Transmissions,'' (hereinafter referred to as ``the 
November 2007 final rule'') which appeared in the November 27, 2007 
Federal Register (72 FR 66222). There is no indication of intent in the 
November 2007 final rule to change the wording in Sec.  
423.160(a)(3)(iii) when it was redesignated, nor can we find evidence 
of when this paragraph may have been altered in subsequent rules. 
Therefore, we believe the word ``recipient'' was inadvertently changed 
to ``beneficiary'' in the distant past and we are proposing to change 
this back to ``recipient.''
    Section 423.160(a)(1) and (2) already indicate that the entities 
listed must comply with the applicable standards in Sec.  423.160(b); 
therefore, the language currently at Sec.  423.160(b)(1), ``Entities 
described in paragraph (a) of this section must comply with the 
following adopted standards for transactions under this section,'' is 
redundant. We propose to remove it from the text of Sec.  
423.160(b)(1). Moreover, Sec.  423.160(b)(1)(i) through (iv) and 
(b)(2)(i) through (iii) contain long-outdated requirements going back 
to the start of the electronic prescribing program in Medicare Part D. 
We propose to delete references to outdated requirements so that the 
regulation text will include only relevant and applicable requirements. 
Transition periods would no longer be specifically spelled out as 
starting at a particular date (historically, 6 months after the 
effective date of a final rule). Rather, the transition period would 
begin as of the effective date of a final rule effectuating a change 
from one version of a standard to a new version and would last until 
the prior version of the standard is expired, as proposed to be 
codified in ONC regulation, or until the date specified in Part D 
regulation. For

[[Page 78498]]

versions of standards adopted by ONC, CMS would consider the necessary 
transition period when working with ONC to establish the appropriate 
expiration date for prior versions of standards in rulemaking. This 
would align the Part D approach with the approach that ONC has used in 
its own regulations.
    As currently organized, separate sections for ``Prescription'' at 
Sec.  423.160(b)(2), ``Medication history'' at Sec.  423.160(b)(4), and 
``Electronic prior authorization'' at Sec.  423.160(b)(8) has resulted 
in multiple versions of the NCPDP SCRIPT standard, and relevant 
transactions, being repeated in these sections. Because Sec.  
423.160(a)(1) and (2) state that the entities listed must comply ``with 
the applicable standards in paragraph (b),'' we believe that we can 
group the functions in paragraph (b) according to the standard used for 
those functions to avoid repetition. Therefore, we propose to combine 
``Prescriptions, electronic prior authorization, and medication 
history'' at Sec.  423.160(b)(1), which will require the use of the 
NCPDP SCRIPT standard version or versions as proposed via cross-
reference to ONC regulations. We propose to delete Sec.  423.160(b)(4) 
and (8). The ePA transactions previously listed at Sec.  
423.160(b)(8)(i)(A) through (D) are proposed at Sec.  
423.160(b)(1)(i)(V) through (Y). We are proposing to delete reference 
to versions of the NCPDP F&B standard, currently codified at Sec.  
423.160(b)(5) introductory text and (b)(5)(i) and (ii), that are no 
longer applicable. The remaining paragraphs in Sec.  423.160(b) are 
renumbered such that Sec.  423.160(b)(2) refers to eligibility, Sec.  
423.160(b)(3) refers to formulary and benefits, Sec.  423.160(b)(4) 
refers to provider identifier, and Sec.  423.160(b)(5) refers to real-
time benefit tools.
    We are proposing to delete standards incorporated by reference at 
Sec.  423.160(c) that are: no longer applicable (that is, were 
associated with outdated requirements that we have proposed to delete); 
are being proposed for incorporation by reference by ONC at 45 CFR 
170.299; or are already incorporated by reference by HHS at 45 CFR 
162.920. The standards incorporated by reference at Sec.  
423.160(c)(1)(i), (ii), and (v) are no longer applicable, and we 
propose to delete them. The standards for eligibility transactions 
currently incorporated by reference at Sec.  423.160(c)(1)(iii) and 
(c)(2)(i) and (ii) have already been incorporated by reference by HHS 
at 45 CFR 162.920. We propose to delete these specified Sec.  
423.160(c)(1) and (2) incorporations by reference in light of our 
proposals in section III.B.8. of this proposed rule to indicate that 
entities must comply with 45 CFR 162.1202 for eligibility transactions. 
In section III.B.11. of this proposed rule, we discuss how we propose 
to renumber the applicable standards currently incorporated by 
reference and where we propose to incorporate by reference the proposed 
new versions of standards as discussed in sections III.B.4., III.B.5., 
and III.B.6. of this proposed rule.
    We believe these changes improve the overall readability of the 
section. With the exception of proposed changes described in sections 
III.B.4., III.B.5., III.B.6., and III.B.8., we do not intend for 
technical changes to alter current requirements.
    We solicit comment on these proposals.
10. Summary of Standards for Electronic Prescribing Proposals
    Sections III.B.4. though III.B.9. of this proposed rule include the 
following proposals:
    <bullet> Requiring, via cross-reference to a standard in 45 CFR 
170.205(b), use of NCPDP SCRIPT standard version 2023011, which ONC 
proposes for adoption at 45 CFR 170.205(b)(2), and retiring use of 
NCPDP SCRIPT standard version 2017071, via the same proposed cross-
reference, for communication of a prescription or prescription-related 
information supported by Part D sponsors. This proposal includes a 
transition period beginning on the effective date of the final rule 
when either version of the NCPDP SCRIPT standard may be used. The 
transition period would end on January 1, 2027, which is the date that 
ONC has proposed that NCPDP SCRIPT standard version 2017071 would 
expire for the purposes of HHS use, as described in section III.C.8.a. 
of this proposed rule. If finalized as proposed, starting January 1, 
2027, NCPDP SCRIPT standard version 2023011 would be the only version 
of the NCPDP SCRIPT standard available for HHS use and for purposes of 
the Medicare Part D electronic prescribing program;
    <bullet> Requiring, beginning January 1, 2027, prescriber RTBTs 
implemented by Part D sponsors to comply with a standard in 45 CFR 
170.205(c), where ONC proposes to adopt NCPDP RTPB standard version 13;
    <bullet> Requiring transmission of formulary and benefit 
information between prescribers and Medicare Part D sponsors to comply 
with a standard in 45 CFR 170.205(u), where ONC proposes to adopt NCPDP 
F&B standard version 60, and retiring use of NCPDP F&B version 3.0 for 
transmitting formulary and benefit information between prescribers and 
Part D sponsors. This proposal includes a transition period beginning 
on the effective date of the final rule and ending January 1, 2027, 
where entities would be permitted to use either NCPDP F&B version 3.0 
(currently named in regulation at Sec.  423.160(b)(5)(iii) and proposed 
to be named at Sec.  423.160(b)(3) consistent with the proposed 
technical changes in this rule) or NCPDP F&B standard version 60, 
proposed for adoption at 45 CFR 170.205(u). If finalized as proposed, 
starting January 1, 2027, only a version of the standard adopted for 
HHS use at 45 CFR 170.205(u) would be permitted for use in Part D 
electronic prescription drug program, which would be NCPDP F&B standard 
version 60 if the proposal in section III.C.8.c. of this rule is 
finalized as proposed;
    <bullet> Cross-referencing standards adopted for eligibility 
transactions in HIPAA regulations at 45 CFR 162.1202 for requirements 
related to eligibility inquiries; and
    <bullet> Making multiple technical changes to the regulation text 
throughout Sec.  423.160 for clarity by removing requirements and 
incorporations by reference that are no longer applicable or redundant, 
re-organizing existing requirements, and correcting a technical error. 
CMS invites comment on all aspects of these proposals, including the 
proposed date of January 1, 2027, for required use of NCPDP SCRIPT 
standard version 2023011, NCPDP RTPB standard version 13, and NCPDP F&B 
standard version 60.
11. Incorporation by Reference and Availability of Incorporation by 
Reference Materials
    The Office of the Federal Register (OFR) has regulations concerning 
incorporation by reference (IBR) at 1 CFR part 51. If the regulations 
reference a standard, either in general or by name, in another section, 
IBR approval is required. In order for CMS to require use of standards 
in Sec.  423.160 by cross citation to 45 CFR 170.205(b), those 
standards must be published in full in the Federal Register or CFR. 
Therefore, CMS must incorporate by reference the materials referenced 
in the proposals in sections III.B.4., III.B.5., and III.B.6. of this 
proposed rule which cross cite standards in ONC regulations.
    For a proposed rule, agencies must discuss in the preamble to the 
proposed rule ways that the materials the agency proposes to 
incorporate by reference are reasonably available to interested parties 
or how the agency worked to make the materials reasonably available.

[[Page 78499]]

Additionally, the preamble to the proposed rule must summarize the 
materials. See also section III.C.10. of this proposed rule for 
summaries of the standards proposed for incorporation by reference by 
ONC.
    Consistent with those requirements CMS has established procedures 
to ensure that interested parties can review and inspect relevant 
materials. The proposals related to the Part D electronic prescribing 
standards have relied on the following materials which we propose to 
incorporate by reference where specified:
    <bullet> NCPDP SCRIPT Standard, Implementation Guide Version 
2017071, approved July 28, 2017, which is currently incorporated by 
reference at Sec.  423.160(c)(1)(vii). We propose to renumber this 
incorporation by reference as Sec.  423.160(c)(2);
    <bullet> NCPDP SCRIPT Standard, Implementation Guide Version 
2023011, published April 2023, (Approval Date for American National 
Standards Institute [ANSI]: January 17, 2023). We propose to 
incorporate by reference at Sec.  423.160(c)(3);
    <bullet> NCPDP Real-Time Prescription Benefit Standard, 
Implementation Guide Version 13, published July 2023 (Approval Date for 
ANSI: May 19, 2022). We propose to incorporate by reference at Sec.  
423.160(c);
    <bullet> NCPDP Formulary and Benefits Standard, Implementation 
Guide, Version 3, Release 0 (Version 3.0), published April 2012, which 
is currently incorporated by reference at Sec.  423.160(c)(1)(vi). We 
propose to renumber this incorporation by reference at Sec.  
423.160(c)(1); and
    <bullet> NCPDP Formulary and Benefit Standard, Implementation Guide 
Version 60, published April 2023 (Approval Date for ANSI: April 12, 
2023). We propose to incorporate by reference at Sec.  423.160(c)(5).
    NCPDP members may access these materials through the member portal 
at www.ncpdp.org. Non-NCPDP members may obtain these materials for 
information purposes by contacting the CMS at 7500 Security Boulevard, 
Baltimore, Maryland 21244 by calling (410) 786-4132 or (877) 267-2323 
(toll free), or emailing <a href="/cdn-cgi/l/email-protection#b2e2d3c0c6f6e2dddedbd1cbf2d1dfc19cdadac19cd5ddc4"><span class="__cf_email__" data-cfemail="1848796a6c5c487774717b61587b756b3670706b367f776e">[email protected]</span></a>.

C. Adoption of Health IT Standards and Incorporation by Reference (45 
CFR 170.205 and 170.299)

1. Overview
    In this section, ONC proposes to adopt standards for electronic 
prescribing and related activities on behalf of HHS under the authority 
in section 3004 of the Public Health Service Act (42 U.S.C. 300jj-14). 
ONC is proposing these standards for adoption by HHS as part of a 
nationwide health information technology infrastructure that supports 
reducing burden and health care costs and improving patient care. ONC 
proposes to adopt these standards on behalf of HHS in one location 
within the Code of Federal Regulations for HHS use, including by the 
Part D Program as proposed in section III.B. of this proposed rule. 
These proposals reflect a unified approach across the Department to 
adopt standards for electronic prescribing (e-prescribing) activities 
that have previously been adopted separately by CMS and ONC under 
independent authorities. This approach is intended to increase 
alignment across HHS and reduce regulatory burden for interested 
parties subject to program requirements that incorporate these 
standards.
    In the Medicare Program; Contract Year 2024 Policy and Technical 
Changes to the Medicare Advantage Program, Medicare Prescription Drug 
Benefit Program, Medicare Cost Plan Program, Medicare Parts A, B, C, 
and D Overpayment Provisions of the Affordable Care Act and Programs of 
All-Inclusive Care for the Elderly; Health Information Technology 
Standards and Implementation Specifications'' (December 2022 proposed 
rule), which appeared in the Federal Register December 27, 2022 (87 FR 
79552 through 79557), we proposed the adoption of NCPDP SCRIPT standard 
version 2022011 and NCPDP Real-Time Prescription Benefit standard 
version 13, as well as related proposals. We considered whether to 
issue a final rule based on that proposed rule, but considering the 
concerns raised by the commenters regarding which version of the 
standards to use, we have opted not to do so. Specifically, some 
commenters recommended adoption of NCPDP SCRIPT standard version 
2023011, rather than the proposed NCPDP SCRIPT standard version 
2022011. Other commenters recommended adoption of NCPDP RTPB standard 
version 13, rather than the proposed NCPDP RTPB standard version 12. 
See additional discussion in section III.B.5. of this rule. Therefore, 
we are withdrawing the proposals in sections III.T. and III.U. of the 
December 2022 proposed rule (87 FR 79552 through 79557). We are issuing 
a series of new proposals in this proposed rule that take into 
consideration the feedback we received from commenters on the December 
2022 proposed rule and further build on these proposals. Additionally, 
summaries of the standards we propose to adopt and subsequently 
incorporate by reference in the Code of Federal Regulations can be 
found below in section III.C.10. of this rule.
2. Statutory Authority
    The Health Information Technology for Economic and Clinical Health 
Act (HITECH Act), Title XIII of Division A and Title IV of Division B 
of the American Recovery and Reinvestment Act of 2009 (the Recovery 
Act) (Pub. L. 111-5), was enacted on February 17, 2009. The HITECH Act 
amended the Public Health Service Act (PHSA) and created ``Title XXX--
Health Information Technology and Quality'' (Title XXX) to improve 
health care quality, safety, and efficiency through the promotion of 
health IT and exchange of electronic health information (EHI). 
Subsequently, Title IV of the 21st Century Cures Act (Pub. L. 114-255) 
(Cures Act) amended portions of the HITECH Act by modifying or adding 
certain provisions to the PHSA relating to health IT.
3. Adoption of Standards and Implementation Specifications
    Section 3001 of the PHSA directs the National Coordinator for 
Health Information Technology (National Coordinator) to perform duties 
in a manner consistent with the development of a nationwide health 
information technology infrastructure that allows for the electronic 
use and exchange of information. Section 3001(b) of the PHSA 
establishes a series of core goals for development of a nationwide 
health information technology infrastructure that--
    <bullet> Ensures that each patient's health information is secure 
and protected, in accordance with applicable law;
    <bullet> Improves health care quality, reduces medical errors, 
reduces health disparities, and advances the delivery of patient-
centered medical care;
    <bullet> Reduces health care costs resulting from inefficiency, 
medical errors, inappropriate care, duplicative care, and incomplete 
information;
    <bullet> Provides appropriate information to help guide medical 
decisions at the time and place of care;
    <bullet> Ensures the inclusion of meaningful public input in such 
development of such infrastructure;
    <bullet> Improves the coordination of care and information among 
hospitals, laboratories, physician offices, and other entities through 
an effective infrastructure for the secure and authorized exchange of 
health care information;

[[Page 78500]]

    <bullet> Improves public health activities and facilitates the 
early identification and rapid response to public health threats and 
emergencies, including bioterror events and infectious disease 
outbreaks;
    <bullet> Facilitates health and clinical research and health care 
quality;
    <bullet> Promotes early detection, prevention, and management of 
chronic diseases;
    <bullet> Promotes a more effective marketplace, greater 
competition, greater systems analysis, increased consumer choice, and 
improved outcomes in health care services; and
    <bullet> Improves efforts to reduce health disparities.
    Section 3004 of the PHSA identifies a process for the adoption of 
health IT standards, implementation specifications, and certification 
criteria, and authorizes the Secretary to adopt such standards, 
implementation specifications, and certification criteria. As specified 
in section 3004(a)(1) of the PHSA, the Secretary is required, in 
consultation with representatives of other relevant Federal agencies, 
to jointly review standards, implementation specifications, and 
certification criteria endorsed by the National Coordinator under 
section 3001(c) of the PHSA and subsequently determine whether to 
propose the adoption of any grouping of such standards, implementation 
specifications, or certification criteria. The Secretary is required to 
publish all determinations in the Federal Register.
    Section 3004(b)(3) of the PHSA, which is titled ``Subsequent 
Standards Activity,'' provides that the Secretary shall adopt 
additional standards, implementation specifications, and certification 
criteria as necessary and consistent with the schedule published by the 
Health IT Advisory Committee (HITAC). As noted in the final rule, 
``2015 Edition Health Information Technology (Health IT) Certification 
Criteria, 2015 Edition Base Electronic Health Record (EHR) Definition, 
and ONC Health IT Certification Program Modifications,'' which appeared 
in the October 16, 2015 Federal Register, we consider this provision in 
the broader context of the HITECH Act and the Cures Act to grant the 
Secretary the authority and discretion to adopt standards, 
implementation specifications, and certification criteria that have 
been recommended by the HITAC and endorsed by the National Coordinator, 
as well as other appropriate and necessary health IT standards, 
implementation specifications, and certification criteria (80 FR 
62606).
    Under the authority outlined in section 3004(b)(3) of the PHSA, the 
Secretary may adopt standards, implementation specifications, and 
certification criteria as necessary even if those standards have not 
been recommended and endorsed through the process established for the 
HITAC under section 3002(b)(2) and (3) of the PHSA. Moreover, while HHS 
has traditionally adopted standards and implementation specifications 
at the same time as adopting certification criteria that reference 
those standards, the Secretary's authority under section 3004(b)(3) of 
the PHSA is not limited to adopting standards or implementation 
specifications at the same time certification criteria are adopted.
    Finally, the Cures Act amended the PHSA by adding section 3004(c), 
which specifies that in adopting and implementing standards under 
section 3004, the Secretary shall give deference to standards published 
by standards development organizations and voluntary consensus-based 
standards bodies.
4. Alignment With Federal Advisory Committee Activities
    The HITECH Act established two Federal advisory committees, the HIT 
Policy Committee (HITPC) and the HIT Standards Committee (HITSC). Each 
was responsible for advising the National Coordinator on different 
aspects of health IT policy, standards, implementation specifications, 
and certification criteria.
    Section 4003(e) of the Cures Act amended section 3002 of the PHSA 
and replaced the HITPC and HITSC with one committee, the HITAC. After 
that change, section 3002(a) of the PHSA establishes that the HITAC 
advises and recommends to the National Coordinator standards, 
implementation specifications, and certification criteria relating to 
the implementation of a health IT infrastructure, nationally and 
locally, that advances the electronic access, exchange, and use of 
health information. The Cures Act specifically directed the HITAC to 
advise on two areas: (1) A policy framework to advance an interoperable 
health information technology infrastructure (section 3002(b)(1) of the 
PHSA); and (2) priority target areas for standards, implementation 
specifications, and certification criteria (section 3002(b)(2) of the 
PHSA).
    For the policy framework, as described in section 3002(b)(1)(A) of 
the PHSA, the Cures Act tasked the HITAC with providing recommendations 
to the National Coordinator on a policy framework for adoption by the 
Secretary consistent with the Federal Health IT Strategic Plan under 
section 3001(c)(3) of the PHSA. In February of 2018, the HITAC made 
recommendations to the National Coordinator for the initial policy 
framework \37\ and subsequently published a schedule in the Federal 
Register and an annual report on the work of the HITAC and ONC to 
implement and evolve that framework.\38\ For the priority target areas 
for standards, implementation specifications, and certification 
criteria, section 3002(b)(2)(A) of the PHSA identified that in general, 
the HITAC would recommend to the National Coordinator, for purposes of 
adoption under section 3004 of the PHSA, standards, implementation 
specifications, and certification criteria and an order of priority for 
the development, harmonization, and recognition of such standards, 
specifications, and certification criteria. In October of 2019, the 
HITAC finalized recommendations on priority target areas for standards, 
implementation specifications, and certification criteria.\39\
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    \37\ HITAC Policy Framework Recommendations, February 21, 2018: 
https://www.healthit.gov/sites/default/files/page/2019-07/2018-02-21_HITAC_Policy-Framework_FINAL_508-signed.pdf.
    \38\ Health Information Technology Advisory Committee (HITAC) 
Annual Report for Fiscal Year 2019 published March 2, 2020: https://www.healthit.gov/sites/default/files/page/2020-03/HITAC%20Annual%20Report%20for%20FY19_508.pdf.
    \39\ HITAC recommendations on priority target areas, October 16, 
2019: https://www.healthit.gov/sites/default/files/page/2019-12/2019-10-16_ISP_TF_Final_Report_signed_508.pdf.
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5. Aligned Approach to Standards Adoption
    Historically, the ONC Health IT Certification Program and the Part 
D Program have maintained complementary policies of aligning health IT 
certification criteria and associated standards related to electronic 
prescribing, medication history, and electronic prior authorization for 
prescriptions. While CMS and ONC have worked closely together to ensure 
consistent adoption of standards through regulatory actions, we 
recognize that the practice of different HHS components conducting 
parallel adoption of the same standards may result in additional 
regulatory burden and confusion for interested parties. For instance, 
due to discrepancies between regulatory timelines, adoption of the 
NCPDP SCRIPT standard version 2017071 in different rules (respectively, 
21st Century Cures Act: Interoperability, Information Blocking, and the 
ONC

[[Page 78501]]

Health IT Certification Program final rule (85 FR 25642) and the 
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 
final rule which appeared in the April 16, 2018 Federal Register (83 FR 
16440)) led to a period where ONC had to exercise special enforcement 
discretion in the ONC Health IT Certification Program.\40\ Given these 
concerns, ONC and CMS proposals in the December 2022 proposed rule (87 
FR 79552 through 79557) reflected a new approach to alignment of 
standards under which ONC proposed to adopt and incorporate by 
reference, on behalf of HHS, the NCPDP SCRIPT standard version 2022011 
and the NCPDP RTPB standard version 12 in a single Code of Federal 
Regulations location at 45 CFR 170.205, where CMS proposed to cross-
reference these standards for requirements in the Part D program.
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    \40\ See the archived version of the Certification Companion 
Guide for the ``electronic prescribing'' certification criterion in 
45 CFR 170.315(b)(3): https://www.healthit.gov/sites/default/files/page/2020-12/b3_ccg.pdf.
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    For additional discussion of this approach see the December 2022 
proposed rule (87 FR 79552 through 79557) and CMS's discussion in 
sections III.B.3 through III.B.7. of this proposed rule. We note that 
the proposals in this rule continue to reflect an aligned approach with 
CMS to adoption of health IT standards for e-prescribing and related 
purposes. We believe our proposed adoption of these standards in a 
single CFR location for HHS use will help to address concerns around 
alignment across HHS programs.
6. Regulatory History
    For a summary of past standards adoption activities under section 
3004 of the PHSA intended to ensure alignment for electronic 
prescribing and related activities across the ONC Health IT 
Certification Program and the Part D Program, we refer readers to the 
December 2022 proposed rule (87 FR 79553). In this proposed rule, we 
also propose to adopt the NCPDP Formulary and Benefit (F&B) standard 
version 60, which was not previously discussed in the December 2022 
proposed rule (87 FR 79553). For a summary of previous notice-and-
comment rulemaking related to formulary and benefit management 
capabilities in the ONC Health IT Certification Program, we refer 
readers to the ``Health Data, Technology, and Interoperability: 
Certification Program Updates, Algorithm Transparency, and Information 
Sharing'' proposed rule (HTI-1 Proposed Rule) (88 FR 23853 through 
23854).
7. Interoperability Standards Advisory
    ONC's Interoperability Standards Advisory (ISA) supports the 
identification, assessment, and public awareness of interoperability 
standards and implementation specifications that can be used by the 
health care industry to address specific interoperability needs.\41\ 
The ISA is updated on an annual basis based on recommendations received 
from public comments and subject matter expert feedback. This public 
comment process reflects ongoing dialogue, debate, and consensus among 
industry interested parties when more than one standard or 
implementation specification could be used to address a specific 
interoperability need.
---------------------------------------------------------------------------

    \41\ See https://www.healthit.gov/isa.
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    ONC currently identifies the standards proposed for adoption in 
this section within the ISA as available standards for a variety of 
potential use cases. The NCPDP SCRIPT standard version 2023011, the 
NCPDP Real-Time Prescription Benefit standard version 13, and the NCPDP 
Formulary and Benefits standard version 60 are currently identified in 
sections of the ISA including the ``Pharmacy Interoperability'' \42\ 
and ``Administrative Transactions--Non-Claims.'' \43\ We encourage 
interested parties to review the ISA to better understand key 
applications for the implementation specifications proposed for 
adoption in this proposed rule.
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    \42\ See https://www.healthit.gov/isa/section/pharmacyinteroperability.
    \43\ See https://www.healthit.gov/isa/section/administrative-transactions-non-claims.
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8. Proposal To Adopt Standards for Use by HHS
    Consistent with section 3004(b)(3) of the PHSA and the efforts, as 
previously described, to evaluate and identify standards for adoption, 
we propose to adopt the following implementation specifications in 45 
CFR 170.205(b)(2), (c)(1), and (u)(1), on behalf of the Secretary, to 
support the continued development of a nationwide health information 
technology infrastructure as described under section 3001(b) of the 
PHSA, and to support Federal alignment of standards for 
interoperability and health information exchange. Specifically, we 
propose to adopt the following standards:
    <bullet> NCPDP SCRIPT Standard, Implementation Guide, Version 
2023011.
    <bullet> NCPDP Real-Time Prescription Benefit (RTPB) Standard, 
Implementation Guide, Version 13.
    <bullet> NCPDP Formulary and Benefits (F&B) Standard, 
Implementation Guide, Version 60.
    In addition to comments on the individual proposals below, we 
invite comments on whether there are alternative versions, including 
any newer versions, of these or other standards that we should consider 
for adoption for HHS use. In particular, we would be interested in, and 
would consider for adoption in a final rule, any newer version of the 
proposed standard(s) that may correct any unidentified errors or 
clarify ambiguities that would support successful implementation of the 
standard(s) and the interoperability of health IT.
a. NCPDP SCRIPT Standard Version 2023011 (45 CFR 170.205(b))
    ONC has previously adopted three versions of the NCPDP SCRIPT 
standard in 45 CFR 170.205. Most recently, we adopted NCPDP SCRIPT 
standard version 2017071 in the ONC 21st Century Cures Act final rule 
to facilitate the transfer of prescription data among pharmacies, 
prescribers, and payers (85 FR 25678).
    The updated NCPDP SCRIPT standard version 2023011 includes 
important enhancements relative to NCPDP SCRIPT standard version 
2017071. Enhancements have been added to support electronic prior 
authorization functions as well as electronic transfer of prescriptions 
between pharmacies. NCPDP SCRIPT standard version 2023011 also includes 
functionality that supports a 3-way transaction among prescriber, 
facility, and pharmacy, which will enable electronic prescribing of 
controlled substances in the long-term care (LTC) setting.\44\
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    \44\ See https://standards.ncpdp.org/Standards/media/pdf/Correspondence/2023/20230213_To_CMS_CMS_4201_P_NPRM.pdf.
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    We propose to adopt NCPDP SCRIPT standard version 2023011 in 45 CFR 
170.205(b)(2), replacing NCPDP SCRIPT standard version 10.6 which is 
currently in 170.205(b)(2). We propose to incorporate NCPDP SCRIPT 
standard version 2023011 by reference in 45 CFR 170.299. Regarding 
NCPDP SCRIPT standard version 2017071, we propose to revise the 
regulatory text in 45 CFR 170.205(b)(1) to specify that adoption of 
this standard will expire on January 1, 2027. If these proposals are 
finalized, this would mean that both the 2017071 and 2023011 versions 
of the NCPDP SCRIPT standard would be available for

[[Page 78502]]

HHS use from the effective date of a final rule until January 1, 2027. 
On and after January 1, 2027, only the 2023011 version of the NCPDP 
SCRIPT standard would be available for HHS use, for instance, where use 
of a standard in 45 CFR 170.205(b) is required. We refer readers to 
section III.B.4. of this proposed rule, where CMS discusses its 
proposal at Sec.  423.160(b)(1) to require use of a standard in 45 CFR 
170.205(b) for communication of a prescription or prescription-related 
information to fulfill the requirements for prescriptions, electronic 
prior authorization, and medication history.
    We request comment on these proposals.
b. NCPDP Real-Time Prescription Benefit (RTPB) Standard Version 13 (45 
CFR 170.205(c))
    The NCPDP Real-Time Prescription Benefit standard version 13 
enables the exchange of coverage status and estimated patient financial 
responsibility for a submitted product and pharmacy, and identifies 
coverage restrictions and alternatives when they exist. See section 
III.B.5. of this proposed rule for a description of Real-Time 
Prescription Benefit standard functionality and enhancements of NCPDP 
Real-Time Prescription Benefit standard version 13 relative to NCPDP 
Real-Time Prescription Benefit standard version 12.
    Our proposal to adopt this standard supports the requirements of 
Division CC, Title I, Subtitle B, section 119 of the Consolidated 
Appropriations Act, 2021 (CAA), Public Law 116-260, which required 
sponsors of Medicare prescription drug plans to implement a real-time 
benefit tool that meets technical standards named by the Secretary, in 
consultation with ONC. In addition, section 119(b) of the CAA amended 
the definition of a ``qualified electronic health record'' in section 
3000(13) of the PHSA to specify that a ``qualified electronic health 
record'' must include or be capable of including a real-time benefit 
tool. ONC intends to address this provision in future rulemaking for 
the ONC Health IT Certification Program and will ensure alignment with 
the proposed NCPDP Real-Time Prescription Benefit standard version 13, 
if finalized, and related proposals in the Part D program where 
appropriate.
    We also note that the HITAC has previously addressed real-time 
prescription benefit standards, consistent with its statutory role to 
recommend standards. In 2019, the HITAC accepted the recommendations 
included in the 2018 report of the Interoperability Priorities Task 
Force, including recommendations to continue to monitor standards then 
being developed for real-time prescription benefit transactions, and, 
when the standards are sufficiently validated, to require EHR vendors 
to provide functionality that integrates real time patient-specific 
prescription benefit checking into the prescribing workflow.\9\ In 
early 2020, the National Committee on Vital and Health Statistics 
(NCVHS) and HITAC convened another task force, the Intersection of 
Clinical and Administrative Data (ICAD) Task Force, which was charged 
with convening industry experts and producing recommendations related 
to electronic prior authorizations. The task force report was presented 
to HITAC in November 2020 \10\ and discussed the NCPDP Real-Time 
Prescription Benefit standard as an important tool for addressing 
administrative transactions around prescribing.
    We are proposing in 45 CFR 170.205(c) to add a new section heading 
``Real-Time Prescription Benefit.'' We are also proposing to adopt the 
NCPDP Real-Time Prescription Benefit standard version 13 \45\ in 45 CFR 
170.205(c)(1) and to incorporate this standard by reference in 45 CFR 
170.299. We refer readers to section III.B.5. of this rule, where CMS 
proposes at Sec.  423.160(b)(5) to require Part D sponsors' RTBTs to 
comply with a standard in 45 CFR 170.205(c) by January 1, 2027, to 
fulfill the requirements for real-time benefit tools. As previously 
noted, ONC will consider proposals to require use of this standard to 
support real-time benefit tool functionality in the ONC Health IT 
Certification Program, consistent with section 119 of the CAA, in 
future rulemaking.
---------------------------------------------------------------------------

    \45\ See https://standards.ncpdp.org/Access-to-Standards.aspx.
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    We request comment on these proposals.
c. NCPDP Formulary and Benefit (F&B) Standard Version 60 (45 CFR 
170.205(u))
    The NCPDP Formulary and Benefit (F&B) standard version 60 \46\ 
provides a uniform means for prescription drug plan sponsors to 
communicate plan-level formulary and benefit information to prescribers 
through electronic prescribing/EHR systems. The NCPDP F&B standard 
transmits, on a batch basis, data on the formulary status of drugs, 
preferred alternatives, coverage restrictions (that is., utilization 
management requirements), and cost sharing consistent with the benefit 
design for example, cost sharing for drugs on a particular tier). The 
NCPDP F&B standard serves as a foundation for other electronic 
prescribing transactions including ePA, real-time benefit check, and 
specialty medication eligibility when used in conjunction with other 
standards.
---------------------------------------------------------------------------

    \46\ See https://standards.ncpdp.org/Access-to-Standards.aspx.
---------------------------------------------------------------------------

    We propose to add a new paragraph heading at 45 CFR 170.205(u), 
``Formulary and benefit.'' We propose to adopt the NCPDP Formulary and 
Benefit standard version 60 at 45 CFR 170.205(u)(1) and to incorporate 
this standard by reference in 45 CFR 170.299. We refer readers to 
section III.B.6. of this proposed rule, where CMS proposes at Sec.  
423.160(b)(3) to require, by January 1, 2027, use of a standard in 45 
CFR 170.205(u) by Part D plan sponsors to fulfill the requirements for 
exchange of formulary and benefit information with prescribers.
9. ONC Health IT Certification Program
    We are not proposing new or revised certification criteria based on 
the proposed adoption of standards within this rulemaking. We note that 
section 119 of the CAA does not require ONC to adopt certification 
criteria for real-time prescription benefit capabilities at the same 
time as a standard is adopted by HHS. We are therefore proposing to 
adopt the standard for HHS use and, as previously discussed, ONC would 
address new or revised certification criteria referencing the standard, 
if finalized, in separate rulemaking. ONC recently published a Request 
for Information in the HTI-1 Proposed Rule seeking information related 
to a real-time prescription benefit criterion (88 FR 23853 through 
23854). ONC will continue to collaborate with CMS to ensure that any 
future proposals in the ONC Health IT Certification Program continue to 
advance alignment with program requirements under the Part D Program.
    We believe the approach reflected in the standards proposals in 
this proposed rule will support Federal alignment and coordination of 
Federal activities with adopted standards and implementation 
specifications for a wide range of systems, use cases, and data types 
within the broad scope of health information exchange. Historically, 
State, Federal, and local partners have leveraged the standards adopted 
by ONC on behalf of HHS to inform program requirements, technical 
requirements for grants and funding opportunities, and systems 
implementation for health information

[[Page 78503]]

exchange. We believe the adoption of these standards will support HHS 
partners in setting technical requirements and advancing the use of 
innovative health IT solutions for electronic prescribing and related 
activities.
10. Incorporation by Reference (45 CFR 170.299)
    The Office of the Federal Register has established requirements for 
materials (for example, standards and implementation specifications) 
that agencies propose to incorporate by reference in the Code of 
Federal Regulations (79 FR 66267; 1 CFR 51.5(a)). Specifically, 1 CFR 
51.5(a) requires agencies to discuss, in the preamble of a proposed 
rule, the ways that the materials it proposes to incorporate by 
reference are reasonably available to interested parties or how it 
worked to make those materials reasonably available to interested 
parties; and summarize, in the preamble of the proposed rule, the 
material it proposes to incorporate by reference.
    To make the materials we intend to incorporate by reference 
reasonably available, we provide a uniform resource locator (URL) for 
the standards and implementation specifications. In many cases, these 
standards and implementation specifications are directly accessible 
through the URLs provided. In instances where they are not directly 
available, we note the steps and requirements necessary to gain access 
to the standard or implementation specification. In most of these 
instances, access to the standard or implementation specification can 
be gained through no-cost (monetary) participation, subscription, or 
membership with the applicable standards developing organization (SDO) 
or custodial organization. In certain instances, where noted, access 
requires a fee or paid membership. As an alternative, a copy of the 
standards may be viewed for free at the U.S. Department of Health and 
Human Services, Office of the National Coordinator for Health 
Information Technology, 330 C Street SW, Washington, DC 20201. Please 
call (202) 690-7171 in advance to arrange inspection.
    The National Technology Transfer and Advancement Act (NTTAA) of 
1995 (15 U.S.C. 3701 et seq.) and the Office of Management and Budget 
(OMB) Circular A-119 require the use of, wherever practical, technical 
standards that are developed or adopted by voluntary consensus 
standards bodies to carry out policy objectives or activities, with 
certain exceptions. The NTTAA and OMB Circular A-119 provide exceptions 
to selecting only standards developed or adopted by voluntary consensus 
standards bodies, namely when doing so would be inconsistent with 
applicable law or otherwise impractical. We have followed the NTTAA and 
OMB Circular A-119 in proposing standards and implementation 
specifications for adoption, and note that the technical standards 
proposed for adoption in 45 CFR 170.205 in this proposed rule were 
developed by NCPDP, which is an ANSI-accredited, not-for-profit 
membership organization using a consensus-based process for standards 
development.
    As required by 1 CFR 51.5(a), we provide summaries of the standards 
we propose to adopt and subsequently incorporate by reference in the 
Code of Federal Regulations. We also provide relevant information about 
these standards and implementation specifications in the preamble where 
these standards are proposed for adoption. We propose to revise Sec.  
170.299(k) with the following updated standards:
<bullet> National Council for Prescription Drug Programs (NCPDP) SCRIPT 
Standard, Implementation Guide, Version 2023011, April 2023 (Approval 
Date for ANSI: January 17, 2023)
    URL: https://standards.ncpdp.org/Access-to-Standards.aspx.
    Access requires registration, a membership fee, a user account, and 
a license agreement to obtain a copy of the standard.
    Summary: SCRIPT is a standard created to facilitate the transfer of 
prescription data between pharmacies, prescribers, and payers. The 
current standard supports transactions regarding new prescriptions, 
prescription changes, renewal requests, prescription fill status 
notification, and prescription cancellation. Enhancements have been 
added for drug utilization review/use (DUR/DUE) alerts and formulary 
information as well as transactions to relay medication history and for 
a facility to notify a pharmacy of resident information. Enhancements 
have been added to support electronic prior authorization functions as 
well as electronic transfer of prescriptions between pharmacies.
<bullet> National Council for Prescription Drug Programs (NCPDP) Real-
Time Prescription Benefit Standard, Implementation Guide, Version 13, 
July 2023 (Approval Date for ANSI: May 19, 2022)
    URL: https://standards.ncpdp.org/Access-to-Standards.aspx.
    Access requires registration, a membership fee, a user account, and 
a license agreement to obtain a copy of the standard.
    Summary: The NCPDP Real-Time Prescription Benefit Standard 
Implementation Guide is intended to meet the industry need within the 
pharmacy services sector to facilitate the ability for pharmacy benefit 
payers/processors to communicate to providers and to ensure a 
consistent implementation of the standard throughout the industry. The 
Real-Time Prescription Benefit (RTPB) Standard enables the exchange of 
patient eligibility, product coverage, and benefit financials for a 
chosen product and pharmacy, and identifies coverage restrictions, and 
alternatives when they exist.
<bullet> National Council for Prescription Drug Programs (NCPDP) 
Formulary and Benefit Standard, Implementation Guide, Version 60, April 
2023 (Approval Date for ANSI: April 12, 2023)
    URL: https://standards.ncpdp.org/Access-to-Standards.aspx.
    Access requires registration, a membership fee, a user account, and 
a license agreement to obtain a copy of the standard.
    Summary: The NCPDP Formulary and Benefit Standard Implementation 
Guide is intended to provide a standard means for pharmacy benefit 
payers (including health plans and Pharmacy Benefit Managers) to 
communicate formulary and benefit information to prescribers via 
technology vendor systems.

D. Improvements to Drug Management Programs (Sec. Sec.  423.100 and 
423.153)

    Section 1860D-4(c)(5)(A) of the Social Security Act (the Act) 
requires that Part D sponsors have a drug management program (DMP) for 
beneficiaries at risk of abuse or misuse of frequently abused drugs 
(FADs), currently defined by CMS as opioids and benzodiazepines. CMS 
codified the framework for DMPs at Sec.  423.153(f) in the April 16, 
2018 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 Programs, and 
the PACE Program'' (83 FR 16440),

[[Page 78504]]

hereafter referred to as the April 2018 final rule.
    Under current DMP policy, CMS identifies potential at-risk 
beneficiaries (PARBs) who meet the clinical guidelines described at 
Sec.  423.153(f)(16), which CMS refers to as the minimum 
Overutilization Monitoring System (OMS) criteria. CMS, through the OMS, 
reports such beneficiaries to their Part D plans for case management 
under their DMP. There are also supplemental clinical guidelines, or 
supplemental OMS criteria, which Part D sponsors can apply themselves 
to identify additional PARBs. Under Sec.  423.153(f)(2), sponsors are 
required to conduct case management for PARBs, which must include 
informing the beneficiary's prescribers of their potential risk for 
misuse or abuse of FADs and requesting information from the prescribers 
relevant to evaluating the beneficiary's risk, including whether they 
meet the regulatory definition of exempted beneficiary.
    If the sponsor determines through case management that the enrollee 
is an at-risk beneficiary (ARB), after notifying the beneficiary in 
writing, the sponsor may limit their access to opioids and/or 
benzodiazepines to a selected prescriber and/or network pharmacy(ies) 
and/or through a beneficiary-specific point-of-sale claim edit, in 
accordance with the requirements at Sec.  423.153(f)(3). CMS 
regulations at Sec.  423.100 define exempted beneficiary, at-risk 
beneficiary, potential at-risk beneficiary, and frequently abused drug.
1. Definition of Exempted Beneficiary Sec.  423.100
    Section 1860D-4(c)(5)(C)(ii) of the Act defines an exempted 
individual as one who receives hospice care, who is a resident of a 
long-term care facility for which frequently abused drugs are dispensed 
for residents through a contract with a single pharmacy, or who the 
Secretary elects to treat as an exempted individual. At Sec.  423.100 
CMS defines an exempted beneficiary as an enrollee being treated for 
active cancer-related pain, or has sickle-cell disease, residing in a 
long-term care facility, has elected to receive hospice care, or is 
receiving palliative or end-of-life care.
    The OMS criteria finalized in the April 2018 final rule were 
developed to align with available information and guidelines, such as 
the Centers for Disease Control and Prevention (CDC) Guideline for 
Prescribing Opioids for Chronic Pain (2016 CDC Guideline) issued in 
March 2016.\47\ The current policy to exempt beneficiaries with cancer 
from DMPs was developed through feedback from interested parties and 
alignment with the 2016 CDC Guideline's active cancer treatment 
exclusion. Patients within the scope of the 2016 CDC Guideline included 
cancer survivors with chronic pain who have completed cancer treatment, 
were in clinical remission, and were under cancer surveillance only. 
The 2022 CDC Clinical Practice Guideline for Prescribing Opioids for 
Pain (2022 CDC Guideline) \48\ expands and updates the 2016 CDC 
Guideline to provide evidence-based recommendations for prescribing 
opioid pain medication for acute, subacute, and chronic pain for 
outpatients aged >=18 years, excluding pain management related to 
sickle cell disease, cancer-related pain treatment, palliative care, 
and end-of-life care.
---------------------------------------------------------------------------

    \47\ https://www.cdc.gov/mmwr/volumes/65/rr/rr6501e1.htm.
    \48\ https://www.cdc.gov/mmwr/volumes/71/rr/rr7103a1.htm.
---------------------------------------------------------------------------

    In the interest of alignment with the 2022 CDC Guideline regarding 
applicability in individuals with cancer, we are proposing to amend the 
regulatory definition of ``exempted beneficiary'' at Sec.  423.100 by 
replacing the reference to ``active cancer-related pain'' with 
``cancer-related pain.'' With this proposal we expand the definition of 
exempted beneficiary to more broadly refer to enrollees being treated 
for cancer-related pain to include beneficiaries undergoing active 
cancer treatment, as well as cancer survivors with chronic pain who 
have completed cancer treatment, are in clinical remission, or are 
under cancer surveillance only.
2. Drug Management Program Notices: Timing and Exceptions Sec.  
423.153(f)(8)
    As discussed above, sponsors must provide case management for any 
PARB that meets the OMS criteria to determine whether the individual is 
an ARB and whether to implement a limitation on their access to FADs. 
Under section 1860D-4(c)(5)(B)(i)(I) of the Act, a sponsor must send an 
initial and second notice to such beneficiary prior to imposing such 
limitation. In the April 2018 final rule (83 FR 16440), CMS adopted 
requirements for the initial and second notices at Sec.  423.153(f)(5) 
and (6). The initial notice must inform the beneficiary that they have 
been identified as a PARB and must include information outlined in 
Sec.  423.153(f)(5)(ii). The second notice must inform the beneficiary 
that they have been identified as an ARB and of the limitations on the 
beneficiary's coverage of FADs, as specified in Sec.  
423.153(f)(6)(ii). In the event that, after sending an initial notice, 
a sponsor determines that a PARB is not an ARB, a second notice would 
not be sent; instead, an alternate second notice would be sent. Though 
not required by the Act, CMS codified a requirement at Sec.  
423.153(f)(7) to provide an alternate second notice for the purpose of 
informing the beneficiary that they are not an ARB and that no 
limitation on their coverage of FADs will be implemented under the DMP.
    Section 1860D-4(c)(5)(B)(iv) of the Act establishes that sponsors 
must send a second notice on a date that is not less than 30 days after 
the initial notice. The 30 days allow sufficient time for the 
beneficiary to provide information relevant to the sponsor's 
determination, including their preferred prescribers and pharmacies. 
CMS codified at Sec.  423.153(f)(8) the timing for providing both the 
second notice and alternate second notice. Currently, CMS requires 
sponsors to send either the second or alternate second notice on a date 
not less than 30 days from the date of the initial notice and not more 
than the earlier of the date the sponsor makes the determination or 60 
days after the date of the initial notice.
    Based on program experience during the first several years of DMPs, 
we propose to change the timeframe within which a sponsor must provide 
an alternate second notice to a beneficiary who is determined to be 
exempt from the DMP subsequent to receiving an initial notice. 
Specifically, we propose to redesignate existing Sec.  
423.153(f)(8)(ii) as Sec.  423.153(f)(8)(iii), and to revise the text 
at Sec.  423.153(f)(8)(ii) to specify that, for such exempted 
beneficiaries, the sponsor must provide the alternate second notice 
within 3 days of determining the beneficiary is exempt, even if that 
occurs less than 30 days from the date of the initial notice. In other 
words, we propose to remove the requirement that sponsors wait at least 
30 days from the date of the initial notice to send the alternate 
second notice to exempted beneficiaries.
    Through program oversight, including audits of Part D sponsors, CMS 
has observed that initial notices are sometimes sent to Part D 
enrollees who meet the definition of an exempted beneficiary at Sec.  
423.100, often because the sponsor does not have the necessary 
information--for example, that the enrollee has a cancer diagnosis or 
is receiving palliative care or end-of-life care--at the time the 
sponsor sends the initial notice. However, this information may be 
provided later by the enrollee or their prescriber in response to the 
initial notice. In some cases, sponsors identify exemptions very 
quickly after issuing

[[Page 78505]]

the initial notice, prior to 30 days elapsing. Under current CMS 
regulations, if a beneficiary meets the definition of an exempted 
beneficiary, the beneficiary does not meet the definition of a PARB. 
For this reason, exempted beneficiaries cannot be placed in a Part D 
sponsor's DMP. Therefore, as stated in the preamble to the April 2018 
final rule (83 FR 16455), 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, their representative, the 
facility, a pharmacy, a prescriber, or an internal or external data 
source, including an internal claims system). CMS understands that 
sponsors may have already been sending alternate second notices after 
determining that a beneficiary is exempt, without waiting for 30 days 
to elapse. This proposed change would specify that it is required to 
send such notices to exempted beneficiaries sooner than 30 days after 
the provision of the initial notice.
    CMS reminds Part D sponsors that, during their review and during 
case management, they are expected to use all available information to 
identify whether a PARB is exempt in advance of sending an initial 
notice to protect these vulnerable beneficiaries from unnecessary 
burden, anxiety, and disruptions in medically necessary drug therapy. 
Thorough review of plan records and robust outreach efforts to 
prescribers during case management help to minimize the risk that an 
exempted beneficiary would receive an initial notice.
    On April 20, 2023, CMS released updated DMP guidance.\49\ Sections 
8.1 and 8.2.2 of the guidance state that if a sponsor learns that a 
beneficiary is exempt after sending an initial notice, the sponsor 
should inform the beneficiary that the initial notice is rescinded. If 
less than 30 days have passed since the initial notice, a sponsor 
should send a Part D Drug Management Program Retraction Notice for 
Exempted Beneficiaries. The model retraction notice addresses the 
required 30-day timing issue in the current regulation. If this 
proposal to require sponsors to provide an alternate second notice to a 
beneficiary who is determined to be exempt from the DMP prior to the 
required 30 days elapsing since the initial notice is finalized, the 
Part D Drug Management Program Retraction Notice for Exempted 
Beneficiaries would no longer be used because sponsors would instead 
send the alternate second notice. We are not estimating any reduction 
of burden for sponsors no longer using the Retraction Notice. The 
Retraction Notice was implemented as a temporary solution for Part D 
sponsors to use for exempted beneficiaries in place of the alternate 
second notice, which had been accounted for in the latest version of 
CMS-10141 (OMB control number 0938-0964).
---------------------------------------------------------------------------

    \49\ https://www.cms.gov/files/zip/cy-2023-part-d-dmp-guidance-april-20-2023.zip.
---------------------------------------------------------------------------

    We note that sponsors may determine that a PARB is not an ARB prior 
to 30 days elapsing for reasons other than the beneficiary being 
exempted. However, we believe the current 30-day requirement before a 
sponsor may send an alternate second notice in such situations is 
important to maintain because it allows the beneficiary and other 
prescribers enough time to provide the sponsor with information that 
may influence the sponsor's determination.
    We propose an additional technical change related to the timeframe 
for providing second and alternate second notices. The current 
regulation at Sec.  423.153(f)(8)(i) requires that a sponsor provide a 
second or alternate second notice not more than the earlier of the date 
the sponsor makes the relevant determination or 60 days after the date 
of the initial notice. It is critical that beneficiaries receive timely 
written notice about changes to their access to Part D drugs, as well 
as information about appeal rights, and the second and alternate second 
notices are tied to the date of the plan's determination. However, CMS 
understands that sponsors may not always be able to issue printed 
notices on the exact day they make a determination for a variety of 
reasons, such as they made the determination on a day when there is no 
USPS mail service, or later in the day after files have been sent to a 
print vendor.
    Specifically, we propose to add at Sec.  423.153(f)(8)(i)(A) a 
window of up to 3 days to allow for printing and mailing the second 
notice or alternate second notice. We note a 3-day window would align 
with requirements for providing written notice of a standard or 
expedited Part D coverage determination after initial oral notice, as 
described at Sec. Sec.  423.568(d) and (f) and 423.572(b), 
respectively, and is therefore familiar to sponsors. However, unlike 
the circumstances covered by those regulatory provisions, sponsors 
would not be providing an initial oral notice, as it would be 
impracticable to verbally convey the details of a second notice or 
alternate second notice to an enrollee. This proposed change would 
provide sponsors sufficient time to print and mail the notices while 
ensuring that beneficiaries receive timely information about DMP 
limitations. Sponsors must continue to issue these notices as soon as 
possible when a determination is made, and CMS does not expect that 
sponsors will routinely take the maximum amount of time.
    We are not proposing to change the requirement in Sec.  
423.153(f)(8)(i)(B) that the second notice or alternate second notice 
must be provided no later than 60 days from the date of the initial 
notice. This is because sponsors have ample time to account in advance 
for the days needed to print and mail these notices.
3. OMS Criteria Request for Feedback
    CMS regulations at Sec.  423.153(f)(16) specify that PARBs and ARBs 
are identified using clinical guidelines that are developed with 
stakeholder consultation, derived from expert opinion backed by 
analysis of Medicare data, and include a program size estimate. In 
addition, the clinical guidelines (also referred to as the ``OMS 
criteria'') are based on the acquisition of FADs from multiple 
prescribers, multiple pharmacies, the level of FADs used, or any 
combination of these factors, or a history of opioid-related overdose.
    PARBs are the Part D beneficiaries whom CMS believes are 
potentially at the highest risk of opioid-related adverse events or 
overdose. The current minimum OMS criteria \50\ identifies PARBs who 
(1) use opioids with an average daily morphine milligram equivalents 
(MME) of greater or equal to 90 mg for any duration during the most 
recent six months, who have received opioids from 3 or more opioid 
prescribers and 3 or more opioid dispensing pharmacies, or from 5 or 
more opioid prescribers regardless of the number of dispensing 
pharmacies (also referred to as ``MIN1'' minimum OMS criteria), or (2) 
have a history of opioid-related overdose, with a medical claim with a 
primary diagnosis of opioid-related overdose within the most recent 12 
months and a Part D opioid prescription (not including Medication for 
Opioid Use Disorder \51\ (MOUD)) within the most recent 6 months (also 
referred to as ``MIN2'' minimum OMS criteria). The current supplemental 
OMS criteria are for sponsors to address plan members who are receiving 
opioids from a large number of prescribers or

[[Page 78506]]

pharmacies, but who do not meet a particular MME threshold. These are 
(1) use of opioids (regardless of average daily MME) during the most 
recent 6 months; AND (2) 7 or more opioid prescribers OR 7 or more 
opioid dispensing pharmacies.
---------------------------------------------------------------------------

    \50\ April 20, 2023 HPMS memorandum, CORRECTION--Contact Year 
2023 Drug Management Program Guidance available at: https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/rxutilization.
    \51\ Referred to as medication-assisted treatment (MAT) in past 
guidance.
---------------------------------------------------------------------------

    In 2019, CMS assigned the Health Federally Funded Research and 
Development Center (FFRDC) to develop evidence-based recommendations 
for improving the OMS criteria for the future. The Health FFRDC 
conducted a literature review, facilitated a Technical Expert Panel 
(TEP), and performed data analyses. All three activities served as 
inputs into the evidence-based recommendations. The Health FFRDC 
recommended that the results of the literature review and data analysis 
support the continued inclusion of average MME, number of opioid 
dispensing pharmacies, and number of opioids prescribers as indicators 
for PARBs. In addition, they recommended that further data analysis 
would be necessary to determine which additional criteria would be 
appropriate to potentially adopt. CMS conducted subsequent literature 
reviews and analysis.
    In recent years, there has been a marked decrease in Medicare Part 
D prescription opioid overutilization, but opioid-related overdose 
deaths continue to be a growing problem throughout the United 
States.\52\ While the CDC found synthetic opioids (other than 
methadone) to be the main driver of opioid overdose deaths, accounting 
for 82 percent of all opioid-involved deaths in 2020,\53\ we must 
remain vigilant regarding the risks of prescription opioids including 
misuse, opioid use disorder (OUD), overdoses, and death. CMS tracks 
prevalence rates for Medicare Part D beneficiaries with an OUD \54\ 
diagnosis and beneficiaries with an opioid poisoning (overdose). While 
overall opioid-related overdose prevalence rates among Medicare Part D 
enrollees have declined over the period from contract year 2017 through 
2021 at about 6.5 percent per annum, overall opioid-related overdose 
prevalence rates increased by 1.0 percent between 2020 and 2021. 
Furthermore, about 1.6 percent of all Part D enrollees had a provider 
diagnosed OUD in contract year 2021 and the OUD prevalence rate has 
grown by 3.2 percent per annum since contract year 2017.
---------------------------------------------------------------------------

    \52\ Spencer, Merianne R. et al. (2022). Drug Overdose Deaths in 
the United States, 2001-2021. (457).
    \53\ https://www.cdc.gov/drugoverdose/deaths/synthetic/index.html.
    \54\ CMS used a modified version of the Chronic Condition 
Warehouse (CCW) definition that excludes undiagnosed OUD 
beneficiaries such as those with an opioid OD event and also limits 
analysis to the particular measurement period instead of the prior 
two years.
---------------------------------------------------------------------------

    A past overdose is the risk factor most predictive for another 
overdose or suicide-related event.\55\ CMS finalized regulations to 
implement section 2004 of the Substance Use-Disorder Prevention that 
Promotes Opioid Recovery and Treatment for Patients and Communities 
(SUPPORT) Act to include beneficiaries with a history of opioid-related 
overdose as PARBs in DMPs. While the implementation of the SUPPORT ACT 
enables identification of beneficiaries with a history of opioid-
related overdose and continues to identify PARBs who receive high 
levels of opioids through multiple providers who may be more likely to 
misuse prescription opioids,\56\ CMS is working on models that can 
identify beneficiaries potentially at risk before their risk level is 
diagnosed as an OUD or the person experiences an opioid-related 
overdose.
---------------------------------------------------------------------------

    \55\ Bohnert K.M., Ilgen M.A., Louzon S., McCarthy J.F., Katz 
I.R., 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.
    \56\ Over 30,000 Part D enrollees met the minimum OMS criteria 
and were reported to sponsors through OMS reports in 2022 (18 
percent met the level of opioid use though multiple provider 
criteria, and 82 percent met the history of history of opioid-
related overdose criteria).
---------------------------------------------------------------------------

    A recently published article that evaluated the use of machine 
learning algorithms for predicting opioid overdose risk among Medicare 
beneficiaries taking at least one opioid prescription concluded that 
the machine learning algorithms appear to perform well for risk 
prediction and stratification of opioid overdose especially in 
identifying low-risk groups having minimal risk of overdose.\57\ 
Machine learning is a method of data analysis that automates analytical 
model building, based on the idea that systems can learn from data, 
identify patterns and make decisions with minimal human intervention.
---------------------------------------------------------------------------

    \57\ Lo-Ciganic WH, Huang J.L., Zhang H.H., Weiss J.C., Wu Y., 
Kwoh C.K., Donohue J.M., Cochran G., Gordon A.J., Malone D.C., Kuza 
C.C., Gellad W.F. Evaluation of Machine-Learning Algorithms for 
Predicting Opioid Overdose Risk Among Medicare Beneficiaries With 
Opioid Prescriptions. JAMA Netw Open. 2019 Mar 1;2(3):e190968. doi: 
10.1001/jamanetworkopen.2019.0968. Erratum in: JAMA Netw Open. 2019 
Jul 3;2(7):e197610. PMID: 30901048; PMCID: PMC6583312.
---------------------------------------------------------------------------

    While we are not proposing changes to the clinical guidelines or 
OMS criteria in this proposed rule, we provide information on our data 
analysis to date and welcome feedback for future changes. Using 
predictor variables identified through the literature reviews, CMS 
performed a data analysis to determine the top risk factors for Part D 
enrollees at high-risk for one of two outcomes: (1) having a new opioid 
poisoning (overdose) or (2) developing newly diagnosed OUD. Since Part 
D enrollees with a known opioid-related overdose are already identified 
in OMS, CMS focused on individuals at high risk for a new opioid-
related overdose or OUD. We anticipate no burden since, as indicated, 
we are not proposing regulatory changes and are soliciting feedback.
    In this analysis, we utilize Medicare data and traditional logistic 
regression as well as machine learning models like Random Forest, Least 
Absolute Shrinkage and Selection Operator (LASSO), and Extreme Gradient 
Boosting (XGBoost) \58\ Cross Validation (CV) to examine and evaluate 
performance in predicting risk of opioid overdose and OUD. The models 
were compared based on the following criteria: Area Under the Curve 
(AUC), sensitivity, specificity, positive predictive value (PPV), 
negative predictive value (NPV), and number needed to examine (NNE). An 
XGBoost model with CV performed best according to the specified 
criteria and was selected as the model of choice for predicting a 
beneficiary with a new opioid overdose or OUD diagnosis.
---------------------------------------------------------------------------

    \58\ Extreme Gradient Boosting (XGBoost) model--data mining 
technique that is similar to Random Forest that combines multiple 
decision trees into a single strong prediction model, but it differs 
in doing so in an iterative manner by building one tree at a time 
and optimizing a differentiable loss function.
---------------------------------------------------------------------------

    The model population included 6,756,152 Medicare beneficiaries 
contemporaneously enrolled in Part D and Parts A, B, or C during the 
period from January to June 2019, who were prescribed at least one non-
MOUD prescription opioid during the measurement period and did not have 
a DMP exemption (that is, cancer, sickle cell disease, hospice, LTC 
facility resident, palliative care, or end-of-life care). We excluded 
beneficiaries with a prior opioid-related overdose or an OUD diagnosis 
in the year prior to the prediction period. The training dataset used 
to build the model consisted of a random 75 percent sample of the study 
population (5,067,114). The remaining 25 percent of the population 
(1,689,038) was used for validating the prediction performance of the 
model. The measurement period to obtain information for the predictor 
variables (for example, opioid use patterns, demographics, 
comorbidities, etc.) was from January 1 to June 30, 2019, and the 
prediction period we used to identify beneficiaries with a new opioid

[[Page 78507]]

overdose event or new OUD diagnosis was from July 1 to December 31, 
2019.
    The following risk factors \59\ were incorporated into the XGBoost 
model:
---------------------------------------------------------------------------

    \59\ Multicollinearity tests were undertaken in order to ensure 
that there was no collinearity among the explanatory variables used 
in the model.
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BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP15NO23.013

     
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    \60\ The Generic Product Identifier (GPI) designates any or all 
of a drug's group, class, sub-class, name, dosage form, and 
strength.

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[[Page 78508]]

[GRAPHIC] [TIFF OMITTED] TP15NO23.014

    We evaluated the performance of the model using the confusion 
matrix generated by applying the prediction model to the validation 
dataset to calculate various metrics.

[[Page 78509]]

    Confusion Matrix and Performance Metrics for the XGBoost model:
    [GRAPHIC] [TIFF OMITTED] TP15NO23.015
    
    [GRAPHIC] [TIFF OMITTED] TP15NO23.016
    
    The top 15 risk factors that were highly associated with a new OUD 
or opioid-related overdose diagnosis were:

[[Page 78510]]

[GRAPHIC] [TIFF OMITTED] TP15NO23.017

    The number of short-acting prescription opioid fills and the 
average daily MME were found to contribute most to XGBoost model 
predictions of a new OUD or opioid-related overdose diagnosis. Risk was 
present across a range of MME levels and increased with higher MME 
levels. The risk of developing a new OUD or opioid-related overdose 
diagnosis also increased with the number of diagnosed mental health or 
substance use disorders. Utilization of opioids with other high-risk 
medications like anticonvulsants, benzodiazepines, anti-psychotics, and 
anti-anxiety medications were positively associated with higher risk. 
Also, utilization of opioids like oxycodone and morphine were 
positively associated with higher risk, while utilization of codeine, 
tramadol, and opioids in the other category were positively associated 
with lower risk.
    Lastly, we applied our finalized model to data from October 1, 
2021, through March 31, 2022, to predict future new opioid-related 
overdose events and OUD diagnoses during the period from April 1, 2022, 
to September 30, 2022, to understand program size estimates and NNE 
values.

[[Page 78511]]

[GRAPHIC] [TIFF OMITTED] TP15NO23.018

BILLING CODE 4120-01-C
    Between 9 percent and 15 percent of the beneficiaries with a 
predicted new opioid-related overdose/OUD actually experienced a new 
overdose or OUD diagnosis during the evaluation period (April 1, 2022, 
through September 30, 2022) depending on the Risk Probability 
Threshold. The Top 1 percent threshold (n = 62,571) reported the lowest 
precision score, while the Top 1,000 threshold showed the highest 
precision. Among those who had a new opioid-related overdose/OUD in the 
evaluation period, about 92 percent developed a new OUD; the proportion 
with a new opioid overdose increased from 10 percent to 17 percent as 
the risk probability threshold increased from the Top 1 percent to the 
Top 1,000; and, as the risk probability threshold increased, about 2 
percent to 8 percent had both a new opioid overdose and were identified 
as having a newly diagnosed OUD. Among the different Risk Probability 
Thresholds, between 93 to 98 percent of the correctly predicted new 
overdoses/OUDs do not meet the current OMS criteria. The percentage 
that meets the current OMS criteria decreases as the Risk Probability 
Threshold becomes more restrictive. Thus, our analysis shows that there 
is very little overlap between the population identified through this 
model and beneficiaries already identified through the OMS.\61\ 
Furthermore, our analysis confirms that machine learning models can 
analyze large datasets and identify complex patterns that are not 
easily discernible by current non-statistical approaches. This makes 
them a powerful tool for identifying new opioid-related overdose or OUD 
risk and capturing an additional population of potential at-risk 
beneficiaries who have not been identified through our current OMS 
criteria.
---------------------------------------------------------------------------

    \61\ CMS also notes that historically, only about 1.6 percent of 
the beneficiaries meeting the history of opioid-related overdose 
(MIN2) OMS criteria also meet the (MIN1) minimum OMS criteria.
---------------------------------------------------------------------------

    CMS next plans to assess risk in the model, validate the stability 
of the model as new data become available, and develop guidelines on 
how to feasibly implement the model into the existing DMP and OMS 
processes. We solicit feedback on the following:
    <bullet> Potentially using such a model to enhance the minimum or 
supplemental OMS criteria in the future (either in addition to the 
current criteria or as a replacement).
    <bullet> How to avoid the stigma and/or misapplication of 
identification of a PARB at high risk for a new opioid-related overdose 
or OUD using the variables in the model.
    <bullet> Implementation considerations, such as effectively 
conducting case management, as described in Sec.  423.153(f)(2), with 
prescribers of PARBs identified by the model; opportunities to promote 
MOUD, co-prescribing of naloxone, or care coordination; or potential 
unintended consequences for access to needed medications.

[[Page 78512]]

    <bullet> Other factors to consider.

E. Codification of Complaints Resolution Timelines and Other 
Requirements Related to the Complaints Tracking Module (CTM) (42 CFR 
417.472(l), 422.125, 423.129, and 460.119)

    CMS maintains the CTM in the Health Plan Management System (HPMS) 
as the central repository for complaints received by CMS from various 
sources, including, but not limited to the Medicare Ombudsman, CMS 
contractors, 1-800-MEDICARE, and CMS websites. The CTM was developed in 
2006 and is the system used to comply with the requirement of section 
3311 of the Affordable Care Act for the Secretary to develop and 
maintain a system for tracking complaints about MA and Part D plans 
received by CMS, CMS contractors, the Medicare Ombudsman, and others. 
Complaints from beneficiaries, providers, and their representatives 
regarding their Medicare Advantage (MA) organizations, Cost plans, 
Programs of All-inclusive Care for the Elderly (PACE) organizations, 
and Part D sponsors are recorded in the CTM and assigned to the 
appropriate MA organization, Cost plan, PACE organization, and Part D 
sponsor if CMS determines the plan, organization, or sponsor is 
responsible for resolving the complaint. Unless otherwise noted, 
``plans'' applies to Medicare Advantage (MA) organizations, Part D 
sponsors, Cost plans, and PACE organizations for purposes of this 
proposal.
    We are proposing to codify existing guidance for the timeliness of 
complaint resolution by plans in the CTM. Currently, Sec. Sec.  
422.504(a)(15) and 423.505(b)(22) require MA organizations and Part D 
sponsors to address and resolve complaints received by CMS against the 
MA organization and Part D sponsor through the CTM; we are proposing to 
codify the expectation in guidance that Cost plans and PACE 
organizations also address and resolve complaints in the CTM. We are 
proposing to codify the existing priority levels for complaints based 
on how quickly a beneficiary needs to access care or services and to 
codify a new requirement for plans to make first contact with 
individuals filing non-immediate need complaints within three (3) 
calendar days. This time frame would not apply to immediate need 
complaints because those complaints need to be resolved within two 
calendar days.
    CMS codified the requirement for MA organizations and Part D 
sponsors to address and resolve complaints in the CTM at Sec. Sec.  
422.504(a)(15) and 423.505(b)(22) in the ``Medicare Program; Changes to 
the Medicare Advantage and the Medicare Prescription Drug Benefit 
Programs for Contract Year 2012 and Other Changes'' (76 FR 21431), 
which appeared in the April 15, 2011 Federal Register (hereafter 
referred to as the ``April 2011 final rule''). As described in the 
April 2011 final rule, the regulation requires that MA organizations 
and Part D sponsors provide a summary of the resolution in the CTM when 
a complaint is resolved. (76 FR 21470)
    As Part D sponsors, Cost plans and PACE organizations that offer 
Part D coverage have been required to comply with Sec.  423.505(b)(22). 
We are proposing to add language to Sec. Sec.  417.472(l) and 460.119 
to codify in the Cost plan regulations and PACE regulations, 
respectively, the requirement that Cost plans and PACE organizations 
address and resolve complaints in the CTM. This proposed new 
requirement would apply to all complaints in the CTM for Cost plans and 
PACE organizations, not just complaints about Part D.
    In addition, CMS has issued guidance describing our expectations 
for how complaints should be handled. In the Complaints Tracking Module 
Plan Standard Operational Procedures (CTM SOP), the most recent version 
of which was released on May 10, 2019, via HPMS memo,\62\ CMS provides 
detailed procedures for plans to use when accessing and using the CTM 
to resolve complaints. This includes describing the criteria CMS uses 
in designating certain complaints as ``immediate need'' or ``urgent'' 
(all other complaints are categorized ``No Issue Level'' in the CTM), 
setting forth our expectation that plans should review all complaints 
at intake, and documentation requirements for entering complaint 
resolutions in the CTM. The CTM SOP defines an ``immediate need 
complaint'' for MA organizations, Cost plans, and PACE organizations as 
``a complaint where a beneficiary has no access to care and an 
immediate need exists.'' For Part D sponsors, ``an immediate need 
complaint is defined as a complaint that is related to a beneficiary's 
need for medication where the beneficiary has two or less days of 
medication remaining.'' The CTM SOP defines an ``urgent complaint'' for 
MA organizations, Cost plans, and PACE organizations as a complaint 
that ``involves a situation where the beneficiary has no access to 
care, but no immediate need exists.'' For Part D sponsors, ``an urgent 
complaint is defined as a complaint that is related to the 
beneficiary's need for medication where the beneficiary has 3 to 14 
days of medication left.''
---------------------------------------------------------------------------

    \62\ Available at https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/ctm%20plan%20sop%20eff053019.pdf.
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    In chapter 7, section 70.1 of the Prescription Drug Benefit Manual, 
``Medication Therapy Management and Quality Improvement Program,'' \63\ 
CMS requires Part D sponsors to resolve any ``immediate need'' 
complaints within two (2) calendar days of receipt into the CTM and any 
``urgent'' complaints within seven (7) calendar days of receipt into 
the CTM. Chapter 7, section 70.1 also sets forth CMS's expectation that 
Part D sponsors promptly review CTM complaints and notify the enrollee 
of the plan's action as expeditiously as the case requires based on the 
enrollee's health status.
---------------------------------------------------------------------------

    \63\ Available at https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/dwnlds/chapter7pdf.
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    Requirements for resolution of complaints received in the CTM do 
not override requirements related to the handling of appeals and 
grievances set forth in 42 CFR part 422, subpart M (which apply to cost 
plans as well as MA organizations per Sec.  417.600), part 423, subpart 
M, for Part D sponsors, and Sec. Sec.  460.120 through 460.124 for PACE 
organizations. Rather, CTM requirements supplement the appeals and 
grievance requirements by specifying how organizations must handle 
complaints received by CMS in the CTM and passed along to the plan. The 
requirement for organizations to enter information on the resolution of 
complaints in the CTM within specified time periods allows CMS to track 
and ensure accountability for complaints CMS itself received, either 
directly from beneficiaries or via entries in the CTM from the Medicare 
ombudsman, CMS contractors, or others. A beneficiary who filed a 
complaint directly with CMS may later contact CMS to find out the 
status of the complaint and the plan's use of the system would allow 
CMS to answer the beneficiaries inquires more expeditiously. In order 
to comply with the applicable regulations, plans must handle any CTM 
complaint that is also an appeal or grievance within the meaning of the 
regulation in such a way that complies with the notice, timeliness, 
procedural, and other requirements of the regulations governing appeals 
and grievances.
    We are proposing to codify the timeliness requirements for MA 
organizations and Part D plans at new Sec. Sec.  422.125 and 423.129, 
both titled ``Resolution of Complaints in Complaints Tracking Module.'' 
We are

[[Page 78513]]

proposing to codify these requirements for Cost plans and PACE 
organizations at Sec. Sec.  417.472(l) and 460.119 by incorporating 
Sec. Sec.  422.504(a)(15) and 422.125 by reference into the 
requirements for Cost plans and PACE organizations, respectively.
    Specifically, we propose to codify at Sec. Sec.  422.125(a) and 
423.129(a) the definitions of ``immediate need'' and ``urgent'' 
complaints in substantially the same way as they are currently defined 
in guidance for MA and Part D-related complaints. However, we propose 
to specify that immediate need and urgent complaints for MA plans (as 
well as Cost plans, and PACE) also include situations where a 
beneficiary has access to enough of a drug or supply to last fewer than 
2 days or from 3 to 14 days, respectively, as part of the definition 
that these complaints are about situations that prevent the beneficiary 
from accessing care or a service. This proposed change recognizes that 
some complaints to an MA organization (or Cost plan or PACE 
organization) may overlap with Part D access, such as when a 
beneficiary reports a problem with their enrollment in an MA-PD plan 
that is blocking access to Part D coverage. The change also recognizes 
that non-Part D MA, Cost plan, and PACE complaints relate not just to 
access to physician services but to drugs and supplies that may be 
covered by the MA plan, Cost plan, or PACE organization's non-Part D 
benefit (for example, Part B drugs or diabetic test strips covered 
under the medical benefit of an MA plan). Further, MA plans, Cost 
plans, and PACE also cover Part B drugs.
    We also propose to codify at Sec. Sec.  422.125(b) and 423.129(b) 
the current timeframes reflected in section 70.2 of chapter 7 of the 
Prescription Drug Benefit Manual for resolving immediate need and 
urgent complaints. A two (2) calendar day deadline for resolving plan-
related immediate need complaints is both consistent with current 
practice by plans and logically follows from the definition of an 
``immediate need'' complaint. By its nature, an immediate need 
complaint requires swift action. Because we define immediate need, in 
part, as a situation where a beneficiary has access to two or fewer 
days' worth of a drug or supply they need, a timeline greater than two 
calendar days for resolving a complaint would represent an unacceptable 
risk to beneficiaries.
    Similarly, a seven (7) calendar day deadline for ``urgent'' 
complaints reflects the importance of not delaying resolution of a 
situation that is preventing access to care or services a beneficiary 
needs. Because we define ``urgent'' in part as a situation where a 
beneficiary has 3 to 14 days' worth of a drug or supply they need, 
allowing more than a week to elapse before resolving the complaint 
would put beneficiaries at unacceptable risk of not receiving 
replacement drugs or supplies timely.
    For all other Part D and non-Part D complaints in the CTM, we 
propose requiring resolution within 30 days of receipt. This is 
consistent with current practice and the guidance in section 70.2 of 
chapter 7 of the Prescription Drug Benefit Manual, and we believe would 
prevent complaints from lingering for months without resolution in the 
CTM. Further, a 30-day timeframe for resolving complaints in the CTM 
aligns with the 30-day period provided in Sec. Sec.  422.564(e) and 
423.564(e) for resolution of grievances. Although those regulations 
permit an extension of up to 14 days for resolving the grievance if the 
enrollee requests the extension or if the organization justifies a need 
for additional information and documents how the delay is in the 
interest of the enrollee, we do not believe that including the 
authority to extend the deadline to resolve complaints in the CTM is 
appropriate because complaints received into the CTM are often the 
result of failed attempts to resolve issues directly with the plan. 
Allowing plans to further extend the time to resolve the complaint only 
allows further delays in addressing beneficiary concerns. Moreover, 
recent evidence indicates that the vast majority of non-immediate need 
or urgent complaints are resolved within 30 days--98% of such 
complaints were resolved by plans within 30 days in 2022.
    All timeframes for resolution would continue to be measured from 
the date a complaint is assigned to a plan in the CTM, rather than the 
date the plan retrieves the complaint from the CTM. This is consistent 
with current guidance and practice. Measuring the timeframe in this 
manner is the best way to protect beneficiaries from delayed resolution 
of complaints and encourages organizations to continue retrieving CTM 
complaints in a timely manner so that they have sufficient time to 
resolve complaints.
    We do not anticipate that plans will have difficulty meeting these 
timeframes. The vast majority of complaints are currently resolved in 
the timelines specified for the priority level of the complaint. For 
example, in 2022, plans resolved 97 percent of complaints within the 
required time frames for the level of complaint. Plans resolved 94 
percent of immediate need complaints within 2 calendar days, 97 percent 
of urgent complaints within 7 calendar days, and 98 percent of 
complaints with no issue level designated within 30 calendar days. 
Codifying the timeframes as proposed merely formalizes CMS's current 
expectations and the level of responsiveness currently practiced by 
plans.
    We are also proposing to create a new requirement for plans to 
contact individuals filing non-immediate need complaints. At Sec. Sec.  
422.125(c) and 423.129(c), we propose to require plans to contact the 
individual filing a complaint within three (3) calendar days of the 
complaint being assigned to a plan. While current guidance generally 
includes the expectation that organizations inform individuals of the 
progress of their complaint, CMS has never specified a timeframe for 
reaching out to a complainant. CMS has observed that, particularly for 
complaints that are not assigned a priority level, plans sometimes wait 
until the timeframe for resolution has almost elapsed to contact the 
complainant. Because the timeframe for resolving uncategorized 
complaints is 30 days, an individual who files a complaint may wait 
weeks to hear back from the plan responsible for resolving it. We 
believe that such delays cause unnecessary frustration for 
beneficiaries and are inconsistent with the customer service we expect 
from plans.
    We acknowledge that our proposed timeframe for reaching out to the 
complainant concerning a CTM complaint is more specific than our 
requirement at Sec. Sec.  422.564(b) and 423.564(b) for plans to 
``promptly inform the enrollee whether the complaint is subject to its 
grievance procedures or its appeals procedures.'' We are proposing a 
specific timeframe for contacting the beneficiary regarding a CTM 
complaint because, unlike with complaints received by the plans outside 
the CTM, the complainant has not reached out directly to the plan and 
may not know that their complaint has been passed on to the plan by CMS 
via the CTM. Moreover, as previously noted, CMS monitors the handling 
of complaints it receives through the CTM in real time. Part of 
handling CTM complaints through the CTM, as required by Sec. Sec.  
422.504(a)(15) and 423.505(b)(22), is entering information into the CTM 
when the plan reaches out to the complainant. CMS would therefore be 
able to monitor whether a plan has reached out to a beneficiary within 
the required timeframe and follow up with the plan well before 
timeframe for resolving the complaint has elapsed.
    We are proposing a 3 calendar day timeframe for reaching out to the

[[Page 78514]]

individual filing the complaint because it would provide a timely 
update to individuals filing both urgent and uncategorized complaints 
without delaying resolution of immediate need complaints. We expect 
that a plan would indicate in this communication that the plan has 
received and is working on the complaint, and that they provide contact 
information that the individual filing the complaint could use to 
follow up with the plan regarding the complaint. We solicit comment on 
whether this timeframe is appropriate and whether a longer or shorter 
timeframe would better balance the needs of beneficiaries with the 
capacity of plans to respond to complaints.
    We are also proposing conforming changes to Sec. Sec.  
422.504(a)(15) and 423.505(b)(22) to incorporate the proposed new 
requirements into the existing contractual requirements for MA 
organizations and Part D sponsors. The proposed revisions to Sec. Sec.  
417.472(l) and 460.119 incorporate both the requirements in proposed 
Sec.  422.125 and the requirement for a contract term for resolving 
complaints received by CMS through the CTM for Cost plans and PACE 
organizations and their contracts with CMS.

F. Additional Changes to an Approved Formulary--Biosimilar Biological 
Product Maintenance Changes and Timing of Substitutions (Sec. Sec.  
423.4, 423.100, and 423.120(e)(2))

1. Introduction
    Section 1860D-11(e)(2) of the Act provides that the Secretary may 
only approve Part D plans if certain requirements are met, including 
the provision of qualified prescription drug coverage. Section 1860D-
11(e)(2)(D) of the Act specifically permits approval only if the 
Secretary does not find that the design of the plan and its benefits, 
including any formulary and tiered formulary structure, are likely to 
substantially discourage enrollment by certain Part D eligible 
individuals. Section 1860D-4(c)(1)(A) of the Act requires ``a cost-
effective drug utilization management program, including incentives to 
reduce costs when medically appropriate.'' Lastly, section 1860D-
4(b)(3)(E) of the Act requires Part D sponsors to provide ``appropriate 
notice'' to the Secretary, affected enrollees, physicians, pharmacies, 
and pharmacists before removing a covered Part D drug from a formulary 
or changing the preferred or tiered cost-sharing status of such a drug.
    In section III.Q., Changes to an Approved Formulary, of the 
proposed rule titled ``Medicare Program; Contract Year 2024 Policy and 
Technical Changes to the Medicare Advantage Program, Medicare 
Prescription Drug Benefit Program, Medicare Cost Plan Program, Medicare 
Parts A, B, C, and D Overpayment Provisions of the Affordable Care Act 
and Programs of All-Inclusive Care for the Elderly; Health Information 
Technology Standards and Implementation Specifications,'' which 
appeared in the December 27, 2022 Federal Register (hereinafter 
referred to as the December 2022 proposed rule), we proposed 
regulations related to (1) Part D sponsors obtaining approval to make 
changes to a formulary already approved by CMS, including extending the 
scope of immediate formulary substitutions (also generally referred to 
as immediate substitutions herein); \64\ and (2) Part D sponsors 
providing notice of such changes.
---------------------------------------------------------------------------

    \64\ We note the distinction between formulary substitutions 
made by a plan sponsor and product substitutions made by a 
pharmacist at the point-of-dispensing. As we describe in section 
III.F.2.a.(2) of this proposed rule, State laws govern the ability 
of pharmacists to substitute biological products at the point-of-
dispensing. By contrast, the Secretary's statutory authority under 
section 1860D-11(e)(2) of the Act governs approval of, and by 
extension any changes to, Part D formularies. The provisions we 
describe throughout section III.F of this proposed rule strictly 
apply to changes to Part D formularies made by plan sponsors, and do 
not apply to substitutions made by pharmacists at the point-of-
dispensing.
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    The December 2022 proposed rule proposed to reorganize current 
regulatory text to incorporate and as necessary conform with 
longstanding sub-regulatory guidance and operations with respect to 
changes to an approved formulary and associated notice provisions. For 
example, Sec.  423.120(b)(5)(iv) currently permits a plan sponsor to 
immediately remove a brand name drug from its formulary when adding a 
therapeutically equivalent generic drug, subject to certain 
requirements. If finalized, the December 2022 proposed rule would 
expand immediate substitutions in a new Sec.  423.120(e)(2)(i) to allow 
plan sponsors to substitute an authorized generic for a brand name 
drug, an interchangeable biological product for a reference product, or 
an unbranded biological product for its corresponding brand name 
biological product under the same biologics license application (BLA).
    These and other proposals discussed in section III.Q., Changes to 
an Approved Formulary, of the December 2022 proposed rule have not been 
finalized and remain under consideration. As we noted in the April 2023 
final rule, CMS intends to address remaining proposals from the 
December 2022 proposed rule in subsequent rulemaking, which would be 
effective no earlier than January 1, 2025. As we continue to consider 
comments we received in response to the December 2022 proposed rule, we 
identified a limited number of changes that we would like to make to 
the proposed regulatory text relating to section III.Q. of the December 
2022 proposed rule. Accordingly, this proposed rule reflects our intent 
to consider section III.Q. of the December 2022 proposed rule, as 
updated by the limited proposed changes discussed herein, for inclusion 
in future rulemaking. While we discuss below certain comments regarding 
the December 2022 proposed rule that informed the limited proposed 
changes herein, we will respond to comments received in response to 
section III.Q. of the December 2022 proposed rule, as well as comments 
received in response to the changes proposed below, if we decide to 
move forward with such proposals in future rulemaking.
    Commenters on section III.Q. of the December 2022 proposed rule did 
not agree on the requirements that should apply to formularies 
substituting Food and Drug Administration (FDA) approved and licensed 
biosimilar biological products. Different commenters submitted 
divergent requests that substitutions of biosimilar biological products 
other than interchangeable biological products be treated as immediate 
substitutions, be treated as maintenance changes, or not be permitted 
whatsoever. Our proposed regulatory text in the December 2022 proposed 
rule only addressed substitution of interchangeable biological products 
and did not specify how Part D sponsors could treat substitution of 
biosimilar biological products other than interchangeable biological 
products, and we believe, in part because of the interest in the topic, 
that it would be appropriate to propose to do so now in order to 
solicit comment directly on the subject.
    Accordingly, we are proposing to update the regulatory text we 
proposed in the December 2022 proposed rule to the extent necessary to 
permit Part D sponsors to treat substitutions of biosimilar biological 
products other than interchangeable biological products as 
``maintenance changes,'' as defined in the December 2022 proposed rule, 
for the reasons discussed below. We are also proposing to define a new 
term, ``biosimilar biological product,'' distinct from our previously 
proposed term ``interchangeable biological products.'' (We propose some 
technical changes to the latter term as well.)

[[Page 78515]]

    We propose to define biosimilar biological products consistent with 
sections 351(i) and (k) of the Public Health Service Act to include 
interchangeable biological products. In section III.Q (87 FR 79536) of 
the December 2022 proposed rule, we proposed to permit maintenance 
changes and immediate substitutions involving interchangeable 
biological products, and that proposal is still under consideration. In 
this proposed rule, we are also proposing to allow substitution of 
biosimilar biological products other than interchangeable biological 
products for reference products as a maintenance change. To ensure 
clarity, we are proposing to address the application of these policies 
to interchangeable biological products and to biosimilar biological 
products other than interchangeable biological products in separate 
paragraphs of the proposed definition of maintenance change in Sec.  
423.100.
    Further, in considering a comment on immediate formulary 
substitutions, we also determined it would be appropriate to propose 
providing Part D sponsors with additional flexibility with respect to 
maintenance changes and immediate substitutions than as originally 
proposed in the December 2022 proposed rule. Rather than requiring a 
Part D sponsor to add a ``corresponding drug'' and make a ``negative 
formulary change'' (as both such terms are defined in the December 2022 
proposed rule) to its related drug ``at the same time,'' we are 
proposing additional flexibility. Specifically, we propose to allow 
Part D sponsors to make a negative formulary change to the related drug 
within a certain period of time following the addition of the 
corresponding drug--rather than at the same time they add the 
corresponding drug.
    Additionally, we propose a technical change to our proposed 
definition of ``corresponding drug'' in Sec.  423.100 included in the 
December 2022 proposed rule to specify that the reference to an 
``unbranded biological product of a biological product'' is intended to 
be a reference to ``an unbranded biological product marketed under the 
same BLA as a brand name biological product.''
    Lastly, we are taking this opportunity to address a technical 
change to the regulatory text proposed in the December 2022 proposed 
rule to specify in introductory language to the Sec.  423.100 proposed 
definition of ``maintenance change'' that changes apply with respect to 
``a covered Part D drug.''
    Our goal in this proposed rule is to focus only on these specific 
changes to the original proposals in the December 2022 proposed rule 
that remain under consideration, but as updated below. We are re-
proposing in this proposed rule only the regulatory text in the 
December 2022 proposed rule necessary to address new policy 
considerations and, therefore, we include only the updated parts of the 
three following sections of proposed regulatory text in the December 
2022 proposed rule: Sec. Sec.  423.4; 423.100; and 423.120(e)(2). 
Section III.F.2.a. of tis proposed rule includes both language and 
synopses of the preamble to the December 2022 proposed rule as 
necessary to provide context for the updates we are proposing in this 
proposed rule. Except as specified in this proposed rule, stakeholders 
should assume, as does the discussion in this proposed rule, that the 
proposals for regulatory text regarding changes to approved formularies 
otherwise remain under consideration as proposed in the December 2022 
proposed rule. If any provisions regarding this topic are finalized, 
the final rule would include the provisions proposed in the December 
2022 proposed rule, as revised by the proposed changes in this proposed 
rule and taking into consideration any potential changes in response to 
comments.
    We received numerous comments on section III.Q. of the December 
2022 proposed rule on changes to an approved formulary, comments which 
we have carefully reviewed and continue to consider (and some of which 
are discussed in this proposed rule). We solicit comments on any 
aspects regarding the changes we are proposing in this rule to the 
December 2022 proposed rule's provisions.
2. Substituting Biosimilar Biological Products for Their Reference 
Products as Maintenance Changes
a. Previously Proposed Provisions
(1) Certain Previously Proposed Provisions Related to Maintenance and 
Non-Maintenance Changes
    In section III.Q.2.b., Proposed Provisions for Approval of 
Formulary Changes, of the December 2022 proposed rule, we proposed to 
define terms such as ``negative formulary change'' and ``affected 
enrollee.'' In categorizing negative formulary changes, we discussed 
the fact that chapter 6 of the Prescription Drug Benefit Manual also 
classifies negative formulary changes as either maintenance or non-
maintenance changes. Maintenance changes are changes generally expected 
to pose a minimal risk of disrupting drug therapy or are warranted to 
address safety concerns or administrative needs (for example, drug 
availability due to shortages and determining appropriate payment such 
as coverage under Part B or Part D). We noted that in our experience 
the vast majority of negative formulary changes are ``maintenance'' 
changes that CMS routinely approves, and the vast majority of 
maintenance changes are generic substitutions, in which the Part D 
sponsor removes a brand name drug and adds its generic equivalent.
    We then noted that consistent with our current manual policy and 
operations, we were proposing at Sec.  423.100 to define ``maintenance 
changes'' to mean the following negative formulary changes: (1) making 
any negative formulary changes to a drug and at the same time adding a 
corresponding drug at the same or lower cost-sharing tier and with the 
same or less restrictive prior authorization (PA), step therapy (ST), 
or quantity limits (QL) requirements (other than those meeting the 
requirements of immediate substitutions currently permitted and that we 
proposed to permit in the December 2022 proposed rule); (2) removing a 
non-Part D drug; (3) adding or making more restrictive PA, ST, or QL 
requirements based upon a new FDA-mandated boxed warning; (4) removing 
a drug deemed unsafe by FDA or withdrawn from sale by the manufacturer 
if the Part D sponsor chooses not to treat it as an immediate negative 
formulary change; (5) removing a drug based on long-term shortage and 
market availability; (6) making negative formulary changes based upon 
new clinical guidelines or information or to promote safe utilization; 
or (7) adding PA to help determine Part B versus Part D coverage. We 
additionally stated that we intended through the use of the plural 
tense to clarify that Part D sponsors may request to apply more than 
one negative formulary change simultaneously to that drug.
    We noted that non-maintenance changes, which are infrequently 
warranted, are negative formulary changes that limit access to a 
specific drug without implementing a corresponding offset (such as 
adding an equivalent drug) or addressing safety or administrative 
needs. We proposed to define ``non-maintenance change'' at Sec.  
423.100 to mean a negative formulary change that is not a maintenance 
change or (as discussed in the next paragraph) an immediate negative 
formulary change.
    We also introduced a third category of negative formulary changes 
in Sec.  423.100 to capture negative formulary changes

[[Page 78516]]

that fall within certain parameters and that may be made immediately. 
We proposed to define ``immediate negative formulary changes'' as those 
which meet the requirements as either an immediate substitution or 
market withdrawal under Sec.  423.120(e)(2)(i) or (ii) respectively. We 
noted, however, that while such changes may be made immediately, Part D 
sponsors retain the option to implement such changes as maintenance 
changes. This means that those Part D sponsors that can meet all 
applicable requirements would have a choice as to whether to make such 
changes immediately and thereafter provide notice of specific changes 
or submit a negative change request and provide specific notice of such 
changes to affected enrollees at least 30 days before they occur.
    We also proposed to define ``corresponding drug'' in Sec.  423.100 
to mean, respectively, a generic or authorized generic of a brand name 
drug, an interchangeable biological product of a reference product, or 
an unbranded biological product of a biological product and to move and 
retain our current regulatory description of ``other specified 
entities'' currently in Sec.  423.120(b)(5)(i) to be a standalone 
definition of the term in Sec.  423.100.
    We proposed in Sec.  423.120(e) that Part D sponsors may not make 
any negative formulary changes to the CMS-approved formulary except as 
specified in the regulation.
    We proposed to codify our existing policy with respect to 
maintenance changes, which would, at proposed Sec.  423.120(e)(3)(i), 
permit Part D sponsors that have submitted a maintenance change request 
to assume that CMS has approved their negative change request if they 
do not hear back from CMS within 30 days of submission. We proposed to 
codify our existing policy with respect to non-maintenance changes as 
well, which would specify at Sec.  423.120(e)(3)(ii) that Part D 
sponsors must not implement non-maintenance changes until they receive 
notice of approval from CMS. We also proposed to codify our 
longstanding policy that affected enrollees are exempt from approved 
non-maintenance changes for the remainder of the contract year at Sec.  
423.120(e)(3)(ii).
    In section III.Q.3.b., Alignment of Approval and Notice Policy, of 
the December 2022 proposed rule, we noted in relevant part that: we 
first proposed in Sec.  423.120(f)(1) to specify that only maintenance 
and non-maintenance negative formulary changes would require 30 days' 
advance notice to CMS and other specified entities, and in writing to 
affected enrollees. We also proposed to retain at Sec.  423.120(f)(1) 
an alternative option for Part D sponsors to provide an affected 
enrollee who requests a refill of an approved month's supply of the 
Part D drug under the same terms as previously allowed, as well as 
written notice of the change. We further proposed in Sec.  
423.120(f)(5)(i) to require Part D sponsors to provide advance general 
notice of other formulary changes to all current and prospective 
enrollees and other specified entities, in formulary and other 
applicable beneficiary communication materials, advising that the 
formulary may change subject to CMS requirements; providing information 
about how to access the plan's online formulary and contact the plan; 
and stating that the written notice of any change made when provided 
would describe the specific drugs involved. For immediate 
substitutions, we indicated we would require information on the steps 
that enrollees may take to request coverage determinations and 
exceptions. We noted that our current model documents already largely 
provide advance general notice of such changes. Section 
423.120(f)(5)(ii) as proposed in the December 2022 proposed rule would 
further require that Part D sponsors provide enrollees and other 
specified entities notice of specific formulary changes by complying 
with Sec.  423.128(d)(2) and provide CMS with notice of specific 
changes through formulary updates.
    We proposed to revise and renumber the existing regulation to 
specify that, except for immediate negative formulary changes, negative 
formulary changes require at least 30 days advance notice. Consistent 
with our proposal for approval of maintenance changes, we proposed that 
a Part D sponsor could submit the negative change request, which would 
constitute its notice to CMS, and notice to other specified entities at 
the same time. We explained this would permit the Part D sponsor to 
implement the maintenance change once it is deemed approved under 
proposed Sec.  423.120(e)(3)(i)--although facing the risk of sending 
notice of a change that is subsequently disapproved by CMS.
    We also noted that Part D sponsors currently submit negative change 
requests to CMS via HPMS that specify the negative change's intended 
effective date, which under our proposed approach, would have to be at 
least 30 days after submission for a maintenance change. However, 
consistent with our previous proposal under Sec.  423.120(f)(3)(ii) to 
prohibit Part D sponsors from implementing non-maintenance changes 
until they receive notice of approval from CMS, Part D sponsors would 
not be permitted to provide notice to other specified entities or 
affected enrollees, or to otherwise update formularies or other 
materials, until CMS has approved the non-maintenance change. We also 
discussed updating online notice of negative formulary changes at Sec.  
423.128(d)(2)(iii).
(2) Certain Previously Proposed Provisions Related to Interchangeable 
Biological Products as Immediate Negative Formulary Changes
    In section III.Q.2.b.(3), Immediate Negative Formulary Changes, of 
the December 2022 proposed rule, we proposed to permit immediate 
substitutions of interchangeable biological products for their 
reference products. In our preamble, we reviewed how, under the current 
Sec.  423.120(b)(5)(iv), we permit immediately substituting new generic 
drugs for brand name drugs, and that current Sec.  423.120(b)(5)(iii) 
permits the immediate removal of drugs deemed unsafe by FDA or 
withdrawn from sale by their manufacturers. We then discussed our 
proposal to broaden the scope of permitted immediate substitutions at 
Sec.  423.120(e)(2)(i) to include authorized generics as defined at 
Sec.  423.4.
    We noted that when we first adopted the immediate substitution 
policy, we stated that the regulation would not apply to biological 
products, but that we would reconsider the issue when interchangeable 
biological products became available in Part D. In the December 2022 
proposed rule, we noted there was at least one interchangeable 
biological product and also an unbranded biological product marketed 
under the same license, and that other licensed interchangeable 
biological products may become available in Part D in the future.\65\ 
Accordingly, we stated we believed it appropriate to expand our policy 
to include interchangeable biological products and unbranded biological 
products marketed under the same license as the brand name biological 
products when immediate substitution would not disrupt existing 
therapy. We noted that as discussed in the preamble to the proposed 
rule titled, ``Medicare Program; Contract Year 2019 Policy and 
Technical Changes to the Medicare Advantage, Medicare Cost Plan, 
Medicare Fee-for-Service, the

[[Page 78517]]

Medicare Prescription Drug Benefit Programs, and the PACE Program,'' 
which appeared in the November 28, 2017 Federal Register (82 FR 56413), 
in deciding to permit immediate generic substitutions without advance 
direct notice of specific changes to affected enrollees, CMS, or other 
specified entities, we weighed the need to maintain the continuity of a 
plan's formulary for beneficiaries who enroll in plans based on the 
drugs offered at the time of enrollment against the need to provide 
Part D sponsors more flexibility to facilitate the use of new generics. 
We stated that key to our decision to permit such substitutions was the 
fact that the rule would apply only to therapeutically equivalent 
generics of the affected brand name drug because such generics are the 
same as an existing approved brand name drug in dosage form, safety, 
strength, route of administration, and quality. Congress, we noted, 
defined ``interchangeable'' in reference to biological products, 
stating that interchangeable biological products ``may be substituted 
for the reference product without the intervention of the health care 
professional who prescribed the reference product.'' \66\ We also 
explained that FDA reports that this is similar to how generic drugs 
are routinely substituted for brand name drugs.\67\
---------------------------------------------------------------------------

    \65\ The December 2022 proposed rule cited Semglee[supreg] 
(insulin glargine-yfgn). Other interchangeable biological products 
now available include Cyltezo[supreg] (adalimumab-adbm) and 
Rezvoglar\TM\ (insulin glargine-aglr).
    \66\ Public Health Service Act section 351(i)(3) (42 U.S.C. 
262(i)(3)).
    \67\ ``Biosimilar and Interchangeable Biologics: More Treatment 
Choices'' at the following FDA website: https://www.fda.gov/consumers/consumer-updates/biosimilar-and-interchangeable-biologics-more-treatment-choices. Accessed April 26, 2022.
---------------------------------------------------------------------------

    We then noted that all 50 States now permit or require pharmacists 
to substitute interchangeable biological products when available, for 
prescribed reference products at the point-of-dispensing, subject to 
varying requirements regarding patient and prescriber notice, 
documentation of the substitution, and patient savings as a result of 
the substitution, among other safeguards.\68\ In the context of a 
growing market for interchangeable biological products, to follow the 
lead of FDA in encouraging uptake of these products, and to provide 
flexibility that could lead to better management of the Part D benefit 
that does not impede State pharmacy practices, we proposed at Sec.  
423.120(e)(2)(i) to permit Part D sponsors meeting the applicable 
requirements to immediately substitute an interchangeable biological 
product for the reference product on its formulary. In support of that 
proposal, we also proposed the following definitions at Sec.  423.4: An 
``interchangeable biological product'' would mean a product licensed 
under section 351(k) of the Public Health Service Act (PHSA) (42 U.S.C. 
262(k)) that FDA has determined to be interchangeable with a reference 
product in accordance with sections 351(i)(3) and 351(k)(4) of the PHSA 
(42 U.S.C. 262(i)(3) and 262(k)(4)).\69\ We stated that a ``biological 
product'' would mean a product licensed under section 351 of the PHSA, 
and a ``reference biological product'' would mean a product as defined 
in section 351(i)(4) of the PHSA.
---------------------------------------------------------------------------

    \68\ Cardinal Health. Biosimilar Interchangeability Laws by 
State. Updated July 2021. Available from: https://www.cardinalhealth.com/content/dam/corp/web/documents/publication/Cardinal-Health-Biosimilar-Interchangeability-Laws-by-State.pdf.
    \69\ See section 351(k)(4) of the PHSA (42 U.S.C. 262(k)(4)). We 
cited as current at the time, ``Considerations in Demonstrating 
Interchangeability With a Reference Product Guidance for Industry'' 
at the following FDA website: https://www.fda.gov/regulatory-information/search-fda-guidance-documents/considerations-demonstrating-interchangeability-reference-product-guidance-industry. Accessed September 2, 2022. See also section 351(i)(3) of 
the PHSA (42 U.S.C. 262(i)(3)) for the statutory definition of the 
term ``interchangeable'' or ``interchangeability.''
---------------------------------------------------------------------------

    We also noted that in addition to interchangeable biological 
products, unbranded biological products have recently been marketed. We 
explained that in the frequently asked questions of FDA's ``Purple Book 
Database of Licensed Biological Products,'' available at https://purplebooksearch.fda.gov/faqs#11, FDA describes an ``unbranded 
biologic'' or ``unbranded biological product'' as an approved brand 
name biological product that is marketed under its approved BLA without 
its brand name on its label. Thus, like an authorized generic, an 
unbranded biological product is the same product as the brand name 
biological product. Accordingly, since we proposed in the December 2022 
proposed rule to permit Part D sponsors to immediately substitute an 
authorized generic for a brand name drug, we similarly proposed at 
Sec.  423.120(e)(2)(i) in that proposed rule to permit immediately 
substituting, as specified, unbranded biological products for 
corresponding brand name biological products. We further proposed at 
Sec.  423.4 to define ``brand name biological products'' to mean 
biological products licensed under section 351(a) or 351(k) of the PHSA 
and marketed under a brand name. We also proposed at Sec.  423.4 to 
define ``unbranded biological products'' as biological products 
licensed under a BLA under section 351(a) or 351(k) of the PHSA and 
marketed without a brand name.
    We also noted we were not proposing to permit Part D sponsors to 
immediately substitute all ``biosimilar products'' (87 FR 79539) 
because not all biosimilar biological products have met additional 
requirements to support a demonstration of interchangeability, as 
outlined by the Biologics Price Competition and Innovation (BPCI) Act 
of 2009.\70\ Nevertheless, we encouraged Part D plan sponsors to offer 
such products on their formularies.
---------------------------------------------------------------------------

    \70\ We note that in the December 2022 proposed rule, the actual 
statement read: ``Biosimilar products have not met additional 
requirements to support a demonstration of interchangeability based 
on further evaluation and testing of the product, as outlined by the 
Biologics Price Competition and Innovation (BPCI) Act.'' This 
statement failed to capture the nuances that the definition of a 
biosimilar biological product includes interchangeable biological 
products, and that a determination of interchangeability may not 
require additional testing.
---------------------------------------------------------------------------

    The remainder of the section covered a variety of topics including 
proposed changes to terminology; use of plural tense for negative 
formulary changes to reflect the possibility of concurrent changes; 
exemption of immediate negative formulary changes from negative change 
request and approval processes and inclusion in formulary updates; 
market withdrawals including renumbering; and exemption of all 
immediate negative formulary changes from transition requirements.
    In section III.Q.3.c., Notice of Negative Immediate Changes, of the 
December 2022 proposed rule, we noted that, consistent with our 
existing requirements for immediate generic substitutions (which we 
proposed to broaden to include other corresponding drugs), we were 
proposing to require advance general notice of immediate substitutions 
and market withdrawals at Sec.  423.120(f)(2), followed by written 
notice to affected enrollees as soon as possible under Sec.  
423.120(f)(3), but by no later than the end of the month following any 
month in which a change takes effect. We provided details on the 
content of the direct written notice at Sec.  423.120(f)(4), noted it 
could be provided for both maintenance and non-maintenance changes, and 
noted that we were renumbering some current regulatory requirements.
b. Current Proposals
(1) Substituting Biosimilar Biological Products for Their Reference 
Products as Maintenance Changes
    In the December 2022 proposed rule, we indicated that biosimilar 
biological products \71\ other than interchangeable

[[Page 78518]]

biological products did not qualify for immediate substitutions but 
nonetheless encouraged their inclusion on formularies. However, neither 
the preamble at section III.Q., Changes to an Approved Formulary, in 
the December 2022 proposed rule, nor the accompanying proposed 
regulatory text, explicitly discussed whether we would treat the 
substitution of biosimilar biological products other than 
interchangeable biological products for their reference products as 
non-maintenance changes or as maintenance changes, as respectively 
proposed to be defined in section Sec.  423.100 in the December 2022 
proposed rule. Our current guidance treats such substitutions as non-
maintenance changes.
---------------------------------------------------------------------------

    \71\ We propose a definition of ``biosimilar biological 
product'' later in this section.
---------------------------------------------------------------------------

    Nevertheless, we received multiple comments regarding this issue 
with a range of views. Commenters asking CMS to treat substitutions of 
reference products with biosimilar biological products, including 
interchangeable biological products, as immediate formulary changes or 
maintenance changes noted, for example, that FDA states that biosimilar 
biological products, including interchangeable biological products, are 
as safe and effective as the reference product they were compared 
to,\72\ and that beneficiaries could benefit from additional treatment 
options and the potential for savings. Commenters asking CMS to 
restrict immediate substitutions to interchangeable biological products 
noted, among other things, that the PHSA distinguishes between 
biosimilar biological products based on interchangeability. Commenters 
asking us not to permit immediate substitutions, or even any 
substitutions, of biosimilar biological products, including 
interchangeable biological products, for reference products noted, for 
instance, that established drug therapies should not be changed for 
non-clinical reasons to avoid risk to patient safety and that 
prescribers need to be consulted before changing medications.
---------------------------------------------------------------------------

    \72\ FDA. Overview of Biosimilar Products. Available from: 
https://www.fda.gov/media/151058/download?attachment.
---------------------------------------------------------------------------

    We appreciate all the comments we received. In response thereto, 
and after further consideration of these issues, we have revisited our 
current policy, which treats substitutions of biosimilar biological 
products for reference products as non-maintenance changes, as well as 
our proposal in the December 2022 proposed rule. Upon further 
consideration, we are now proposing in this rule to include 
substitutions of biosimilar biological products other than 
interchangeable biological products \73\ for their reference products 
as maintenance changes. All FDA-licensed biosimilar biological 
products, including FDA-licensed interchangeable biological products, 
must be highly similar to and have no clinically meaningful differences 
from the reference product in terms of safety and effectiveness 
notwithstanding minor differences in clinically inactive components. 
Thus, based on FDA's standards for approval, health care providers and 
patients can be confident in the safety and effectiveness of all 
biosimilar biological products, just as they would be for their 
reference products. The FDA has noted that all biosimilar biological 
products are as safe and effective as their reference product:
---------------------------------------------------------------------------

    \73\ We would note that in our December 2022 proposed rule, we 
already proposed the option for Part D sponsors to treat 
substitution of interchangeable biological products for their 
reference products as maintenance changes: We proposed in paragraph 
(1) of the proposed definition of ``maintenance change'' in Sec.  
423.100 to mean, in part, making any negative formulary changes to a 
drug and at the same time adding a corresponding drug as specified. 
In turn, we proposed to define ``corresponding drug'' in Sec.  
423.100 to include an interchangeable biological product of a 
reference product. In this proposed rule, we are proposing to add a 
new paragraph (2) to the proposed definition of ``maintenance 
change'' in Sec.  423.100 to treat substitution of biosimilar 
biological products other than interchangeable biological products 
for their reference products as maintenance changes.
---------------------------------------------------------------------------

    Both are rigorously and thoroughly evaluated by the FDA before 
approval. For [biosimilar biological products] to be approved by the 
FDA, manufacturers must show that patients taking [biosimilar 
biological products] do not have any new or worsening side effects as 
compared to people taking the [reference products].
    As it does with all medication approvals, the FDA carefully reviews 
the data provided by manufacturers and takes several steps to ensure 
that all [biosimilar biologic products] meet standards for patient use. 
The FDA's thorough evaluation makes sure that all [biosimilar 
biological products] are as safe and effective as their [reference 
products] and meet the FDA's high standards for approval. This means 
[consumers] can expect the same safety and effectiveness from the 
[biosimilar biological product] over the course of treatment as [they] 
would from the original product.
    In addition, the FDA closely regulates the manufacturing of 
[biosimilar biological products]. The same quality manufacturing 
standards that apply to the [reference product] also apply to the 
[biosimilar biological product]. It must be manufactured in accordance 
with Current Good Manufacturing Practice[\74\] requirements, which 
cover: Methods, Facilities, and Controls for the manufacturing, 
processing, packaging, or holding of a medication. This helps to 
prevent manufacturing mistakes or unacceptable impurities, and to 
ensure consistent product quality.
---------------------------------------------------------------------------

    \74\ https://www.fda.gov/drugs/pharmaceutical-quality-resources/current-good-manufacturing-practice-cgmp-regulations. Accessed 
October 18, 2023.
---------------------------------------------------------------------------

* * * * *
    [All biosimilar biological products, not just interchangeable 
biological products,] are as safe and effective as the [reference 
product] they were compared to, and they can both be used in its place. 
This means that health care professionals can prescribe either a 
biosimilar [biological product] or interchangeable [biological] product 
instead of the [reference product].\75\
---------------------------------------------------------------------------

    \75\ See FDA website entitled ``Biosimilar and Interchangeable 
Biologics: More Treatment Choices'' at: https://www.fda.gov/
consumers/consumer-updates/biosimilar-and-interchangeable-biologics-
more-treatment-
choices#:~:text=Biosimilars%20are%20a%20type%20of,macular%20degenerat
ion%2C%20and%20some%20cancers. Accessed October 18, 2023.
---------------------------------------------------------------------------

    However, we note that under the PHSA an FDA determination that a 
biological product is interchangeable with the reference product means 
that the interchangeable biological product may be substituted without 
the intervention of the health care provider who prescribed the 
reference product. A manufacturer of a proposed interchangeable 
biological product must show that the product is biosimilar to its 
reference product and that it can be expected to produce the same 
clinical results as the reference product in any given patient and 
there are no greater risks in terms of safety or diminished efficacy 
with alternating or switching between the reference product and the 
interchangeable biological product.\76\ We appreciate the importance of 
provider and patient education to advance uptake and acceptance as the 
development and market for biosimilar biological products, including 
interchangeable biological products, continues to grow.
---------------------------------------------------------------------------

    \76\ See 42 U.S.C. 262(i)(3) and (k)(4).
---------------------------------------------------------------------------

    We believe that including substitutions of biosimilar biological 
products other than interchangeable biological products for their 
reference products as maintenance changes would strike the right 
balance between promoting utilization of more biosimilar biological 
products and providing enrollees with sufficient advance notice

[[Page 78519]]

of such changes. This proposal would provide Part D sponsors with more 
flexibility than the current policy of treating such changes as non-
maintenance changes (which do not apply to enrollees who are currently 
taking a reference product when the change takes effect \77\) but would 
not extend the flexibility to what is permitted for immediate 
substitutions (which apply to all enrollees, including those currently 
taking a reference product, but only require direct notice of specific 
changes made to affected enrollees after the fact \78\). We realize now 
that not addressing in the December 2022 proposed rule the treatment of 
biosimilar biological products other than interchangeable biological 
products suggested that we wanted to continue our sub-regulatory policy 
of treating substitution of reference products by biosimilar biological 
products other than interchangeable biological products as non-
maintenance changes. However, continuing to treat such changes as non-
maintenance would not support our goal to encourage greater use of 
biosimilar biological products.
---------------------------------------------------------------------------

    \77\ See proposed Sec.  423.120(e)(3)(ii), of the December 2022 
proposed rule, which would codify longstanding policy regarding non-
maintenance changes.
    \78\ See Sec.  423.120(b)(5)(iv).
---------------------------------------------------------------------------

    At the same time, we are not convinced that it is appropriate at 
this time to propose to permit immediate substitutions of reference 
products for biosimilar biological products other than interchangeable 
biological products without 30 days advance notice. In this regard, we 
would note that, pharmacists generally cannot substitute a biosimilar 
biological product other than an interchangeable biological product for 
its reference product without first consulting the prescribing health 
care provider, subject to State pharmacy laws. If a biosimilar 
biological product other than an interchangeable biological product 
were able to be immediately substituted, the result is that any 
enrollee seeking a refill on their prescription for a reference product 
after a Part D sponsor has substituted a biosimilar biological product 
for that reference product (regardless of whether such a formulary 
change were permitted to take place as an immediate substitution or a 
maintenance change) would be told that their plan no longer covers the 
reference product. And, subject to State pharmacy laws, a pharmacist in 
most cases would not be able to provide the corresponding biosimilar 
biological product to the enrollee unless they receive a new 
prescription from a prescriber.
    The above would mean that, were we to treat substitutions of 
biosimilar biological products other than interchangeable biological 
products as immediate substitutions, enrollees currently taking a 
reference product would receive no direct advance notice of specific 
changes made and would likely find themselves at the pharmacy counter 
unable to obtain coverage for their reference product and needing to 
either request an exception or obtain a new prescription for the 
biosimilar biological product. Such enrollees would receive a notice at 
the point of sale telling them what they or their prescriber would need 
to do to request an exception to stay on the reference product and that 
they can call their plan for more information. To avoid a situation in 
which the enrollee might not have medication on hand and need to take 
quick action, but at the same time still encourage the use of all 
biosimilar biological products, we are proposing to treat such 
substitutions as maintenance changes. Given that maintenance changes 
would apply to all enrollees under proposed Sec.  423.120(e)(3) in the 
December 2022 proposed rule, permitting Part D sponsors to substitute 
such biosimilar biological products for their reference products as 
maintenance changes would presumably result in more widespread use of 
such products than continuing our current sub-regulatory policy that 
treats such substitutions as non-maintenance changes. Further, under 
current sub-regulatory policy and proposed Sec.  423.120(e)(3)(i) in 
the December 2022 proposed rule, Part D sponsors that submit a 
maintenance change request are able to assume that CMS has approved 
their negative change request if they do not hear back from CMS within 
30 days of submission, which could result in changes that take place 
more quickly.
    Additionally, we believe that the 30-day notice period is 
appropriate for a variety of reasons. We have applied the 30-day time 
frame in other contexts (such as notice of changes required under 
current Sec.  423.120(b)(5)(i)(A) and for changes proposed in our 
December 2022 proposed rule) and are hesitant to create more confusion 
by carving out certain biosimilar biological products. We understand 
the nature of the change is different from, for instance, substituting 
generic drugs for brand name drugs, in that in most states the 
enrollees that are prescribed reference products must at this time 
obtain new prescriptions for biosimilar biological products other than 
interchangeable biological products. However, this would not be the 
only time an enrollee has 30 days' notice within which to obtain a new 
prescription. For instance, in the final rule 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,'' 
which appeared in the April 16, 2018 Federal Register, we reduced the 
time for advance direct notice of certain formulary changes from 60 to 
30 days and since its effective date, Sec.  423.120(b)(5)(i)(A) has 
required only 30 days' notice of changes to the formulary that are not 
immediate. A similar period applies to the transition process for 
enrollees prescribed Part D drugs that are not on the Part D plan's 
formulary: under Sec.  423.120(b)(3)(iii), enrollees receive a month's 
supply of a drug after which they must obtain a new prescription for an 
alternate drug or apply for an exception. If we required Part D 
sponsors to issue notice earlier, for instance to provide advance 
notice 90 days prior to the formulary change, the lengthened notice 
period would provide Part D sponsors less time within a year for a 
change to be effective and might unintentionally motivate them to wait 
until the next plan year--which would defeat the goal of this proposal 
to encourage uptake of biosimilar biological products other than 
interchangeable biological products sooner than would otherwise be the 
case.
    If a Part D sponsor were to implement a maintenance change for a 
biosimilar biological product other than an interchangeable biological 
product under our proposal, then it would work as follows: Part D 
sponsors removing or making any negative changes to a reference product 
would be required to add a biosimilar biological product other than an 
interchangeable biological product at the same or a lower cost-sharing 
tier and with the same or less restrictive PA, ST, or QL requirements 
as the reference product. Part D sponsors adding a biosimilar 
biological product other than an interchangeable biological product 
would also be required to provide 30 days' advance written notice 
before making any negative change to the reference product. The written 
notice under proposed Sec.  423.120(f)(4) would include details 
regarding the change, including the specific biosimilar biological 
product to be added to the formulary; whether the sponsor will be 
removing the related reference product, subjecting it to a new or more 
restrictive PA, ST,

[[Page 78520]]

or QL, or moving it to a higher cost-sharing tier; and identification 
of whether appropriate alternatives, other than the biosimilar 
biological product that is the subject of the notice, are available on 
the formulary at the same or lower cost-sharing tier as the reference 
product. The written notice would also include the means by which the 
affected enrollee can request a coverage determination under Sec.  
423.566 or an exception to a coverage rule under Sec.  423.578. 
Specifically, under Sec.  423.566, the enrollee can always ask for a 
coverage determination, including an exception to a coverage rule, and 
might choose to do so after receiving their notice of a specific change 
due to occur within 30 days. Furthermore, the enrollee can also request 
an expedited determination if their health requires. Again, treating 
the change as a maintenance change would mean enrollees have 30 days to 
take action before the change becomes effective.
    We would note that the Part D transition policy does not apply to 
midyear maintenance changes. An enrollee is only entitled to a 
transition supply under Sec.  423.120(b)(3)(i)(A) if the enrollee is 
new to the plan or stayed in the plan until the next contract year and 
a drug they are taking is affected by formulary changes in the next 
contract year. Formulary changes from one contract year to the next do 
not constitute changes to an approved formulary since formularies are 
submitted for review and approval annually as part of the Part D bid 
submission process. Rather, the advance direct notice of changes 
currently required under Sec.  423.120(b)(5)(i), and which we proposed 
to require in the December 2022 proposed rule at the proposed Sec.  
423.120(f)(1), provides an affected enrollee with time to obtain a new 
prescription for that biosimilar biological product other than an 
interchangeable biological product or to seek an exception, before the 
reference product comes off the formulary.
    We assume that in most cases, substituting a biosimilar biological 
product other than an interchangeable biological product for the 
reference product on the formulary will be more financially favorable 
to enrollees since biosimilar biological products are generally lower 
cost than reference products and must be added to the same or lower 
cost-sharing tier as the reference product. However, differences in 
plan benefit designs make it challenging to predict the degree of 
savings an enrollee may experience. For example, if a Part D sponsor 
removes a reference product from the formulary and adds a biosimilar 
biological product other than an interchangeable biological product to 
the formulary on the same tier, the affected enrollee likely would 
experience savings if the cost sharing for the tier is based on a 
percent coinsurance, but not if the cost sharing for the tier is a 
fixed copay. If an affected enrollee pursues a formulary exception to 
continue to take the non-formulary reference product, these enrollees 
may be faced with higher out-of-pocket costs, depending on the tier 
that the Part D sponsor designates for Part D drugs obtained through 
formulary exceptions and the tier that the reference product was 
originally on. If the reference product was on a preferred tier, but 
the formulary exception tier designated in the plan benefit package is 
the non-preferred tier, then affected enrollees who obtain a formulary 
exception may be subject to higher cost sharing than previously.
    For the reasons discussed above, we are now proposing to update the 
proposed definition of ``maintenance changes'' at Sec.  423.100 in the 
December 2022 proposed rule to include a new paragraph (2) on making 
any negative formulary changes to a reference product when adding a 
biosimilar biological product other than an interchangeable biological 
product to the same or a lower cost-sharing tier and with the same or 
less restrictive PA, ST, or QL requirements. We would renumber the 
remaining maintenance changes listed in the proposed definition in the 
December 2022 proposed rule.
    We are also proposing in this proposed rule at Sec.  423.4 to 
define ``biosimilar biological product'' to mean a biological product 
licensed under section 351(k) of the PHSA that, in accordance with 
section 351(i)(2) of the PHSA, is highly similar to the reference 
product, notwithstanding minor differences in clinically inactive 
components, and has no clinically meaningful differences between the 
biological product and the reference product, in terms of the safety, 
purity, and potency of the product. The proposed term, biosimilar 
biological product, includes interchangeable biological products as we 
proposed to define them in our December 2022 proposed rule. We are also 
proposing a technical correction to the proposed definition of an 
interchangeable biological product to mean a product licensed under 
section 351(k) of the PHSA (42 U.S.C. 262(k)) that FDA has determined 
meets the standards described in section 351(k)(4) of the PHSA (42 
U.S.C. 262(k)(4)).
    We solicit comment on our proposal to treat formulary substitutions 
of biosimilar biological products other than interchangeable biological 
products for reference products as maintenance changes, as well as our 
proposed definition of biosimilar biological product. We also would be 
interested in any comments on our proposal that enrollees taking a 
reference product would receive 30 days' notice before the change is 
made and whether that is sufficient time to obtain a new prescription 
for the biosimilar biological product other than an interchangeable 
biological product, as well as how that 30-day notice period relates to 
the timing of other notice requirements. We also solicit comment on our 
proposal that the biosimilar biological product other than the 
interchangeable biological product be placed on the same or a lower 
cost-sharing tier as the reference product it replaces or that is 
subject to negative formulary changes.
(2) Updated Proposal Related to Timing of Substitutions
    In reexamining our proposed definition of ``maintenance changes'' 
in Sec.  423.100 in the December 2022 proposed rule to add a new 
category for biosimilar biological products other than interchangeable 
biological products in paragraph (2), as discussed above, we also 
revisited paragraph (1) of the proposed definition, in which we 
proposed to require Part D sponsors making a negative formulary change 
to a drug to ``at the same time'' add a corresponding drug at the same 
or lower cost-sharing tier and with the same or less restrictive PA, 
ST, or QL requirements (excluding immediate substitutions permitted 
under the proposed Sec.  423.120(e)(2)(i) of the December 2022 proposed 
rule). Considering that our current sub-regulatory guidance does not 
require maintenance substitutions to occur ``at the same time,'' we 
have reconsidered and do not believe it is necessary to propose 
imposing such strict timing requirements for a maintenance change--
whether it be related to plan sponsors removing or making negative 
changes (1) to a brand name or reference product when adding a 
corresponding drug that is not an immediate substitution, or (2) to a 
reference product when adding a biosimilar biological product other 
than an interchangeable biological product. We would like to encourage 
plans to offer more choices by adding corresponding drugs (the proposed 
definition of which in the December 2022 proposed rule includes 
interchangeable biological products) and biosimilar biological products 
other than interchangeable

[[Page 78521]]

biological products to their formularies as soon as possible. We are 
concerned that requiring such an addition to occur ``at the same time'' 
as the negative formulary change to the brand name drug or reference 
product could cause a Part D sponsor to delay adding a corresponding 
drug or biosimilar biological product other than an interchangeable 
biological product until the Part D sponsor has taken the steps it 
deems necessary to operationalize the negative changes that would be 
made to the brand name drug or reference product currently on the 
formulary, which in turn would delay enrollee access to the 
corresponding drug or biosimilar biological product other than an 
interchangeable biological product.
    Therefore, we propose to remove the requirement to have changes 
take place ``at the same time'' in the December 2022 proposed rule's 
definition of ``maintenance change'' at proposed Sec.  423.100, and 
will not add that modifier for the change for biosimilar biological 
products other than interchangeable biological products that we are 
proposing in this proposed rule, with the understanding that the 
addition of the corresponding drug or biosimilar biological product 
other than an interchangeable biological product would need to come 
before the negative change is applied to the brand name drug or 
reference product. Further, this proposed update to the definition of a 
maintenance change does not alter other proposed requirements for 
maintenance changes in the December 2022 proposed rule, including that 
CMS must be provided a 30-day opportunity to review any such changes 
and in all cases enrollees will receive at least 30 days' notice before 
a drug is removed or subject to any other negative formulary change.
    At the same time, we are not proposing an unlimited window in which 
to make a negative formulary change to the related drug after adding a 
corresponding drug under paragraph (1) or adding a biosimilar 
biological product other than an interchangeable biological product 
under paragraph (2) of the proposed Sec.  423.100 definition of a 
``maintenance change.'' We believe Part D sponsors should make such 
negative changes within a reasonable amount of time after adding 
corresponding drugs and biosimilar biological products other than 
interchangeable biological products as specified in order to best 
achieve the goal of increasing their utilization. We understand that 
Part D sponsors may be eager to add, for example, a newly approved 
generic drug or biosimilar biological product to their formularies, but 
may need additional time to operationalize the negative formulary 
change to the brand name or reference product, respectively; however, 
we do not believe that Part D sponsors should have an unlimited amount 
of time to effectuate the negative formulary change because this 
presents challenges for CMS to monitor and deviates from the idea that 
such formulary changes are in many cases substitutions of one drug for 
another. In other words, the addition of a corresponding drug or a 
biosimilar biological product other than an interchangeable biological 
product justifies the negative formulary change to the brand name or 
reference product. Nevertheless, we do not want to establish too short 
a timeframe requirement to make the negative change to the brand name 
drug or reference product because it could increase the chance that 
Part D sponsors will miss the formulary update opportunity, resulting 
in more continued utilization of the brand name drug or reference 
product and less utilization of the corresponding drug or biosimilar 
biological product other than an interchangeable biological product 
than otherwise could be achieved. To strike a balance, we are proposing 
to codify our longstanding operational limitation of a 90-day timeframe 
for a Part D sponsor to remove a brand name drug from the formulary 
when a generic drug is added. Our experience suggests that this 
timeframe would provide Part D sponsors with sufficient time to 
implement the negative formulary change for a brand name drug or 
reference product after adding a corresponding drug or biosimilar 
biological product other than an interchangeable biological product, 
but still ensure the removal of the brand name drug or reference 
product is timely enough to help increase utilization of the 
corresponding drug or biosimilar biological product other than an 
interchangeable biological product. Accordingly, we believe negative 
formulary changes to the brand name drug or reference product should 
have to take effect within 90 days after a generic or other 
corresponding drug, or biosimilar biological product other than an 
interchangeable biological product, is added as specified to the 
formulary.
    To provide Part D sponsors with more flexibility, we propose to 
remove from paragraph (1) of the proposed definition of ``maintenance 
change'' in Sec.  423.100 of the December 2022 proposed rule the 
requirement that the corresponding drug be added and the related drug 
be subject to negative formulary changes ``at the same time.'' Rather, 
we now propose to revise paragraph (1) to require Part D sponsors to 
make any negative formulary changes ``within 90 days of'' adding a 
corresponding drug. Similarly, the newly proposed paragraph (2) of the 
proposed definition of ``maintenance change'' in Sec.  423.100, as 
discussed above, would require Part D sponsors to make negative 
formulary changes to a reference product ``within 90 days of'' adding a 
biosimilar biological product other than an interchangeable biological 
product.
    In this vein, we note that a commenter on the December 2022 
proposed rule requested that we remove the requirement in the proposed 
Sec.  423.120(e)(2)(i) of the December 2022 proposed rule (currently 
appearing at Sec.  423.120(b)(5)(iv)(A)) that Part D sponsors making 
immediate substitutions remove or make any other negative formulary 
changes to a related drug ``at the same time'' they add its 
corresponding drug. The commenter suggested that this requirement might 
discourage them from adding new corresponding drugs, which could be 
lower in cost than related drugs, as soon as possible because they 
often need more time to implement the changes with respect to the 
related drug. For instance, they suggested it takes time to evaluate 
new products; check their availability; communicate changes; update 
operations; and assess suitability for substitution among 
interchangeable biological products. We appreciate the comment and 
reiterate that we favor expeditious access for enrollees to Part D 
drugs that could be lower in cost. The purpose of the immediate 
substitutions policy is to encourage quick action with respect to 
immediately placing a corresponding drug on the formulary after it is 
released.
    Accordingly, with respect to the proposed Sec.  423.120(e)(2)(i) in 
the December 2022 proposed rule, we now propose to remove the 
requirement that immediate substitutions occur ``at the same time'' and 
instead state that negative formulary changes may still qualify as 
immediate substitutions if made within 30 days of adding a 
corresponding drug to a formulary. As proposed in the December 2022 
proposed rule, for immediate substitutions, Part D sponsors would be 
required to submit such changes to CMS, in a form and manner specified 
by CMS, in their next required or scheduled formulary update.
    We note that we are proposing different windows of time in which 
Part D sponsors can make negative formulary changes to the related drug 
based on whether there is an immediate substitution (that is, within 30 
days after

[[Page 78522]]

adding the corresponding drug) or a maintenance change (that is, within 
90 days after adding the corresponding drug). The different 
requirements reflect a distinction in the nature of the changes 
themselves. As noted earlier, the entire purpose of immediate 
substitutions is quick action, such that Part D sponsors can put a 
newer corresponding drug on the formulary and remove the related drug 
it is replacing as soon as possible. For that reason, we continue to 
encourage that immediate substitutions take place ``at the same time,'' 
but propose setting a 30-day limit. To encourage this, Part D sponsors 
implementing immediate substitutions may provide notice to affected 
enrollees of the specific changes after they have taken effect.
    For the reasons discussed above, for other kinds of maintenance 
changes that are not immediate, we propose that we would approve only 
negative formulary changes to the related drug that take effect within 
90 days after a corresponding drug is added to the formulary.
    We invite comment on these proposed changes, the reasons why Part D 
sponsors would need a period of time after adding a corresponding drug 
or biosimilar biological product other than an interchangeable 
biological product in which to take action, and any other appropriate 
window of time in which to permit maintenance changes or immediate 
substitutions to take place, including whether we should maintain a 
distinction between the two.
(3) Miscellaneous Changes
    In re-examining our proposed definition of ``maintenance change'' 
in the December 2022 proposed rule at Sec.  423.100, we found a 
technical error, in that we did not specify in the introductory clause 
that the changes would apply with respect to ``a covered Part D drug.'' 
We hereby propose to make that correction in this proposed rule.
    We propose a technical change to our proposed definition of 
``corresponding drug'' included in the December 2022 proposed rule in 
Sec.  423.100 to specify that the reference to ``an unbranded 
biological product of a biological product'' is intended to be a 
reference to ``an unbranded biological product marketed under the same 
BLA as a brand name biological product.''
3. Summary
    In conclusion, we are proposing the changes below to three sections 
of regulatory text originally proposed in the December 2022 proposed 
rule. We are currently not proposing updates to the other proposed 
regulatory text in the December 2022 proposed rule related to section 
III.Q., Changes to an Approved Formulary, which, as noted above, 
remains under consideration.
    <bullet> In Sec.  423.4, to add a definition of ``biosimilar 
biological product;''
    <bullet> In Sec.  423.4, to make technical corrections to the 
proposed definition of an ``interchangeable biological product;''
    <bullet> In Sec.  423.100, to revise the proposed definition of 
``maintenance change'' as follows: to add an introductory clause noting 
its application to covered Part D drugs; to revise paragraph (1) to 
require changes ``within 90 days of,'' rather than ``at the same time 
as,'' adding a corresponding drug; to add a new paragraph (2) to 
include substitution of biosimilar biological products other than 
interchangeable biological products as a type of maintenance change; 
and to renumber the remaining maintenance changes listed;
    <bullet> In Sec.  423.100, to revise the proposed definition of 
``corresponding drug'' to specify that the reference to ``an unbranded 
biological product of a biological product'' is intended to be a 
reference to ``an unbranded biological product marketed under the same 
BLA as a brand name biological product;'' and
    <bullet> In proposed Sec.  423.120(e)(2)(i), to require changes 
``within 30 days of,'' rather than ``at the same time as,'' adding a 
corresponding drug.

G. Parallel Marketing and Enrollment Sanctions Following a Contract 
Termination (Sec. Sec.  422.510(e) and 423.509(f))

    Sections 1857(c)(2) and 1860D-12(b)(3)(B) of the Act provide CMS 
with the ability to terminate MA (including MA-PD) and PDP contracts if 
we determine that a contract(s) has met any of the following 
thresholds:
    <bullet> Has failed substantially to carry out the contract.
    <bullet> Is carrying out the contract in a manner that is 
inconsistent with the efficient and effective administration of, 
respectively, Part C or Part D of Title XVIII of the Act (that is, the 
Medicare statute).
    <bullet> No longer substantially meets the applicable conditions of 
the applicable part of the statute.
    This termination authority is codified at 42 CFR 422.510(a)(1) 
through (3) and 423.509(a)(1) through (3), respectively. In addition, 
section 1857(g)(3) of the Act (incorporated for Part D sponsors under 
section 1860D-12(b)(3)(F)) specifies that intermediate sanctions and 
civil money penalties (CMPs) can be imposed on the same grounds upon 
which a contract could be terminated (63 FR 34968 and 70 FR 4193). CMS 
codified this authority at Sec. Sec.  422.752(b) and 423.752(b) with 
respect to intermediate sanctions, and Sec. Sec.  422.752(c)(1)(i) and 
423.752(c)(1)(i) with respect to CMPs.
    If CMS terminates an MA organization or Part D sponsor contract(s) 
during the plan year but the termination is not effective until January 
1 of the following year, the MA organization or Part D sponsor could 
potentially continue to market and enroll eligible beneficiaries (as 
described in part 422, subpart B, and part 423, subpart B) into plans 
under the terminating contract(s) unless CMS imposes separate marketing 
and enrollment sanctions on the terminating contract(s).\79\ A 
terminating contract that continues to market to and enroll eligible 
beneficiaries would cause confusion and disruption for beneficiaries 
who enroll in the period of time between when the termination action is 
taken and the January 1 effective date of the termination.
---------------------------------------------------------------------------

    \79\ Regulations in 42 CFR part 422, subpart B, and part 423, 
subpart B, permit enrollees to enroll in a plan mid-year during 
their initial election period or special election periods.
---------------------------------------------------------------------------

    For these reasons, we propose to add paragraph (e) to Sec.  422.510 
and paragraph (f) to Sec.  423.509 that, effective contract year 2025, 
marketing and enrollment sanctions will automatically take effect after 
a termination is imposed. At paragraph (e)(1) of Sec.  422.510 and 
paragraph (f)(1) of Sec.  423.509, we propose to state that the 
marketing and enrollment sanctions will go into effect 15 days after 
CMS issues a contract termination notice. This timeframe is consistent 
with the number of days CMS often designates as the effective date for 
sanctions after CMS issues a sanction notice.
    At paragraph (e)(2) of Sec.  422.510 and paragraph (f)(2) of Sec.  
423.509, we propose that MA organizations and Part D sponsors would 
continue to be afforded the same appeals rights and procedures specific 
to contract terminations under subpart N of 42 CFR parts 422 and 423, 
however, there would not be a separate appeal for the sanction (in 
other words the appeal of the termination would include the associated 
marketing and enrollment sanctions). In addition, at paragraph (e)(3) 
of Sec.  422.510 and paragraph (f)(3) of Sec.  423.509 we propose that 
if an MA organization or Part D sponsor appeals the contract 
termination, the marketing and enrollment sanctions would not be stayed 
pending the appeal consistent with Sec. Sec.  422.756(b)(3) and 
423.756(b)(3). Finally, at paragraph (e)(4) of Sec.  422.510 and 
paragraph (f)(4) of Sec.  423.509 we

[[Page 78523]]

propose that the sanction would remain in effect until the effective 
date of the termination, or if the termination decision is overturned 
on appeal, until the final decision to overturn the termination is made 
by the hearing officer or Administrator.
    CMS rarely terminates MA organization and Part D sponsor contracts 
and, on average, contract terminations affect less than one MA 
organization or Part D sponsor a year. Therefore, we anticipate that 
this proposal would not result in additional costs or additional 
administrative burden for affected MA organizations and Part D 
sponsors. For example, an MA organization and Part D sponsor would not 
be required to submit a corrective action plan, and if appealed there 
would only be one appeal rather than multiple. MA organizations and 
Part D sponsors would continue to be required to comply with existing 
regulations that require public and beneficiary notice that their 
contract is being terminated under this proposal.

H. Update to the Multi-Language Insert Regulation (Sec. Sec.  422.2267 
and 423.2267)

    Individuals with limited English proficiency (LEP) experience 
obstacles to accessing health care in the United States. Language 
barriers negatively affect the ability of patients with LEP to 
comprehend their diagnoses and understand medical instructions when 
they are delivered in English, and impact their comfort with post-
discharge care regimens.\80\ For example, Hispanic/Latino individuals 
with LEP report worse access to care and receipt of fewer preventive 
services than Hispanic/Latino individuals who speak English 
proficiently. For Asian Americans who are not proficient in English, 
language barriers are one of the most significant challenges to 
accessing health care, including making an appointment, communicating 
with health care professionals, and gaining knowledge about an illness; 
this is even more pronounced among older Asian Americans, who are more 
likely to have limited English proficiency.\81\ Studies show that 
patients with LEP experience longer hospital stays--leading to a 
greater risk of line infections, surgical infections, falls, and 
pressure ulcers--when compared to English-speaking patients; because 
patients with LEP have greater difficulty understanding medical 
instructions when those instructions are given in English, they are at 
higher risk of surgical delays and readmissions.\82\ Although the use 
of qualified interpreters is effective in improving care for patients 
with LEP, some clinicians choose not to use them, fail to use them 
effectively, or rely instead on ad hoc interpreters--such as family 
members or untrained bilingual staff.\83\ However, in addition to 
posing legal and ethical concerns, ad hoc interpreters are more likely 
to make mistakes than professional interpreters.\84\ Also, clinicians 
with basic or intermediate non-English spoken language skills often 
attempt to communicate with the patient on their own without using an 
interpreter, increasing patient risk.\85\ These barriers contribute to 
disparities in health outcomes for individuals with LEP, which likely 
worsened during the COVID-19 pandemic.\86\
---------------------------------------------------------------------------

    \80\ Espinoza, J. and Derrington, S. ``How Should Clinicians 
Respond to Language Barriers that Exacerbate Health Inequity?'', AMA 
Journal of Ethics (February 2021) E109. Retrieved from https://journalofethics.ama-assn.org/sites/journalofethics.ama-assn.org/files/2021-02/cscm3-2102.pdf; Karliner, L., Perez-Stable, and E., 
Gregorich, S. ``Convenient Access to Professional Interpreters in 
the Hospital Decreases Readmission Rates and Estimated Hospital 
Expenditures for Patients with Limited English Proficiency'', Med 
Care (March 2017) 199-206. Retrieved from https://pubmed.ncbi.nlm.nih.gov/27579909/.
    \81\ Wooksoo, K. and Keefe, R. ``Barriers to Healthcare Among 
Asian Americans'', Social Work in Public Health (2010) 286-295. 
Retrieved from https://www.tandfonline.com/doi/pdf/10.1080/19371910903240704?needAccess=true.
    \82\ U.S. Department of Health & Human Services, Agency for 
Healthcare Research & Quality. ``Executive Summary: Improving 
Patient Safety Systems for Patients with Limited English 
Proficiency'', (September 2020). Retrieved from https://www.ahrq.gov/health-literacy/professional-training/lepguide/index.html.
    \83\ Espinoza, J. and Derrington, S. ``How Should Clinicians 
Respond to Language Barriers that Exacerbate Health Inequity?'', AMA 
Journal of Ethics (February 2021) E110. Retrieved from https://journalofethics.ama-assn.org/sites/journalofethics.ama-assn.org/files/2021-02/cscm3-2102.pdf.
    \84\ Glenn Flores et al., Errors of Medical Interpretation and 
Their Potential Clinical Consequences: A Comparison of Professional 
Versus Ad Hoc Versus No Interpreters, 5 Annals of Emerg. Med. 545 
(Nov. 1, 2012), https://pubmed.ncbi.nlm.nih.gov/22424655/; Ali Labaf 
et al., The Effect of Language Barrier and Non-Professional 
Interpreters on the Accuracy of Patient-Physician Communication in 
Emergency Department, 3 Adv. J. Emerg. Med., June 6, 2019, at p. 4, 
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6789075/pdf/AJEM-3-e38.pdf.
    \85\ U.S. Department of Health & Human Services, Agency for 
Healthcare Research & Quality. ``Executive Summary: Improving 
Patient Safety Systems for Patients with Limited English 
Proficiency'', (September 2020). Retrieved from https://www.ahrq.gov/health-literacy/professional-training/lepguide/exec-summary.html#what.
    \86\ Lala Tanmoy Das et al., Addressing Barriers to Care for 
Patients with Limited English Proficiency During the COVID-19 
Pandemic, Health Affairs Blog (July 29, 2020), https://www.healthaffairs.org/do/10.1377/hblog20200724.76821/full/.
---------------------------------------------------------------------------

    The multi-language insert (MLI) required at Sec. Sec.  
422.2267(e)(31) and 423.2267(e)(33) is a standardized communications 
material that informs enrollees and prospective enrollees that 
interpreter services are available in Spanish, Chinese, Tagalog, 
French, Vietnamese, German, Korean, Russian, Arabic, Italian, 
Portuguese, French Creole, Polish, Hindi, and Japanese. These are the 
15 most common non-English languages in the United States. 
Additionally, Sec. Sec.  422.2267(e)(31)(i) and 423.2267(e)(33)(i) 
require plans to provide the MLI in any non-English language that is 
the primary language of at least five percent of the individuals in a 
plan benefit package (PBP) service area but is not already included on 
the MLI. These regulations also provide that a plan may opt to include 
the MLI in any additional languages that do not meet the five percent 
threshold, where it determines that including the language would be 
appropriate. The MLI states, ``We have free interpreter services to 
answer any questions you may have about our health or drug plan. To get 
an interpreter, just call us at [1-xxx-xxx-xxxx]. Someone who speaks 
[language] can help you. This is a free service.'' The issuance of the 
MLI is independent of the Medicare written translation requirements for 
any non-English language that meets the five percent threshold, as 
currently required under Sec. Sec.  422.2267(a)(2) and 423.2267(a)(2), 
and the additional written translation requirements for fully 
integrated D-SNPs (FIDE SNPs) and highly integrated D-SNPs (HIDE SNPs) 
provided in Sec. Sec.  422.2267(a)(4) and 423.3367(a)(4).\87\ 
Additionally, we note that pursuant to CMS's authority in section 
1876(c)(3)(C) to regulate marketing and the authority in section 
1876(i)(3)(D) to specify new section 1876 contract terms, we have also 
established in Sec.  417.428 that most of the marketing and 
communication regulations in subpart V of part 422, including the MLI 
requirement in Sec.  422.2267(e)(31), also apply to section 1876 cost 
plans.
---------------------------------------------------------------------------

    \87\ This proposal pertains only to the MLI requirements in 
Sec. Sec.  422.2267(e)(31) and 423.2267(e)(33), not Sec. Sec.  
422.2267 and 423.2267 broadly.
---------------------------------------------------------------------------

    On May 18, 2016, the Office for Civil Rights (OCR) published a 
final rule (81 FR 31375; hereinafter referenced to as the section 1557 
final rule) implementing section 1557 of the Patient Protection and 
Affordable Care Act (ACA).\88\ Section 1557 of the ACA provides that an 
individual shall not be excluded from participation in, be denied the 
benefits of, or be subjected to discrimination on the grounds 
prohibited under Title VI of the Civil Rights Act of 1964, 42 U.S.C. 
2000d et

[[Page 78524]]

seq. (race, color, national origin), Title IX of the Education 
Amendments of 1972, 20 U.S.C. 1681 et seq. (sex), the Age 
Discrimination Act of 1975, 42 U.S.C. 6101 et seq. (age), or section 
504 of the Rehabilitation Act of 1973, 29 U.S.C. 794 (disability), 
under any health program or activity, any part of which is receiving 
Federal financial assistance; any health program or activity 
administered by the Department; or any program or activity administered 
by any entity established under Title I of the Act. The 2016 
regulations implementing section 1557 included the requirement that all 
covered entities include taglines with all ``significant 
communications.'' The sample tagline provided by the Department 
consisted of a sentence stating, in the 15 most common non-English 
languages in a State or States, ``ATTENTION: If you speak [insert 
language], language assistance services, free of charge, are available 
to you. Call 1-xxx-xxx-xxxx (TTY: 1-xxx-xxx-xxxx).'' Because of the 
inherent duplication with the MLI, CMS issued an HPMS email on August 
25, 2016, to revise the Medicare Marketing Guidelines (MMG) at that 
time to remove the then-applicable MLI requirements.
---------------------------------------------------------------------------

    \88\ Public Law 111-148.
---------------------------------------------------------------------------

    On June 19, 2020, OCR published a second section 1557 final rule 
(2020 OCR Rule) (85 FR 37160), which is currently in effect, that 
repealed the notice and tagline requirements, citing costs, confusion, 
and waste, but stated that covered entities are still required ``to 
provide taglines whenever such taglines are necessary to ensure 
meaningful access by LEP individuals to a covered program or 
activity.'' In the February 2020 proposed rule (85 FR 9002), we 
proposed to require plans to use a disclaimer tagline about the 
availability of non-English translations in all required materials. 
However, we did not finalize that proposal in the January 2021 final 
rule (86 FR 5864). We based this decision on our belief that future 
rulemaking regarding non-English disclaimers, if appropriate, would be 
best addressed by OCR, as those requirements would be HHS-wide instead 
of limited to CMS. We also stated 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 (86 FR 5995).
    It is important to note that none of the actions impacting the 
various notifications of interpreter services changed the requirement 
that MA organizations, Part D sponsors, or cost plans must provide 
these services under applicable law. Plans have long been required to 
provide interpreters when necessary to ensure meaningful access to 
individuals with LEP, consistent with existing civil rights laws. In 
implementing and carrying out the Part C and D programs under sections 
1851(h), 1852(c), 1860-1(b)(1)(B)(vi), 1860D-4(a), and 1860D-4(l) of 
the Act, CMS considers the materials required under Sec. Sec.  
422.2267(e) and 423.2267(e) to be vital to the beneficiary decision 
making process; ensuring beneficiaries with LEP are aware of and are 
able to access interpreter services provides a clear path for this 
portion of the population to properly understand and access their 
benefits. For a more detailed discussion of previous rulemaking related 
to section 1557, the MLI, and non-English translation and interpreter 
requirements, we direct readers to the August 4, 2022 HHS notice of 
proposed rulemaking regarding section 1557 of the Affordable Care Act 
(87 FR 47853 through 47856) (hereinafter referred to as the August 2022 
proposed rule) and the January 2022 proposed rule (87 FR 1899 through 
1900).\89\
---------------------------------------------------------------------------

    \89\ Specifically, we highlight pages 1899-1900 and 1926-1927 of 
the August 2022 proposed rule and 87 FR 1899 through 1900 of the 
January 2022 proposed rule.
---------------------------------------------------------------------------

    In the Medicare Program; Contract Year 2023 Policy and Technical 
Changes to the Medicare Advantage and Medicare Prescription Drug 
Benefit Programs; Policy and Regulatory Revisions in Response to the 
COVID-19 Public Health Emergency; Additional Policy and Regulatory 
Revisions in Response to the COVID-19 Public Health Emergency final 
rule (87 FR 27704) (hereafter referred to as the May 2022 final rule), 
we reinstituted the requirement to use the MLI at Sec. Sec.  
422.2267(e)(31) and 423.2267(e)(33). We noted that we gained additional 
insight regarding the void created by the lack of any notification 
requirement associated with the availability of interpreter services 
for Medicare beneficiaries (87 CFR 27821). We stated that we consider 
the materials required under Sec. Sec.  422.2267(e) and 423.2267(e) to 
be vital to the beneficiary decision-making process. We also noted that 
we reviewed complaint tracking module (CTM) cases in the Health Plan 
Management System (HPMS) related to ``language'' and found a pattern of 
beneficiary confusion stemming from not fully understanding materials 
based on a language barrier. We noted that solely relying on the 
requirements delineated in the 2020 OCR Rule for covered entities to 
convey the availability of interpreter services is insufficient for the 
MA, cost plan, and Part D programs and is not in the best interest of 
Medicare beneficiaries who are evaluating whether to receive their 
Medicare benefits through these plans and who are enrolled in these 
plans. We stated that we believed that informing Medicare beneficiaries 
that interpreter services are available is essential to realizing the 
value of our regulatory requirements for interpreter services.
    On August 4, 2022, OCR published a proposed rule (87 FR 47824) that 
proposed to require covered entities to notify the public of the 
availability of language assistance services and auxiliary aids and 
services for their health programs and activities using a ``Notice of 
Availability.'' Proposed Sec.  92.11(b) would require the Notice of 
Availability to be provided in English and at least in the 15 most 
common languages spoken by individuals with LEP in the relevant State 
or States, and in alternate formats for individuals with disabilities 
who request auxiliary aids and services to ensure effective 
communications. If finalized, these proposed provisions would result in 
misalignment with the MLI requirement under Sec. Sec.  422.2267(e)(31) 
and 423.2267(e)(33) which require that notice be provided in the 15 
most common non-English languages in the United States. At the time 
this proposed rule is published, OCR has not issued a final rule on its 
August 2022 proposed rule, and the 2020 OCR Rule remains in effect.
    In addition, per Sec.  438.10(d)(2), States must require managed 
care organizations (MCOs), prepaid inpatient health plans (PIHPs), 
prepaid ambulatory health plans (PAHPs), and primary care case 
management programs to include taglines in written materials that are 
critical to obtaining services for potential enrollees in the prevalent 
non-English languages in the State explaining the availability of oral 
interpretation to understand the information provided, information on 
how to request auxiliary aids and services, and the toll-free telephone 
number of the entity providing choice counseling services in the State. 
Several States that use integrated Medicare and Medicaid materials for 
D-SNPs and Medicare-Medicaid Plans have contacted CMS and requested 
that we change the MLI to be based on the 15 most common languages in 
the State rather than the 15 most common languages nationally because 
the most common languages in the State are often not the same as the 
most common 15 languages nationally. For example, while French Creole 
is included in the current MLI list for the most common languages 
nationally, it is not a common

[[Page 78525]]

language in Minnesota. In Minnesota, Hmong and Somali, which are not 
included in the MLI, are two of the most prevalent languages. In fact, 
Minnesota informed CMS that only seven of the languages on the national 
list were included in their list of the 15 most common languages in 
their State.
    As a result of this conflict between the MLI requirements at 
Sec. Sec.  422.2267(e)(31) and 423.2267(e)(33) and the Medicaid 
requirement at Sec.  438.10(d)(2), any applicable integrated plans 
(AIPs), as defined at Sec.  422.561, that provide integrated Medicare 
and Medicaid materials for enrollees must currently include the MLI in 
the 15 most common languages nationally as well as the Medicaid tagline 
in the prevalent non-English languages in the State if they want to 
comply with both Medicare and Medicaid regulatory requirements. 
Specifically, these plans that provide integrated materials must comply 
with the MLI requirements at Sec. Sec.  422.2267(e)(31) and 
423.2267(e)(33) and the Medicaid requirement at Sec.  438.10(d)(2) to 
include taglines in written materials that are critical to obtaining 
services for potential enrollees in the prevalent non-English languages 
in the State. In the enrollee materials, this can result in a very long 
multi-page list of statements noting the availability of translations 
services in many languages. This lengthy list can be a distraction from 
the main information conveyed in the material. As discussed in greater 
detail below, we are proposing to update Sec. Sec.  422.2267(e)(31) and 
423.2267(e)(33) to instead require that notice of availability of 
language assistance services and auxiliary aids and services be 
provided in the 15 most common languages in a State; we expect that 
this proposed policy would better align with the Medicaid translation 
requirements at Sec.  438.10(d)(2).\90\
---------------------------------------------------------------------------

    \90\ We expect the 15 most common languages for a given State to 
include any language required by the Medicaid program at Sec.  
438.10(d)(2). Therefore, our proposed rule would reduce burden on 
fully integrated dual eligible special needs plans and highly 
integrated dual eligible special needs plans, as defined at Sec.  
422.2, and applicable integrated plans, as defined at Sec.  422.561, 
to comply with regulations at Sec. Sec.  422.2267(a)(4) and 
423.2267(a)(4).
---------------------------------------------------------------------------

    We believe rulemaking regarding a non-English notice of the 
availability of language assistance services and auxiliary aids and 
services is needed to more closely reflect the actual languages spoken 
in the service area. We also believe it is in the best interest of 
enrollees for the requirements to align with the Medicaid translation 
requirements because it will allow D-SNPs that are AIPs to provide a 
more applicable, concise Notice of Availability to enrollees that does 
not distract from the main purpose of the document.
    Noting that while OCR has yet to finalize the Notice of 
Availability policy described in its August 2022 proposed rule, and 
thus that OCR's proposed policy could be subject to change or not be 
finalized, alignment of Medicare and OCR rules would help to prevent 
confusion among MA organizations, Part D sponsors, and cost plans 
regarding which requirements they must comply with. Should the OCR 
final rule differ from the original August 2022 proposed rule, we will 
consider modifying our final rule to align with OCR's final rule.
    Therefore, we propose to amend Sec. Sec.  422.2267(e)(31) and 
423.2267(e)(33). First, we propose to replace references to the MLI 
with references to a Notice of Availability. We propose to modify the 
language to reflect CMS's proposal that this notice be a model 
communication material rather than a standardized communication 
material and thus that CMS would no longer specify the exact text that 
must be used in the required notice. We propose to change paragraphs 
(e)(31) and (33) to require MA organizations and Part D sponsors to 
provide enrollees a notice of availability of language assistance 
services and auxiliary aids and services that, at a minimum, states 
that MA organizations and Part D sponsors provide language assistance 
services and appropriate auxiliary aids and services free of charge. We 
are proposing, in new paragraphs (e)(31)(i) and (e)(33)(i), that the 
Notice of Availability must be provided in English and at least the 15 
languages most commonly spoken by individuals with limited English 
proficiency of the relevant State and must be provided in alternate 
formats for individuals with disabilities who require auxiliary aids 
and services to ensure effective communication. This proposed State-
specific standard would ensure that a significant proportion of each 
State's particular LEP population receives key information in the 
appropriate languages. The U.S. Census Bureau's ACS 2009-2013 multi-
year data show that the top languages spoken in each State can vary 
significantly.\91\ State-specific language translations provide for 
flexibility to maximize access to care for individuals with LEP. This 
updated notice must also include a statement regarding the availability 
of appropriate auxiliary aids and services to reduce barriers to access 
for individuals with disabilities.
---------------------------------------------------------------------------

    \91\ https://www2.census.gov/library/data/tables/2008/demo/language-use/2009-2013-acs-lang-tables-nation.xls.
---------------------------------------------------------------------------

    We believe this proposal would make it easier for individuals to 
understand the full scope of available Medicare benefits (as well as 
Medicaid benefits available through the D-SNPs, where applicable), 
increasing their ability to make informed health care decisions, and 
promote a more equitable health care system by increasing the 
likelihood that MA enrollees have access to information and necessary 
health care. As an additional benefit, our proposed changes would 
mitigate the risk that Sec. Sec.  422.2267(e)(31) and 423.2267(e)(33) 
could conflict with Sec.  438.10(d)(2) and the forthcoming OCR final 
rule, if finalized, requiring applicable Medicare plans to comply with 
two, disparate sets of requirements. Such an outcome adds undue burden 
on plans. Further, requiring MA organizations and Part D sponsors to 
provide multiple sets of translated statements accompanying enrollee 
materials could lead to enrollee confusion and detract from the 
enrollee material message. Notwithstanding OCR's final rule policy, we 
believe our proposed changes are appropriate given the benefits of a 
non-English notice of availability of language assistance services and 
auxiliary aids and service more closely reflecting the actual languages 
spoken in the service area and alignment with the Medicaid translation 
requirements.
    Additionally, we propose in Sec. Sec.  422.2267(e)(31)(ii) and 
423.2267(e)(33)(ii) that if there are additional languages in a 
particular service area that meet the 5-percent service area threshold, 
described in paragraph Sec. Sec.  422.2267(a)(2) and 423.2267(a)(2), 
beyond the languages described in Sec. Sec.  422.2267(e)(31)(i) and 
423.2267(e)(33)(i), the Notice of Availability must also be translated 
into those languages, similar to the current MLI requirements at 
Sec. Sec.  422.2267(e)(31)(i) and 423.2267(e)(33)(i). While Sec. Sec.  
422.2267(a)(2) and 423.2267(a)(2) apply to the Notice of Availability 
since it is a required material under Sec. Sec.  422.2267(e) and 
423.2267(e), we wanted to clarify this in the regulation text. MA 
organizations and Part D sponsors may also opt to translate the Notice 
of Availability in any additional languages that do not meet the five 
percent service area threshold at Sec. Sec.  422.2267(a)(2) and 
423.2267(a)(2), where the MA organization or Part D sponsor determines 
that such inclusion would be appropriate, which is also included in the 
current MLI requirements at Sec. Sec.  422.2267(e)(31)(i) and 
423.2267(e)(33)(i). It is possible that

[[Page 78526]]

there may be a subpopulation in the plan benefit package service area 
that uses a language that does not fall within the top 15 languages or 
meet the five percent service area of a plan benefit package threshold 
that the plan determines can benefit by receiving the notice. We again 
note that pursuant to CMS's authority in section 1876(c)(3)(C) to 
regulate marketing and the authority in section 1876(i)(3)(D) to 
specify new section 1876 contract terms, and as established in Sec.  
417.428, this proposal would also apply to section 1876 cost plans.
    To assist plans with fulfilling their requirements under Sec. Sec.  
422.2267(a)(2) and 423.2267(a)(2) to translate required materials into 
any non-English language that is the primary language of at least 5 
percent of the population of a plan service area, since 2009 CMS has 
provided plans with a list of all languages that are spoken by five 
percent or more of the population for every county in the U.S. Each 
fall, we release an HPMS memorandum announcing that MA organizations 
and Part D sponsors can access this list in the HPMS marketing review 
module.\92\ However, plans can also use Census Bureau ACS data to 
determine the top languages spoken in a given State or service area. 
The September 2023 Medicare Part C & D Language Data Technical Notes 
\93\ outlines our methodology for calculating the percentage of the 
population in a plan's service area speaking a language other than 
English and provides plans with instructions to make these calculations 
on their own.
---------------------------------------------------------------------------

    \92\ We released the contract year 2024 version of this HPMS 
memorandum titled, ``Corrected Contract Year 2024 Translated Model 
Materials Requirements and Language Data Analysis'' on September 25, 
2023. This memorandum can be retrieved at: https://www.cms.gov/about-cms/information-systems/hpms/hpms-memos-archive-weekly/hpms-memos-wk-4-september-18-22.
    \93\ Found in HPMS as described in the September 25, 2023 HPMS 
memo, ``Corrected Contract Year 2024 Translated Model Materials 
Requirements and Language Data Analysis.'' This memo can be 
retrieved at https://www.cms.gov/about-cms/information-systems/hpms/hpms-memos-archive-weekly/hpms-memos-wk-4-september-18-22.
---------------------------------------------------------------------------

I. Expanding Permissible Data Use and Data Disclosure for MA Encounter 
Data (Sec.  422.310)

    Section 1853(a) of the Act requires CMS to risk-adjust payments 
made to Medicare Advantage (MA) organizations. In order to carry out 
risk adjustment, section 1853(a)(3)(B) of the Act requires submission 
of data by MA organizations regarding the services provided to 
enrollees and other information the Secretary deems necessary. The 
implementing regulation at Sec.  422.310(b) requires that MA 
organizations submit to CMS ``the data necessary to characterize the 
context and purposes of each item and service provided to a Medicare 
enrollee by a provider, supplier, physician, or other practitioner.'' 
Currently, Sec.  422.310(d)(1) provides that MA organizations submit 
risk adjustment data equivalent to Medicare fee-for-service (FFS) data 
to CMS as specified by CMS. MA encounter data, which are comprehensive 
data equivalent to Medicare FFS data, are risk adjustment data.\94\
---------------------------------------------------------------------------

    \94\ See System of Records Notices for the CMS Encounter Data 
System (EDS), System No. 09-70-0506, published June 17, 2014 (79 FR 
34539), as amended at February 14, 2018 (83 FR 6591); and for the 
CMS Risk Adjustment Suite of Systems (RASS), System No. 09-70-0508, 
published August 17, 2015 (80 FR 49237), as amended at February 14, 
2018 (83 FR 6591).
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    Section 1106(a)(1) of the Act authorizes the Secretary to adopt 
regulations governing release of information gathered in the course of 
administering programs under the Act. In addition, section 1856(b) of 
the Act authorizes CMS to adopt standards to carry out the MA statute, 
and section 1857(e)(1) of the Act authorizes CMS to add contract terms 
that are not inconsistent with the Part C statute and are necessary and 
appropriate for the program. Currently, Sec.  422.310(f)(1) establishes 
permissible CMS uses of MA encounter data (referred to as ``risk 
adjustment data'' in the regulation), while Sec.  422.310(f)(2) and (3) 
establish rules for CMS release of data. Prior to 2008, Sec.  
422.310(f) provided for CMS to use MA risk adjustment data to risk 
adjust MA payments and, except for any medical record data also 
collected under Sec.  422.310, for other purposes. Over time, we 
subsequently refined the regulatory language describing the scope of 
permissible uses and releases of the MA risk adjustment data, including 
MA encounter data, to (i) risk adjusting MA payments, (ii) updating 
risk adjustment models, (iii) calculating Medicare disproportionate 
share hospital percentages, (iv) conducting quality review and 
improvement activities, (v) for Medicare coverage purposes, (vi) 
conducting evaluations and other analysis to support the Medicare 
program (including demonstrations) and to support public health 
initiatives and other health care-related purposes, (vii) for 
activities to support administration of the Medicare program, (viii) 
for activities to support program integrity, and (ix) for purposes 
authorized by other applicable laws (70 FR 4588; 73 FR 48650 through 
48654; 79 FR 50325 through 50334).
    Section 422.310(f)(2) permits the release of MA encounter data to 
other HHS agencies, other Federal executive branch agencies, States, 
and external entities, while Sec.  422.310(f)(3) of our current 
regulation specifies circumstances under which we may release MA 
encounter data for the purposes described in Sec.  422.310(f)(1). 
Currently, we may release the data only after risk adjustment 
reconciliation for the applicable payment year has been completed or 
under certain emergency preparedness or extraordinary circumstances. We 
note that we included a proposal to publicly report aggregated counts 
of procedures performed by providers, based on MA encounter data, 
before risk adjustment reconciliation is complete in the Medicare and 
Medicaid Programs in the CY 2024 Payment Policies Under the Physician 
Fee Schedule and Other Changes to Part B Payment and Coverage Policies; 
Medicare Shared Savings Program Requirements; Medicare Advantage; 
Medicare and Medicaid Provider and Supplier Enrollment Policies; and 
Basic Health Program proposed rule (hereafter referred to as the August 
2023 proposed rule; 88 FR 52262).
    Here, we are proposing to allow MA encounter data to be used to 
support the Medicaid program for certain purposes already specified for 
use to support the Medicare program in Sec.  422.310(f)(1)(vi) and 
(vii). Under our proposal, MA risk adjustment data could be used for 
supporting either program separately or in conjunction. In addition, we 
are proposing to allow release of MA encounter data to State Medicaid 
agencies (States) in advance of the completion of risk adjustment 
reconciliation for the specific purpose of care coordination for 
individuals who are dually eligible for Medicare and Medicaid, also 
known as dually eligible individuals. These proposals related to 
disclosure of MA encounter data are focused on expanding allowable 
disclosures of these data to support not only the Medicare program or 
Medicare-Medicaid demonstrations, but also the Medicaid program in the 
interest of improving care for individuals who are eligible for 
Medicaid.
    We believe disclosure for the purpose of improving States' ability 
to understand and improve care provided to dually eligible individuals 
is appropriate and consistent with our intention in prior rulemaking. 
We clarified that States may access and use MA encounter data while 
``in the administration of Medicare-Medicaid demonstrations'' in the 
Medicare Program; Hospital Inpatient Prospective

[[Page 78527]]

Payment Systems for Acute Care Hospitals and the Long-Term Care 
Hospital Prospective Payment System and Fiscal Year 2015 Rates; Quality 
Reporting Requirements for Specific Providers; Reasonable Compensation 
Equivalents for Physician Services in Excluded Hospitals and Certain 
Teaching Hospitals; Provider Administrative Appeals and Judicial 
Review; Enforcement Provisions for Organ Transplant Centers; and 
Electronic Health Record (EHR) Incentive Program final rule (hereafter 
referred to as the August 2014 final rule; 79 FR 50325). Additionally, 
current regulation text at Sec.  422.310(f)(1)(vi) permits CMS to 
release MA encounter data to third parties, including States, to 
``conduct evaluations and other analysis to support the Medicare 
program (including demonstrations).'' This proposal would expand 
certain allowable use and disclosures of MA encounter data to support 
the Medicaid program, which would thereby enable State access to 
comprehensive data for all dually eligible individuals in the State 
regardless of their enrollment in a demonstration, dual eligible 
special needs plan (D-SNP), or other MA plan. Our proposal to further 
expand MA encounter data sharing to include support for the Medicaid 
program would also be consistent with the goals of the Federal 
Coordinated Health Care Office, as established in statute. Section 2602 
of the Patient Protection and Affordable Care Act of 2010 (Pub. L. 111-
148) (Affordable Care Act) established the office within CMS to better 
integrate benefits and improve coordination for dually eligible 
individuals, including specific goals and responsibilities such as:
    <bullet> Providing dually eligible individuals full access to the 
benefits to which such individuals are entitled under the Medicare and 
Medicaid programs.
    <bullet> Improving the quality of health care and long-term 
services for dually eligible individuals.
    <bullet> Improving care continuity and ensuring safe and effective 
care transitions for dually eligible individuals.
    <bullet> Improving the quality of performance of providers of 
services and suppliers under the Medicare and Medicaid programs.
    <bullet> Supporting State efforts to coordinate and align acute 
care and long-term care services for dually eligible individuals with 
other items and services furnished under the Medicare program.
    MA enrollment has grown to approximately half of all Medicare 
beneficiaries; a trend also seen in the enrollment of dually eligible 
individuals. For example, 51 percent of all dually eligible individuals 
were enrolled in an MA plan in 2021 (up from 12 percent in December 
2006).<SUP>95 96</SUP> Such individuals experience the health care 
system and incur health outcomes as individuals regardless of which 
health care program pays for the service. But currently, the States' 
ability to obtain MA encounter data for program analysis and 
evaluations or program administration for dually eligible individuals 
enrolled in an MA plan is limited to support of a Medicare-Medicaid 
demonstration. Our current regulation text does not specify that we may 
make MA encounter data available to States for Medicaid program 
administration, or to conduct evaluations and other analyses for the 
Medicaid program, with the exception of those evaluations and analyses 
used to support demonstrations. Therefore, previous rulemaking limits 
opportunities for States to effectively perform functions such as 
coordination of care, quality measure design, and program evaluation 
and analysis by allowing them access to MA encounter data for these 
activities only for those dually eligible individuals enrolled in 
Medicare-Medicaid demonstrations.
---------------------------------------------------------------------------

    \95\ 2023 Medicare Trustees Report https://www.cms.gov/oact/tr.
    \96\ https://www.cms.gov/files/document/managedcareenrollmenttrendsdatabrief2012-2021.pdf.
---------------------------------------------------------------------------

    We are proposing changes to Sec.  422.310(f) to improve access for 
States to MA encounter data, including making a specific exception to 
the timing of sharing MA encounter data. We do not intend for our 
proposals to impact the terms and conditions governing CMS release of 
MA risk adjustment data as described in Sec.  422.310(f)(2), in 
accordance with applicable Federal laws and CMS data sharing 
procedures. As discussed in the August 2014 final rule, CMS data 
sharing procedures require each recipient of data from CMS to sign and 
maintain a CMS data sharing agreement, ``which addresses privacy and 
security for the data CMS discloses'' and ``contains provisions 
regarding access to and storage of CMS data to ensure that beneficiary 
identifiable information is stored in a secure system and handled 
according to CMS's security policies,'' which encompasses the 
limitations for additional disclosure of CMS data (79 FR 50333). Such 
provisions would similarly apply to States that receive MA encounter 
data under the proposed amendments to Sec.  422.310(f) here.
    As stated in the August 2014 final rule, the data described in 
paragraphs (a) through (d) would include those elements that constitute 
an encounter data record, including contract, plan, and provider 
identifiers, with the exception of disaggregated payment data (79 FR 
50325). In accordance with Sec.  422.310(f)(2)(iv), we aggregate 
payment data to protect commercially sensitive information.
1. Expanding and Clarifying the Programs for Which MA Encounter Data 
May Be Used for Certain Allowable Purposes
    As we stated in the Medicare Program; Hospital Inpatient 
Prospective Payment Systems for Acute Care Hospitals and the Long-Term 
Care Hospital Prospective Payment System and Fiscal Year 2015 Rates; 
Quality Reporting Requirements for Specific Providers; Reasonable 
Compensation Equivalents for Physician Services in Excluded Teaching 
Hospitals; Provider Administrative Appeals and Judicial Review; 
Enforcement Provisions for Organ Transplant Centers; and Electronic 
Health Record (EHR) Incentive Program proposed rule (hereafter referred 
to as the May 2014 proposed rule; 79 FR 27978), using MA encounter data 
enables us, our contractors, and external entities to support Medicare 
program evaluations, demonstration designs, and effective and efficient 
operational management of the Medicare program, encourages research 
into better ways to provide health care, and increases transparency in 
the administration of the Medicare program (79 FR 28281 through 28282). 
However, because States lack access to MA encounter data, States' 
ability to conduct activities for dually eligible individuals enrolled 
in MA plans is limited. As Medicare is the primary payer for dually 
eligible individuals, States generally lack comprehensive data on care 
provided to dually eligible individuals enrolled in MA. Over the years, 
various States have requested that CMS share MA encounter data for 
dually eligible individuals to better coordinate care, conduct quality 
improvement activities, support program design, conduct evaluations, 
and improve efficiency in the administration of the Medicaid program.
    Our current regulation text at Sec.  422.310(f)(1)(vi) (evaluations 
and analysis to support the Medicare program) and (vii) (activities to 
support administration of the program) specifies that for these 
purposes, the encounter data must be used for the Medicare program. 
Therefore, though Sec.  422.310(f)(2) permits CMS to release

[[Page 78528]]

MA encounter data to States for the purposes listed in paragraph 
(f)(1), Sec.  422.310(f)(1)(vi) and (vii) do not clearly permit CMS to 
release MA encounter data to States to support Medicaid program 
evaluations and analysis or to support administration of the Medicaid 
program.
    We are proposing to add ``and Medicaid program'' to the current MA 
encounter data use purposes codified at Sec.  422.310(f)(1)(vi) and 
(vii). These additions would enable CMS to use the data and release it 
(in accordance with Sec.  422.310(f)(2) and (3)) for the purposes of 
evaluation and analysis and program administration for Medicare, 
Medicaid, or Medicare and Medicaid combined purposes. We believe that 
our release of MA encounter data for these data use purposes that 
support the Medicare and Medicaid programs would generally be to the 
States and would support our responsibility to improve the quality of 
health care and long-term services for dually eligible individuals; 
improve care continuity, ensuring safe and effective care transitions 
for dually eligible individuals; improve the quality of performance of 
providers of services and suppliers under the Medicare and Medicaid 
programs for dually eligible individuals; and support State efforts to 
coordinate and align acute care and long-term care services for dually 
eligible individuals with other items and services furnished under the 
Medicare program.
    As stated above, CMS data sharing procedures apply to the release 
of MA encounter data in accordance with Sec.  422.310(f)(2) and contain 
provisions regarding access to and storage of CMS data to ensure that 
beneficiary identifiable information is protected. We make other data 
available to external entities, including States, in accordance with 
CMS data sharing procedures and Federal laws, including but not limited 
to the Privacy Act of 1974. We review data requests for appropriate use 
justifications, including updated or amended use justifications for 
existing data requests. We employ data sharing agreements, such as a 
Data Use Agreement and Information Exchange Agreement, that limit 
external entities to CMS-approved data uses and disclosure of CMS data. 
For example, States that request data from CMS for care coordination 
and program integrity initiatives may disclose the data to State 
contractors, vendors, or other business associates. In accordance with 
CMS data sharing agreements, these State contractors, vendors, or other 
business associates must also follow the terms and conditions for use 
of the CMS data, including limiting use of the CMS-provided data only 
for approved purposes. This would mean that, under this proposal, a 
State receiving MA encounter data for care coordination may disclose MA 
encounter data to Medicaid managed care plans to coordinate services 
for enrolled dually eligible individuals. Comments submitted on the 
August 2014 final rule cited concerns that access to MA encounter data 
by competitors of the various MA organizations that are required to 
submit data could permit a competitor to gain an advantage by trending 
cost and utilization patterns over a number of years. Given that Sec.  
422.310(f)(2)(iv) provides for aggregation of dollar amounts reported 
for the associated encounter to protect commercially sensitive data and 
that any release of MA encounter data to States would comply with 
applicable statutes, regulations, and processes including those 
described above, we believe that concern around potential competitive 
advantage is mitigated if the risk exists at all. As stated in the 
August 2014 final rule, we believe that CMS data sharing procedures and 
review of use justifications ``strikes an appropriate balance between 
the significant benefits of furthering knowledge'' and concerns 
regarding the release of risk adjustment data, including for 
beneficiary privacy or commercially sensitive information of MA plans 
(79 FR 50328). Consistent with what we stated in the August 2014 final 
rule, CMS data sharing agreements have enforcement mechanisms, and data 
requestors acknowledge these mechanisms. For example, penalties under 
section 1106(a) of the Social Security Act [42 U.S.C. 1306(a)], 
including possible fines or imprisonment, and criminal penalties under 
the Privacy Act [5 U.S.C. 552a(i)(3)] may apply, as well as criminal 
penalties may be imposed under 18 U.S.C. 641 (79 FR 50333). Requestors 
of CMS data, such as States, are responsible for abiding by the law, 
policies, and restrictions of the data sharing agreements--which 
extends to any downstream disclosures of the data to State contractors, 
vendors, or other business associates--as condition of receiving the 
data. We intend to only approve requests for MA encounter data that 
have clear written data use justifications and identify any downstream 
disclosure--such as to State contractors, vendors, or other business 
associates--for each requested purpose. We have not identified any 
issues regarding competitive harm or disadvantage in our current data 
sharing programs.
    Under this proposal, we would be able to use MA encounter data and 
disclose it--subject to the other limitations and protections specified 
in Sec.  422.310(f) and other applicable laws and regulations--to 
States to perform evaluations and analysis, which would include program 
planning for dually eligible individuals. For example, access to MA 
encounter data could support States' analysis of geographic trends to 
create targeted community outreach and education, including 
identification of geographic areas with higher rates of dementia, 
diabetes, or emergency room visit overutilization; and evaluation of 
current Medicaid initiatives, including tracking efficacy of opioid 
overuse and misuse programs by monitoring service utilization for those 
with opioid dependency, evaluating appropriate and inappropriate use of 
antibiotic and psychotropic medications, and analyzing deaths among 
individuals with opioid use disorder. Currently, States generally only 
receive Medicare FFS data from CMS under current authorities, which 
results in an incomplete assessment of the dually eligible population. 
Under this proposal, States could request MA encounter data for all of 
the dually eligible enrollees they serve and include this growing 
portion of the dually eligible population in their data analysis and 
efforts to improve outcomes for low-income older adults and people with 
disabilities who are enrolled in the Medicaid program.
    We are taking this opportunity to make a clarification related to 
the existing program administration purpose, as specified in Sec.  
422.310(f)(1)(vii). In the August 2014 final rule, we stated that, in 
addition to use of these data for review of bid validity and MLR, we 
expected there would be additional potential uses for these data as 
part of the program administration purpose, such as the development of 
quality measures (79 FR 50326). Consistent with our expectation at that 
time, we are clarifying here that care coordination would be an 
allowable use for these data as part of the purpose currently codified 
at Sec.  422.310(f)(1)(vii)--for activities to support the 
administration of the Medicare program--which includes activities that 
are not within the scope of the other permitted uses defined at Sec.  
422.310(f)(1). Similar to quality measure development, a use we 
explicitly named, care coordination is critical to ensuring that 
individuals receive effective and efficient care, especially when 
services may be covered under multiple health care

[[Page 78529]]

programs, as is the case for dually eligible individuals who are 
enrolled in Medicaid and an MA plan. We believe use and release of MA 
encounter data to States to support administering the Medicaid program, 
including to coordinate care and improve quality of care for Medicaid-
covered individuals, is appropriate. For example, in administering the 
Medicaid program, a State may need MA encounter data to coordinate care 
for dually eligible individuals, which may include identification of 
individuals at high risk of institutional placement or other 
undesirable outcomes based on past service utilization; coordination of 
services from the MA plan's coverage of an inpatient stay to Medicaid 
coverage of subsequent home and community-based services; coordination 
of Medicaid-covered services in a skilled nursing facility for a dually 
eligible individual after reaching the limits of the individual's 
coverage through the MA plan; monitoring nursing facility quality of 
care, including through tracking rates of hospitalization and emergency 
room visits; and coordination of physical health services with 
behavioral health services, where Medicaid coverage differs from the MA 
plan's coverage.
    We welcome public comment on this proposal.
2. Adding an Additional Condition Under Which MA Encounter Data May Be 
Released Prior to Reconciliation
    Section 422.310(f)(3) describes the circumstances under which we 
may release MA encounter data. Specifically, our current regulation 
provides that MA encounter data will not become available for release 
unless the risk adjustment reconciliation for the applicable payment 
year has been completed or under certain emergency preparedness or 
extraordinary circumstances. Section 422.310(g) specifies the deadlines 
that we use to determine which risk adjustment data submissions we 
consider when assigning the risk adjustment factors for payment in a 
given payment year. This section also establishes a reconciliation 
process to adjust payments for additional data submitted after the end 
of the MA risk adjustment data collection year (meaning the year the 
item or service was furnished to the MA enrollee) but before the 
established deadline for the payment year, which can be no earlier than 
January 31 of the year following the payment year. This reconciliation 
period provides MA organizations an opportunity to update or submit 
encounter data records and chart review records to be considered for 
risk adjustment and payment in the applicable payment year. Section 
422.310(b)(1) requires MA organizations to submit data for all items 
and services provided; therefore, MA organizations must continue to 
submit encounter data records and data corrections after the final 
submission deadline if needed. (We note that there are limitations on 
which submissions after the final reconciliation deadline may be used 
in risk adjustment. See Sec.  422.310(g).) The timing limitation on 
release of MA encounter data in our current regulation is tied to the 
established deadline for the payment year, and it results in a data lag 
of at least 13 months after the end of the MA risk adjustment data year 
(that is, the year during which the services were furnished), before 
CMS may release the MA risk adjustment data for the purposes described 
in Sec.  422.310(f)(1).\97\ We believe there will be increased utility 
of MA encounter data for Medicaid programs if the data is released 
before final reconciliation for coordination of care under the 
allowable purpose in Sec.  422.310(f)(1)(vii). We believe that the 
reasons and concerns we identified when adopting the delay in release 
of MA encounter data can be sufficiently taken into account by CMS as 
part of evaluating a request to use the data for specific purposes and 
determining whether to release the data. Further, in many cases, those 
reasons and concerns likely do not sufficiently apply in the context of 
care coordination to require a delay in releasing the data as discussed 
further below.
---------------------------------------------------------------------------

    \97\ ``Deadline for Submitting Risk Adjustment Data for Use in 
Risk Score Calculation Runs for Payment Years 2021, 2022, 2023, and 
2024'' HPMS memo. https://www.cms.gov/files/document/py20202021202220232024paymentrunnotice508g.pdf.
---------------------------------------------------------------------------

    In order to improve utility of MA encounter data for certain 
approved purposes, we propose to add a new subsection Sec.  
422.310(f)(3)(v) to allow for MA encounter data to be released to 
States for the purpose of coordinating care for dually eligible 
individuals when CMS determines that releasing the data to a State 
Medicaid agency before reconciliation is necessary and appropriate to 
support activities and uses authorized under paragraph (f)(1)(vii). As 
discussed above, the proposed amendments to Sec.  422.310(f)(1)(vii) 
would expand the scope of that provision to include using the data to 
support administration of the Medicaid program, and in our discussion 
we clarified that coordination of care activities are within the scope 
of activities that support administration of these health care 
programs. We are specifying care coordination for our proposal for 
release of MA encounter data prior to reconciliation as we believe 
providing States access to this more timely data is critical to 
effectively coordinating care, is directly tied to our responsibility 
to support States' efforts to coordinate and align care and services 
for dually eligible individuals, and furthers our goal to improve care 
continuity and ensure safe and effective care transitions for dually 
eligible individuals (see 42 U.S.C. 1315B) while accommodating the 
concerns that led us to adopt the time limits in Sec.  422.310(f)(3). 
Together, the proposed changes to Sec.  422.310(f)(1)(vii) and 
(f)(3)(v) would improve timeliness of the MA encounter data we make 
available to States for coordination of care for dually eligible 
individuals.
    As discussed above, a growing number of dually eligible individuals 
are enrolled in MA plans. To ensure that these individuals are 
receiving high quality, efficient care, it is essential that States 
have access to information on their service utilization in a timely 
manner. Without timely, comprehensive beneficiary data, which are not 
currently available to States for all MA enrollees, States cannot 
conduct care coordination for dually eligible individuals in MA. For 
example:
    <bullet> A State looks to coordinate care related to the COVID-19 
pandemic for individuals concurrently enrolled in Medicaid and MA 
plans, such as by identifying people who had COVID-related 
hospitalizations. In accordance with Sec.  422.310(f)(3), our current 
release schedule of MA encounter data for research purposes limits 
available MA encounter data to between 13 and 25 or more months after 
the service was rendered.\98\ Therefore, with the exception of those 
dually eligible individuals enrolled in an MA plan under a 
demonstration or in an MA D-SNP, where the State can use the contract 
with the plan in accordance with Sec.  422.107 to obtain MA encounter 
data or other notifications under Sec.  422.107(d)(1) from the D-SNP, 
States could not access service utilization data for MA enrollees to 
coordinate care for dually eligible individuals who had a COVID-related 
hospitalization in a timely manner. Instead, the States would need to 
wait for the MA encounter data until after risk adjustment 
reconciliation for the applicable payment year has been completed--
which would be months after a dually eligible individual required post-
hospitalization follow-up

[[Page 78530]]

care. However, if States could access timely MA encounter data, then 
Medicaid care coordinators could follow up after a COVID-related 
hospitalization to ensure adequate care related to mental health 
treatment, coordinate approval of durable medical equipment, or ensure 
physical or rehabilitation therapy while reducing redundant visits or 
delays in care to the dually eligible individual.
---------------------------------------------------------------------------

    \98\ https://resdac.org/cms-news/2021-preliminary-medicare-encounter-data-now-available.
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    <bullet> A State uses a predictive modeling algorithm--using past 
service utilization, diagnosis, and other data--to identify people at 
high risk for poor outcomes or institutional placement. The State then 
targets those high-risk individuals in the Medicaid program for an 
intensive care management intervention and helps connect such 
individuals to necessary supports and services. In this case, the 
timeliness of information on service utilization (for example, an 
individual discharged from a skilled nursing facility stay could 
benefit by transition to Medicaid home and community-based services) is 
more important than the completeness of the available data (that is, 
whether additional subsequent encounters may later become available) so 
the State can coordinate care and deliver the intervention when an 
individual most needs it.
    We believe the two examples above represent cases where we would 
consider sharing MA encounter data with State Medicaid agencies prior 
to reconciliation as necessary and appropriate to support coordinating 
care for dually eligible individuals. States cannot rely on MA 
encounter data after final reconciliation because coordinating services 
requires access to timely data. For these activities, States rely more 
on timely data about service utilization than on complete data. 
Improving access to timely MA encounter data and ensuring Medicaid 
programs can coordinate care for dually eligible individuals supports 
our goal to providing dually eligible individuals full access to the 
benefits to which they are entitled (42 U.S.C. 1315B(d)).
    As discussed above, State Medicaid agencies cannot effectively 
coordinate care for individuals using data that is more than one or two 
years old. We recognize that the MA encounter data may be subject to 
edits before final reconciliation given the deadline for submission of 
risk adjustment data under Sec.  422.310(g), which states that the 
final submission deadline is a date no earlier than January 31 of the 
year following the payment year, or that data from some MA 
organizations or for some enrollees may not be available as quickly as 
data from or for others. However, we believe that earlier release of MA 
encounter data to States for the purpose of care coordination for 
dually eligible individuals would be appropriate and, as stated above, 
many of the reasons and concerns to require a delay releasing MA 
encounter data likely do not sufficiently apply in the context of care 
coordination. Care coordination activities require State Medicaid 
agencies, or their contractors, to identify and contact individuals who 
have received, or are in need of, services from their providers. Since 
States would use the MA encounter data to identify opportunities for 
care improvement such as improving transitions of care or to promote 
the use of underutilized services, we do not foresee any risk to 
individuals from States using data that may be subject to change in the 
future. States would be able to use the data to identify more dually 
eligible individuals who are potentially in need of Medicaid-covered 
services. States are not required to act on the data and can address 
potential data concerns arising from using MA encounter data before 
final reconciliation as States have experience using Medicare data that 
may not be final for effective care coordination. In fact, many States 
already obtain timely Medicare FFS claims with a lag between 14 days to 
three months, depending on the data file, for uses such as care 
coordination, quality improvement, and program integrity in the 
Medicaid program. These Medicare FFS claims may also be subject to 
change subsequent to the States' receipt of the data, yet we are not 
aware of any problems in these use cases caused by CMS sharing data 
that is still subject to change. Because the MA encounter data released 
to States would be for care coordination purposes, we do not anticipate 
any negative impacts from any potential subsequent changes to the 
encounters. MA encounter data made available to States prior to 
reconciliation would not contain disaggregated payment information, in 
accordance with Sec.  422.310(f)(2)(iv). Unlike MA encounter data used 
for CMS payment purposes, the pre-reconciliation MA encounter data 
would have no impact on plan payment. Under this proposal, release of 
the MA encounter data for care coordination purposes must be necessary 
and appropriation to support administration of the Medicaid program; we 
do not believe it would be appropriate or necessary to use the MA data 
released on this accelerated schedule for payment purposes.
    Coordination of care is a clear situation where more timely MA 
encounter data is needed for effective intervention without invoking 
risks that we have cited in the past about sharing MA risk adjustment 
data before final reconciliation. The timing limits in Sec.  
422.310(f)(3) were adopted in the August 2014 final rule in response to 
comments expressing concern about release of the MA risk adjustment 
data (79 FR 50331 through 50332). In that prior rulemaking, some 
commenters cited concerns about release of MA encounter data submitted 
in the initial years due to concerns regarding systems development and 
submission challenges. We believe these concerns are mitigated by the 
subsequent years since the implementation of the August 2014 final rule 
that have resulted in accumulation of experience submitting, reviewing, 
and using MA encounter data in accordance with Sec.  422.310(f). In 
addition, CMS maintains several checks and edits in the encounter data 
system to minimize duplicate, incomplete, or inappropriate data stored 
in the encounter data system. We reiterate that this proposal to amend 
paragraph (f)(3) would only permit the release of MA encounter data to 
State Medicaid agencies for care coordination for dually eligible 
individuals.
    We also noted in prior rulemaking that our approach to reviewing 
requests for MA encounter data from external entities would incorporate 
the Medicare Part A/B and Part D minimum necessary data policy, with 
additional restrictions to protect beneficiary privacy and commercially 
sensitive information of MA organizations and incorporated that 
limitation into paragraph (f)(2) (79 FR 50327). Therefore, this 
limitation would also apply when reviewing State requests for MA 
encounter data under the proposed expansion of Sec.  422.310(f)(1)(vi) 
and (vii), as well as to any State requests for MA encounter data 
before the reconciliation deadline to support coordination of care. CMS 
data sharing procedures include a review team that assesses data 
requests for minimum data necessary and appropriate use justifications 
for care coordination, and we would only approve release of MA 
encounter data for any data requests where the requestor has 
sufficiently demonstrated that the request satisfies all requirements 
of Sec.  422.310(f). Other commenters on the August 2014 final rule 
expressed concerns that MA organizations are able to delete, replace, 
or correct MA encounter data before the reconciliation deadline, which 
could potentially result in inaccurate or incomplete MA encounter data 
and that incomplete or inaccurate data should

[[Page 78531]]

not be used or released for the purposes outlined in Sec.  422.310(f). 
As noted in the prior rulemaking, we consider what disclaimers are 
appropriate to provide to requestors to understand the limitations of 
the MA encounter data (79 FR 50329 through 50330).\99\ As noted above, 
States, or their contractors, are not required to act on the data and 
have experience using Medicare FFS claims that may not be final for 
effective care coordination. We are not aware of any care coordination 
issues that have arisen as a result of our sharing more Medicare FFS 
current data with States under our current data sharing processes. 
Additionally, CMS makes available technical assistance to States to 
help with State use and understanding of Medicare data; we intend to 
extend this technical assistance to States requesting MA encounter data 
to mitigate issues arising from non-final data. We will evaluate the 
potential concerns arising from using MA encounter data before final 
reconciliation when determining whether to release MA encounter data to 
States for care coordination activities for dually eligible individuals 
to support administration of the Medicare and Medicaid programs.
---------------------------------------------------------------------------

    \99\ For example, see the CCW Medicare Encounter Data User 
Guide: https://www2.ccwdata.org/web/guest/user-documentation.
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    Finally, we propose that these amendments to Sec.  422.310(f) would 
be applicable upon the effective date of the final rule if these 
proposals are finalized as proposed. As outlined in section I.A., the 
majority of the proposals in this rule are proposed to be applicable 
beginning January 1, 2025. We do not believe that delaying the 
applicability of these proposed amendments beyond the effective date of 
the final rule is necessary because these proposals address CMS's 
authority to use and share MA encounter data but do not impose any 
additional or new obligations on MA organizations.
    We welcome public comment on this proposal.
3. Solicitation of Comments on Use of MA Encounter Data To Support 
Required Medicaid Quality Reporting
    In the final rule titled ``Medicaid Program and CHIP; Medicaid and 
Children's Health Insurance Program (CHIP) Core Set Reporting,'' which 
appeared in the Federal Register on August 31, 2023 (88 FR 60278) 
(``August 2023 final rule''), we established mandatory Core Set 
reporting requirements for States, as set forth in the Bipartisan 
Budget Act of 2018 (Pub. L. 115-123, enacted February 9, 2018) and the 
Substance Use-Disorder Prevention that Promotes Opioid Recovery and 
Treatment for Patients and Communities Act (SUPPORT Act) (Pub. L. 115-
271, enacted October 24, 2018). The new Core Set reporting requirements 
apply to all States with Medicaid and CHIP programs and include all 
Medicaid and CHIP participants, including dually eligible individuals 
enrolled in MA plans.
    States can only report certain Child and Adult Core Set measures by 
using utilization data. For reporting related to dually eligible 
individuals, this means accessing Medicare data. For dually eligible 
individuals in Medicare FFS, we make available Medicare FFS claims and 
events data to States to support, among other purposes, quality 
reporting for Child and Adult Core Set measures. But we do not 
currently make available MA encounter data to States in the same way. 
Although we have not shared MA encounter data broadly for Medicaid 
quality performance and quality improvement purposes through existing 
CMS data sharing programs, States may use their contracts with MA D-
SNPs, which are required under Sec.  422.107, to obtain Medicare data 
about the dually eligible individuals enrolled in those plans; this 
contractual ability to obtain MA encounter data through contracts with 
plans is specific to D-SNPs and does not include all MA plans. 
Therefore, we anticipate that reporting on dually eligible individuals 
enrolled in MA plans will be optional (that is, not mandatory) for 
States to include in reporting of the Child and Adult Core Sets. As we 
acknowledged in the August 2023 final rule, ``We recognize that States 
must obtain, link, and analyze Medicare data in order to report the 
Child and Adult Core Sets of measures for fee-for-service 
beneficiaries, and that States do not have access to encounter data for 
Medicare Part C (Medicare Advantage), and we expect to phase in 
required reporting of Child and Adult Core Set measures for dually 
eligible beneficiaries'' (88 FR 60298 through 60299).
    In accordance with current regulation text at Sec.  422.310(f)(2), 
States may request MA encounter data for the purpose described at Sec.  
422.310(f)(1)(iv)--to conduct quality review and improvement 
activities--which could support Medicaid Child and Adult Core Set 
reporting. However, the limitations in paragraph (f)(3) on sharing MA 
encounter data before final reconciliation would frustrate our desire 
for States to use the data to support timely Child and Adult Core Set 
reporting. The August 2023 final rule establishes a schedule through 
which Core Set reporting to CMS begins in the fall of 2024, applicable 
to data collected during the 2024 reporting period. However, as stated 
above, our current release schedule of MA encounter data in accordance 
with Sec.  422.310(f)(3) limits available MA encounter data to between 
13 and 25 or more months after the service was rendered. Therefore, in 
the fall of 2024, during the 2024 Core Set reporting period, we 
anticipate only making available MA encounter data for services 
furnished in the 2022 year. This means that based on the current 
limitations in paragraph (f)(3), States would be unable to report on 
2023 services received by dually eligible individuals enrolled in an MA 
plan to CMS in the fall of 2024 for the Child and Adult Core Set 
measures. With over half of dually eligible individuals enrolled in MA 
plans, we believe it is essential that State Child and Adult Core Set 
reporting eventually include that population. We are soliciting 
comments on making MA encounter data available to States to support 
Child and Adult Core Set reporting as efficiently as possible while 
complying with Sec.  422.310(f) and balancing considerations related to 
the timeliness of quality reporting with accuracy and completeness. We 
intend to take such comments into account in developing future policies 
and potential additional proposed revisions to Sec.  422.310.

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

    In this proposed rule, we are proposing to revise certain timing 
issues in terms of when RADV medical record review determination and 
payment error calculation appeals can be requested and adjudicated. 
Specifically, we are proposing that Medicare Advantage (MA) 
organizations must exhaust all levels of appeal for medical record 
review determinations before the payment error calculation appeals 
process can begin. We believe that this clarification is necessary 
because RADV payment error calculations are directly based upon the 
outcomes of medical record review determinations. We also propose 
several other changes to our regulatory appeals process to conform with 
these proposed revisions.
    Section 1853(a)(1)(C) of the Act requires that CMS risk-adjust 
payments made to MA organizations. Risk adjustment strengthens the MA 
program by ensuring that accurate payments are made to MA organizations 
based on the health status and demographic characteristics of their 
enrolled beneficiaries, and that MA organizations are paid 
appropriately for their plan

[[Page 78532]]

enrollees (that is, less for healthier enrollees who are expected to 
incur lower health care costs, and more for less healthy enrollees who 
are expected to incur higher health care costs). Making accurate 
payments to MA organizations also ensures we are safeguarding Federal 
taxpayer dollars.
    Contract-level RADV audits are CMS's main corrective action for 
overpayments made to MA organizations when there is a lack of 
documentation in the medical record to support the diagnoses reported 
for risk adjustment. CMS conducts RADV audits of MA organization-
submitted diagnosis data from a selection of MA organizations for 
specific payment years to ensure that the diagnoses they submitted are 
supported by their enrollees' medical records. CMS can collect the 
improper payments identified during CMS and Department of Health and 
Human Services Office of Inspector General (HHS-OIG) audits, including 
the extrapolated amounts calculated by the OIG. The RADV audit appeals 
process, as outlined in 42 CFR 422.311, is applicable to both CMS and 
HHS-OIG audits and is therefore referred to as the ``MA RADV audit 
appeals process.'' Additional information regarding CMS's contract 
level RADV audits was outlined in the RADV final rule, CMS-4185-F2, 
published on February 1, 2023.\100\
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    \100\ 88 FR 6643; https://www.federalregister.gov/documents/2023/02/01/2023-01942/medicare-and-medicaid-programs-policy-and-technical-changes-to-the-medicare-advantage-medicare.
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1. Current MA RADV Appeals Process
    CMS previously established a process after notice and comment 
rulemaking for MA organizations to appeal RADV audit findings as 
outlined by provisions at 42 CFR 422.311(c)(6) through (8). Once review 
of the medical records submitted by MA organizations to support audited 
HCCs is completed and overpayment amounts are calculated, HHS (CMS or 
HHS-OIG) issues an audit report to each audited MA organization 
contract. In accordance with Sec.  422.311(b)(1), this audit report 
includes the following:
    <bullet> Detailed enrollee-level information relating to confirmed 
enrollee HCC discrepancies.
    <bullet> The contract-level RADV-payment error estimate in dollars.
    <bullet> The contract-level payment adjustment amount to be made in 
dollars.
    <bullet> An approximate timeframe for the payment adjustment.
    <bullet> A description of the MA organization's RADV audit appeal 
rights.
    The MA RADV audit appeals process begins once MA organizations are 
notified of their audit findings via a RADV audit report. MA 
organizations have 60 days from the date of issuance of a RADV audit 
report to file a written request for appeal and must follow the 
Secretary's RADV audit appeals procedures and requirements under Sec.  
422.311. MA organizations may appeal RADV medical record review 
determinations and/or the MA RADV payment error calculation and must 
specify which findings the MA organization is appealing when requesting 
an appeal of a RADV audit finding.
    Under CMS's existing RADV audit appeals regulations under 42 CFR 
422.311(c)(6) through (8), the MA RADV administrative audit appeals 
process consists of three levels: reconsideration, hearing, and CMS 
Administrator review. Below is a summary of the three levels of appeal 
for background information only. This regulation is not proposing to 
revise the basic structure of these three levels of appeal.
a. Reconsideration
    Reconsideration is the first stage of the RADV audit appeals 
process. When appealing a medical record review determination, the MA 
organization's written request must specify the audited HCC(s) that it 
wishes to appeal and provide a justification of why the audited HCC(s) 
should not have been identified as an error. When appealing a payment 
error calculation, the MA organization's written request must include 
its own RADV payment error calculation that clearly indicates where 
HHS' payment error calculation was erroneous, as well as additional 
documentary evidence pertaining to the calculation of the error that 
the MA organization wishes the reconsideration official to consider. 
For payment error calculation appeals, a third-party who was not 
involved in the initial RADV payment error calculation reviews the HHS 
and MA organization's RADV payment error calculations and recalculates, 
as appropriate, the payment error using the appropriate payment error 
calculation method for the relevant audit.
    The reconsideration official issues a written reconsideration 
decision to the MA organization, and this decision is considered final 
unless the MA organization disagrees with the reconsideration 
official's decision and submits a valid request for CMS hearing officer 
review. A new audit report is subsequently issued for either a medical 
record review determination reconsideration or a payment error 
calculation reconsideration only if the reconsideration official's 
decision is considered final.
b. Hearing Officer Review
    An MA organization that disagrees with the reconsideration decision 
may request a hearing officer review in accordance with procedures and 
timeframes established by CMS under 42 CFR 422.311(c)(7). If the MA 
organization appeals the medical record review reconsideration 
determination, the written request for RADV hearing must include a copy 
of the written decision of the reconsideration official, specify the 
audited HCC(s) that the reconsideration official confirmed as being in 
error, and explain why the MA organization disputes the reconsideration 
official's determination. If the MA organization appeals a RADV payment 
error calculation, the written request for RADV hearing must include a 
copy of the written decision of the reconsideration official and the MA 
organization's RADV payment error calculation that clearly specifies 
where the MA organization believes the Secretary's payment error 
calculation was erroneous.
    The hearing officer has the authority to decide whether to uphold 
or overturn the reconsideration official's decision and, pursuant to 
this decision, sends a written determination to CMS and the MA 
organization explaining the basis for the decision. If necessary, a 
third party who was not involved in the initial RADV payment error 
calculation recalculates the RADV payment error and issues a new RADV 
audit report to the MA organization. For MA organizations appealing the 
RADV payment error calculation only, a third party not involved in the 
initial RADV payment error calculation recalculates the MA 
organization's RADV payment error and issues a new RADV audit report to 
the appellant MA organization and CMS. The hearing officer's decision 
is final unless the decision is reversed or modified by the CMS 
Administrator.
c. CMS Administrator Review
    Under the existing RADV audit appeals regulation at 42 CFR 
422.311(c)(8), a request for CMS Administrator review must be made in 
writing and filed with the CMS Administrator within 60 days of receipt 
of the hearing officer's decision. After receiving a request for 
review, the CMS Administrator has the discretion to elect to review the 
hearing officer's decision or decline to review the hearing officer's 
decision. If the CMS Administrator elects to review the hearing 
decision, the CMS Administrator then will

[[Page 78533]]

acknowledge the decision to review the hearing officer's decision in 
writing and notify CMS and the MA organization of their right to submit 
comments within 15 days of the date of the notification. The CMS 
Administrator renders his or her final decision in writing to the 
parties within 60 days of acknowledging his or her decision to review 
the hearing officer's decision. The decision of the hearing officer 
becomes final if the CMS Administrator declines to review the hearing 
officer's decision or does not render a decision within 60 days.
2. Proposed Policies
    In this proposed rule, we are revising the timing of when a medical 
record review determination and a payment error calculation appeal can 
be requested and adjudicated. Specifically, we are proposing that MA 
organizations must exhaust all levels of appeal for medical record 
review determinations before beginning the payment error calculation 
appeals process. We believe that this change is necessary because RADV 
payment error calculations are based upon the outcomes of medical 
record review determinations and the current regulatory language is 
somewhat ambiguous regarding this point. Adjudicating medical record 
review determination appeals prior to payment error calculation appeals 
alleviates operational concerns for CMS and burden on MA organizations 
by preventing unnecessary appeals of payment error calculations that 
will be moot if revisions must be made to payment error calculations 
based on medical record review determination appeal decisions.
    Section 422.311(c)(5)(iii) states that, ``for [MA organizations] 
that appeal both medical record review determination appeal and RADV 
payment error calculation appeal [,] . . . the Secretary adjudicates 
the request for the RADV payment error calculation following conclusion 
of reconsideration of the MA organization's request for medical record 
review determination appeal.'' The regulations also state that, for 
cases in which an MA organization requests both a medical record review 
determination appeal and payment error calculation appeal, ``. . . an 
[MA organization's] request for appeal of its RADV payment error 
calculation will not be adjudicated until appeals of RADV medical 
record review determinations filed by the MA organization have been 
completed and the decisions are final for that stage of appeal'' 
[emphasis added]. This language arguably addresses both those cases in 
which the final adjudication is reached during the reconsideration 
phase, as well as those that proceed to the second and third level of 
appeal. We propose to delete Sec.  422.311(c)(5)(ii)(C), which requires 
MA organizations requesting both a medical record review determination 
appeal and payment error calculation appeal to file their written 
requests for both appeals within 60 days of the issuance of the RADV 
audit report before the reconsideration level of administrative appeal. 
Instead, we propose that MA organizations may request only a medical 
record review determination appeal or payment error calculation appeal 
for purposes of reconsideration, and not both at the same time. We 
propose to amend Sec.  422.311(c)(5)(iii) by providing that MA 
organizations who request a medical record review determination appeal 
may only request a payment error calculation appeal after the 
completion of the medical record review determination administrative 
RADV appeal process.
    An MA organization may also choose to only appeal the payment error 
calculation, and therefore, no preceding medical record review 
determination appeal would occur. MA organizations choosing to only 
file a payment error calculation appeal will not be able to file a 
medical record review determination appeal after the adjudication of 
payment error calculation appeal. At Sec.  422.311(c)(5)(ii)(B), we 
propose to specify that MA organizations will forgo their medical 
record review determination appeal if they choose to only file a 
payment error calculation appeal, because medical record review appeals 
decisions need to be final prior to adjudicating a payment error 
calculation appeal.
    At Sec.  422.311(c)(5)(iii)(A) and (B), we propose to specify that 
this process is complete when the medical record review determination 
appeals process has been exhausted through the three levels of appeal, 
or when the MA organization does not timely request a medical record 
review determination appeal at the hearing officer or CMS Administrator 
review stage. At proposed Sec.  422.311(c)(5)(iii)(B), we propose that 
an MA organization whose medical record review determination appeal has 
been completed has 60 days from the issuance of a revised RADV audit 
report to file a written request for payment error calculation appeal, 
which specifies the issues with which the MA organization disagrees and 
the reasons for the disagreements. If, as a result of the medical 
record review determination appeals process, no original determinations 
are reversed or changed, then the original audit report will be 
reissued and the MA organization will have 60 days from the date of 
issuance to submit a payment error calculation appeal if it so chooses.
    We also propose to revise Sec.  422.311(c)(6)(i)(A) to clarify that 
an MA organization's request for medical record review determination 
reconsideration must specify any and all audited HCCs from an audit 
report that the MA organization wishes to dispute. The intent of this 
revision is to permit an MA organization to submit only one medical 
record review determination reconsideration request per audited 
contract, which includes all disputed audited HCCs, given that the 
results of all audited HCCs for a given audited contract are 
communicated as part of a single audit report.
    We also propose to revise Sec.  422.311(c)(6)(iv)(B) to clarify 
that the reconsideration official's decision is final unless it is 
reversed or modified by a final decision of the hearing officer as 
defined at Sec.  422.311(c)(7)(x).
    We also propose to add Sec.  422.311(c)(6)(v) to clarify that the 
reconsideration official's written decision will not lead to the 
issuance of a revised audit report until the decision is considered 
final in accordance with Sec.  422.311(c)(6)(iv)(B). If the 
reconsideration official's decision is considered final in accordance 
with Sec.  422.311(c)(6)(iv)(B), the Secretary will recalculate the MA 
organization's RADV payment error and issue a revised RADV audit report 
superseding all prior RADV audit reports to the appellant MA 
organization.
    We also propose to revise Sec.  422.311(c)(7)(ix) to clarify that 
if the hearing officer's decision is considered final in accordance 
with Sec.  422.311(c)(7)(x), the Secretary will recalculate the MA 
organization's RADV payment error and issue a revised RADV audit report 
superseding all prior RADV audit reports for the specific MA contract 
audit. Once the medical record review determination decision of the 
adjudicator is final, we believe the same entity that issued the audit 
report will be able to revise the audit report by applying any medical 
record review determination findings that may have changed through the 
medical record review determination appeal process, and issue a revised 
audit report in the most efficient and streamlined manner. Issuing a 
revised audit report is a standard process and neutrally applies the 
final adjudicator's medical record review determination findings. This 
process is consistent with other long standing CMS appeals program, 
such as the Provider Reimbursement Review Board (PRRB), where post-
adjudication revised determinations are issued by the

[[Page 78534]]

same entity (e.g., the Medicare Administrative Contractor for PRRB 
cases) that issued the original determination.
    We also propose the following to provide clarity to the 
Administrator's level of appeal:
    <bullet> To revise Sec.  422.311(c)(8)(iii) to add a requirement 
that if the CMS Administrator does not decline to review or does not 
elect to review within 90 days of receipt of either the MA organization 
or CMS's timely request for review (whichever is later), the hearing 
officer's decision becomes final.
    <bullet> To revise Sec.  422.311(c)(8)(iv)(A) to clarify that CMS 
and the MA organization may submit comments within 15 days of the date 
of the issuance of the notification that the Administrator has elected 
to review the hearing decision.
    <bullet> To revise Sec.  422.311(c)(8)(v) to clarify that the 
requirement of the Administrator to render a final decision in writing 
within 60 days of the issuance of the notice acknowledging the decision 
to elect to review the hearing officer's decision and the 60 day time 
period is determined by the date of the final decision being made by 
the Administrator, not by the date it is delivered to the parties.
    <bullet> To revise Sec.  422.311(c)(8)(vi) to clarify the scenarios 
in which the hearing officer's decision becomes final after a request 
for Administrator review has been made.
    <bullet> To add new Sec.  422.311(c)(8)(vii) that states once the 
Administrator's decision is considered final in accordance with Sec.  
422.311(c)(8)(vi), the Secretary will recalculate the MA organization's 
RADV payment error and issue a revised RADV audit report superseding 
all prior RADV audit reports to the appellant MA organization.
    We also propose to add new Sec.  422.311(c)(9) to specify what 
actions related to the RADV audit appeals process constitute final 
agency action. Specifically, in cases when an MA organization appeals a 
payment error calculation subsequent to an MRRD appeal that has 
completed the administrative appeals process, the MRRD final decision 
and the payment error calculation final decision will not be considered 
a final agency action until the related payment error calculation 
appeal has completed the administrative appeals process and a final 
revised audit report has been issued.
    We also propose to revise Sec.  422.311(a) to remove the word 
``annually'' for clarity, as the Secretary may conduct RADV audits on 
differing cadences between the CMS and HHS-OIG RADV audits.

IV. Benefits for Medicare Advantage and Medicare Prescription Drug 
Benefit Programs

A. Definition of ``Basic Benefits'' (Sec.  422.2)

    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 enrollees such benefits. Section 17006(c)(1) of 
the 21st Century Cures Act (Pub. L. 114-255) (hereafter referred to as 
``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 no longer cover organ acquisitions 
for kidney transplants, including the costs for living donors covered 
by Medicare pursuant to section 1881(d) of the Act.
    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 (84 FR 15680), hereinafter referred to as the April 
2019 final rule and the January 2021 final rule, we amended the 
definition of ``basic benefits'' at Sec.  422.100(c)(1) to exclude 
coverage for organ acquisitions for kidney transplants, effective 
beginning in 2021, in addition to the existing exclusion for hospice 
care. In the June 2020 final rule, we also amended several regulations 
to address coverage of organ acquisition for kidney transplants for MA 
enrollees, with amendments to Sec. Sec.  422.258, 422.322, and 422.306. 
However, we inadvertently omitted making the same type of revision to 
the ``basic benefits'' definition at Sec.  422.2. We propose to correct 
the definition of basic benefits at Sec.  422.2 to add the exclusion of 
coverage for organ acquisitions for kidney transplants to Sec.  422.2.
    Specifically, we propose to revise the ``basic benefits'' 
definition at Sec.  422.2 to change the phrase ``all Medicare-covered 
benefits'' to ``Part A and Part B benefits'' and correct the phrase 
``(except hospice services)'' to include, beginning in 2021, organ 
acquisitions for kidney transplants (which includes costs covered under 
section 1881(d) of the Act).
    This proposal is a technical change to align the definition of 
basic benefits with existing law; therefore, neither an economic impact 
beyond current operating expenses nor an associated paperwork burden 
are expected.

B. Evidence as to Whether a Special Supplemental Benefit for the 
Chronically Ill Has a Reasonable Expectation of Improving the Health or 
Overall Function of an Enrollee (42 CFR 422.102(f)(3)(iii) and (iv) and 
(f)(4))

    The Balanced Budget Act (BBA) of 2018 included new authorities 
concerning supplemental benefits that may be offered to chronically ill 
enrollees in Medicare Advantage (MA) plans. We addressed these new 
supplemental benefits extensively in the Medicare Program; Contract 
Year 2021 Policy and Technical Changes to the Medicare Advantage 
Program, Medicare Prescription Drug Benefit Program, and Medicare Cost 
Plan Program (hereafter referred to as ``June 2020 final rule'') (85 FR 
33796, 33800-05), where we referred to them as Special Supplemental 
Benefits for the Chronically Ill (SSBCI).
    As we summarized in the June 2020 final rule, we interpreted the 
intent of this new category of supplemental benefits as enabling MA 
plans to better tailor benefit offerings, address gaps in care, and 
improve health outcomes for chronically ill enrollees who meet the 
definition established by the statute. Section 1852(a)(3)(D)(ii)(II) of 
the Act authorizes the Secretary to waive the uniformity requirements 
generally applicable to the benefits covered by MA plans with respect 
to SSBCI. Therefore, CMS may allow MA plans to offer SSBCI that are not 
uniform across the entire population of chronically ill enrollees in 
the plans but that are tailored and covered for an individual 
enrollee's specific medical condition and needs (83 FR 16481-82).
    In addition to limiting the eligibility of enrollees who can 
receive SSBCI to chronically ill enrollees, section 
1852(a)(3)(D)(ii)(I) of the Act requires that an item or service 
offered as an SSBCI have a reasonable expectation of improving or 
maintaining the health or overall function of the chronically ill 
enrollee. We codified this statutory requirement as part of the 
definition of SSBCI at Sec.  422.102(f)(1)(ii).
    As we provided in a Health Plan Management System (HPMS) memorandum 
dated April 24, 2019 (``2019 HPMS memo'' hereafter), SSBCI can be in 
the form of:
    <bullet> Reduced cost sharing for Medicare-covered benefits;

[[Page 78535]]

    <bullet> Reduced cost sharing for primarily health-related 
supplemental benefits;
    <bullet> Additional primarily health-related supplemental benefits; 
and/or
    <bullet> Non-primarily health-related supplemental benefits.
    To offer an item or service as an SSBCI to an enrollee, an MA plan 
must make at least two separate determinations with respect to that 
enrollee in order to satisfy the statutory and regulatory requirements 
for these benefits. First, the MA plan must determine that an enrollee 
meets the definition of ``chronically ill enrollee.'' Section 
1852(a)(3)(D)(iii) of the Act defines ``chronically ill enrollee'' as 
an individual enrolled in the MA plan who meets all of the following: 
(I) has one or more comorbid and medically complex chronic conditions 
that is life-threatening or significantly limits the overall health or 
function of the enrollee; (II) has a high risk of hospitalization or 
other adverse health outcomes; and (III) requires intensive care 
coordination. Per Sec.  422.102(f)(1)(i)(B), CMS may publish a non-
exhaustive list of conditions that are medically complex chronic 
conditions that are life-threatening or significantly limit the overall 
health or function of an individual. This list is currently the same as 
the list of chronic conditions for which MA organizations may offer 
chronic condition special needs plans, which can be found in section 
20.1.2 of chapter 16-B of the Medicare Managed Care Manual. We require, 
at Sec.  422.102(f)(3)(i), the MA plan to have written policies for 
making this determination and to document each determination that an 
enrollee is a chronically ill enrollee. Documentation of this 
determination must be available to CMS upon request according to Sec.  
422.102(f)(3)(ii).
    Second, the MA plan must determine that the SSBCI has a reasonable 
expectation of improving or maintaining the health or overall function 
of the enrollee. Per Sec.  422.102(f)(3)(iii), the MA plan ``must have 
written policies based on objective criteria for determining a 
chronically ill enrollee's eligibility to receive a particular SSBCI 
and must document these criteria.'' We also require the MA plan to 
document ``each determination that an enrollee is eligible to receive 
an SSBCI and make this information available to CMS upon request'' at 
Sec.  422.102(f)(3)(iv).
    We do not define or definitively interpret the phrase ``has a 
reasonable expectation of improving or maintaining the health or 
overall function of the enrollee'' in regulation or policy guidance. 
Rather, in a Health Plan Management System (HPMS) memorandum dated 
April 24, 2019 (``2019 HPMS memo'' hereafter), we provided MA plans 
with ``broad discretion in determining what may be considered `a 
reasonable expectation' when choosing to offer specific items and 
services as SSBCI.'' We granted MA plans this discretion so that they 
might effectively tailor their SSBCI offerings and the eligibility 
standards for those offerings to the specific chronically ill 
population upon which the plan is focusing.
    We further indicated that ``CMS will provide supporting evidence or 
data to an MA organization if CMS determines that an MA plan may not 
offer a specific item or service as an SSBCI because it does not have a 
reasonable expectation of improving or maintaining the health or 
overall function of a chronically ill enrollee.'' In other words, we 
placed the burden on CMS, and not the MA plan, to generate evidence 
demonstrating whether the ``reasonable expectation'' standard--a 
standard that we granted broad discretion for an MA plan to determine--
has been met when offering items or services as SSBCI.
    Supplemental benefits, including SSBCI, are generally funded using 
MA plan rebate dollars.\101\ When submitting an annual bid to 
participate in the MA program, an MA organization includes in its bid a 
Plan Benefit Package (PBP) and Bid Pricing Tool for each of its plans, 
where the MA organization provides information to CMS on the premiums, 
cost sharing, and supplemental benefits (including SSBCI) it proposes 
to offer. Since issuing the 2019 HPMS memo, the number of MA plans that 
offer SSBCI--and the number and scope of SSBCI offered by an individual 
plan--has significantly increased. We have observed these trends in 
reviewing PBPs from MA plans submitted in the past few years.
---------------------------------------------------------------------------

    \101\ MA plan rebates are a portion of the amount by which the 
bidding benchmark or maximum MA capitation rate for a service area 
exceeds the plan's bid; MA plans are obligated to use the MA rebates 
for the purposes specified in 42 CFR 422.266: payment of 
supplemental benefits (including reductions in cost sharing) or 
reductions in Part B or Part D premiums.
---------------------------------------------------------------------------

    Based on our internal data, 101 MA plans offered a food and produce 
benefit in contract year 2020, while 929 MA plans are offering this as 
an SSBCI in contract year 2023.\102\ Similarly, 88 MA plans offered 
transportation for non-medical needs as an SSBCI in contract year 2020. 
In contract year 2023, 478 MA plans are offering this as an SSBCI.\103\ 
MA plans are also continuing to identify items or services as SSBCI 
that were not included as examples in the 2019 HPMS memo. When an MA 
plan is offering such a benefit, it indicates this in the PBP \104\ 
that it submits with its bid. The MA plan categorizes the benefit 
within our PBP submission system as an ``other'' SSBCI (a benefit 
designation within the PBP submission system) and describes the 
proposed new benefit in a ``free text'' field. While 51 MA plans 
offered an ``other'' non-primarily health-related supplemental benefit 
in contract year 2020, 440 plans are offering at least one ``other'' 
non-primarily health related SSBCI in contract year 2023--and 226 plans 
are offering at least two.\105\
---------------------------------------------------------------------------

    \102\ Taken from internal data.
    \103\ Taken from internal data.
    \104\ A PBP is a set of benefits for a defined MA (or 
Prescription Drug Plan) service area. The PBP is submitted by MA 
organizations and PDP sponsors to CMS for benefit analysis, 
marketing, and beneficiary communication purposes.
    \105\ Taken from internal data.
---------------------------------------------------------------------------

    Through SSBCI, MA organizations can design and implement benefits, 
including non-primarily health-related benefits, that may be able to 
holistically address various needs of chronically ill enrollees. As 
these benefits become a more significant part of the MA program, we 
believe it is important to update our processes for reviewing and 
approving SSBCI to manage the growth and development of new SSBCI 
offerings, as well as to ensure compliance with the statutory 
requirements at section 1852(a)(3)(D). Additionally, section 
1854(b)(1)(C) of the Act requires that MA plans offer the value of MA 
rebates back to enrollees in the form of payment for supplemental 
benefits, cost sharing reductions, or payment of Part B or D premiums. 
As an increasing share of Medicare dollars is going toward MA rebates 
that plans are using to offer SSBCI, we believe that revising the 
regulation to adopt greater review and scrutiny of these benefits is 
important for CMS to maintain good stewardship of Medicare dollars, 
including the MA rebates used to pay for these benefits, and for 
ensuring that the SSBCI offered are consistent with applicable law and 
those most likely to improve or maintain the health or overall function 
of chronically ill enrollees. Therefore, we propose to update our 
processes to simultaneously ensure effective program administration and 
oversight, while enabling MA organizations to offer SSBCI and improve 
health outcomes for chronically ill enrollees.
    Currently, the burden is on CMS to review SSBCI included in an MA 
organization's bid and determine whether sufficient evidence or data 
exists to demonstrate that it has a

[[Page 78536]]

reasonable expectation of improving or maintaining the health or 
overall function of a chronically ill enrollee. Given the growth in the 
quantity and type of SSBCI offerings and given the associated burden 
increase on CMS in reviewing and approving bids that include SSBCI, we 
believe that it would be more efficient for the MA organization, rather 
than CMS, to demonstrate that the reasonable expectation standard has 
been met.
    When CMS provides MA organizations with broad latitude in offering 
items or services as SSBCI and in establishing what a ``reasonable 
expectation'' means for a given SSBCI, we believe that it is 
appropriate for the MA organization, rather than CMS, to identify 
supporting evidence or data to support an SSBCI and to establish 
compliance with the applicable law.
    We are proposing that an MA organization that includes an item or 
service as SSBCI in its bid must be able to demonstrate through 
relevant acceptable evidence that the item or service has a reasonable 
expectation of improving or maintaining the health or overall function 
of a chronically ill enrollee. As part of shifting responsibility this 
way, we are proposing, as relevant to an MA organization that includes 
SSBCI in its bid, to: (1) require the MA organization to establish, by 
the date on which it submits its bid, a bibliography of ``relevant 
acceptable evidence'' related to the item or service the MA 
organization would offer as an SSBCI during the applicable coverage 
year; (2) require that an MA plan follow its written policies (that 
must be based on objective criteria) for determining eligibility for an 
SSBCI when making such determinations; (3) require the MA plan to 
document denials of SSBCI eligibility rather than approvals; and (4) 
codify CMS's authority to decline to accept a bid due to the SSBCI the 
MA organization includes in its bid and to review SSBCI offerings 
annually for compliance, taking into account the evidence available at 
the time. In addition, we propose to make a technical edit to Sec.  
422.102(f)(1)(i)(A)(2) to correct a typographical error. We describe 
each proposal in greater detail below.
    First, we propose to redesignate what is currently Sec.  
422.102(f)(3) to Sec.  422.102(f)(4), and to address, at new Sec.  
422.102(f)(3), new requirements for each MA plan that includes an item 
or service as SSBCI in its bid. The MA organization must be able to 
demonstrate through relevant acceptable evidence that the item or 
service to be offered as SSBCI has a reasonable expectation of 
improving or maintaining the health or overall function of a 
chronically ill enrollee and must, by the date on which it submits its 
bid to CMS, establish a bibliography of all ``relevant acceptable 
evidence'' concerning the impact that the item or service has on the 
health or overall function of its recipient. The bibliography must be 
made available to CMS upon request. As part of this proposal, an MA 
organization would be required to include, for each citation in its 
written bibliography, a working hyperlink to or a document containing 
the entire source cited. This proposal would apply only to SSBCI 
offered in the form of additional primarily health-related supplemental 
benefits or SSBCI offered in the form of non-primarily health-related 
supplemental benefits. It would not apply to an SSBCI offered in the 
form of reduced cost sharing, regardless of the benefit for which it is 
offered. We also intend, at this time, that the proposal not apply to 
supplemental benefits offered under the Value-Based Insurance Design 
(VBID) Model administered by the Center for Medicare and Medicaid 
Innovation (CMMI), unless CMMI incorporates this policy within the VBID 
Model.
    We also propose, in new paragraph (f)(3)(iv), that the MA 
organization must make its bibliography of relevant acceptable evidence 
available to CMS upon request. CMS may request and use this 
bibliography, without limitation, during bid review to assess whether 
SSBCI offerings comply with regulatory requirements, or during the 
coverage year as part of CMS's oversight activities. CMS does not 
intend, at this time, to require MA organizations to submit these 
bibliographies as a matter of course in submitting bids.
    We propose that the term ``relevant acceptable evidence'' would 
include large, randomized controlled trials or prospective cohort 
studies with clear results, published in a peer-reviewed journal, and 
specifically designed to investigate whether the item or service (that 
is proposed to be covered as an SSBCI) impacts the health or overall 
function of a population, or large systematic reviews or meta-analyses 
summarizing the literature of the same. We further propose that the MA 
plan must include in its bibliography all relevant acceptable evidence 
published within the 10 years preceding the month in which the MA plan 
submits its bid. Ideally, relevant acceptable evidence should include 
studies and other investigations specific to the chronic conditions for 
which the MA organization intends to target the SSBCI, but we are not 
proposing to make this a requirement at this time. We are concerned 
that relevant acceptable evidence applicable to many SSBCI will already 
be limited, and that requiring a bibliography be limited to only 
studies concerning certain chronic conditions would discourage the 
development of new SSBCI. Similarly, to the extent there exists 
sufficient relevant acceptable evidence that the item or service meets 
the reasonable expectation standard for a sample of a population, an MA 
organization may still offer an SSBCI to enrollees with a specific 
chronic condition even in the absence of any studies addressing the 
connection between an item or service and its effect on the health or 
overall function of individuals with that condition.
    We propose that, in the absence of publications that meet these 
standards, ``relevant acceptable evidence'' for purposes of the MA 
plan's bibliography could include case studies, Federal policies or 
reports, and internal analyses or any other investigation of the impact 
that the item or service has on the health or overall function of its 
recipient. By ``bibliography,'' we mean a list, and not a description, 
of scholarly publications or other works, as we describe below.
    In our April 2023 final rule, we discussed what constituted 
sufficiently high-quality clinical literature in the context of an MA 
organization establishing internal clinical criteria for certain 
Medicare basic benefits (88 FR 22189, 22197). We believe that those 
standards are also applicable for identifying ``relevant acceptable 
evidence'' in the context of supporting whether an item or service 
offered as SSBCI has a reasonable expectation of improving or 
maintaining the health or overall function of a chronically ill 
enrollee. Therefore, our proposal for Sec.  422.102(f)(3)(ii) largely 
tracks the language in Sec.  422.101(b)(6) describing acceptable 
clinical literature for purposes of establishing internal coverage 
criteria, but with revisions to be specific to the context of SSBCI and 
the reasonable expectation standard.
    Literature that CMS considers to be ``relevant acceptable 
evidence'' for supporting an SSBCI offering include large, randomized 
controlled trials or cohort studies or all-or-none studies with clear 
results, published in a peer-reviewed journal, and specifically 
designed to answer a question relevant to the requirements for offering 
and covering SSBCI and how the MA plan will implement the coverage--
such as the impact of structural home modifications on health or 
overall function. Literature might also include that which involves 
large systematic

[[Page 78537]]

reviews or meta-analyses summarizing the literature specifically 
related to the subject of the SSBCI--such as meal delivery, 
availability of certain food or produce, or access to pest control--
published in a peer-reviewed journal with clear and consistent results. 
Under this proposal, an MA organization would be required to cite all 
such available evidence in its bibliography, and not just studies that 
present findings favorable to its SSBCI offering.
    We also propose that, in the absence of literature that conforms to 
these standards for relevant acceptable evidence, an MA organization 
would be required to include in its bibliography evidence that is 
unpublished, is a case series or report, or derived solely from 
internal analyses within the MA organization. In this way, our proposed 
policy would deviate from the standard we established for the type of 
evidence necessary to support an MA organization's internal coverage 
criteria for Medicare basic benefits. We believe this deviation is 
appropriate as there is relatively less research into the impact of the 
provision on items or services commonly offered as SSBCI on health or 
overall function of chronically ill individuals.
    We are not proposing that relevant acceptable evidence must 
directly address whether there is a reasonable expectation of improving 
or maintaining the health or overall function of a chronically ill 
enrollee with a specific chronic illness or condition (conditions that 
the MA plan would have identified in its PBP submission), but such 
materials may be more persuasive than materials that only describe the 
impact of certain items and services--particularly non-primarily 
health-related items and services--on healthier individuals or 
populations. Further, our proposal is limited to SSBCI offered as 
additional primarily health-related supplemental benefits and non-
primarily health-related supplemental benefits. We are not proposing to 
require a bibliography for SSBCI that are exclusively cost sharing 
reductions for Medicare-covered benefits or primarily health-related 
supplemental benefits, so the regulation text is limited to SSBCI that 
are items or services. Although we are not proposing to apply this new 
documentation requirement to cost sharing reductions offered as SSBCI, 
that type of SSBCI must also meet the reasonable expectation standard 
to be offered as SSBCI.
    We believe that this proposal would serve our goal of ensuring that 
SSBCI regulatory standards are met--specifically, that an item or 
service covered as an SSBCI has a reasonable expectation of improving 
or maintaining the health or overall function of a chronically ill 
enrollee. We expect that rigorous research like that we describe above 
might be limited, and that some studies may not produce results 
favorable to the offering of an SSBCI. However, when there are also 
favorable studies, the existence of such unfavorable studies does not 
necessarily mean that there could not be a ``reasonable expectation'' 
that the SSBCI would improve or maintain the health or overall function 
of a chronically ill enrollee. And it is not our goal that mixed 
results in current literature--or the lack of rigorous research at 
all--would reduce innovation in SSBCI offerings. We wish to continue to 
see MA organizations identify new ways to deliver helpful benefits to 
chronically ill enrollees that can address their social needs while 
also improving or maintain the health or overall function of these 
chronically ill enrollees. Our goal is to ensure that SSBCI innovation 
occurs in a manner that is grounded to the extent possible in research, 
and that MA organizations and CMS alike are tracking to the most 
current research relevant to SSBCI offerings. We believe this proposal 
would continue to promote SSBCI innovation while helping to ensure that 
when Medicare funds are used to offer SSBCI, such offerings meet 
statutory requirements.
    We solicit comments on our proposed requirement that an MA 
organization that includes an item or service as SSBCI in its bid must, 
by the date on which it submits its bid to CMS, establish in writing a 
bibliography of all relevant acceptable evidence concerning the impact 
that the item or service has on the health or overall function of its 
recipient. We also solicit comments on our definition of ``relevant 
acceptable evidence,'' including the specific parameters or features of 
studies or other resources that would be most appropriate to include in 
our definition. We also solicit comments on our proposal that, for each 
citation in the written bibliography, the MA organization would be 
required to include a working hyperlink to or a document containing the 
entire source cited. Additionally, we solicit comments on whether we 
should apply this requirement to all items or services offered as 
SSBCI, or whether there are certain types or categories of SSBCI for 
which this requirement should not apply.
    Second, for clarity, we propose to explicitly require at 
redesignated Sec.  422.102(f)(4)(iii) that an MA plan apply its written 
policies, which must be based on objective criteria, that it 
establishes for determining whether an enrollee is eligible to receive 
an SSBCI. The regulation currently requires MA organizations to have 
written policies based on objective criteria for determining a 
chronically ill enrollee's eligibility to receive a particular SSBCI 
and must document these criteria. While we anticipate that MA plans are 
already applying their written policies that identify the eligibility 
criteria when making these determinations, we propose to make clear 
that an MA plan must apply its written policies when making SSBCI 
eligibility determinations.
    We are considering whether to exclude the policies required by 
current Sec.  422.102(f)(3) (that is, the requirements we are proposing 
to redesignate to new paragraph (f)(4)) from the general rule reflected 
in Sec.  422.111(d) that MA plans may change plan rules during the year 
so long as notice is provided to enrollees. We solicit comments on 
whether CMS should permit changes in SSBCI eligibility policies during 
the coverage year, and, if so, the limitations or flexibilities that 
CMS should implement that would still allow CMS to provide effective 
oversight over SSBCI offerings. The ability to change plan rules during 
the year does not permit changes in benefit coverage but would include 
policies like utilization management requirements, evidentiary 
standards for a specific enrollee to be determined eligible for a 
particular SSBCI, or the specific objective criteria used by a plan as 
part of SSBCI eligibility determinations.
    Third, we are proposing to amend redesignated paragraph (f)(4)(iv) 
to require that an MA plan document each instance wherein the plan 
determines that an enrollee is ineligible to receive an SSBCI. Denials 
of coverage when an enrollee requests an SSBCI are organization 
determinations subject to the rules in subpart M, including the 
requirements related to the timing and content of denial notices in 
Sec.  422.568. By fully documenting denials as required by this 
proposal, MA organizations should be better placed to address any 
appeals, including when an adverse reconsideration must be sent to the 
independent review entity for review. Similarly, requiring robust 
documentation of denials of SSBCI by MA organizations will make 
oversight and monitoring by CMS easier and more productive, should CMS 
request documentation.
    We solicit comments on our proposal to require an MA plan to 
document its findings that a chronically ill enrollee is ineligible, 
rather than eligible, for an SSBCI.

[[Page 78538]]

    Fourth, we are proposing to add Sec.  422.102(f)(5) to codify CMS's 
authority to decline to approve an MA organization's bid, if CMS 
determines that the MA organization has not demonstrated, through 
relevant acceptable evidence, that an SSBCI has a reasonable 
expectation of improving or maintaining the health or overall function 
of the chronically ill enrollees that the MA organization is targeting. 
We clarify that while this proposal would establish a specific basis on 
which CMS may decline to approve an MA organization's bid, our 
authority to enforce compliance with other regulations and to negotiate 
bids (see section 1854(a) of the Act and subpart F) would not be 
limited by this provision. As described in section 1854(a)(5)(C) of the 
Act, CMS is not obligated to accept any or every bid submitted by an MA 
organization, and CMS may reject bids that propose significant 
increases in cost sharing or decreases in benefits offered under the 
plan. Similarly, CMS's authority to review benefits to ensure non-
discrimination is not limited or affected under this proposal. This 
proposal is intended to clarify and establish that CMS's review of bids 
that include SSBCI could include specific evaluation of SSBCI and that 
CMS may decline to approve bids based on a lack of relevant acceptable 
evidence in support of the SSBCI offering the MA organization includes 
in its bid.
    We also propose to codify that, regardless of whether an SSBCI 
offering was approved in the past, CMS may annually review the items or 
services that an MA organization includes as SSBCI in its bid for 
compliance with all applicable requirements, considering the relevant 
acceptable evidence applicable to each item or service at the time the 
bid is submitted. Under this proposal, CMS would have clear authority 
to evaluate an SSBCI included in a bid each year based on the evidence 
available at that time. CMS would not be bound to approve a bid that 
contains a certain SSBCI only because CMS approved a bid with the same 
SSBCI in the past. We believe this provision, if finalized, would help 
ensure sound use of Medicare dollars by establishing a clear connection 
between an SSBCI and the most current evidence addressing whether there 
is a reasonable expectation that the SSBCI will improve or maintain the 
health or overall function of a chronically ill enrollee.
    We believe that codifying that CMS may decline to approve a bid for 
an MA organization to offer certain SSBCI is appropriate to support 
CMS's programmatic oversight function. CMS already possesses the 
authority to negotiate and reject bids under section 1854 of the Act, 
and to establish certain minimum requirements related to SSBCI under 
section 1852 of the Act. We can rely on these bases to decline to 
approve bids that include SSBCI that lack evidence to support the MA 
organization's expectations related to the SSBCI, but we believe it 
prudent to establish clearly how our evaluation of individual SSBCI 
offerings and the evidence supporting these offerings fit within our 
bid negotiation and approval authority. We believe that SSBCI provide a 
critical source of innovation, and we wish to see MA organizations 
continue to develop impactful benefits tailored to their chronically 
ill enrollees. However, we must also ensure that benefits offered 
within the MA program comply with all applicable statutory and 
regulatory standards. We believe it is critical for effective program 
administration that CMS be able to obtain, upon request, relevant 
acceptable evidence from an MA organization to support CMS's review of 
SSBCI each year in light of the information and evidence available at 
that point in time.
    We solicit comment on this proposal to codify CMS's authority to 
decline to approve an MA organization's bid if the MA organization 
fails to demonstrate, through relevant acceptable evidence, that an 
SSBCI included in the bid has a reasonable expectation of improving or 
maintaining the health or overall function of the chronically ill 
enrollees that the MA organization is targeting.
    The policies proposed in this section work together to place the 
burden of showing whether an item or service offered as SSBCI has a 
reasonable expectation of improving the health or overall function of a 
chronically ill enrollee onto the MA organization. Implementing these 
proposals would change the policy set forth in the 2019 HPMS memo 
requiring CMS to provide supporting evidence or data to an MA 
organization if CMS determines that an MA plan may not offer a specific 
item or service as an SSBCI because it has not met the reasonable 
expectation standard. Under these proposals, the MA organization must, 
in advance of including an SSBCI in its bid, have already conducted 
research on the evidence establishing a reasonable expectation that the 
item or service would improve or maintain the health or overall 
function of the recipient of the item or service. By the time the MA 
organization submits its bid, it must be able to show CMS, upon 
request, the relevant applicable evidence that supports the reasonable 
expectation that the item or service would improve or maintain the 
health or overall function of the chronically ill enrollees it is 
targeting. We expect that MA plans are already proactively conducting 
similar research and establishing written policies for implementing 
SSBCI based on this research when designing them. Additionally, MA 
plans may seek guidance from CMS regarding SSBCI items or services not 
defined in the PBP or in previous CMS guidance prior to bid submission. 
As such, we believe this proposal, if implemented, would create 
efficiency while imposing relatively little burden on MA plans.
    In addition, under this proposal, MA plans would be required to 
document and submit to CMS upon request each determination that an 
enrollee is not eligible to receive an SSBCI. We believe that requiring 
an MA organization to support its SSBCI offerings with a written 
bibliography of relevant acceptable evidence and an MA plan to document 
denials of SSBCI work together to ensure that SSBCI are being 
implemented in an evidence-based, non-discriminatory, and fair manner. 
The evidence base established by an MA organization could serve to 
inform an MA plan's objective criteria for determining eligibility. By 
requiring an MA plan to document instances of SSBCI denials, we believe 
this proposal would improve the experience of MA plans, enrollees, and 
CMS in managing and oversight of appeals of such denials. Further, it 
would help ensure that MA plans are not denying access to SSBCI based 
on factors that are biased or discriminatory or unrelated to the basis 
on which the SSBCI are reasonably expected to improve or maintain the 
health or overall function of the chronically ill enrollees. For 
example, researchers have identified that certain algorithms that have 
been used to decide who gets access to additional services can have 
clear racial bias, when factors such as expected future cost or 
expected future utilization are incorporated into the algorithm.\106\ 
By codifying CMS' authority to decline to approve a bid that includes 
an SSBCI not supported by evidence, this proposal also serves to ensure 
appropriate program administration and oversight.
---------------------------------------------------------------------------

    \106\ See, e.g., Ziad Obermeyer et al., Dissecting racial bias 
in an algorithm used to manage the health of populations. Science 
366, 447-453 (2019). DOI:10.1126/science.aax2342.
---------------------------------------------------------------------------

    Finally, we propose to make a technical edit to Sec.  
422.102(f)(1)(i)(A)(2) to correct a typographical error. In our June 
2020 final rule, we noted that section 1852(a)(3)(D)(ii) of the Act, as

[[Page 78539]]

amended, defines a chronically ill enrollee as an individual who, among 
other requirements, ``[h]as a high risk of hospitalization or other 
adverse health outcomes[.]'' We then indicated that ``we proposed to 
codify this definition of a chronically ill enrollee'' at Sec.  
422.102(f)(1)(i). However, our regulation at Sec.  
422.102(f)(1)(i)(A)(2) currently reads: ``Has a high risk of 
hospitalization of other adverse outcomes[.]'' We propose to substitute 
``or'' for the second ``of'' in this provision, such that it aligns 
with the statutory language that we intended to codify in our 
regulation.

C. Mid-Year Notice of Unused Supplemental Benefits (Sec. Sec.  
422.111(l) and 422.2267(e)(42))

    Per CMS regulations at Sec.  422.101, MA organizations are 
permitted to offer mandatory supplemental benefits, optional 
supplemental benefits, and special supplemental benefits for the 
chronically ill (SSBCI). When submitting an annual bid to participate 
in the MA program, an MA organization includes a Plan Benefit Package 
(PBP) and Bid Pricing Tool (BPT) for each of its plans where the MA 
organization provides information to CMS on the premiums, cost sharing, 
and supplemental benefits (including SSBCI) it proposes to offer. The 
number of supplemental benefit offerings has risen significantly in 
recent years, as observed through trends identified in CMS's annual PBP 
reviews. In 2023, roughly $61 billion was directed towards supplemental 
benefits in MA. At the same time, CMS has received reports that MA 
organizations have observed low utilization of these benefits by their 
enrollees, and it is unclear whether plans are actively encouraging 
utilization of these benefits by their enrollees, which could be an 
important part of a plan's overall care coordination efforts.
    CMS remains concerned that utilization of these benefits is low and 
has taken multiple steps to obtain more complete data in this area. For 
example, in the May 2022 final rule, we finalized expanded Medical Loss 
Ratio (MLR) reporting requirements, requiring MA organizations to 
report expenditures on popular supplemental benefit categories such as 
dental, vision, hearing, transportation, and the fitness benefit (87 FR 
27704, 27826-28).\107\ In addition, in March 2023, as a part of our 
Part C reporting requirements, we announced our intent to collect data 
to better understand the utilization of supplemental benefits, which if 
finalized, would include requiring MA plans to report utilization and 
cost data for all supplemental benefit offerings (88 FR 15726). 
Currently, there is no specific requirement for MA organizations, 
beyond more general care coordination requirements, to conduct outreach 
to enrollees to encourage utilization of supplemental benefits.
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    \107\ Available at https://www.federalregister.gov/documents/2022/05/09/2022-09375/medicare-program-contract-year-2023-policy-and-technical-changes-to-the-medicare-advantage-and.
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    CMS understands that projected supplemental benefit utilization, 
that is, the extent to which an MA organization expects a particular 
supplemental benefit to be accessed during a plan year, is estimated by 
an MA organization in part by the type and extent of outreach conducted 
for the benefit.\108\ We are concerned that beneficiaries may make 
enrollment decisions based on the allure of supplemental benefits that 
are extensively marketed by a given MA plan during the annual election 
period (AEP) only to not fully utilize, or utilize at all, those 
supplemental benefits during the plan year. This underutilization may 
be due to a lack of effort by the plan to help the beneficiary access 
the benefits or a lack of easy ability to know what benefits have not 
been accessed and are still available to the enrollee throughout the 
year. Such underutilization of supplemental benefits may nullify any 
potential health value offered by these extra benefits.
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    \108\ U.S. Government Accountability Office (GAO). ``MEDICARE 
ADVANTAGE Plans Generally Offered Some Supplemental Benefits, but 
CMS Has Limited Data on Utilization.'' Report to Congressional 
Committee, 31 Jan. 2023, p. 20, www.gao.gov/products/gao-23-105527.
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    Additionally, section 1854(b)(1)(C) requires that MA plans offer 
the value of MA rebates back to enrollees in the form of payment for 
supplemental benefits, cost sharing reductions, or payment of Part B or 
D premiums. Therefore, CMS has an interest in ensuring that MA rebates 
are provided to enrollees in a way that they can benefit from the value 
of these rebate dollars. For example, analysis indicates that while 
supplemental dental benefits are one of the most widely offered 
supplemental benefits in MA plans, enrollees in these plans are no more 
likely to access these services than Traditional Medicare 
enrollees.\109\
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    \109\ https://www.cms.gov/research-statistics-data-and-systems/research/mcbs/data-briefs/dental-coverage-status-and-utilization-preventive-dental-services-medicare-beneficiaries-poster.
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    As discussed, MA organizations are given the choice of how to 
provide MA rebates to their enrollees. Organizations may, instead of 
offering supplemental benefits in the form of covering additional items 
and services, use rebate dollars to further reduce Part B and Part D 
premiums, reduce cost sharing for basic benefits compared to cost 
sharing in Traditional Medicare, and reduce cost sharing in other ways, 
such as reducing maximum out-of-pocket (MOOP) amounts.
    Over the last several years, CMS has observed upticks in (1) the 
number and variety of supplemental benefits offered by MA plans, (2) 
plan marketing activities by MA organizations, and (3) overall MA 
enrollment; we presume that an enrollee's plan choice is influenced, at 
least in part, by the supplemental benefits an MA plan offers because 
the absence or presence of a particular supplemental benefit represents 
a distinguishable and easily understood difference between one plan and 
another. We are also concerned that some MA plans may be using these 
supplemental benefits primarily as marketing tools to steer enrollment 
towards their plan and are not taking steps to ensure that their 
enrollees are using the benefits being offered or tracking if these 
benefits are improving health or quality of care outcomes or addressing 
social determinants of health. We believe targeted communications 
specific to the utilization of supplemental benefits may further ensure 
that covered benefits (including those that are heavily marketed) are 
accessed and used by plan enrollees during the plan year. This 
outreach, in conjunction with the improved collection of utilization 
data for these supplemental benefits through MLR and our proposed 
collection through Part C reporting, should help inform whether future 
rulemaking is warranted.
    Finally, CMS is also working to achieve policy goals that advance 
health equity across its programs and pursue a comprehensive approach 
to advancing health equity for all, including those who have been 
historically underserved, marginalized, and adversely affected by 
persistent poverty and inequality. Several studies have pointed to 
disparities in health care utilization. For example, a Kaiser Family 
Foundation (KFF) study \110\ found that there are significant racial 
and ethnic disparities in utilization of care among individuals with 
health insurance. Additionally, underserved populations tend to have a 
disproportionate prevalence of unmet social determinants of health 
needs,

[[Page 78540]]

which can adversely affect health. We believe that the ability to offer 
supplemental benefits provides MA plans the unique opportunity to use 
Trust Fund dollars (in the form of MA rebates) to fill in coverage gaps 
in Traditional Medicare, by offering additional health care benefits or 
SSBCI that address unmet social determinants of health needs, and as 
such, all eligible MA enrollees should benefit from these offerings. 
Targeted outreach specific to the utilization of supplemental benefits 
may also serve to further ensure more equitable utilization of these 
benefits.
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    \110\ https://www.kff.org/report-section/racial-and-ethnic-disparities-in-access-to-and-utilization-of-care-among-insured-adults-issue-brief/.
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    The establishment of a minimum requirement for targeted outreach 
with respect to supplemental benefits that have not been accessed by 
enrollees would standardize a process to ensure all enrollees served 
under MA are aware of and utilizing, as appropriate, the supplemental 
benefits available to them. Section 1852(c)(1) of the Act requires, in 
part, that MA organizations disclose detailed descriptions of plan 
provisions, including supplemental benefits, in a clear, accurate, and 
standardized form to each enrollee of a plan at the time of enrollment 
and at least annually thereafter. We propose to use our authority to 
establish standards under Part C in section 1856(b)(1) of the Act to 
ensure adequate notice is provided to enrollees regarding supplemental 
benefits coverage. This proposal will further implement the disclosure 
requirement in section 1852(c)(1)(F) of the Act. Specifically, we 
propose that MA organizations must provide a model notification to 
enrollees of supplemental benefits they have not yet accessed. We 
propose to meet this goal by adding new provisions at Sec. Sec.  
422.111(l) and 422.2267(e)(42) to establish this new disclosure 
requirement and the details of the required notice, respectively.
    This proposed requirement would ensure that a minimum outreach 
effort is conducted by MA organizations to inform enrollees of 
supplemental benefits available under their plan that the enrollee has 
not yet accessed. We propose that, beginning January 1, 2026, MA 
organizations must mail a mid-year notice annually, but not sooner than 
June 30 and not later than July 31 of the plan year, to each enrollee 
with information pertaining to each supplemental benefit available 
during that plan year that the enrollee has not begun to use. We 
understand that there may be a lag between the time when a benefit is 
accessed and when a claim is processed, so we would require that the 
information used to identify recipients of this notice be as up to date 
as possible at the time of mailing. MA organizations are not required 
to include supplemental benefits that have been accessed, but are not 
yet exhausted, in this proposed mid-year notice.
    Understanding that not all Medicare beneficiaries enroll in an MA 
plan during the AEP, we are specifically seeking comment on how CMS 
should address the timing of the notice for beneficiaries that have an 
enrollment effective date after January 1. One possible approach we are 
considering is to require the notice to be sent six months after the 
effective date of the enrollment for the first year of enrollment, and 
then for subsequent years, revert to mailing the notice between the 
proposed delivery dates of June 30 and July 31. Another option CMS is 
considering is to not require the notice to be mailed for the first 
year of enrollment for those beneficiaries with an effective date of 
May 1 or later, as they would be receiving their Evidence of Coverage 
(EOC) at around this same time but will not have had significant time 
in which to access these benefits. Those enrollees who would be exempt 
from the mailing, based on their enrollment effective date, would then 
receive the notice (if applicable because one or more supplemental 
benefits have not been accessed by the enrollee) between June 30 and 
July 31 in subsequent enrollment years.
    For each covered mandatory supplemental benefit and optional 
supplemental benefit (if the enrollee has elected) the enrollee is 
eligible for, but has not accessed, the MA organization must list in 
the notice the information about each such benefit that appears in EOC. 
For SSBCI, MA organizations must include an explanation of the SSBCI 
covered under the plan (including eligibility criteria and limitations 
and scope of the covered items and services) and must also provide 
point-of-contact information (which can be the customer service line or 
a separate dedicated line), with trained staff that enrollees can 
contact to inquire about or begin the SSBCI eligibility determination 
process and to address any other questions the enrollee may have about 
the availability of SSBCI under their plan. When an enrollee has been 
determined by the plan to be eligible for one or more specific SSBCI 
but has not accessed the SSBCI benefit by June 30 of the plan year, the 
notice must also include a description of the SSBCI to which the 
enrollee is entitled and must describe any limitations on the benefit. 
Note the proposals at section VI.A of this proposed rule that, if 
finalized, would require specific SSBCI disclaimers for marketing and 
communications materials that discuss the limitations of the SSBCI 
benefit being offered; we also propose that this mid-year notice must 
include the SSBCI disclaimer to ensure that the necessary information 
provided in the disclaimer is also provided to the enrollee in the 
notice.
    Furthermore, we are proposing that each notice must include the 
scope of the supplemental benefit(s), applicable cost sharing, 
instructions on how to access the benefit(s), applicable information on 
the use of network providers for each available benefit, list the 
benefits consistent with the format of the EOC, and a toll-free 
customer service number and, as required, a corresponding TTY number to 
call if additional help is needed. We solicit comments on the required 
content of the mid-year notice.
    We request comment on our proposal to require MA plans to provide 
enrollees with mid-year notification of covered mandatory and optional 
supplemental benefits (if elected) that have not been at least 
partially accessed by that enrollee, particularly the appropriate 
timing (if any) of the notice for MA enrollees who enroll in the plan 
mid-year.

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

    In recent years, CMS has received feedback from interested parties, 
including people with Medicare, patient groups, consumer advocates, and 
providers that utilization management (UM) practices in Medicare 
Advantage (MA), especially the use of prior authorization, can 
sometimes create a barrier for patients in accessing medically 
necessary care. Further, some research has indicated that the use of 
prior authorization may disproportionately impact individuals who have 
been historically underserved, marginalized, and adversely affected by 
persistent poverty and inequality,\111\ due to several factors, 
including; the administrative burden associated with processing prior 
authorization requests (for example, providers and administrative staff 
serving historically underserved populations, in particular, may not 
have the time or resources to complete the prior authorization process, 
including navigating the appeals process \112\), a reduction in 
medication adherence, and overall worse medical outcomes due to delayed 
or denied care. Research has also shown

[[Page 78541]]

that dual eligibility for Medicare and Medicaid is one of the most 
influential predictors of poor health outcomes, and that disability is 
also an important risk factor linked to health outcomes.\113\
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    \111\ https://www.hmpgloballearningnetwork.com/site/frmc/commentary/addressing-health-inequities-prior-authorization; and 
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10024078/.
    \112\ http://abcardio.org/wp-content/uploads/2019/03/AB-20190227-PA-White-Paper-Survey-Results-final.pdf.
    \113\ https://www.aspe.hhs.gov/sites/default/files/migrated_legacy_files/171041/ASPESESRTCfull.pdf?_ga=2.49530854.1703779054.1662938643-470268562.1638986031.
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    On January 20, 2021, President Biden issued Executive Order 13985: 
``Advancing Racial Equity and Support for Underserved Communities 
Through the Federal Government'' (E.O. 13985).\114\ E.O. 13985 
describes the Administration's policy goals to advance equity across 
Federal programs and directs Federal agencies to pursue a comprehensive 
approach to advancing equity for all, including those who have been 
historically underserved, marginalized, and adversely affected by 
persistent poverty and inequality. Consistent with this Executive 
order, CMS announced ``Advance Equity'' as the first pillar of its 2022 
Strategic Plan.\115\ This pillar emphasizes the importance of advancing 
health equity by addressing the health disparities that impact our 
health care system. CMS defines health equity as ``the attainment of 
the highest level of health for all people, where everyone has a fair 
and just opportunity to attain their optimal health regardless of race, 
ethnicity, disability, sexual orientation, gender identity, 
socioeconomic status, geography, preferred language, or other factors 
that affect access to care and health outcomes.'' \116\
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    \114\ 86 FR 7009 (January 25, 2021); https://www.federalregister.gov/d/2022-26956/p-227.
    \115\ 87 FR 79479 fn. 7 (December 27, 2022); https://www.federalregister.gov/d/2022-26956/p-228.
    \116\ 87 FR 79479 fn. 8 (December 27, 2022); https://www.federalregister.gov/d/2022-26956/p-229.
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    The April 2023 final rule \117\ included several policy changes to 
advance health equity, as well as changes to address concerns from 
interested parties about the use of utilization management policies and 
procedures, including prior authorization, by MA plans. CMS understands 
that utilization management is an important means to coordinate care, 
reduce inappropriate utilization, and promote cost-efficient care. The 
April 2023 final rule adopted several important guardrails to ensure 
that utilization management policies and procedures are used, and 
associated coverage decisions are made, in ways that ensure timely and 
appropriate access to covered items and services for people enrolled in 
MA plans. CMS also continues to work to identify regulatory actions 
that can help support CMS's goal to advance health equity and improve 
access to covered benefits for enrollees.
---------------------------------------------------------------------------

    \117\ ``Medicare Program; Contract Year 2024 Policy and 
Technical Changes to the Medicare Advantage Program, Medicare 
Prescription Drug Benefit Program, Medicare Cost Plan Program, and 
Programs of All-Inclusive Care for the Elderly'' final rule, which 
appeared in the Federal Register on April 12, 2023 (88 FR 22120).
---------------------------------------------------------------------------

    Authority for MA organizations to use utilization management 
policies and procedures regarding basic benefits is subject to the 
mandate in section 1852(a)(1) of the Act that MA plans cover Medicare 
Part A and Part B benefits (subject to specific, limited statutory 
exclusions) and, thus, to CMS's authority under section 1856(b) of the 
Act to adopt standards to carry out the MA statutory provisions. In 
addition, the MA statute and MA contracts cover both the basic and 
supplemental benefits covered under MA plans, so additional contract 
terms added by CMS pursuant to section 1857(e)(1) of the Act may also 
address supplemental benefits. Additionally, per section 1852(b) of the 
Act and Sec.  422.100(f)(2), plan designs and benefits may not 
discriminate against beneficiaries, promote discrimination, discourage 
enrollment, encourage disenrollment, steer subsets of Medicare 
beneficiaries to particular MA plans, or inhibit access to services. 
These requirements apply to both basic and supplemental benefits. We 
consider utilization management policies and procedures to be part of 
the plan benefit design, and therefore they cannot be used to 
discriminate or direct enrollees away from certain types of services.
    In the April 2023 final rule, CMS finalized a new regulation at 
Sec.  422.137, which requires all MA organizations that use UM policies 
and procedures to establish a Utilization Management Committee to 
review and approve all UM policies and procedures at least annually and 
ensure consistency with Traditional Medicare's national and local 
coverage decisions and relevant Medicare statutes and regulations. Per 
Sec.  422.137, an MA plan may not use any UM policies and procedures 
for basic or supplemental benefits on or after January 1, 2024, unless 
those policies and procedures have been reviewed and approved by the UM 
committee. While this requirement will ensure that all UM policies and 
procedures are kept up to date, we believe that reviewing and analyzing 
these policies from a health equity perspective is an important 
beneficiary protection. In addition, such an analysis may assist in 
ensuring that MA plan designs do not deny, limit, or condition the 
coverage or provision of benefits on a prohibited basis (such as a 
disability) and are not likely to substantially discourage enrollment 
by certain MA eligible individuals with the organization. For these 
reasons, we propose to add health equity-related requirements to Sec.  
422.137. First, we propose at Sec.  422.137(c)(5) to require that 
beginning January 1, 2025, the UM committee must include at least one 
member with expertise in health equity. We are proposing that health 
equity expertise includes educational degrees or credentials with an 
emphasis on health equity, experience conducting studies identifying 
disparities amongst different population groups, experience leading 
organization-wide policies, programs, or services to achieve health 
equity, or experience leading advocacy efforts to achieve health 
equity. Since there is no universally accepted definition of expertise 
in health equity, we referred to materials from the Council on Linkages 
Between Academia and Public Health Practice \118\ and the National 
Board of Public Health Examiners,\119\ to describe ``expertise in 
health equity'' in the context of MA and prior authorization.
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    \118\ https://www.phf.org/resourcestools/Documents/Core_Competencies_for_Public_Health_Professionals_2021October.pdf.
    \119\ https://www.nbphe.org/cph-content-outline/.
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    We also propose to add a requirement at Sec.  422.137(d)(6) that 
the UM committee must conduct an annual health equity analysis of the 
use of prior authorization. We propose that the member of the UM 
committee, who has health equity expertise, as required at the proposed 
Sec.  422.137(c)(5), must approve the final report of the analysis 
before it is posted on the plan's publicly available website. The 
proposed analysis would examine the impact of prior authorization at 
the plan level, on enrollees with one or more of the following social 
risk factors (SRF): (1) receipt of the low-income subsidy or being 
dually eligible for Medicare and Medicaid (LIS/DE); or (2) having a 
disability. Disability status is determined using the variable original 
reason for entitlement code (OREC) for Medicare using the information 
from the Social Security Administration and Railroad Retirement Board 
record systems. CMS chose these SRFs because they mirror the SRFs that 
will be used to measure the Heath Equity Index reward for the 2027 Star 
Ratings (see Sec.  422.166(f)(3)), and we believe it is important to 
align expectations and metrics across the program. Moreover, CMS is 
requiring this analysis to take place at the MA plan level because the 
relevant information regarding enrollees with the specified SRFs is 
available at

[[Page 78542]]

the plan level, and we believe this level of analysis is important to 
discern the actual impact of the use of utilization management on 
enrollees that may be particularly subject to health disparities.
    To gain a deeper understanding of the impact of prior authorization 
practices on enrollees with the specified SRFs, the proposed analysis 
must compare metrics related to the use of prior authorization for 
enrollees with the specified SRFs to enrollees without the specified 
SRFs. This will allow the MA plan and CMS to begin to identify whether 
the use of prior authorization causes any persistent disparities among 
enrollees with the specified SRFs. The proposed analysis must use the 
following metrics, calculated for enrollees with the specified SRFS, 
and for enrollees without the specified SRFs, from the prior contract 
year, to conduct the analysis:
    <bullet> The percentage of standard prior authorization requests 
that were approved, aggregated for all items and services.
    <bullet> The percentage of standard prior authorization requests 
that were denied, aggregated for all items and services.
    <bullet> The percentage of standard prior authorization requests 
that were approved after appeal, aggregated for all items and services.
    <bullet> The percentage of prior authorization requests for which 
the timeframe for review was extended, and the request was approved, 
aggregated for all items and services.
    <bullet> The percentage of expedited prior authorization requests 
that were approved, aggregated for all items and services.
    <bullet> The percentage of expedited prior authorization requests 
that were denied, aggregated for all items and services.
    <bullet> The average and median time that elapsed between the 
submission of a request and a determination by the MA plan, for 
standard prior authorizations, aggregated for all items and services.
    <bullet> The average and median time that elapsed between the 
submission of a request and a decision by the MA plan for expedited 
prior authorizations, aggregated for all items and services.
    We propose to add at Sec.  422.137(d)(7) that by July 1, 2025, and 
annually thereafter, the health equity analysis be posted on the plan's 
publicly available website in a prominent manner and clearly identified 
in the footer of the website. We propose that the health equity 
analysis must be easily accessible to the general public, without 
barriers, including but not limited to ensuring the information is 
available: free of charge; without having to establish a user account 
or password; without having to submit personal identifying information 
(PII); in a machine-readable format with the data contained within that 
file being digitally searchable and downloadable from a link in the 
footer of the plan's publicly available website, and include a .txt 
file in the root directory of the website domain that includes a direct 
link to the machine-readable file, in a format described by CMS (which 
CMS will provide in guidance), to establish and maintain automated 
access. We believe that by making this information more easily 
accessible to automated searches and data pulls, it will help third 
parties develop tools and researchers conduct studies that further aid 
the public in understanding the information and capturing it in a 
meaningful way across MA plans.
    Finally, we welcome comment on this proposal and seek comment on 
the following:
    <bullet> Additional populations CMS should consider including in 
the health equity analysis, including but not limited to: Members of 
racial and ethnic communities, members of the lesbian, gay, bisexual, 
transgender, and queer (LGBTQ+) community; individuals with limited 
English proficiency; members of rural communities; and persons 
otherwise adversely affected by persistent poverty or inequality.
    <bullet> If there should be further definition for what constitutes 
``expertise in health equity,'' and if so, what other qualifications to 
include in a definition of ``expertise in health equity.''
    <bullet> The proposed requirements for publicly posting the results 
on the plan's website under Sec.  422.137(d)(7) to ensure the data will 
be easily accessible to both the public and researchers.
    <bullet> Alternatives to the July 1, 2025, deadline for the initial 
analysis to be posted to the plan's publicly available website.
    <bullet> CMS is considering adding an additional requirement that 
the UM Committee submit to CMS the link to the analysis report. This 
would allow CMS to post every link in one centralized location. We 
believe this would increase accessibility and transparency.
    In addition, we request comment on any specific items or services, 
or groups of items or services, subject to prior authorization that CMS 
should consider also disaggregating in the analysis to consider for 
future rulemaking. If further disaggregation of a group of items or 
services is requested, CMS is soliciting comment on what specific items 
or services would be included within the group. For example, if CMS 
should consider disaggregating a group of items or services related to 
behavioral health treatment in the health equity analysis, what items 
or services should CMS consider a part of behavioral health treatment.

V. Enrollment and Appeals

A. Revise Initial Coverage Election Period Timeframe To Coordinate With 
A/B Enrollment (Sec.  422.62)

    Section 4001 of the Balanced Budget Act of 1997 (Pub. L. 105-33) 
added sections 1851 through 1859 to the Social Security Act (the Act) 
establishing Part C of the Medicare program known originally as 
``Medicare+Choice'' (M+C) and later as Medicare Advantage (MA). As 
enacted, section 1851(e) of the Act establishes specific parameters in 
which elections can be made and/or changed during enrollment and 
disenrollment periods under the MA program. Specifically, section 
1851(e)(1) of the Act requires that the Secretary specify an initial 
coverage election period (ICEP) during which an individual who first 
becomes entitled to Part A benefits and enrolled in Part B may elect an 
MA plan. The statute further stipulates that if an individual elects an 
MA plan during that period, coverage under the plan will become 
effective as of the first day on which the individual may receive that 
coverage. Consistent with this section of the Act, in the Medicare 
Program; Establishment of the Medicare+Choice Program interim final 
rule with comment period which appeared in the Federal Register on June 
26, 1998, (herein referred to as the June 1998 interim final rule), CMS 
codified this policy at Sec.  422.62(a)(1) (63 FR 35072).
    In order for an individual to have coverage under an MA plan, 
effective as of the first day on which the individual may receive such 
coverage, the individual must elect an MA plan before he or she is 
actually entitled to Part A and enrolled in Part B coverage. Therefore, 
in the June 1998 interim final rule CMS codified the ICEP to begin 3 
months prior to the month the individual is first entitled to both Part 
A and enrolled in Part B and ends the last day of the month preceding 
the month of entitlement (63 FR 35072).
    Section 102 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Pub. L. 108-173) revised section 
1851(e)(1) of the Act to provide for an ICEP for MA that ends on the 
later of, the day it would end under pre-MMA rules as described above, 
or the last day of an individual's Medicare Part B initial enrollment 
period (IEP). This approach extended an individual's ICEP which

[[Page 78543]]

helped to ensure that an individual who uses their IEP to enroll in 
Medicare Part A and B has the opportunity to elect an MA or MA 
prescription drug (MA-PD) plan following their first entitlement to 
Part A and enrollment in Part B. Consistent with the revised provisions 
of section 1851(e)(1) of the Act, CMS codified this policy at Sec.  
422.62(a)(1) in the Medicare Program; Establishment of the Medicare 
Advantage Program final rule which appeared in the Federal Register on 
January 28, 2005 (70 FR 4717).
    As described in Sec.  422.50(a)(1), eligibility for MA or MA-PD 
enrollment generally requires that an individual first have Medicare 
Parts A and B and meet all other eligibility requirements to do so. The 
ICEP is the period during which an individual newly eligible for MA may 
make an initial enrollment request to enroll in an MA or MA-PD plan. 
Currently, once an individual first has both Parts A and B, their ICEP 
begins 3 months immediately before the individual's first entitlement 
to Medicare Part A and enrollment in Part B and ends on the later of:
    <bullet> The last day of the month preceding entitlement to Part A 
and enrollment in Part B, or;
    <bullet> The last day of the individual's Part B IEP.
    Individuals who want to enroll in premium-Part A, Part B, or both, 
must submit a timely enrollment request during their IEP, the General 
Enrollment Period (GEP), or an existing special enrollment period (SEP) 
for which they are eligible. Eligible individuals may choose to enroll 
in both Part A and B during their first opportunity, that is, during 
their IEP. These individuals have an ICEP as described in Sec.  
422.62(a)(1)(ii), that is, they can choose to enroll in an MA plan 
(with or without drug coverage) at the time of, or after, they have 
both Part A and B, up until the last day of their IEP. However, not all 
individuals enroll in both Part A and B during their IEP. Other 
individuals, such as those who are working past age 65, may not have 
both Part A and B for the first time until after their IEP. These 
individuals may only have Part A and/or B for the first time when they 
use an SEP or a future GEP to enroll. To note, prior to January 1, 
2023, individuals who enrolled in Part A and/or Part B during the GEP 
had a universal effective date of July 1st. These individuals had an 
ICEP as described in Sec.  462.22(a)(1)(i), that is, the ICEP started 
April 1st and ended June 30th. Although these individuals had to decide 
whether to enroll in an MA or MA-PD plan prior to their July 1st 
effective date, they did have time to consider their options, as the 
GEP is January 1st-March 31st annually, and their enrollment in Part B, 
(and Part A if applicable), was not effective until July 1st. However, 
the Consolidated Appropriations Act, 2021, (CAA) (Pub. L. 116-260), 
revised sections 1838(a)(2)(D)(ii) and 1838(a)(3)(B)(ii) of the Act to 
provide that for individuals who enroll during the GEP in a month 
beginning on or after January 1, 2023, their entitlement would begin 
with the first day of the month following the month in which they 
enroll. For example, if an individual has Part A, but enrolls in Part B 
in March, during the GEP, they would first have both Part A and Part B 
effective April 1st. Although this provides for an earlier Medicare 
effective date, the individual's ICEP would occur prior to that 
Medicare effective date, that is, as described in Sec.  422.62(a)(1)(i) 
above, and they no longer have that additional time to consider their 
options.
    Currently, the individuals described above have an ICEP as 
described in Sec.  422.62(a)(1)(i) and can only enroll in an MA plan 
(with or without drug coverage) prior to the effective date of their 
Part A and B coverage. For example, an individual's 65th birthday is 
April 20, 2022, and they are eligible for Medicare Part A and Part B 
beginning April 1, 2022. They have premium-free Part A; however, the 
individual is still working, and has employer health insurance, so they 
decide not to enroll in Part B during their IEP. The individual retires 
in April 2023, and enrolls in Part B effective May 1, 2023 (using a 
Part B SEP). The individual's ICEP would be February 1st through April 
30, 2023. These individuals need to decide if they want to receive 
their Medicare coverage through an MA plan prior to the effective date 
of their enrollment in both Part A and B. In this example, the 
individual would have to enroll in an MA plan using the ICEP by April 
30, 2023.
    Section 422.62(a)(1) was intended to provide beneficiaries who 
enroll in both Part A and Part B for the first time with the 
opportunity to elect an MA plan at the time that both their Part A and 
B coverage were effective. However, in practice, individuals described 
above, who do not enroll in Part B during their IEP, do not have an 
opportunity to elect to receive their coverage through an MA plan after 
their Part A and B coverage goes into effect. When an individual 
enrolls in both Part A and B for the first time using an SEP or the 
GEP, they have to determine, prior to the start of their coverage, if 
they want to receive their coverage through Original Medicare or an MA 
plan prior to the effective date of their Part A and B coverage. If 
they do not use their ICEP to enroll in an MA plan prior to when their 
Part A and B coverage becomes effective, they lose the opportunity to 
enroll in an MA plan to receive their Medicare coverage and will 
generally have to wait until the next enrollment period that is 
available to them to choose an MA plan.
    To provide more flexibility, we are proposing to revise the end 
date for the ICEP for those who cannot use their ICEP during their IEP. 
That is, we are proposing in Sec.  422.62(a)(1)(i) that an individual 
would have 2 months after the month in which they are first entitled to 
Part A and enrolled in Part B to use their ICEP. Under proposed Sec.  
422.62(a)(1)(i), the individual's ICEP would begin 3 months prior to 
the month the individual is first entitled to Part A and enrolled in 
Part B and would end on the last day of the second month after the 
month in which the individual is first entitled to Part A and enrolled 
in Part B. Using the example above, we are proposing that the 
individual's ICEP would be February 1st through June 30, 2023, instead 
of February 1st to April 30th. As described in Sec.  422.68(a)(1), if 
an election is made prior to the month of entitlement in both Part A 
and Part B, the MA election would be effective as of the first date of 
the month that the individual is entitled to both Part A and Part B.
    We believe that extending the timeframe for the ICEP under Sec.  
422.62(a)(1)(i) would provide beneficiaries that are new to Medicare 
additional time to decide if they want to receive their coverage 
through an MA plan. We believe that extending this timeframe would help 
those new to Medicare to explore their options and select coverage that 
best suits their needs and reduce the number of instances where an 
individual inadvertently missed their ICEP and has to wait until the 
next open enrollment period to enroll in MA or MA-PD plan. This 
proposal also supports President Biden's April 5, 2022 Executive Order 
on Continuing to Strengthen Americans' Access to Affordable, Quality 
Health Coverage,\120\ which, among other things, requires agencies to 
examine policies or practices that make it easier for all consumers to 
enroll in and retain coverage, understand their coverage options and 
select appropriate coverage, and also examine policies or practices

[[Page 78544]]

that strengthen benefits and improve access to health care providers.
---------------------------------------------------------------------------

    \120\ 87 FR 20689 (April 8, 2022); https://www.whitehouse.gov/briefing-room/presidential-actions/2022/04/05/executive-order-on-continuing-to-strengthen-americans-access-to-affordable-quality-health-coverage/.
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    This proposed change in the ICEP timeframe aligns with the SEP 
timeframe that we have established in Sec.  422.62(b)(10), for 
individuals to enroll in an MA or MA-PD plan when their Medicare 
entitlement determination is made for a retroactive effective date, and 
the individual has not been provided the opportunity to elect an MA or 
MA-PD plan during their ICEP. It also aligns with the timeframe we have 
established in Sec.  422.62(b)(26), effective January 1, 2024, for an 
individual to enroll in an MA plan when they enroll in Part A and/or 
Part B using an exceptional condition SEP, as described in Sec. Sec.  
406.27 and 407.23.
    This proposal would extend the timeframe of an existing enrollment 
period and would not result in a new or additional paperwork burden 
since MA organizations are currently assessing applicants' eligibility 
for election periods as part of existing enrollment processes. All 
burden impacts of these provisions have already been accounted for 
under OMB control number 0938-1378 (CMS-10718). Similarly, we do not 
believe the proposed changes would have any impact to the Medicare 
Trust Fund.

B. Enhance Enrollees' Right To Appeal an MA Plan's Decision To 
Terminate Coverage for Non-Hospital Provider Services (Sec.  422.626)

    Medicare Advantage (MA) enrollees have the right to a fast-track 
appeal by an Independent Review Entity (IRE) when their covered skilled 
nursing facility (SNF), home health, or comprehensive outpatient 
rehabilitation facility (CORF) services are being terminated. The 
regulations for these reviews at the request of an MA enrollee are 
located at 42 CFR 422.624 and 422.626. Section 422.624 requires these 
providers of services to deliver a standardized written notice to the 
enrollee of the MA organization's decision to terminate the provider's 
services for the enrollee. This notice, called the Notice of Medicare 
Non-Coverage (NOMNC), must be furnished to the enrollee before services 
from the providers are terminated. The NOMNC informs enrollees of their 
right to a fast-track appeal of the termination of these provider 
services and how to appeal to the IRE. CMS currently contracts with 
certain Quality Improvement Organizations (QIOs) that have contracts 
under Title XI, Part B and section 1862(g) of the Act to perform as the 
IRE for these specific reviews. The NOMNC is subject to the Paperwork 
Reduction Act (PRA) process and approval by the Office of Management 
and Budget (OMB). There is a parallel appeal process in effect for 
Medicare beneficiaries in Original Medicare (42 CFR 405.1200 and 
405.1202).
    Presently, if an MA enrollee misses the deadline to appeal as 
stated on the NOMNC, the appeal is considered untimely, and the 
enrollee loses their right to a fast-track appeal to the QIO. Enrollees 
may, instead, request an expedited reconsideration by their MA plan, as 
described in Sec.  422.584. The QIO is unable to accept untimely 
requests from MA enrollees but does perform appeals for untimely 
requests from Medicare beneficiaries in Original Medicare as described 
at Sec.  405.1202(b)(4).
    Further, MA enrollees forfeit their right to appeal to the QIO if 
they leave a facility or otherwise end services from one of these 
providers before the termination date listed on the NOMNC, even if 
their appeal requests to the QIO are timely. (The MA enrollee retains 
the right to appeal to their MA plan in such cases because the decision 
to terminate the services is an appealable organization determination 
per Sec.  422.566(b)(3).) Beneficiaries in Original Medicare retain 
their right to appeal to the QIO, regardless of whether they end 
services before the termination date on the NOMNC.
    This proposed rule would modify the existing regulations regarding 
fast-track appeals for enrollees when they untimely request an appeal 
to the QIO, or still wish to appeal after they end services on or 
before the planned termination date. The proposed changes would bring 
the MA program further into alignment with Original Medicare 
regulations and procedures for the parallel appeals process. Finally, 
these changes were recommended by interested parties in comments to a 
previous rulemaking (CMS-4201-P, February 27, 2022).
    Specifically, the proposed changes would (1) require the QIO, 
instead of the MA plan, to review untimely fast-track appeals of an MA 
plan's decision to terminate services in an HHA, CORF, or SNF; and (2) 
allow enrollees the right to appeal the decision to terminate services 
after leaving an SNF or otherwise ending covered care before the 
planned termination date. The proposed changes are modeled after the 
parallel process in effect for Original Medicare at 42 CFR 405.1200 
through 405.1202.
    To implement these changes, we are proposing to revise Sec.  
422.626(a)(2) to specify that if an enrollee makes an untimely request 
for a fast-track appeal, the QIO will accept the request and perform 
the appeal. We would also specify that the IRE decision timeframe in 
Sec.  422.626(d)(5) and the financial liability provision in Sec.  
422.626(b) would not apply. The provision for untimely appeal requests 
by enrollees in proposed Sec.  422.626(a)(2) closely parallel 422 CFR 
405.1202(b)(4) which establishes that the QIO will review untimely 
appeals of terminations of certain provider services from beneficiaries 
in Original Medicare.
    Secondly, we propose removing the provision at Sec.  422.626(a)(3) 
that prevents enrollees from appealing to the QIO if they end their 
covered services on or before the date on their termination notice, 
even in instances of timely requests for fast-track appeals. Removal of 
this provision preserves the appeal rights of MA enrollees who receive 
a termination notice, regardless of whether they decide to leave a 
provider or stop receiving their services.
    This proposed expedited coverage appeals process would afford 
enrollees in MA plans access to similar procedures for fast-track 
appeals as for beneficiaries in Original Medicare in the parallel 
process. Untimely enrollee fast-track appeals would be absorbed into 
the existing process for timely appeals at Sec.  422.626, and thus, 
would not necessitate additional changes to the existing fast-track 
process. The burden on MA plans would be minimal and would only require 
that MA plans provide notices as required at Sec.  422.626(d)(1) for 
these appeals. Further MA plans would no longer have to perform the 
untimely appeals as currently required at Sec.  422.626(a)(2). 
Beneficiary advocacy organizations, in comments to previous rulemakings 
on this topic, supported changes that would afford enrollees more time 
to appeal and afford access to IRE appeals even for untimely requests.
    The burden of conducting these reviews is currently approved under 
OMB collection 0938-0953. The proposed changes would require that 
untimely fast-track appeals would be performed by the QIO, rather than 
the enrollee's health plan; thus, any burden related to this proposal 
would result in a shift in fast-track appeals from health plans to 
QIOs.

C. Amendments to Part C and Part D Reporting Requirements (Sec. Sec.  
422.516 and 423.514)

    CMS has authority under sections 1857(e)(1) and 1860D-12(b)(3)(D) 
of the Act to require MA organizations and Part D plan sponsors to 
provide CMS ``with such information . . . as the Secretary may find 
necessary and appropriate.'' CMS also has authority, in

[[Page 78545]]

section 1856(b) of the Act, to establish standards to carry out the MA 
program.
    Likewise, existing CMS regulations cover a broad range of topics 
and data to be submitted to CMS. Under these authorities, CMS 
established reporting requirements at Sec. Sec.  422.516(a) (Validation 
of Part C reporting requirements) and 423.514(a) (Validation of Part D 
reporting requirements), respectively. Pursuant to Sec. Sec.  
422.516(a) and 423.514(a), each MA organization and Part D sponsor must 
have an effective procedure to develop, compile, evaluate, and report 
information to CMS at the times and in the manner that CMS requires. In 
addition, Sec. Sec.  422.504(f)(2) and 423.505(f)(2) require MA 
organizations and Part D plan sponsors, respectively, to submit to CMS 
all information that is necessary for CMS ``to administer and 
evaluate'' the MA and Part D programs and to facilitate informed 
enrollment decisions by beneficiaries. Part D sponsors are also 
required to report all data elements included in all its drug claims by 
Sec.  422.505(f)(3). Sections 422.504(f)(2), 422.516(a), 423.505(f)(2), 
and 423.514(a) each list general topics of information and data to be 
provided to CMS, including benefits, enrollee costs, quality and 
performance, cost of operations, information demonstrating that the 
plan is fiscally sound, patterns of utilization, information about 
beneficiary appeals and grievances, and information regarding actions, 
reviews, findings, or other similar actions by States, other regulatory 
bodies, or any other certifying or accrediting organization.
    For many years, CMS has used this authority to collect 
retrospective information from MA organizations and Part D sponsors 
according to the Parts C and D Reporting Requirements that we issue 
each year, which can be accessed on CMS's website.\121\ In addition to 
the data elements, reporting frequency and timelines, and levels of 
reporting found in the Reporting Requirements information collection 
documents, CMS also issues Technical Specifications, which supplement 
the Reporting Requirements and serve to further clarify data elements 
and outline CMS's planned data analyses. The reporting timelines and 
required levels of reporting may vary by reporting section. While many 
of the current data elements are collected in aggregate at the contract 
level, such as grievances, enrollment/disenrollment, rewards and 
incentives, and payments to providers, the collection of more granular 
data is also supported by the regulations. CMS has the ability to 
collect more granular data, per the Part C and D Reporting Requirements 
as set forth in Sec. Sec.  422.516(a) and 423.514(a), or to collect 
more timely data with greater frequency or closer in real-time than we 
have historically done. We propose revisions to update Sec. Sec.  
422.516(a) and 423.514(a). Section 422.516 currently reads, ``Each MA 
organization must have an effective procedure to develop, compile, 
evaluate, and report to CMS, to its enrollees, and to the general 
public, at the times and in the manner that CMS requires, and while 
safeguarding the confidentiality of the doctor-patient relationship, 
statistics and other information.'' We propose to strike the term 
``statistics,'' as well as the words ``and other,'' with the 
understanding that the broader term ``information'' which is already at 
Sec.  422.516(a), includes statistics, Part C data, and information on 
plan administration. In a conforming proposal to amend Sec.  
423.514(a), we propose to strike the term ``statistics'' and add 
``information.'' CMS does not interpret these regulations to limit data 
collection to statistical or aggregated data and we are using this 
rulemaking as an opportunity to ensure that we are clear and consistent 
with our interpretation of these rules.
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    \121\ Part C Reporting Requirements are at https://www.cms.gov/medicare/health-plans/healthplansgeninfo/reportingrequirements and 
Part D Reporting Requirements are at https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/rxcontracting_reportingoversight.
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    Additionally, we propose to amend Sec. Sec.  422.516(a)(2) and 
423.514(a)(2) to make an affirmative change regarding CMS's collection 
of information related to what occurs from beginning to end when 
beneficiaries seek to get coverage from their health and drug plans for 
specific services. In other words, under the existing requirements CMS 
has the ability to collect information related to all plan activities 
regarding adjudicating requests for coverage and plan procedures 
related to making service utilization decisions, and we aim to make 
this more transparent through this proposal. This could include, for 
example, information on pharmacy rejections, initial determinations, 
decision rationales, and plan level appeals. Both Sec. Sec.  
422.516(a)(2) and 423.514(a)(2) currently require plans to report ``The 
patterns of utilization of services.'' We propose to amend both 
sections to read, ``The procedures related to and utilization of its 
services and items'' to be clear that these regulations authorize 
reporting and data collection about MA and Part D plan procedures 
related to coverage, utilization in the aggregate, and beneficiary-
level utilization, including the steps beneficiaries may need to take 
to access covered benefits. Such information will ensure that CMS may 
better understand under what circumstances plans choose whether to 
provide or pay for a service or item.
    CMS is not proposing to change specific current data collection 
efforts through this rulemaking. Any future information collection 
would be addressed through the Office of Management and Budget (OMB) 
Paperwork Reduction Act (PRA) process, which would provide advance 
notice to interested parties and provides both a 60- and 30-day public 
comment period on drafts of the proposed collection.
    We do not believe the proposed changes to Sec. Sec.  422.516(a) and 
423.514(a) have either paperwork burden or impact on the Medicare Trust 
Fund at this time. These proposed changes allow CMS, in the future, to 
add new burden to plans in collection efforts; however, any such new 
burden associated with a new data collection would be estimated through 
the PRA process.

D. Amendments To Establish Consistency in Part C and Part D Timeframes 
for Filing an Appeal Based on Receipt of the Written Decision 
(Sec. Sec.  422.582, 422.584, 422.633, 423.582, 423.584, and 423.600)

    Based on general feedback CMS has received from interested parties 
regarding a variance in the regulatory timeframe for beneficiaries to 
file an appeal with an MA organization or Part D plan sponsor, we are 
proposing to amend the Parts C and D regulations at Sec. Sec.  
422.582(b), 422.584(b), 422.633(d)(1), 423.582(b), 423.584(b), and 
423.600(a) with respect to how long an enrollee has to file an appeal 
with a plan or the Part D Independent Review Entity (IRE). These 
proposed amendments aim to ensure consistency with the regulations at 
Sec. Sec.  422.602(b)(2), 423.2002(d), 422.608, and 423.2102(a)(3), 
applicable to Administrative Law Judge (ALJ) and Medicare Appeals 
Council (Council) reviews, that either state or cross-reference the 
Medicare FFS regulations at 42 CFR part 405 that prescribe that the 
date of receipt of the notice of decision or dismissal is presumed to 
be 5 calendar days after the date of the notice, unless there is 
evidence to the contrary. These proposals would also apply to 
integrated organization determinations and reconsiderations. In 
addition, because cost plans are required, by Sec. Sec.  417.600 and 
417.840, to comply with the MA appeal regulations,

[[Page 78546]]

these proposed changes will also apply to cost plan appeals.
    Pursuant to our authority under section 1856(b) and 1860D-12 of the 
Act to adopt standards to carry out the Part C and Part D programs and 
in order to implement sections 1852(g)(2) and 1860D-4(g) and (h) of the 
Act regarding coverage decisions and appeals, CMS established 
procedures and minimum standards for an enrollee to file an appeal 
regarding benefits with an MA organization, Part D plan sponsor, and 
IREs. These requirements are codified in regulation at 42 CFR parts 422 
and 423, subpart M. See also section 1876(c)(5) of the Act regarding 
cost plans' obligations to have appeal processes.
    Specifically, section 1852(g)(2)(A) of the Act requires that an MA 
organization shall provide for reconsideration of a determination upon 
request by the enrollee involved. The reconsideration shall be made no 
later than 60 days after the date of the receipt of the request for 
reconsideration. Section 1860D-4(g)(1) of the Act requires that a Part 
D plan sponsor shall meet the requirements of paragraph (2)(A) of 
section 1852(g) with respect to providing for reconsideration of a 
determination upon request by the enrollee involved.
    While section 1852 of the Act does not specify the timeframe in 
which an enrollee must request an appeal of an unfavorable organization 
determination, integrated organization determination or coverage 
determination, the timeframe for filing an appeal in the Part C and 
Part D programs is established in regulations. Sections 422.582(b), 
422.633(d)(1), and 423.582(b) state that an appeal must be filed within 
60 calendar days from the date of the notice issued as a result of the 
organization determination, integrated organization determination, 
coverage determination, or at-risk determination. Plans are permitted 
to extend this filing deadline for good cause.
    We continue to believe that a 60 calendar day filing timeframe 
strikes an appropriate balance between due process rights and the goal 
of administrative finality in the administrative appeals process. 
However, to establish consistency with the regulations applicable to 
ALJ and Council reviews with respect to receipt of the notice of 
decision or dismissal and how that relates to the timeframe for 
requesting an appeal, we are proposing to account for a presumption 
that it will generally take 5 calendar days for a notice to be received 
by an enrollee or other appropriate party. Therefore, we are proposing 
to revise Sec. Sec.  422.582(b), 422.633(d)(1)(i), 423.582(b), and 
423.600(a) to state that a request for a Part C reconsideration, Part D 
redetermination, Part D at-risk redeterminations and Part D IRE 
reconsiderations must be filed within 60 calendar days after receipt of 
the written determination notice. The proposal also includes adding new 
Sec. Sec.  422.582(b)(1), 422.633(d)(1)(i), and 423.582(b)(1), which 
would provide that the date of receipt of the organization 
determination, integrated organization determination, coverage 
determination, or at-risk determination is presumed to be 5 calendar 
days after the date of the written organization determination, 
integrated organization determination, coverage determination or at-
risk determination, unless there is evidence to the contrary. Based on 
CMS's experience with audits and other similar review of plan 
documents, we realize that it is standard practice that the date of the 
written decision notice is the date the plan sends the notice. The 
presumption that the notice is received 5 calendar days after the date 
of the decision is a long-standing policy with respect to IRE appeals 
and has been codified in regulation at Sec. Sec.  422.602(b)(2), 
423.2002(d), and 423.2102(a)(3) regarding hearings before an ALJ and 
Council; further, Sec.  422.608 regarding MA appeals to the Medicare 
Appeals Council provides that the regulations under part 405 regarding 
Council review apply to such MA appeals, which would include the 
provision at Sec.  405.1102(a)(2) that applies the same 5 day rule. To 
ensure consistency throughout the administrative appeals process, we 
believe it is appropriate and practical to adopt this approach for plan 
and Part D IRE appeals in Sec. Sec.  422.582(b), 422.633(d)(1), 
423.582(b), 423.584, and 423.600(a).
    In addition to the aforementioned proposals related to when an 
organization determination, integrated organization determination, 
coverage determination, or at-risk determination is presumed to be 
received by an enrollee of other appropriate party, we are also 
proposing to add language to Sec. Sec.  422.582, 422.633, 423.582, and 
423.600(a) that specifies when an appeal is considered filed with a 
plan and the Part D IRE. Specifically, we are proposing to add new 
Sec. Sec.  422.582(b)(2), 422.633(d)(1)(ii), 423.582(b)(2), and 
423.600(a) to provide that for purposes of meeting the 60 calendar day 
filing deadline, the appeal request is considered filed on the date it 
is received by the plan, plan-delegated entity or Part D IRE specified 
in the written organization determination, integrated organization 
determination, coverage determination, at-risk determination, or 
redetermination. The inclusion of when a request is considered filed 
would codify what currently exists in CMS's sub-regulatory guidance and 
the Part D IRE procedures manual. CMS's sub-regulatory guidance 
indicates that a standard request is considered filed when any unit in 
the plan or delegated entity receives the request. An expedited request 
is considered filed when it is received by the department responsible 
for processing it. Pursuant to existing manual guidance, plan material 
should clearly state where requests should be sent, and plan policy and 
procedures should clearly indicate how to route requests that are 
received in an incorrect location to the correct location as 
expeditiously as possible.
    These proposed revisions related to when a notice is presumed to 
have been received would ensure that the time to request an appeal is 
not truncated by the time it takes for a coverage decision notice to 
reach an enrollee by mail or other delivery method. If these proposals 
are finalized, corresponding changes would be made to the Part C and 
Part D standardized denial notices so that enrollees are accurately 
informed of the timeframe for requesting an appeal.
    We are also proposing clarifications to Sec. Sec.  422.584(b) and 
423.584(b) to explicitly state the timeframe in which an enrollee must 
file an expedited plan appeal for it to be timely. The current text of 
Sec. Sec.  422.584 and 423.584 does not include the 60-calendar day 
timeframe for filing an expedited appeal request, but CMS manual 
guidance for Part C and Part D appeals has long reflected this 60-
calendar day timeframe. We also note that this timeframe for filing an 
appeal is consistent with the current regulations at Sec. Sec.  
422.582(b) and 423.582(b) for filing a request for a standard appeal. 
Neither sections 1852 and 1860D-4 of the Act, nor Sec. Sec.  422.584 
and 423.584 specify the timeframe in which an enrollee must request an 
expedited appeal of an unfavorable organization determination, coverage 
determination or at-risk determination in the Part C and Part D 
programs. This provision would codify existing guidance. We are certain 
that plans already comply as this long-standing policy is reflected in 
CMS's sub-regulatory guidance \122\ and

[[Page 78547]]

standardized denial notices \123\ that explain an enrollee's right to 
appeal. Additionally, we have not received any complaints on this 
matter. In proposing new Sec. Sec.  422.584(b)(3) and (4) and 
423.584(b)(3) and (4), we also propose to add the procedure and 
timeframe for filing expedited organization determinations and coverage 
determinations consistent with proposed requirements at Sec. Sec.  
422.582(b)(1) and (2) and 423.582(b)(1) and (2).
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    \122\ https://www.cms.gov/medicare/appeals-and-grievances/mmcag/downloads/parts-c-and-d-enrollee-grievances-organization-coverage-determinations-and-appeals-guidance.pdf.
    \123\ https://www.cms.gov/medicare/medicare-general-information/bni/madenialnotices.
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    If finalized, we believe these proposals would enhance consistency 
in the administrative appeals process and provide greater clarity on 
the timeframe for requesting an appeal and when an appeal request is 
considered received by the plan. Theoretically, the proposed amendments 
may result in a small increase in the number of appeals from allowing 
65 versus 60 days to appeal an organization determination, integrated 
organization determination, coverage determination or at-risk 
determination. However, we believe, based on the low level of 
dismissals at the plan level due to untimely filing, that most 
enrollees who wish to appeal a denial do so immediately, thereby 
mitigating the impact of 5 additional days for a plan to accept an 
appeal request if this proposal is finalized. Consequently, we are not 
associating impact to the Medicare Trust Fund. We solicit interested 
party input on the accuracy of this assumption.

E. Authorized Representatives for Parts C/D Elections (Sec. Sec.  
422.60 and 423.32)

    Section 1851(c)(1) of the Act gives the Secretary the authority to 
establish a process through which MA elections, that is, enrollments 
and disenrollments, are made and changed. This authority includes 
establishing the form and manner in which elections are made. Section 
1860D-1(b)(1)(A) of the Act gives the Secretary the authority to 
establish a process for enrollment, disenrollment, termination, and 
change of enrollments in Part D prescription drug plans. Likewise, 
section 1860D-1(b)(1)(B)(ii) of the Act directs CMS to use rules 
similar to those established in the MA context pursuant to 1851(c) for 
purposes of establishing rules for enrollment, disenrollment, 
termination, and change of enrollment with an MA-PD plan.
    Consistent with these sections of the Act, Parts C and D 
regulations set forth our election processes under Sec. Sec.  422.60 
and 423.32. These enrollment processes require that Part C/D eligible 
individuals wishing to make an election must file an appropriate 
enrollment form, or other approved mechanism, with the plan. The 
regulations also provide information for plans on the process for 
accepting election requests, notice that must be provided, and other 
ways in which the plan may receive an election on behalf of the 
beneficiary.
    Though the term ``authorized representative'' is not used in the 
context of the statutory provisions within the Act governing MA and 
Part D enrollment and eligibility (for example, sections 1851 and 
1860D-1), ``authorized representative''--and other similar terms--are 
used in other contexts throughout the Act. Section 1866(f)(3) of the 
Act defines the term ``advance directive,'' deferring to applicable 
State law to recognize written instructions such as a living will or 
durable power of attorney for health care. Section 
1862(b)(2)(B)(vii)(IV) of the Act recognizes that an individual may be 
represented by an ``authorized representative'' in secondary payer 
disputes. Section 1864(a) of the Act allows a patient's ``legal 
representative'' to stand in the place of the patient and give consent 
regarding use of the patient's medical records.
    In the June 1998 interim final rule that first established the M+C 
program, now the MA program (63 FR 34985), we acknowledged in Part C 
enrollment regulations at Sec.  422.60(c) that there are situations 
where an individual may assist a beneficiary in completing an 
enrollment request and required the individual to indicate their 
relationship to the beneficiary. In the ``Medicare Program; Medicare 
Prescription Drug Benefit'' final rule which appeared in the Federal 
Register on January 28, 2005 (70 FR 4194), we first recognized in Sec.  
423.32(b) that an authorized representative may assist a beneficiary in 
completing an enrollment request, and required authorized 
representatives to indicate that they provided assistance. In response 
to public comments about the term ``authorized representative'' in that 
rule, we indicated that CMS would recognize and rely on State laws that 
authorize a person to effect an enrollment on behalf of a Medicare 
beneficiary for purposes of this provision. We also stated that the 
authorized representative would constitute the ``individual'' for 
purposes of making the enrollment or disenrollment request.
    Historically, we have provided the definition and policies related 
to authorized representatives in our sub-regulatory manuals.\124\ We 
are now proposing to add new paragraphs Sec. Sec.  422.60(h) and 
423.32(h) to codify our longstanding guidance on authorized 
representatives making Parts C and D elections on behalf of 
beneficiaries.
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    \124\ This guidance can be found in chapter 2, sections 10 and 
40.2.1 of the Medicare Managed Care Manual and chapter 3, sections 
10 and 40.2.1 of the Prescription Drug Benefit Manual.
---------------------------------------------------------------------------

    Current regulation in Sec.  423.32(b)(i) acknowledges that an 
``authorized representative'' may assist a beneficiary in completing an 
enrollment form, but it does not define who an ``authorized 
representative'' is. A similar term, ``representative,'' is currently 
defined under Sec. Sec.  422.561 and 423.560; however, that definition 
is used only in the appeals context and applies only to subpart M of 
the MA and Part D regulations. Therefore, we are defining the term 
``authorized representative'' for subpart B (eligibility, election, and 
enrollment).
    Our proposal defers to the law of the State in which the 
beneficiary resides to determine who is a legal representative. 
Deference to State law on these matters is consistent with other 
similar practices within CMS, including in the MA appeals definition of 
``representative'' (Sec.  422.561) and Medicaid's definition of 
``authorized representative'' (Sec. Sec.  435.923; 438.402), as well as 
in the HIPAA privacy regulations' description of ``personal 
representative'' (45 CFR 164.502(g)).
    For those with State legal authority to act and make health care 
decisions on behalf of a beneficiary, our proposal would codify at 
paragraph (h)(1) of Sec. Sec.  422.60 and 423.32 that authorized 
representatives will constitute the ``beneficiary'' or the ``enrollee'' 
for the purposes of making an election, meaning that CMS, MA 
organizations, and Part D sponsors will consider the authorized 
representative to be the beneficiary/enrollee during the election 
process. Any mention of beneficiary/enrollee in our enrollment and 
eligibility regulations would be considered to also include 
``authorized representative,'' where applicable. Our proposal at 
paragraph (h)(2) of Sec. Sec.  422.60 and 423.32 would clarify that 
authorized representatives under State law may include court-appointed 
legal guardians, durable powers of attorney for health care decisions 
and State surrogate consent laws as examples of those State law 
concepts that allow the authorized representative to make health care 
decisions on behalf of the individual. This is not a complete list; we 
would defer to applicable State law granting authority to act and make

[[Page 78548]]

health care decisions on behalf of the beneficiary.
    Codifying this longstanding guidance provides plans, beneficiaries 
and their caregivers, and other interested parties clarity and 
transparency on the requirements when those purporting to be the 
representatives of the beneficiary attempt to make election decisions 
on their behalf. We have not received negative public feedback on this 
longstanding policy. However, we have recently answered questions on 
plan procedures when dealing with authorized representatives. We are 
proposing to codify this longstanding guidance in order to clarify our 
policy regarding the role of authorized representatives in the MA and 
Part D enrollment process, including the applicability of State law in 
this context.
    This proposal represents the codification of longstanding MA and 
Part D sub-regulatory guidance. Based on questions from plans and 
beneficiaries related to current guidance, we conclude that the 
guidance has been previously implemented and is currently being 
followed by plans. Therefore, there is no additional paperwork burden 
associated with codifying this longstanding sub-regulatory policy, and 
there is also no impact to the Medicare Trust Fund. All information 
impacts related to the current process for determining a beneficiary's 
eligibility for an election period and processing election requests 
have already been accounted for under OMB control numbers 0938-0753 
(CMS-R-267), 0938-1378 (CMS-10718), and 0938-0964 (CMS-10141).

F. Open Enrollment Period for Institutionalized Individuals (OEPI) End 
Date (Sec.  422.62(a)(4))

    Section 1851(e) of the Act establishes the coverage election 
periods for making or changing elections in the Medicare+Choice (M+C), 
later known as Medicare Advantage (MA), program. Section 501(b) of the 
Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113) amended 
section 1851(e)(2) of the Act by adding a new subparagraph (D), which 
provides for continuous open enrollment for institutionalized 
individuals after 2001. CMS published a final rule with comment period 
(65 FR 40317) in June 2000 implementing section 1851(e)(2)(D) by 
establishing a new continuous open enrollment period for 
institutionalized individuals (OEPI) at then Sec.  422.62(a)(6). In 
subsequent rulemaking (83 FR 16722), the OEPI regulations were further 
updated to reflect conforming changes related to implementation of 
Title II of The Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Pub. L. 108-173) (70 FR 4717) and to 
redesignate this provision from Sec.  422.62(a)(6) through (4).
    As noted above, the OEPI is continuous. Individuals may use the 
OEPI to enroll in, change, or disenroll from a plan. Individuals are 
eligible for the OEPI if they move into, reside in, or move out of an 
institution. Longstanding sub-regulatory guidance has stated that the 
OEPI ends 2 months after an individual moves out of an institution, but 
this has not been articulated in regulations.\125\
---------------------------------------------------------------------------

    \125\ This guidance can be found in chapter 2, section 30.3 of 
the Medicare Managed Care Manual.
---------------------------------------------------------------------------

    To provide transparency and stability for plans, beneficiaries and 
their caregivers, and other interested parties about this aspect of MA 
enrollment, we propose to codify current sub-regulatory guidance that 
defines when the OEPI ends. Specifically, we propose to codify at new 
Sec.  422.62(a)(4)(ii) that the OEPI ends on the last day of the second 
month after the month the individual ceases to reside in one of the 
long-term care facility settings described in the definition of 
``institutionalized'' at Sec.  422.2.
    This proposal would define when the OEPI ends and would not result 
in a new or additional paperwork burden since MA organizations are 
currently implementing the policy related to the OEPI end date as part 
of existing enrollment processes. All burden impacts related to an 
applicant's eligibility for an election period have already been 
accounted for under OMB control number 0938-0753 (CMS-R-267). 
Similarly, we do not believe the proposed changes would have any impact 
to the Medicare Trust Fund.

G. Beneficiary Choice of C/D Effective Date if Eligible for More Than 
One Election Period (Sec. Sec.  422.68 and 423.40)

    Section 1851(f) of the Act establishes the effective dates of 
elections and changes of elections for MA plans. In the June 1998 
interim final rule, we specified the effective dates for elections and 
changes of elections of M+C (now MA) plan coverage made during various 
specified enrollment periods (63 FR 34968). The effective date 
requirements for the initial coverage election period (ICEP), annual 
election period (AEP), MA open enrollment period (MA-OEP), open 
enrollment period for institutionalized individuals (OEPI), and special 
election periods (SEP) are codified in regulation at Sec.  422.68. For 
Part D plans, section 1860D-1(b)(1)(B)(iv) of the Act directs us to 
establish similar rules for effective dates of elections and changes of 
elections to those provided under the MA program statute at section 
1851(f). In the January 2005 Part D final rule, we specified the 
effective dates for elections and changes of elections of Part D 
coverage made during various specified enrollment periods (70 FR 4193). 
The effective date requirements for the initial enrollment period (IEP) 
for Part D, AEP, and SEPs are codified in regulation at Sec.  423.40.
    Existing regulations at Sec. Sec.  422.68 and 423.40 do not address 
what the MA organization or Part D plan sponsor should do when a 
beneficiary is eligible for more than one election period, thus 
resulting in more than one possible effective date for their election 
choice. For example, the beneficiary is eligible to make a change in 
their election choice during the MA-OEP, but they are also eligible for 
an SEP due to changes in the individual's circumstances. Current sub-
regulatory guidance provides that the MA organization or Part D plan 
sponsor determine the proper effective date based on the election 
period for which the beneficiary is eligible before the enrollment or 
disenrollment may be transmitted to CMS.\126\ Because the election 
period determines the effective date of the election in most instances, 
with the exception of some SEPs or when election periods overlap, 
beneficiaries may not request their election effective date. The MA 
organization or Part D plan sponsor determines the effective date once 
the election period is identified. If a beneficiary is eligible for 
more than one election period, which results in more than one possible 
effective date, CMS's sub-regulatory guidance \127\ directs the MA 
organization or Part D plan sponsor to allow the beneficiary to choose 
the election period that results in the desired effective date. To 
determine the beneficiary's choice of election period, MA organizations 
and Part D plan sponsors are instructed to attempt to contact the 
beneficiary, and to document their attempt(s). However, sub-regulatory 
guidance \128\ states that this does not apply to beneficiary requests 
for enrollment into an employer or union group health plan (EGHP) using 
the group enrollment

[[Page 78549]]

mechanism. Beneficiaries who make an election via the employer or union 
election process will be assigned an effective date according to the 
SEP EGHP, unless the beneficiary requests a different effective date 
that is allowed by one of the other election periods for which they are 
eligible.
---------------------------------------------------------------------------

    \126\ This guidance can be found in chapter 2, section 30.6 and 
30.7 of the Medicare Managed Care Manual and chapter 3, section 30.4 
and 30.5 of the Prescription Drug Benefit Manual.
    \127\ This guidance can be found in chapter 2, section 30.6 of 
the Medicare Managed Care Manual and chapter 3, section 30.4 of the 
Prescription Drug Benefit Manual.
    \128\ This guidance can be found in chapter 2, section 30.6 of 
the Medicare Managed Care Manual and chapter 3, section 30.4 of the 
Prescription Drug Benefit Manual.
---------------------------------------------------------------------------

    Because a beneficiary must be entitled to Medicare Part A and 
enrolled in Medicare Part B in order to be eligible to receive coverage 
under a MA or MA-PD plan, CMS's sub-regulatory guidance \129\ explains 
that if one of the election periods for which the beneficiary is 
eligible is the ICEP, the beneficiary may not choose an effective date 
any earlier than the month of entitlement to Part A and enrollment in 
Part B. Likewise, because a beneficiary must be entitled to Part A or 
enrolled in Part B in order to be eligible for coverage under a Part D 
plan, sub-regulatory guidance explains that if one of the election 
periods for which the beneficiary is eligible is the Part D IEP, the 
beneficiary may not choose an effective date any earlier than the month 
of entitlement to Part A and/or enrollment in Part B.\130\
---------------------------------------------------------------------------

    \129\ This guidance on effective dates of elections is currently 
outlined in section 30.6 of chapter 2 of the Medicare Managed Care 
Manual.
    \130\ This guidance on effective dates of elections is currently 
outlined in section 30.4 of chapter 3 of the Medicare Prescription 
Drug Benefit Manual.
---------------------------------------------------------------------------

    Furthermore, sub-regulatory guidance \131\ provides that if a 
beneficiary is eligible for more than one election period and does not 
choose which election period to use, and the MA organization or Part D 
plan sponsor is unable to contact the beneficiary, the MA organization 
or Part D plan sponsor assigns an election period for the beneficiary 
using the following ranking of election periods (1 = Highest, 5 = 
Lowest): (1) ICEP/Part D IEP, (2) MA-OEP, (3) SEP, (4) AEP, and (5) 
OEPI. The election period with the highest rank generally determines 
the effective date of enrollment. In addition, if an MA organization or 
Part D sponsor receives a disenrollment request when more than one 
election period applies, the plan is instructed to allow the 
beneficiary to choose which election period to use. If the beneficiary 
does not make a choice, then the plan is directed to assign the 
election period that results in the earliest disenrollment.
---------------------------------------------------------------------------

    \131\ This guidance can be found in sections 30.6 and 30.7 of 
chapter 2 of the Medicare Managed Care Manual and sections 30.4 and 
30.5 of chapter 3 of the Medicare Prescription Drug Benefit Manual.
---------------------------------------------------------------------------

    To provide transparency and stability about the MA and Part D 
program for plans, beneficiaries, and other interested parties, we are 
proposing at new Sec. Sec.  422.68(g) and 423.40(f) that if the MA 
organization or Part D plan sponsor receives an enrollment or 
disenrollment request, determines the beneficiary is eligible for more 
than one election period and the election periods allow for more than 
one effective date, the MA organization or Part D plan sponsor must 
allow the beneficiary to choose the election period that results in the 
desired effective date. We also propose at Sec. Sec.  422.68(g)(1) and 
423.40(f)(1) that the MA organization or Part D plan sponsor must 
attempt to contact the beneficiary, and must document its attempt(s), 
to determine the beneficiary's choice. The plan may contact the 
beneficiary by phone, in writing, or any other communication mechanism. 
Plans would annotate the outcome of the contact(s) and retain the 
record as part of the individual's enrollment or disenrollment request. 
In addition, we propose at Sec. Sec.  422.68(g)(2) and 423.40(f)(2) to 
require that the MA organization or Part D plan sponsor must use the 
proposed ranking of election periods to assign an election period if 
the beneficiary does not make a choice. With the exception of the SEP 
EGHP noted earlier, if a beneficiary is simultaneously eligible for 
more than one SEP and they do not make a choice, and the MA 
organization or PDP sponsor is unable to obtain the beneficiary's 
desired enrollment effective date, the MA organization or PDP sponsor 
should assign the SEP that results in an effective date of the first of 
the month after the enrollment request is received by the plan. 
Finally, we propose at Sec. Sec.  422.68(g)(3) and 423.40(f)(3) to 
require that if the MA organization or Part D plan sponsor is unable to 
obtain the beneficiary's desired disenrollment effective date, they 
must assign an election period that results in the earliest 
disenrollment.
    This proposal represents the codification of longstanding MA and 
Part D sub-regulatory guidance. Based on infrequent complaints and 
questions from plans and beneficiaries related to current guidance, we 
conclude that the guidance has been previously implemented and is 
currently being followed by plans. There is no additional paperwork 
burden associated with codifying this longstanding sub-regulatory 
policy, and there is also no impact to the Medicare Trust Fund. All 
information impacts related to the current process for determining a 
beneficiary's eligibility for an election period and processing 
election requests have already been accounted for under OMB control 
number 0938-0753 (CMS-R-267) for Part C and 0938-0964 (CMS-10141) for 
Part D.

VI. Medicare Advantage/Part C and Part D Prescription Drug Plan 
Marketing and Communications

A. Marketing and Communications Requirements for Special Supplemental 
Benefits for the Chronically Ill (SSBCI) (Sec.  422.2267)

    Section 1851(h) and (j) of the Act provide a structural framework 
for how MA organizations may market to beneficiaries and direct CMS to 
set standards related to the review of marketing materials and 
establish limitations on marketing activities, as part of the standards 
for carrying out the MA program under section 1856(b) of the Act. In 
the Medicare and Medicaid Programs; Contract Year 2022 Policy and 
Technical Changes to the Medicare Advantage Program, Medicare 
Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan 
Program, and Programs of All-Inclusive Care for the Elderly final rule 
(hereinafter referred to as the January 2021 final rule), CMS used this 
statutory authority to codify guidance from the Medicare Communications 
& Marketing Guidelines (MCMG) into subpart V of part 422. Several 
commenters in that prior rulemaking urged CMS to add specific 
provisions in the marketing and communications regulations regarding 
how MA organizations may market SSBCI described in Sec.  422.102(f). In 
response, CMS established a new requirement for a disclaimer to be used 
when SSBCI are mentioned. The SSBCI disclaimer was originally codified 
at Sec.  422.2267(e)(32), and it currently appears at paragraph 
(e)(34). Currently, that regulation requires MA organizations to: (i) 
convey that the benefits mentioned are a part of special supplemental 
benefits, (ii) convey that not all members will qualify for these 
benefits; and (iii) include the model content in the material copy 
which mentions SSBCI benefits. Section 422.2267(e)(34) does not 
explicitly state that it applies to both marketing and communications 
materials, but our sub-regulatory guidance is clear that it applies 
whenever SSBCI are mentioned; the disclaimer is required regardless of 
whether the material that mentions the benefits is a marketing or 
communications material. The purpose of the SSBCI disclaimer is to 
ensure that beneficiaries are 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 Sec.  422.102(f). Ensuring a 
clear statement of these limitations in a

[[Page 78550]]

disclaimer guards against beneficiary confusion or misunderstanding of 
the scope of SSBCI, and thus lessens the chance that a beneficiary will 
enroll in a certain plan believing they can access that plan's SSBCI 
for which they may not ultimately be eligible.
    Per the January 2021 final rule, MA organizations were required to 
comply with the new SSBCI disclaimer requirement beginning January 1, 
2022. Since MA organizations have had over a year to implement their 
use of the SSBCI disclaimer, we are taking an opportunity to reevaluate 
the requirement at Sec.  422.2267(e)(34), considering our observation 
of its actual implementation.
    MA organizations market SSBCI by advertising various benefits, 
including coverage of groceries, pest control, prepared meals, 
household items, gasoline, utility bills, auto repair, pet supplies or 
grooming, and more. Although some of these benefits may be available 
under a given plan, the enrollee must meet the criteria established to 
receive a particular SSBCI. In many instances, MA organizations have 
been found to use marketing to potentially misrepresent the benefit 
offered, oftentimes not presenting a clear picture of the benefit and 
limits on eligibility. In a May 2022 letter sent to Congress, the 
National Association of Insurance Commissioners (NAIC) detailed its 
findings from surveys with State departments of insurance, showing ``an 
increase in complaints from seniors about confusing, misleading and 
potentially deceptive advertising and marketing of these plans.'' \132\ 
Additionally, as discussed in prior rulemaking, CMS has seen an 
increase in complaints related to marketing, with more than twice as 
many complaints related to marketing in 2021 compared to 2020.\133\ As 
evidenced by complaints CMS has received, some of the current marketing 
of SSBCI has the potential to give beneficiaries the wrong impression 
by leading them to believe they can automatically receive all SSBCI 
available by enrolling in the plan.
---------------------------------------------------------------------------

    \132\ https://content.naic.org/sites/default/files/State%20MA%20Marketing%20Authority%20Senate%20Letter%20.pdf.
    \133\ See Medicare Program; Contract Year 2023 Policy and 
Technical Changes to the Medicare Advantage and Medicare 
Prescription Drug Benefit Programs; Policy and Regulatory Revisions 
in Response to the COVID-19 Public Health Emergency; Additional 
Policy and Regulatory Revisions in Response to the COVID-19 Public 
Health Emergency final rule (87 FR 27704, May 9, 2022).
---------------------------------------------------------------------------

    CMS has seen multiple examples of such misleading SSBCI 
advertisements among MA organizations. We have seen ads (for example, 
online, billboards, television) in which the MA organization presents 
an extensive list of benefits that are available, with this list being 
displayed prominently in large font and the SSBCI disclaimer appearing 
in very small font at the end of the ad. Often the disclaimer is brief, 
merely stating that the enrollee must have one of the identified 
chronic conditions in order to receive the benefit and that eligibility 
will be determined after enrollment, with no other information 
provided. A beneficiary reading such an ad could easily miss the small-
size disclaimer at the end because their attention is immediately drawn 
to the long, attractive list of appealing benefits prominently 
displayed in large, bold font. This type of SSBCI marketing is 
potentially misleading because, at face value, it might appear to a 
beneficiary that if they enroll in the advertised plan, they can 
receive all the highlighted benefits, without any question as to the 
beneficiary's eligibility, what an eligibility determination entails, 
or when eligibility is assessed.
    Based on our findings, we propose to expand the current required 
SSBCI disclaimer to include more specific requirements, with the 
intention of increasing transparency for beneficiaries and decreasing 
misleading advertising by MA organizations. Our proposed expansion of 
the SSBCI disclaimer would clarify what must occur for an enrollee to 
be eligible for the SSBCI. That is, per Sec.  422.102(f), the enrollee 
must first have the required chronic condition(s), then they must meet 
the definition of a ``chronically ill enrollee'' at Sec.  
422.102(f)(1)(i)(A), and finally the MA organization must determine 
that the enrollee is eligible to receive a particular SSBCI under the 
plan's coverage criteria. An MA organization designs and limits its 
SSBCI to target specific chronic conditions. An enrollee might meet the 
definition of ``chronically ill enrollee'' but nonetheless be 
ineligible for the MA organization's advertised SSBCI because they do 
not have the specific chronic condition(s) required for the particular 
SSBCI being advertised. Taking these important SSBCI eligibility 
requirements into account, our proposal amends the required SSBCI 
disclaimer content to clearly communicate the eligibility parameters to 
beneficiaries without misleading them. Specifically, at Sec.  
422.2267(e)(34), we are proposing three key changes to the regulation 
and two clarifications.
    First, we are proposing to redesignate current paragraph 
(e)(34)(ii) as paragraph (e)(34)(iii) and add a new paragraph 
(e)(34)(ii), in which we propose to require MA organizations offering 
SSBCI to list, in their SSBCI disclaimer, the chronic condition or 
conditions the enrollee must have to be eligible for the SSBCI offered 
by the MA organization. Per Sec.  422.102(f)(1)(i)(A), a ``chronically 
ill enrollee'' must have one or more comorbid and medically complex 
chronic conditions to be eligible for SSBCI. (See section IV.B. of this 
proposed rule for a more detailed discussion of the definition of 
``chronically ill enrollee'' and eligibility for SSBCI as part of our 
proposal to strengthen the requirements for how determinations are made 
that a particular item or service may be offered as SSBCI and 
eligibility determinations for SSBCI.) We are proposing that if the 
number of condition(s) is five or fewer, then the SSBCI disclaimer must 
list all condition(s), and if the number of conditions is more than 
five, then the SSBCI disclaimer must list the top five conditions, as 
determined by the MA organization. For this top five list, we are 
proposing it is the MA organization's discretion as to which five 
conditions to include. In making this determination, an MA organization 
might consider factors such as which conditions are more common or less 
obscure among the enrollee population the MA organization intends to 
serve. We believe that five is a reasonable number of conditions for 
the MA organization to list, so that a beneficiary may have an idea of 
the types of conditions that may be considered for eligibility for the 
SSBCI, without listing so many conditions that a beneficiary ignores 
the information.
    Second, we propose to revise newly redesignated paragraph 
(e)(34)(iii). Section 422.2267(e)(34)(ii) currently requires that MA 
organizations that offer SSBCI convey that not all members will 
qualify. We are proposing to expand this provision to require that the 
MA organization must convey in its SSBCI disclaimer that even if the 
enrollee has a listed chronic condition, the enrollee may not receive 
the benefit because coverage of the item or service depends on the 
enrollee being a ``chronically ill enrollee'' as defined in Sec.  
422.102(f)(1)(i)(A) and on the MA organization's coverage criteria for 
a specific SSBCI item or service required by Sec.  422.102(f)(4). 
Section 1852(a)(3)(D) of the Act and Sec.  422.102(f) provide that 
SSBCI are a permissible category of MA supplemental benefits only for a 
``chronically ill enrollee,'' as that term is specifically defined, and 
the item or service must have a reasonable expectation of improving or 
maintaining

[[Page 78551]]

the health or overall function of the chronically ill enrollee. In 
other words, just because an enrollee has one of the conditions listed 
in the SSBCI disclaimer, it does not automatically mean that they are 
eligible to receive the relevant SSBCI, as other criteria will also 
need to be met. In addition, a particular item or service must meet the 
requirements in Sec.  422.102(f)(1)(ii) to be offered as an SSBCI. 
Likewise, if the requirements we are proposing to add to Sec.  
422.102(f) for the item or service to be covered as an SSBCI are 
finalized, an MA organization would also need to meet those 
requirements to offer SSBCI (see section IV.B. of this proposed rule). 
Determinations on whether an MA organization may offer coverage of a 
particular item or service as an SSBCI will generally be made before an 
MA organization begins marketing or communicating the benefits, 
therefore, we are not including those requirements from the proposal in 
section IV.B. of this proposed rule in the proposed expansion of the 
SSBCI disclaimer. Our proposed newly redesignated Sec.  
422.2267(e)(34)(iii) refers to the eligibility requirements and MA 
organization responsibilities in Sec.  422.102(f) because we expect the 
MA organization to use this information in developing their SSBCI 
disclaimer to clearly convey that not all enrollees with the required 
condition(s) will be eligible to receive the SSBCI. Per Sec.  
422.102(f) currently and with the revisions proposed in section IV.B. 
of this proposed rule, MA organizations offering SSBCI must have 
written policies based on objective criteria for determining a 
chronically ill enrollee's eligibility to receive a particular SSBCI.
    The SSBCI disclaimer is model content, so each MA organization may 
tailor their disclaimer's language to convey that, in addition to 
having an eligible chronic condition, the enrollee must also meet other 
eligibility requirements (that is, the definition of a ``chronically 
ill enrollee'' and the coverage criteria of the MA organization for a 
specific SSBCI item or service) in order to receive the SSBCI. MA 
organizations would not need to specifically detail the additional 
eligibility requirements (such as the coverage criteria) in the 
disclaimer, but rather convey that coverage is dependent on additional 
factors, not only on the fact that the enrollee has an eligible chronic 
condition. For example, an MA organization might use the following 
language in its SSBCI disclaimer: ``Eligibility for this benefit cannot 
be guaranteed based solely on your condition. All applicable 
eligibility requirements must be met before the benefit is provided. 
For details, please contact us.'' We are providing this language as an 
example, as the SSBCI disclaimer is model content. Therefore, in 
developing their SSBCI disclaimer, MA organizations may deviate from 
the model so long as they accurately convey the required information 
and follow CMS's specified order of content, if specified (Sec.  
422.2267(c)). Currently, Sec.  422.2267(e)(34) does not specify the 
order of content for the SSBCI disclaimer, and we are not proposing to 
add such a requirement; however, MA organizations must accurately 
convey the required information listed in the proposed regulatory text 
at Sec.  422.2267(e)(34)(i) through (iii) in their SSBCI disclaimer. In 
addition, the disclaimer as drafted by the MA organization must be 
clear, accurate, and comply with all applicable rules on marketing, 
communications, and the standards for required materials and content at 
Sec.  422.2267(a).
    Third, at new proposed paragraph (e)(34)(iv), we are proposing 
specific formatting requirements for MA organizations' SSBCI 
disclaimers in ads, related to font and reading pace. These proposed 
formatting requirements would apply to SSBCI disclaimers in any type of 
ad, whether marketing or communications. For print ads, we reiterate 
our existing requirement under paragraph (a)(1) that MA organizations 
must display the disclaimer in 12-point font, Times New Roman or 
equivalent. For television, online, social media, radio, or other-
voice-based ads, we propose that MA organizations must either: (1) read 
the disclaimer at the same pace as the organization does for the phone 
number or other contact information mentioned in the ad, or (2) display 
the disclaimer in the same font size as the phone number or other 
contact information mentioned in the ad. For outdoor advertising 
(ODA)--which is defined in Sec.  422.2260 and includes billboards--we 
propose that MA organizations must display the disclaimer in the same 
font size as the phone number or other contact information appearing on 
the billboard or other ODA. The specific font and reading pace 
requirements for the SSBCI disclaimer in ads would appear at new 
proposed paragraphs (e)(34)(iv)(A) and (B).
    Finally, in revisiting the requirement at Sec.  422.2267(e)(34), we 
believe additional clarification of current requirements is 
appropriate. In the introductory language at paragraph (e)(34), we 
propose a minor addition to clarify that the SSBCI disclaimer must be 
used by MA organizations who offer CMS-approved SSBCI (as specified in 
Sec.  422.102(f)). Also, current paragraph (e)(34)(iii) (requiring the 
MA organization to include the SSBCI disclaimer in the material copy 
which mentions SSBCI benefits) would be revised and moved to new 
proposed paragraph (e)(34)(v). In this newly redesignated paragraph 
(e)(34)(v), we propose to clarify that MA organizations must include 
the SSBCI disclaimer in all marketing and communications materials that 
mention SSBCI. We also propose a slight adjustment in this paragraph to 
delete the redundant word ``benefits'' after ``SSBCI.''
    In summary, this proposal would expand upon the current SSBCI 
disclaimer requirements at Sec.  422.2267(e)(34) in several important 
ways. Requiring a more robust disclaimer with specific conditions 
listed would provide beneficiaries with more information to determine 
whether a particular plan with SSBCI is appropriate for their needs. We 
believe the revised disclaimer would diminish the ambiguity of when 
SSBCI are covered, thus reducing the potential for misleading 
information or misleading advertising. Our goal is to ensure that 
beneficiaries enrolling in MA choose a plan that best meets their 
health care needs. Transparency and precision in marketing and 
communications to current and potential enrollees is of utmost 
importance in this proposal.
    We are not scoring this provision in the COI section since we 
believe all burden impacts of this provision have already been 
accounted for under OMB control number 0938-1051 (CMS-10260). In 
addition, this provision is not expected to have any economic impact on 
the Medicare Trust Fund. We welcome comment on our proposed amendments 
to Sec.  422.2267(e)(34), and we thank commenters in advance for their 
feedback.

B. Agent Broker Compensation

    Pursuant to section 1851(j)(2)(D) of the Act, the Secretary has a 
statutory obligation to establish guidelines to ensure that the use of 
agent and broker compensation creates incentives for agents and brokers 
to enroll individuals in the Medicare Advantage (MA) plan that is 
intended to best meet beneficiaries' health care needs. In September 
2008, CMS published the ``Medicare Program; Revisions to the Medicare 
Advantage and Prescription Drug Benefit Programs'' interim final rule 
(73 FR 54226, 54237), our first regulation to establish requirements 
for agent and broker compensation, which included certain limitations 
on agent and broker compensation and other

[[Page 78552]]

safeguards. In that rulemaking, we noted that these reforms addressed 
concerns that the previously permitted compensation structure resulted 
in financial incentives for agents to only market and enroll 
beneficiaries in some plan products and not others due to larger 
commissions. These incentives potentially resulted in beneficiaries 
being directed towards plans that were not best suited to their needs.
    In that interim final rule, we noted that depending on the 
circumstances, agent and broker relationships can be problematic under 
the Federal anti-kickback statute if they involve, by way of example 
only, compensation in excess of fair market value, compensation 
structures tied to the health status of the beneficiary (for example, 
cherry-picking), or compensation that varies based on the attainment of 
certain enrollment targets. These and other fraud and abuse risks exist 
among the current agent and broker relationships. We note that the HHS 
Office of the Inspector General (OIG) advisory opinion process is 
available to parties seeking OIG's opinion as to the legality of a 
particular arrangement. Information about this process remains 
available on the OIG's website at http://oig.hhs.gov/compliance/advisory-opinions/process/.
    In subsequent years, agents and brokers have become an integral 
part of the industry, helping millions of Medicare beneficiaries to 
learn about and enroll in Medicare, MA plans, and PDPs by providing 
expert guidance on plan options in their local area, while assisting 
with everything from comparing costs and coverage to applying for 
financial assistance. CMS has also adopted updates to the agent and 
broker compensation requirements. It has become apparent that shifts in 
the MA industry and resulting changes in contract terms offered to 
agents and brokers for enrollment-related services and expenses, 
warrant further action to ensure CMS is complying with its statutory 
requirement to ensure compensation paid to agents and brokers 
incentivizes them to enroll individuals in the MA plan that is intended 
to best meet their health care needs.
    CMS has observed that the MA marketplace, nationwide, has become 
increasingly consolidated among a few large national parent 
organizations, which presumably have greater capital to expend on 
sales, marketing, and other incentives and bonus payments to agents and 
brokers than smaller market MA plans. This provides a greater 
opportunity for these larger organizations, either directly or through 
third parties, to use financial incentives outside and potentially in 
violation of the compensation cap set by CMS to encourage agents and 
brokers to enroll individuals in their plan over a competitor's plans. 
For example, CMS has seen web-based advertisements for agents and 
brokers to work with or sell particular plans where the agents and 
brokers are offered bonuses and perks (such as golf parties, trips, and 
extra cash) in exchange for enrollments. These payments, while being 
presented to the agents and brokers as innocuous bonuses or incentives, 
are implemented in such a way that allows the plan sponsor, in most 
cases, to credibly account for these anti-competitive payments as 
``administrative'' rather than ``compensation,'' and these payments are 
therefore not limited by the regulatory limits on compensation.
    CMS has also received complaints from a host of different 
organizations, including State partners, beneficiary advocacy 
organizations, and MA plans. A common thread to the complaints is that 
agents and brokers are being paid, typically through various purported 
administrative and other add-on payments, amounts that cumulatively 
exceed the maximum compensation allowed under the current regulations. 
Moreover, CMS has observed that such payments have created an 
environment, not dissimilar to what prompted CMS to engage in the 
original agent and broker compensation requirements in 2008, where the 
amounts being paid for activities that do not fall under the umbrella 
of ``compensation,'' are rapidly increasing. The result is that agents 
and brokers are presented with a new suite of questionable financial 
incentives that are likely to influence which MA plan an agent 
encourages a beneficiary to select during enrollment.
    We believe these financial incentives are contributing to behaviors 
that are driving an increase in MA marketing complaints received by CMS 
in recent years. As was discussed in our most recent Medicare Program 
Contract Year 2023 Rule, based on the most recent data available at 
that time, in 2021, CMS received more than twice the number of 
beneficiary complaints related to marketing of MA plans compared to 
2020, and for some states those numbers were much higher (87 FR 27704, 
27704-27902). These complaints are typically filed by enrollees or 
their caregivers with CMS through 1-800-Medicare or CMS regional 
offices, and generally allege that a beneficiary was encouraged or 
pressured to join an MA plan, and that once enrolled, the plan was not 
what the enrollee expected or what was explained to them when they 
spoke to an agent or broker.
    In the Contract Year 2024 Policy and Technical Changes to the 
Medicare Advantage Program, Medicare Prescription Drug Benefit Program, 
Medicare Cost Plan Program, and Programs of All-Inclusive Care for the 
Elderly final rule (88 FR 22234-22256), which appeared in the Federal 
Register on April 12, 2023, we discussed at length the rapidly 
increasing use of various marketing activities that typically result in 
beneficiaries being connected with agents and brokers to be enrolled in 
MA plans. Based on a number of complaints CMS reviewed, as well as 
audio recordings of sale calls, it appears that the increased marketing 
of 1-800 numbers to facilitate enrollment in Medicare Advantage plans 
through national television advertisements combined with the subsequent 
actions of agents and brokers when beneficiaries responded to those ads 
resulted in beneficiary confusion. In some instances, through listening 
to the call recording, CMS observed that when beneficiaries reached an 
agent or broker in response to these television ads, the beneficiary 
was often pressured by the agent or broker to continue with a plan 
enrollment even though the beneficiary was clearly confused.
    At the same time, these types of complaints have escalated at a 
pace that mirrors the growth of administrative or add-on payments, 
which we contend are being misused as a means to compensate over and 
above the CMS-set compensation limits on payment to agents and brokers. 
We also note that such payments appear to have no regional correlation, 
that is, they are generated across the country.\134\ CMS is concerned 
that when the value of administrative payments offered to agents and 
brokers reaches the levels that CMS has observed in recent years, these 
payments may distort the process that agents and brokers are expected 
to engage in when they assist beneficiaries in weighing the merits of 
different available plans. This distortion disadvantages beneficiaries 
who enroll in a plan based on the recommendation or encouragement of an 
agent or broker who may be influenced by how much or what kind of 
administrative payment the agent or broker expects to receive, rather 
than enrolling the beneficiary in a plan that is intended to best meet 
the beneficiary's health care needs.
---------------------------------------------------------------------------

    \134\ https://www.cms.gov/medicare/enrollment-renewal/managed-care-eligibility-enrollment/agent-broker-compensation.
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    Consequently, the rise in MA marketing complaints noted above

[[Page 78553]]

suggests that agents and brokers are being influenced to engage in high 
pressure tactics, which may in turn cause beneficiary confusion about 
their enrollment choices, to meet enrollment targets or earn 
``administrative payments'' in excess of their compensation payment. 
Although CMS's existing regulations already prohibit plans, and by 
extension their agents and brokers, from engaging in misleading or 
confusing communications with current or potential enrollees, 
additional limitations on payments to agents and brokers may be 
necessary to adequately address the rise in MA marketing complaints 
described here.
    Additionally, while the proposals described in this proposed rule 
are focused on payments and compensation made to agents and brokers, 
CMS is also concerned about how payments from MA plans to third party 
marketing organizations (TPMOs) may further influence or obscure the 
activities of agent and brokers. In particular, CMS is interested in 
the effect of payments made to Field Marketing Organizations (FMOs), 
which is a type of TPMO that employs agents and brokers to complete MA 
enrollment activities and may also conduct additional marketing 
activities on behalf of MA plans, such as lead generating and 
advertising. In fact, at the time of our first agent and broker 
compensation regulation, CMS expressed concern about amounts paid to 
FMOs for services that do not necessarily relate directly to 
enrollments completed by the agent or broker who deals directly with 
the beneficiary (73 FR 54239). Some examples of such services are 
training, material development, customer service, direct mail, and 
agent recruitment.
    As we noted in the preamble to the two interim final rules 
published in 2008 (73 FR 67406 and 73 FR 54226), all parties should be 
mindful that their compensation arrangements, including arrangements 
with FMOs and other similar type entities, must comply with the fraud 
and abuse laws, including the Federal anti-kickback statute. Beginning 
as early as 2010, an OIG report indicated that ``plan sponsors may have 
created financial incentives that could lead FMOs to encourage sales 
agents to enroll Medicare beneficiaries in plans that do not meet their 
health care needs. Because FMOs, like sales agents, may influence 
Medicare beneficiaries' enrollment in MA plans, CMS should issue 
additional regulations more clearly defining how and how much FMOs 
should be paid for their services.'' \135\ In the time since CMS first 
began to regulate agent and broker compensation, we have seen the FMO 
landscape change from mostly small regionally-based companies to a 
largely consolidated group of large national private equity-backed or 
publicly-traded companies.
---------------------------------------------------------------------------

    \135\ Levinson, Daniel R, BENEFICIARIES REMAIN VULNERABLE TO 
SALES AGENTS' MARKETING OF MEDICARE ADVANTAGE PLANS (March 2010); 
https://oig.hhs.gov/oei/reports/oei-05-09-00070.pdf.
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    We have also observed that, similar to the additional payments made 
to agents and brokers, there has been a steep increase in 
administrative payments made to FMOs by MA organizations. Likewise, CMS 
is concerned that these quick increases in fees have resulted in a 
``bidding war'' among plans to secure anti-competitive contract terms 
with FMOs and their affiliated agents and brokers. If left unaddressed, 
such bidding wars will continue to escalate with anti-competitive 
results, as smaller, local or regional plans that are unable to pay 
exorbitant fees to FMOs risk losing enrollees to larger, national plans 
who can. In addition to comments on our proposals here to help us 
develop additional regulatory action, we specifically request comments 
regarding how CMS can further ensure that payments made by MA plans to 
FMOs do not undercut the intended outcome of the agent and broker 
compensation proposals included in this proposed rule.
    Finally, in addition to the undue influence that perks, add-on 
payments, volume bonuses and other financial incentives paid by MA 
organizations to FMOs may have on agents and brokers, they also create 
a situation where there is an unlevel playing field among plans. 
Larger, national plans are more able to shoulder the added costs being 
paid as compared to smaller, more locally based MA plans. Furthermore, 
we have received reports that some larger FMOs are more likely to 
contract with national plans, negatively impacting competition. On July 
9, 2021, President Biden issued Executive Order (E.O.) 14036: 
``Promoting Competition in the American Economy'' (hereinafter referred 
to as E.O. 14036). E.O. 14036 describes the Administration's policy 
goals to promote a fair, open, competitive marketplace, and directs the 
U.S. Department of Health and Human Services to consider policies that 
ensure Americans can choose health insurance plans that meet their 
needs and compare plan offerings, furthering competition and consumer 
choice. The proposed regulatory changes included here also aim to deter 
anti-competitive practices engaged in by MA organizations, agents, 
brokers, and TPMOs that prevent beneficiaries from exercising fully 
informed choice and limit competition in the Medicare plan marketplace 
among Traditional Medicare, MA plans, and Medigap plans.
    In this proposed rule we are focusing on current payment structures 
among MA organizations, agents, brokers, and TMPOs, specifically FMOs, 
that may incentivize agents or brokers to emphasize or prioritize one 
plan over another, irrespective of the beneficiary's needs, leading to 
enrollment in a plan that does not best fit the beneficiary's needs and 
a distortion of the competitive process.
    As noted above, section 1851(j)(2)(D) and 1851(h)(4)(D) of the 
Social Security Act directs the Secretary to set limits on compensation 
rates 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,'' and that the 
Secretary ``shall only permit a Medicare Advantage organization (and 
the agents, brokers, and other third parties representing such 
organization) to conduct the activities described in subsection (j)(2) 
in accordance with the limitations established under such subsection.''
    Our regulations at Sec.  422.2274 set out limitations regarding 
various types of payments and compensation that may be paid to agents, 
brokers, and third parties who represent MA organizations. Each of 
these limitations is intended to better align the professional 
incentives of the agents and brokers with the interests of the Medicare 
beneficiaries they serve. Our regulations specify maximum compensation 
amounts that may be paid to agents and brokers for initial enrollment 
and renewals. The regulations also allow for payment to agents and 
brokers for administrative costs such as training and operational 
overhead, as long as the payments are at or below the value of those 
services in the marketplace. The maximum compensation for initial and 
renewal enrollments and the requirement that administrative payments 
reflect fair market value for actual administrative services are 
intended to ensure incentives for agents and brokers to help enroll 
beneficiaries into MA plans that best meet their health care needs.
    However, while CMS has affirmatively stated the types of allowable 
payment arrangements and the parameters for those payments in 
regulations at Sec.  422.2274, some recent studies suggest that MA 
plans offer

[[Page 78554]]

additional or alternative incentives to agents and brokers, often 
through third parties such as FMOs, to prioritize enrollment into some 
plans over others These incentives are both explicit (in the form of 
higher payments purportedly for administrative services) and implicit 
(such as in the case of passing on leads, as discussed below).\136\
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    \136\ The Commonwealth Fund, The Challenges of Choosing Medicare 
Coverage: Views from Insurance Brokers and Agents (Feb. 28, 2023); 
https://www.commonwealthfund.org/publications/2023/feb/challenges-choosing-medicare-coverage-views-insurance-brokers-agents.
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    As previously mentioned, we believe payments categorized by MA 
organizations as ``administrative expenses,'' paid by MA organizations 
to agents and brokers, have significantly outpaced the market rates for 
similar services provided in non-MA markets, such as Traditional 
Medicare with Medigap. This is based on information shared by insurance 
associations and focus groups and published in research articles by 
groups such as the Commonwealth Fund, which found that ``most brokers 
and agents in the focus groups recalled receiving higher commissions 
[total payments, including commission and administrative payments]--
sometimes much higher--for enrolling people in Medicare Advantage plans 
compared to Medigap.'' \137\
---------------------------------------------------------------------------

    \137\ The Commonwealth Fund, The Challenges of Choosing Medicare 
Coverage: Views from Insurance Brokers and Agents (Feb. 28, 2023); 
https://www.commonwealthfund.org/publications/2023/feb/challenges-choosing-medicare-coverage-views-insurance-brokers-agents.
---------------------------------------------------------------------------

    Similarly, some MA organizations are paying for things such as 
travel or operational overhead on a ``per enrollment'' basis, resulting 
in instances where an agent or broker may be paid multiple times for 
the same, one-time expense, if the agent incurring the expense happened 
to enroll more than one beneficiary into the plan making the payment. 
For example, an agent could be reimbursed for the cost of traveling to 
an event where that agent enrolls a beneficiary into an MA plan; if the 
cost of travel is paid on a ``per enrollment'' basis, the agent would 
be reimbursed the price of the trip multiplied by the number of 
enrollments the agent facilitated while at that event. In this 
scenario, whichever MA organization reimburses for travel at the 
highest rates would effectively be offering a higher commission per 
enrollee. This would inherently create a conflict of interest for the 
agent. As the Secretary must ``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,'' we believe this type of conflict must be addressed.
    We are also concerned that other activities undertaken by a TPMO, 
as a part of their business relationships with MA organizations, may 
influence the plan choices offered or how plan choices are presented by 
the agent or broker to a prospective enrollee. For example, we have 
learned of arrangements where an entity, such as an FMO, provides an MA 
organization with both marketing and brokering services. As part of the 
arrangement, the MA organization pays the FMO for leads generated by 
the FMO and then the leads are given directly to the FMO's agents 
instead of to the MA organization itself (or the MA organization's 
other contracted agents and brokers). When the FMO's agents then 
contact the individual and enroll the individual into an MA plan, the 
MA organization pays the agent or the FMO the enrollment compensation 
described in Sec.  422.2267(d), separate and apart from any referral 
fee paid to the FMO.
    While MA organizations that are engaged in these types of 
arrangements (such as paying FMOs for lead generating activities and 
marketing, then giving the leads to the FMO's agents and then paying 
compensation for that same enrollment) might argue that they are not 
intended to influence an agent or broker in determining which plan 
``best meets the health care needs of a beneficiary,'' we believe it is 
likely that these arrangements are having this effect. We believe that 
current contracts in place between FMOs and MA plans can trickle down 
to influence agents and brokers in enrolling more beneficiaries into 
those plans that also provide the agents and brokers with leads, 
regardless of the appropriateness of the plan is for the individual 
enrollees. In fact, FMOs could leverage these leads as a form of 
additional compensation by ``rewarding'' agents who enroll 
beneficiaries into a specific plan with additional leads. Therefore, 
CMS is required under section 1851(j)(2)(D) of the Social Security Act 
to establish guidelines that will bring the incentives for agents and 
brokers to enroll individuals in an MA plan that is intended to best 
meet their health care needs, in accordance with the statute.
    In this rule we are proposing to: (1) generally prohibit contract 
terms between MA organizations and agents, brokers, or other TMPOs that 
may interfere with the agent's or broker's ability to objectively 
assess and recommend the plan which best fits a beneficiary's health 
care needs; (2) set a single agent and broker compensation rate for all 
plans, while revising the scope of what is considered ``compensation;'' 
and (3) eliminate the regulatory framework which currently allows for 
separate payment to agents and brokers for administrative services. We 
are also proposing to make conforming edits to the agent broker 
compensation rules at Sec.  423.2274.
1. Limitation on Contract Terms
    We propose to add at Sec.  422.2274(c)(13) that, beginning in 
contract year 2025, MA organizations must ensure that no provision of a 
contract with an agent, broker, or TPMO has the direct or indirect 
effect of creating an incentive that would reasonably be expected to 
inhibit an agent's or broker's ability to objectively assess and 
recommend which plan best meets the health care needs of a beneficiary.
    Examples of the anti-competitive contract terms we intend to 
prohibit would include, for instance, those that specify renewal or 
other terms of a plan's contract with an agent broker or FMO contingent 
upon preferentially higher rates of enrollment; that make an MA 
organizations contract with an FMO or reimbursement rates for marketing 
activities contingent upon agents and brokers employed by the FMO 
meeting specified enrollment quotas; terms that provide for bonuses or 
additional payments from an MA organizations to an FMO with the 
explicit or implicit understanding that the money be passed on to 
agents or brokers based on enrollment volume in plans sponsored by that 
MA organizations; for an FMO to provide an agent or broker leads or 
other incentives based on previously enrolling beneficiaries into 
specific plans for a reason other than what best meets their health 
care needs.
    We believe this proposal gives plans further direction as to the 
types of incentives and outcomes that must be avoided without being 
overly prescriptive as to how the plans should structure these 
arrangements.
    We seek comment on this proposal.
2. Compensation Rates
    Under current regulations, compensation for agents and brokers 
(described at Sec.  422.2274(d)(2) and excluding administrative 
payments as described in Sec.  422.2274(e)) may be paid at a rate 
determined by the MA organization but may not exceed caps that CMS 
calculates each year, based on Fair Market Value (FMV) as specified at 
Sec.  422.2274(a). For example, the CY2023 national agent/broker FMV 
compensation caps are $601 for each

[[Page 78555]]

MA initial enrollment, $301 for a MA renewal enrollment, $92 for each 
Part D initial enrollment, and $46 for a Part D renewal enrollment.
    We have learned that overall payments to agents and brokers can 
vary significantly depending on which plan an individual enrolls in. We 
are concerned that the lack of a uniform compensation standard across 
plans can encourage the types of arrangements that provide strong 
financial incentives for agents and brokers to favor some plans over 
others and that these incentives could result in beneficiaries 
enrolling in plans that do not best fit their needs. To eliminate this 
potential for bias and ensure that CMS's regulations governing agent 
and broker compensation ensure that agents and brokers are incented to 
enroll individuals in the MA plan that is intended to best meet their 
health care needs, we are proposing to amend our regulations to require 
that all payments to agents or brokers that are tied to enrollment, 
related to an enrollment in an MA plan or product, or are for services 
conducted as part of the relationship associated with the enrollment 
into an MA plan or product must be included under compensation, as 
defined at Sec.  422.2274(a), including payments for activities 
previously excluded under paragraph (ii) of the definition of 
compensation at Sec.  422.2274(a), and are regulated by the 
compensation requirements of Sec.  422.2274(d)(1) through (3). We are 
also proposing to make conforming amendments to the regulations at 
Sec.  422.2274(e)(2) to clarify that all administrative payments are 
included in the calculation of enrollment-based compensation; this 
proposal is further discussed at section VI.B.3. of this proposed rule.
    Further, we are proposing to change the caps on compensation 
payments that are currently provided in Sec.  422.2274 to set rates 
that would be paid by all plans across the board. Under this proposal, 
agents and brokers would be paid the same amount either from the MA 
plan directly or by an FMO. We note that the proposal does not extend 
to payments for referrals as described at Sec.  422.2274(f); we believe 
the cap set on referral payments is sufficient to avoid the harms 
described above, and that a referral payment is often made in lieu of a 
compensation payment, and so it does not provide the same incentives as 
compensation payments.
    We believe that this approach would level the playing field for all 
plans represented by an agent or broker and promote competition. In 
addition, by explicitly saying that compensation extends to additional 
activities as a part of the relationship between the agent and the 
beneficiary, we reinforce CMS's longstanding understanding that the 
initial and renewal compensation amounts are based on the fact that 
additional work may be done by an agent or broker throughout the plan 
year, including fielding follow-up questions from the beneficiary or 
collecting additional information from them would enhance a 
beneficiary's ability to get the most out of their plan.
    MA organizations are currently required, under Sec.  
422.2274(c)(5), to report to CMS on an annual basis the specific rates 
and range of rates they will be paying independent agents and brokers. 
We propose to remove the reporting requirement at Sec.  422.2274(c)(5), 
as all agents and brokers would be paid the same compensation rate in a 
given year under our proposal.
    We seek comment on this proposal.
3. Administrative Payments
    As discussed above, CMS is proposing that all payments to an agent 
or broker relating to the initial enrollment, renewal, or services 
related to a plan product would be included in the definition of 
compensation. For consistency with that proposed policy, we are also 
proposing to remove the separate regulatory authority regarding 
``administrative payments'' currently at Sec.  422.2274(e)(1), and to 
amend Sec.  422.2274(e)(2) to clarify that the portion of an agent's 
compensation for an enrollment may be calculated and updated 
independently We believe this step is necessary to ensure that MA 
organizations cannot utilize the existing regulatory framework allowing 
for separate payment for administrative services to effectively 
circumvent the FMV caps on agent and broker compensation.
    For instance, we understand that many plans are paying agents and 
brokers for conducting health risk assessments (HRAs) and categorize 
these HRAs as an ``administrative service.'' We understand the fair 
market value of these services, when provided by non-medical staff, to 
be approximately $12.50 per hour and the time required to complete an 
HRA is intended to be no more than twenty minutes.\138\ However, we 
have been made aware of instances of an agent or broker enrolling a 
beneficiary into a plan, asking the enrollee to complete one of these 
short assessments, and then being compensated at rates of up to $125 
per HRA.\139\ Compensation at these levels is not consistent with 
market value. Moreover, a study funded by the CDC to provide guidance 
for best practices ``recommend that HRAs be tied closely with clinician 
practice and be collected electronically and incorporated into 
electronic/patient health records [. . .] agents/brokers lack the 
necessary health care knowledge, information technology capabilities, 
and provider relationships to link HRAs in the recommended way.'' \140\ 
For this reason, we believe that the HRAs completed by agents and 
brokers do not have the same value as those performed and interpreted 
by health care providers or in a health care setting.
---------------------------------------------------------------------------

    \138\ CDC, Interim Guidance for Health Risk Assessments and 
their Modes of Provision for Medicare Beneficiaries; https://www.cms.gov/files/document/healthriskassessmentscdcfinalpdf.
    \139\ https://4239296.fs1.hubspotusercontent-na1.net/hubfs/4239296/2023%20Plan%20Year%20Docs/2023%20HRA%20Instructions/Cigna%202023%20HRA%20Details.pdf.
    \140\ The Commonwealth Fund, The Challenges of Choosing Medicare 
Coverage: Views from Insurance Brokers and Agents (Feb. 28, 2023); 
https://www.commonwealthfund.org/publications/2023/feb/challenges-choosing-medicare-coverage-views-insurance-brokers-agents;cf. 
Guidance on Development of Health Risk Assessment as Part of the 
Annual Wellness Visit for Medicare Beneficiaries--(section 4103 of 
the Patient Protection and Affordable Care Act) https://www.cdc.gov/policy/paeo/hra/hraawvguidancereportfinal.pdf.
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    Similarly, according to recent market surveys and information 
gleaned from oversight activities, payments purportedly for training 
and testing and other administrative tasks for agents and brokers 
selling some MA plans seem to significantly outpace payments for 
similar activities made by other MA plans, as well as payments for 
similar activities undertaken by insurance agents and brokers in other 
industries. The higher overall cost as compared to other industries, 
combined with the otherwise inexplicable difference in payments for 
administrative activities for some MA organizations compared to others, 
further points to the payment for these administrative activities being 
used as a mechanism to effectively pay agents and brokers enrollment 
compensation amounts in excess of the limits specified at Sec.  
422.2274(a) and (d).
    By eliminating separate payment for administrative services, CMS 
expects that this proposal would eliminate a significant method which 
some plans may have used to circumvent the regulatory limits on 
enrollment compensation. Furthermore, we believe ensuring a fixed 
payment rate for agents will result in compensation greater than what 
is currently provided through typical contractual arrangements with 
FMOs, as there would no longer be a

[[Page 78556]]

range of compensation rates at which the MA organizations could pay for 
agents and brokers' services. While our proposal would prohibit 
separate administrative payments, as described below, we propose to 
adjust the FMV for compensation to take into account costs for certain 
appropriate administrative activities.
    We recognize that this approach could have some drawbacks, 
particularly as this policy would, in effect, leave agents and brokers 
unable to directly recoup administrative costs such as overhead or lead 
purchasing from its compensation from Medicare health and drug plans, 
unless the agent has a certain volume of business. For instance, the 
cost of a customer relationship management (CRM) system (the software 
used to connect and log calls to potential enrollees) is about $50 per 
month. This expense would require at least one enrollment commission 
per year to cover these costs, whereas it is currently permissible for 
an MA organization to pay for these costs directly, leaving the entire 
commission as income for the agent or broker. However, given the high 
volume of enrollees that use an agent or broker for enrollment 
services, we do not believe there to be a large risk of agents or 
brokers failing to cross that initial threshold to recoup their 
administrative costs.
    We considered an alternate policy proposal wherein we would 
maintain our current definitions of compensation and administrative 
payments but would remove the option for a plan to make administrative 
payments based on enrollment, as currently codified at Sec.  
422.2274(e)(2). We considered instead requiring that administrative 
payments be made a maximum of one time per administrative cost, per 
agent or broker. We considered the argument that these expenses, such 
as payments for training and testing, or nonmonetary compensation such 
as leads, should be paid at their FMV and not as a factor of overall 
enrollment because the value of such administrative tasks is usually a 
fixed rate, regardless of how many enrollments are ultimately generated 
by the agent or broker engaged in these administrative tasks.
    We also considered whether, under this alternative policy approach, 
it would be best to require that each administrative expense be 
reimbursed at the same rate by each contracting MA organization as a 
means of encouraging agents and brokers to represent multiple plans at 
any given time. However, this alternative policy would, of necessity, 
be comparatively prescriptive and could present challenges for all 
parties as it relates to the tracking these expenses. We believe our 
proposal to include all payments to an agent or broker under the 
definition of compensation is likely to reduce the ability of plans 
and/or TPMOs to circumvent the maximum compensation rates defined by 
CMS via the annual FMV determination.
    We seek comment on this proposal.
    We are also proposing to increase the compensation rate described 
at Sec.  422.2274(a) to add certain appropriate administrative costs. 
In particular, we believe that the administrative cost of the licensing 
and training and testing requirements at Sec.  422.2274(b), and the 
recording requirements at Sec.  422.2274(g)(2)(ii), may warrant an 
increase in the rate of compensation given the significant and 
predictable cost of these mandatory activities.\141\ Based on our fair 
market value analysis, we believe these activities would warrant 
increasing the base compensation rate by $31,\142\ and be updated 
annually as part of the scheduled compensation rate update described at 
Sec.  422.2274(a). Therefore, we propose to add, beginning in 2025, 
that FMV will be increased by $31 to account for administrative 
payments included under the compensation rate, and to be updated 
annually in compliance with the requirements for FMV updates.
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    \141\ https://www.cms.gov/medicare/enrollment-renewal/managed-care-eligibility-enrollment/agent-broker-compenstation.
    \142\ Our calculations arriving at this number are further 
discussed in the COI in section X.B.10 titled ICRs Regarding Agent 
Broker Compensation (Sec.  422.2274).
---------------------------------------------------------------------------

    We believe it is necessary to increase the rate for compensation by 
$31, based on the estimated costs for training, testing, and call 
recording that would need to be covered by this single enrollment-based 
payment. We are proposing to begin with a one-time $31 increase, 
including various locality-specific adjustments, with annual FMV 
updates to this amount as described by the regulation, including 
``adding the current year FMV and the product of the current year FMV 
and MA Growth Percentage for aged and disabled beneficiaries.'' We note 
that we are not proposing a proportionate increase to compensation for 
renewals and we considered this in determining the amount by which we 
are proposing to increase the rate for compensation for enrollments.
    We seek comment on our proposal to increase the rate for 
compensation to account for necessary administrative costs that would 
be incorporated into this rate under our previous proposal. 
Specifically, CMS is requesting comment on the administrative costs 
that should be considered, and how else we might determine their value, 
as we consider the future of the compensation structure.
4. Agent Broker Compensation for Part D Plans
    Finally, we also are proposing to apply each of the proposals 
described above to the sale of PDP plans by agents and brokers, as 
codified at Sec.  423.2274.
    Pursuant to sections 1851(j)(2)(D) and 1860D-4(l) of the Act, the 
Secretary has a statutory obligation to establish guidelines to ensure 
that the use of agent and broker compensation creates incentives for 
agents and brokers to enroll individuals in the Medicare Advantage (MA) 
and Part D prescription drug plans that are intended to best meet 
beneficiaries' health care needs.
    Because the same agents and brokers are often licensed to sell both 
MA plans and PDPs, we believe it is necessary under our statutory 
authority to apply the same compensation rules to the sale of both MA 
plans and PDPs in order to ensure that both plan types are being held 
to the same standards and are on a `level playing field' when it comes 
to incentives faced by agents and brokers. This includes increasing the 
FMV rate compensation rate by $31.
    We also believe it is necessary to extend these regulations to the 
sale of PDPs to avoid shifting the incentives discussed at length 
above, such as the incentive for agents to favor one plan over another 
based upon bonuses or other payments that are not currently accounted 
for under the definition of ``compensation.'' If conforming changes are 
not made to the sale of PDP plans, the PDP plans may have an unfair 
advantage in that they have the opportunity to offer additional 
payments and perks to FMOs and agents, while MA plan sponsors are 
limited by the policies proposed above. Therefore, for the same reasons 
discussed above regarding proposed changes to Sec.  422.2274, we 
propose to make conforming amendments to Sec.  423.2274.
    We seek comment on this proposal, and specifically whether and to 
what extend modifications to these proposals should be made to account 
for differences between MA and Part D plan types.

VII. Medicare Advantage/Part C and Part D Prescription Drug Plan 
Quality Rating System

A. Introduction

    CMS develops and publicly posts a 5-star rating system for Medicare 
Advantage (MA)/Part C and Part D plans

[[Page 78557]]

as part of its responsibility to disseminate comparative information, 
including information about quality, to beneficiaries under sections 
1851(d) and 1860D-1(c) of the Act and based on the collection of 
different types of quality data under section 1852(e) of the Act. The 
Part C and Part D Star Ratings system is used to determine quality 
bonus payment (QBP) ratings for MA plans under section 1853(o) of the 
Act and the amount of MA beneficiary rebates under section 1854(b) of 
the Act. Cost plans under section 1876 of the Act are also included in 
the MA and Part D Star Ratings system, as codified at Sec.  417.472(k). 
We use multiple data sources to measure quality and performance of 
contracts, such as CMS administrative data, surveys of enrollees, 
information provided directly from health and drug plans, and data 
collected by CMS contractors. Various regulations, including Sec. Sec.  
417.472(j) and (k), 422.152(b), 423.153(c), and 423.156, require plans 
to report on quality improvement and quality assurance and to provide 
data which help beneficiaries compare plans. The methodology for the 
Star Ratings system for the MA and Part D programs is codified at 
Sec. Sec.  422.160 through 422.166 and 423.180 through 423.186, 
respectively, and we have specified the measures used in setting Star 
Ratings through rulemaking. In addition, the cost plan regulation at 
Sec.  417.472(k) requires cost contracts to be subject to the parts 422 
and 423 Medicare Advantage and Part D Prescription Drug Program Quality 
Rating System. (83 FR 16526-27) As a result, the proposals here would 
apply to the quality ratings for MA plans, cost plans, and Part D 
plans. We generally use ``Part C'' to refer to the quality measures and 
ratings system that applies to MA plans and cost plans.
    We have continued to identify enhancements to the Star Ratings 
program to ensure it is aligned with the CMS Quality Strategy as that 
Strategy evolves over time. To support the CMS National Quality 
Strategy, CMS is moving towards a building-block approach to streamline 
quality measures across CMS quality and value-based care programs. 
Across our programs, where applicable, we are considering including the 
Universal Foundation \143\ of quality measures, which is a set of 
measures that are aligned across CMS programs. CMS is committed to 
aligning a set of measures across all our quality and value-based care 
programs and ensuring we measure quality across the entire care 
continuum in a way that promotes the best, safest, and most equitable 
care for all individuals. Improving alignment of measures across 
Federal programs and with private payers will reduce provider burden 
while also improving the effectiveness and comparability of measures. 
The Universal Foundation of quality measures will focus provider 
attention, reduce burden, identify disparities in care, prioritize 
development of interoperable, digital quality measures, allow for 
cross-comparisons across programs, and help identify measurement gaps. 
The Universal Foundation is a building block to which programs will add 
additional aligned or program-specific measures. The set of measures 
will evolve over time to meet the needs of individuals served across 
CMS programs. We have submitted the Initiation and Engagement of 
Substance Use Disorder Treatment (IET) measure (Part C) (a Universal 
Foundation measure) to the 2023 Measures under Consideration process 
for review by the Measures Application Partnership prior to proposing 
use of that measure in the Star Ratings system through future 
rulemaking to align with the Universal Foundation. We also note that, 
beginning with measurement year 2023, Part C contracts are beginning to 
report to CMS additional measures that are part of the Universal 
Foundation, such as Adult Immunization Status, Depression Screening and 
Follow-Up for Adolescents and Adults, and Social Need Screening and 
Intervention, for the display page. We have previously solicited 
feedback regarding potentially proposing these measures as Star Ratings 
in the future through both the Advance Notice of Methodological Changes 
for Calendar Year (CY) 2023 for Medicare Advantage (MA) Capitation 
Rates and Part C and Part D Payment Policies and the Advance Notice of 
Methodological Changes for Calendar Year (CY) 2024 for Medicare 
Advantage (MA) Capitation Rates and Part C and Part D Payment Policies. 
We intend to submit these measures to the Measures Under Consideration 
process for review by the Measures Application Partnership in the 
future and propose them through future rulemaking as additional Star 
Ratings measures. The remaining measures that are part of the Universal 
Foundation are already part of the current Part C and D Star Ratings 
program.
---------------------------------------------------------------------------

    \143\ https://www.nejm.org/doi/full/10.1056/NEJMp2215539.
---------------------------------------------------------------------------

    In this proposed rule, we are also proposing to update the 
Medication Therapy Management (MTM) Program Completion Rate for 
Comprehensive Medication Review (CMR) measure (Part D).
    We are also proposing the following methodological enhancements, 
clarifications, and operational updates:
    <bullet> Revise the process for identifying data completeness 
issues and calculating scaled reductions for the Part C appeals 
measures.
    <bullet> Update how the CAI and HEI reward are calculated in the 
case of contract consolidations.
    <bullet> Revise an aspect of the QBP appeals process.
    <bullet> Add that a sponsor may request CMS review of its 
contract's administrative claims data used for the Part D Patient 
Safety measures no later than the annual deadline set by CMS for the 
applicable Star Ratings year.
    Unless otherwise stated, proposed changes would apply (that is, 
data would be collected and performance measured) for the 2025 
measurement period and the 2027 Star Ratings.

B. Adding, Updating, and Removing Measures (Sec. Sec.  422.164 and 
423.184)

    The regulations at Sec. Sec.  422.164 and 423.184 specify the 
criteria and procedures for adding, updating, and removing measures for 
the Star Ratings program. In the ``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'' final rule which appeared in the 
Federal Register on April 16, 2018 (83 FR 16532) (hereinafter referred 
to as the April 2018 final rule), we stated we are committed to 
continuing to improve the Part C and Part D Star Ratings system and 
anticipated that over time measures would be added, updated, and 
removed. We also specified at Sec. Sec.  422.164(d) and 423.184(d) 
rules for measure updates based on whether they are substantive or non-
substantive. The regulations, at paragraph (d)(1), list examples of 
non-substantive updates. See also 83 FR 16534-37. Due to the regular 
updates and revisions made to measures, CMS does not codify a list in 
regulation text of the measures (and their specifications) adopted for 
the Part C and Part D Star Ratings program. CMS lists the measures used 
for the Star Ratings each year in the Medicare Part C & D Star Ratings 
Technical Notes or similar guidance issued with publication of the Star 
Ratings. In this rule, CMS is proposing a measure change to the Star 
Ratings program and an updated methodology for calculating scaled 
reductions of the Part C appeals measures for performance periods 
beginning on or after January 1, 2025, unless noted otherwise.

[[Page 78558]]

    We are committed to continuing to improve the Part C and Part D 
Star Ratings system by focusing on improving clinical and other health 
outcomes. Consistent with Sec. Sec.  422.164(c)(1) and 423.184(c)(1), 
we continue to review measures that are nationally endorsed and in 
alignment with the private sector. For example, we regularly review 
measures developed by NCQA and PQA.
1. Proposed Measure Update
a. Medication Therapy Management (MTM) Program Completion Rate for 
Comprehensive Medication Review (CMR) (Part D)
    Section 1860D-4(c)(2) of the Act requires all Part D sponsors to 
have an MTM program designed to assure, with respect to targeted 
beneficiaries, that covered Part D drugs are appropriately used to 
optimize therapeutic outcomes through improved medication use, and to 
reduce the risk of adverse events, including adverse drug interactions. 
Section 1860D-4(c)(2)(A)(ii) of the Act requires Part D sponsors to 
target those Part D enrollees who have multiple chronic diseases, are 
taking multiple Part D drugs, and are likely to meet a cost threshold 
for covered Part D drugs established by the Secretary. CMS codified the 
MTM targeting criteria at Sec.  423.153(d)(2).
    CMS also uses the MTM Program Completion Rate for CMR Star Rating 
measure, which is defined as the percent of MTM program enrollees who 
received a CMR during the reporting period. The Part D MTM Program 
Completion Rate for CMR measure shows how many members in a plan's MTM 
program had an assessment from their plan by a pharmacist or other 
health professional to help them manage their medications. As part of 
the completion of a CMR, a Part D enrollee receives a written summary 
of the discussion in CMS's Standardized Format, including an action 
plan that recommends what the member can do to better understand and 
use their medications.\144\
---------------------------------------------------------------------------

    \144\ The Medicare Part C & D Star Ratings Technical Notes 
provide details on existing measures and are available at: https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovgenin/performancedata.
---------------------------------------------------------------------------

    In the December 27, 2022 proposed rule, ``Medicare Program; 
Contract Year 2024 Policy and Technical Changes to the Medicare 
Advantage Program, Medicare Prescription Drug Benefit Program, Medicare 
Cost Plan Program, Medicare Parts A, B, C, and D Overpayment Provisions 
of the Affordable Care Act and Programs of All-Inclusive Care for the 
Elderly; Health Information Technology Standards and Implementation 
Specifications'' (87 FR 79452), hereafter referred to as the December 
2022 proposed rule, CMS proposed changes to the MTM program targeting 
criteria, including: (1) requiring plan sponsors to target all core 
chronic diseases identified by CMS, codifying the current 9 core 
chronic diseases \145\ in regulation, and adding HIV/AIDS for a total 
of 10 core chronic diseases; (2) lowering the maximum number of covered 
Part D drugs a sponsor may require from 8 to 5 drugs and requiring 
sponsors to include all Part D maintenance drugs in their targeting 
criteria; and (3) revising the methodology for calculating the cost 
threshold ($4,935 in 2023) to be commensurate with the average annual 
cost of 5 generic drugs ($1,004 in 2020). We estimated that the 
proposed changes would increase the number and percentage of Part D 
enrollees eligible for MTM from 4.5 million (9 percent) to 11.4 million 
(23 percent).
---------------------------------------------------------------------------

    \145\ The current core chronic diseases are diabetes*, 
hypertension*, dyslipidemia*, chronic congestive heart failure*, 
Alzheimer's disease, end stage renal disease (ESRD), respiratory 
disease (including asthma*, chronic obstructive pulmonary disease 
(COPD), and other chronic lung disorders), bone disease-arthritis 
(osteoporosis, osteoarthritis, and rheumatoid arthritis), and mental 
health (including depression, schizophrenia, bipolar disorder, and 
other chronic/disabling mental health conditions). Enumerated in 
statute (*).
---------------------------------------------------------------------------

    As noted in the April 12, 2023 final rule, ``Medicare Program; 
Contract Year 2024 Policy and Technical Changes to the Medicare 
Advantage Program, Medicare Prescription Drug Benefit Program, Medicare 
Cost Plan Program, and Programs of All-Inclusive Care for the Elderly'' 
(88 FR 22120), hereafter referred to as the April 2023 final rule, we 
did not address comments received on the provisions of the proposed 
rule that were not finalized in that rule, such as the proposed MTM 
program targeting criteria changes, and stated that they would be 
addressed at a later time, in a subsequent rulemaking document, as 
appropriate. If those proposed changes were to be finalized, the number 
of Part D enrollees eligible for MTM programs would increase, and the 
denominator of the MTM Program Completion Rate for CMR Measure would 
expand accordingly; therefore such changes in the targeting criteria 
would be substantive updates to the Star Rating measure per Sec.  
423.184(d)(2). Specifically, these proposed changes to the targeting 
criteria would not update the actual measure specifications but would 
meaningfully impact the number of Part D enrollees eligible for MTM 
services from 9 percent to an estimated 23 percent and, thus, 
substantially increase the number of enrollees included in the 
denominator of the MTM Program Completion Rate for CMR Measure, if 
finalized.
    Accordingly, if the changes to eligibility for the MTM program in 
the December 2022 proposed rule (described above) are finalized in a 
future rule, in this proposed rule CMS proposes to move the MTM Program 
Completion Rate for CMR Star Rating measure to a display measure for at 
least 2 years due to substantive measure updates. For example, if such 
MTM program eligibility changes are finalized for CY 2025, our proposal 
in this rule would move the measure to the display page for at least 2 
years prior to using the updated measure to calculate and assign Star 
Ratings. There would be no legacy measure to calculate while the 
updated measure using the same measure specifications is on the display 
page because the MTM-eligible denominator population would have 
meaningfully increased due to changes in the program requirements. 
Therefore, the measure would be removed from the Star Ratings entirely 
for the 2025 and 2026 measurement years and would return to the Star 
Ratings program no earlier than the 2027 measurement year for the 2029 
Star Ratings. CMS does not anticipate any additional burden associated 
with the measure update, as burden tied to the changes in the MTM 
eligibility criteria is already considered in estimates for the 
December 2022 proposed rule.
    If the changes to eligibility for MTM programs described above and 
in the December 2022 proposed rule are not finalized, CMS would not 
make any substantive changes to the MTM Program Completion Rate for CMR 
measure--that is, we would also not finalize the proposal in this rule 
to update the Star Rating measure.
    Table GB1 summarizes the updated MTM Program Completion Rate for 
CMR measure addressed in this proposed rule. The measure description 
listed in this table is a high-level description. The annual 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. The 
annual Star Ratings are produced in the fall of the prior year. For 
example, the 2027 Stars Ratings are produced in the

[[Page 78559]]

fall of 2026. If a measurement period is listed as ``the calendar year 
2 years prior to the Star Ratings year'' and the Star Ratings year is 
2027, the measurement period is referencing the January 1, 2025, to 
December 31, 2025, period.
[GRAPHIC] [TIFF OMITTED] TP15NO23.019

C. Data Integrity (Sec. Sec.  422.164(g) and 423.184(g))

    We currently have rules specified at Sec. Sec.  422.164(g) and 
423.184(g) to reduce a measure rating when CMS determines that a 
contract's measure data are incomplete, inaccurate, or biased. For the 
Part C appeals measures, we have statistical criteria to reduce a 
contract's appeals measures for missing Independent Review Entity (IRE) 
data. Specifically, these criteria allow us to use scaled reductions 
for the appeals measures to account for the degree to which the data 
are missing. See 83 FR 16562-16564. The data underlying a measure score 
and Star Rating must be complete, accurate, and unbiased for them to be 
useful for the purposes we have codified at Sec. Sec.  422.160(b) and 
423.180(b). In the April 2018 final rule (83 FR 16562), CMS codified at 
Sec. Sec.  422.164(g)(1)(iii) and 423.184(g)(1)(ii) a policy to make 
scaled reductions to the Part C and D appeals measures' Star Ratings 
when the relevant IRE data are not complete based on the Timeliness 
Monitoring Project (TMP) or audit information. As provided under Sec.  
423.184(e)(1)(ii), we removed the two Part D appeals measures (Appeals 
Auto-Forward and Appeals Upheld) beginning with the 2020 measurement 
year and 2022 Star Ratings in the 2020 Rate Announcement \146\ due to 
low statistical reliability; thus, the scaled reductions are no longer 
applicable to the Part D appeals measures. However, we made no changes 
to the scaled reductions used with the Part C appeals measures, Plan 
Makes Timely Decisions about Appeals and Reviewing Appeals Decisions, 
because there were no similar statistical reliability issues with those 
measures. Therefore, these two Part C measures continue to be subject 
to the scaled reductions authorized at Sec.  422.164(g)(1)(iii) based 
on TMP or audit information.
---------------------------------------------------------------------------

    \146\ Announcement of Calendar Year (CY) 2020 Medicare Advantage 
Capitation Rates and Medicare Advantage and Part D Payment Policies 
and Final Call Letter (cms.gov).
---------------------------------------------------------------------------

    Because the Part D appeals measures are no longer part of the Star 
Ratings, we are proposing to remove and reserve the paragraphs at 
Sec. Sec.  422.164(g)(1)(iii)(B), (F), and (I) and 423.184(g)(1)(ii). 
Paragraphs (g)(1)(iii)(B), (F), and (I) of Sec.  422.164 all address 
how the error rate on the TMP for the Part D appeals measures had been 
used in calculating scaled reductions for MA-PDs that are measured on 
both Part C and Part D appeals. Currently, Sec.  423.184(g)(1)(ii) 
addresses the scaled reductions for Part D appeals measures based on 
the TMP. Given the removal of the Part D appeals measures from the Star 
Ratings, these provisions are moot. We propose to reserve the relevant 
paragraphs to avoid the risk that redesignating the remaining 
paragraphs would cause unintended consequences with any existing 
references to these provisions.
    The completeness of the IRE data is critical to support fair and 
accurate measurement of the two Part C appeals measures. Since the 2019 
Star Ratings we have used data from the TMP, which uses the Part C 
audit protocols for collecting Organization Determinations, Appeals and 
Grievances (ODAG) universes, to determine whether the IRE data used to 
calculate the Part C appeals measures are complete. As described at 
Sec.  422.164(g)(1)(iii), we use scaled reductions to account for the 
degree to which the IRE data are missing. The current regulations 
describe how scaled reductions are based on the TMP. However, due to a 
change in the Part C audit protocols for collecting universes of ODAG 
data, we are proposing to modify, and in one case reserve, paragraphs 
(g)(1)(iii) introductory text, (g)(1)(iii)(A)(1) and (2), 
(g)(1)(iii)(H) and (J), (g)(1)(iii)(K)(2), and (g)(1)(iii)(O) to change 
how we address reductions in the Star Ratings for Part C appeals 
measures using different data. We are proposing to revise the 
introductory language in Sec.  422.164(g)(1)(iii) to remove references 
to the timeliness monitoring study and audits and replace them with 
references to data from MA organizations, the IRE or CMS administrative 
sources. In addition, our proposed revisions to this paragraph include 
minor grammatical changes to the verb tense. We are also proposing to 
modify Sec.  422.164(g)(1)(iii)(A) to use data from MA organizations, 
the IRE, or CMS administrative sources to determine the completeness of 
the data at the IRE for the Part C appeals measures starting with the 
2025 measurement year and the 2027 Star Ratings. Currently, data 
collected through Sec.  422.516(a) could be used to confirm the 
completeness of the IRE data; however, data collected from MA 
organizations through other mechanisms in addition to data from the IRE 
or CMS administrative sources could be used in the future. The proposed 
amendment to Sec.  422.164(g)(1)(iii)(A) is not intended to limit the 
data CMS uses to conduct analyses of the completeness of the IRE data 
in order to adapt to changing information submissions that could be 
reliably used for the same purpose in the future. The revisions 
proposed for the other paragraphs provide for a new calculation to 
implement scaled reductions for the Part C appeals

[[Page 78560]]

measures for specific data integrity issues.
    Part C contracts are required to send partially favorable 
(partially adverse) and unfavorable (adverse) decisions to the IRE 
within applicable timeframes as specified at Sec.  422.590(a) through 
(e). In order for the existing Part C appeals measures (Plan Makes 
Timely Decisions about Appeals and Reviewing Appeals Decisions) to 
accurately reflect plan performances in those areas, the appeals must 
be sent to the IRE because the data source for these measures is based 
on the data that have been submitted to the IRE. Currently, through the 
Part C Reporting Requirements as set forth at Sec.  422.516(a), CMS 
collects information at the contract level from MA organizations about 
the number of partially favorable reconsiderations (that is, the number 
of partially favorable claims and the number of partially favorable 
service requests by enrollees/representatives and non-contract 
providers) and unfavorable reconsiderations (that is, the number of 
partially favorable claims and the number of partially favorable 
service requests by enrollees/representatives and non-contract 
providers) over a calendar year.\147\ These data are subject to data 
validation requirements, in accordance with specifications developed by 
CMS, under Sec.  422.516(g), to confirm that they are reliable, valid, 
complete, and comparable. CMS would use this information to determine 
the total number of cases that should have been sent to the IRE over 
the measurement year (that is, number of partially favorable 
reconsiderations + number of unfavorable reconsiderations) to compare 
to information from the IRE about submissions received from each MA 
organization. In the future, CMS may use detailed beneficiary-level 
data collected on the number of partially favorable reconsiderations 
and the number of unfavorable reconsiderations if such more detailed 
information is collected under CMS's statutory and regulatory authority 
to require reporting and data submission from MA organizations (such as 
the reporting requirements in Sec. Sec.  422.504(f)(2) and/or 
422.516(a)).
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    \147\ Elements E through L in Subsection #4 on page 15 at 
https://www.cms.gov/files/document/cy2023-part_technical-
specifications-222023.pdf are currently used to identify favorable 
and partially favorable reconsiderations.
---------------------------------------------------------------------------

    To determine if a contract may be subject to a potential reduction 
for the Part C appeals measures' Star Ratings, CMS is proposing to 
compare the total number of appeals received by the IRE, including all 
appeals regardless of their disposition (for example, including appeals 
that are dismissed for reasons other than the plan's agreement to cover 
the disputed services and withdrawn appeals), to the total number of 
appeals that were supposed to go to the IRE. The total number of 
appeals that were supposed to be sent to the IRE would be based on the 
sum of the number of partially favorable reconsiderations and the 
number of unfavorable reconsiderations from the Part C Reporting 
Requirements during the measurement year (January 1 to December 31st). 
We propose to modify the calculation of the error rate at Sec.  
422.164(g)(1)(iii)(H) by taking 1 minus the quotient of the total 
number of cases received by the IRE and the total number of cases that 
were supposed to be sent to the IRE (Equation 1). The total number of 
appeals that were supposed to be sent to the IRE in Equation 2 would be 
calculated from the data described in the proposed revisions to Sec.  
422.164(g)(1)(iii)(A):
[GRAPHIC] [TIFF OMITTED] TP15NO23.000

[GRAPHIC] [TIFF OMITTED] TP15NO23.001

    We propose to remove and reserve Sec.  422.164(g)(1)(iii)(J) 
because we intend to calculate the Part C error rate based on 12 months 
rather than a projected number of cases not forwarded to the IRE in a 
3-month period as has historically been done with the TMP data. 
Currently, a contract is subject to a possible reduction due to lack of 
IRE data completeness if the calculated error rate is 20 percent or 
more and the projected number of cases not forwarded to the IRE is at 
least 10 in a 3-month period as described at Sec.  
422.164(g)(1)(iii)(K). We are proposing to modify Sec.  
422.164(g)(1)(iii)(K)(2) so that the number of cases not forwarded to 
the IRE is at least 10 for the measurement year (that is, total number 
of cases that should have been forwarded to the IRE minus the total 
number of cases received by the IRE is at least 10 for the measurement 
year). The requirement for a minimum number of cases is needed to 
address statistical concerns with precision and small numbers. If a 
contract meets only one of the conditions specified in paragraph (K), 
the contract would not be subject to reductions for IRE data 
completeness issues.
    We are proposing at Sec.  422.164(g)(1)(iii)(O) that the two Part C 
appeals measure Star Ratings be reduced to 1 star if CMS does not have 
accurate, complete, and unbiased data to validate the completeness of 
the Part C appeals measures. For example, the data collected in the 
Part C Reporting Requirements go through a data validation process 
(Sec.  422.516(a)). CMS has developed and implemented data validation 
standards to ensure that data reported by sponsoring organizations 
pursuant to Sec.  422.516 satisfy the regulatory obligation. If these 
data are used to validate the completeness of the IRE data used to 
calculate the Part C appeals measures, we would reduce the two Part C 
appeals measure Star Ratings to 1 star if a contract fails data 
validation of the applicable Part C Reporting Requirements sections for 
reconsiderations by not scoring at least 95 percent or is not compliant 
with data validation standards (which includes sub-standards as 
applicable), since we cannot confirm the data used for the Part C 
appeals measures.
    We also propose to update Sec.  422.164(g)(1)(iii)(A)(2) to change 
the data source in the case of contract consolidations so that the data

[[Page 78561]]

described in paragraph (g)(1)(iii)(A)(1) are combined for consumed and 
surviving contracts for the first year after consolidation. In 
addition, we propose to delete the phrase ``For contract consolidations 
approved on or after January 1, 2022'' as unnecessary.
    We are not proposing to update the steps currently described at 
Sec.  422.164(g)(1)(iii)(C) through (E) and (G), (g)(1)(iii)(K)(1), and 
(g)(1)(iii)(L) through (N) to determine whether a scaled reduction 
should be applied to the two Part C appeals measures. We welcome 
feedback on this updated approach for making scaled reductions proposed 
at Sec.  422.164(g)(1)(iii) introductory text, (g)(1)(iii)(A)(1) and 
(2), (g)(1)(iii)(H), (g)(1)(iii)(K)(2), and (g)(1)(iii)(O), the removal 
of the Part D related provisions at Sec. Sec.  422.164(g)(1)(iii)(B), 
(F), and (I) and 423.184(g)(1)(ii), and removal of the provision at 
Sec.  422.164(g)(1)(iii)(J).

D. Review of Sponsor's Data (Sec. Sec.  422.164(h) and 423.184(h))

    Currently, Sec. Sec.  422.164(h) and 423.184(h) provide that an MA 
organization (and a cost plan organization as the regulations are 
applied under Sec.  417.472(k)) and a Part D plan sponsor may request a 
review of certain administrative data (that is, the contracts' appeals 
data and Complaints Tracking Module data) before Star Ratings are 
calculated. The regulations provide that CMS will establish an annual 
deadline by which such requests must be submitted. At Sec. Sec.  
422.164(h)(3) and 423.184(h)(3), CMS proposes to expand the policy for 
requests that CMS review certain data used for Star Ratings to include 
administrative data used for their contract's Part D Star Rating 
Patient Safety measures. These requests would also have to be received 
by the annual deadline set by CMS. We intend that the requests could 
include CMS's review of Prescription Drug Event (PDE), diagnosis code, 
and enrollment data but the requests are not necessarily limited to 
these specific data.
    CMS reports and updates the rates for the current Part D Star 
Ratings Patient Safety measures (that is, Medication Adherence for 
Cholesterol (Statins) (ADH-Statins), Medication Adherence for 
Hypertension (RAS Antagonists) (ADH-RAS), Medication Adherence for 
Diabetes Medications (ADH-Diabetes), and Statin Use in Persons with 
Diabetes (SUPD) measures) via the Patient Safety Analysis Web Portal 
for sponsors to review and download. Part D sponsors can use the 
Patient Safety reports to compare their performance to overall averages 
and monitor their progress in improving their measure rates. In the 
April 17, 2023, HPMS memorandum titled ``Information to Review Data 
Used for Medicare Part C and D Star Ratings and Display Measures,'' CMS 
reminded sponsors of the various datasets and reports available for 
sponsors to review their underlying measure data that are the basis for 
the Part C and D Star Ratings and display measures, including the 
monthly Part D Patient Safety measure reports. We expect sponsors to 
review their monthly Patient Safety reports that include measure rates 
along with available underlying administrative data and alert CMS of 
potential errors or anomalies in the rate calculations per the measure 
specifications in advance of CMS's plan preview periods to allow 
sufficient time to investigate and resolve them before the release of 
the Star Ratings.
    Reviewing administrative data for the Patient Safety measures is a 
time-consuming process. In addition, once CMS implements 
sociodemographic status (SDS) risk adjustment for the three Medication 
Adherence measures, as finalized in the April 2023 final rule (88 FR 
22265-22270), the final measure rates, which are calculated in July 
after the end of the measurement period, will require increased 
processing time to calculate. To allow enough time for CMS to review a 
sponsor's administrative data and ensure the accuracy of the final 
calculated Patient Safety measure rates, we are proposing that 
sponsors' requests for CMS review of administrative data must be 
received no later than the annual deadline set by CMS.
    Beginning with the 2025 measurement year (2027 Star Ratings), we 
propose at Sec. Sec.  422.164(h)(3) and 423.184(h)(3) that any requests 
by an MA organization or Part D sponsor to review its administrative 
data for Patient Safety measures be made by the annual deadline set by 
CMS for the applicable Star Ratings year. Similar to the implementation 
of Sec. Sec.  422.164(h)(1) and (2) and 423.184(h)(1) and (2), to 
provide flexibility to set the deadline contingent on the timing of the 
availability of data for plans to review, we intend to announce the 
deadline in advance either through the process described for changes in 
and adoption of payment and risk adjustment policies section 1853(b) of 
the Act (that is, the annual Advance Notice and Rate Announcement) or 
an HPMS memorandum.
    Given the timing of the publication of the Advance Notice of 
Methodological Changes for Calendar Year (CY) 2025 for Medicare 
Advantage (MA) Capitation Rates and Part C and Part D Payment Policies 
and of this proposal, we intend to announce the deadline for 
measurement year 2025 in the final rule, should this proposal be 
finalized. In subsequent years, we will announce annual deadlines in 
advance via annual Advance Notice and Rate Announcement, or by a HPMS 
memorandum. For the 2025 measurement year (2027 Star Ratings), we 
expect this deadline to be May 18, 2026. In establishing this deadline, 
we factored in data completeness along with operational deadlines to 
produce the final Star Ratings. These requests may be time-consuming to 
review, and it is beneficial to receive the requests before the final 
rates are calculated and before the first plan preview. Historically, 
we find that PDE data for performance measurement are complete by April 
of the following year (that is, PDE data for Year of Service (YOS) 2025 
is generally complete by April of 2026) even though the PDE submission 
deadline is established at the end of June following the payment year.

E. Categorical Adjustment Index (Sec. Sec.  422.166(f)(2) and 
423.186(f)(2))

    We propose to calculate the percentage LIS/DE enrollees and 
percentage disabled enrollees used to determine the Categorical 
Adjustment Index (CAI) adjustment factor in the case of contract 
consolidations based on the combined contract enrollment from all 
contracts in the consolidation beginning with the 2027 Star Ratings. 
The methodology for the CAI is codified at Sec. Sec.  422.166(f)(2) and 
423.186(f)(2). The CAI adjusts for the average within-contract 
disparity in performance associated with the percentages of enrollees 
who receive a low-income subsidy or are dual eligible (LIS/DE) or have 
disability status within that contract. Currently, the percentage LIS/
DE enrollees and percentage disabled enrollees for the surviving 
contract of a consolidation that are used to determine the CAI 
adjustment factor are calculated using enrollment data for the month of 
December for the measurement period of the Star Ratings year for the 
surviving contract as described at Sec. Sec.  422.166(f)(2)(i)(B) and 
423.186(f)(2)(i)(B). To more accurately reflect the membership of the 
surviving contract after the consolidation, we propose to determine the 
percentage LIS/DE enrollees and percentage disabled enrollees for the 
surviving contract by combining the enrollment data across all 
contracts in the consolidation.
    We propose to modify Sec. Sec.  422.166(f)(2)(i)(B) and 
423.186(f)(2)(i)(B) to calculate the percentage LIS/DE enrollees and 
the

[[Page 78562]]

percentage disabled enrollees for the surviving contract for the first 
two years following a consolidation by combining the enrollment data 
for the month of December for the measurement period of the Star 
Ratings year across all contracts in the consolidation. Once the 
enrollment data are combined across the contracts in the consolidation, 
all other steps described at Sec. Sec.  422.166(f)(2)(i)(B) and 
423.186(f)(2)(i)(B) for determining the percentage LIS/DE enrollees and 
percentage disabled enrollees would remain the same, but we are 
proposing to restructure that regulation text into new paragraphs 
(f)(2)(i)(B)(2) through (4). We are proposing this change since 
Sec. Sec.  422.166(b)(3) and 423.186(b)(3) do not address the 
calculation of enrollment for the CAI in the event of a contract 
consolidation; rather, they focus on the calculation of measure scores 
in the case of consolidations.

F. Health Equity Index Reward (Sec. Sec.  422.166(f)(3) and 
423.186(f)(3))

    We are proposing how to calculate the health equity index (HEI) 
reward in the case of contract consolidations beginning with the 2027 
Star Ratings. (The 2027 Star Ratings will be the first Star Ratings to 
include the HEI.) The methodology for the HEI reward is codified at 
Sec. Sec.  422.166(f)(3) and 423.186(f)(3). The HEI rewards contracts 
for obtaining high measure-level scores for the subset of enrollees 
with the specified social risk factors (SRFs). The goal of the HEI 
reward is to improve health equity by incentivizing MA, cost, and PDP 
contracts to perform well among enrollees with specified SRFs. In 
calculating the HEI reward for the surviving contract of a 
consolidation, we want to avoid masking the scores of contracts with 
low performance among enrollees with the specified SRFs under higher 
performing contracts. We also want to avoid masking contracts that 
serve relatively few enrollees with the specified SRFs under contracts 
that serve relatively many more of these enrollees.
    For the first year following a consolidation, we propose to add new 
paragraphs Sec. Sec.  422.166(f)(3)(viii)(A) and 423.186(f)(3)(viii)(A) 
to assign the surviving contract of a consolidation the enrollment-
weighted mean of the HEI reward of the consumed and surviving contracts 
using enrollment from July of the most recent measurement year used in 
calculating the HEI reward; the existing rules laid out at Sec. Sec.  
422.162(b)(3)(iv) and 423.182(b)(3)(iv) address how CMS will handle 
combining measures scores for consolidations, but do not address how 
CMS will handle the calculation of the HEI when contracts consolidate 
since the HEI is not a measure. We propose that contracts that do not 
meet the minimum percentage of enrollees with the specified SRF 
thresholds or the minimum performance threshold described at Sec. Sec.  
422.166(f)(3)(vii) and 423.186(f)(3)(vii) would have a reward value of 
zero used in calculating the enrollment-weighted mean reward. For the 
second year following a consolidation, we propose at new paragraphs 
Sec. Sec.  422.166(f)(3)(viii)(B) and 423.186(f)(3)(viii)(B) that, when 
calculating the HEI score for the surviving contract, the patient-level 
data used in calculating the HEI score would be combined across the 
contracts in the consolidation prior to calculating the HEI score. The 
HEI score for the surviving contract would then be used to calculate 
the HEI reward for the surviving contract following the methodology 
described in Sec. Sec.  422.166(f)(3)(viii) and 423.186(f)(3)(viii).

G. Quality Bonus Payment Rules (Sec.  422.260)

    Sections 1853(n) and 1853(o) of the Act require CMS to make QBPs to 
MA organizations that achieve at least 4 stars in a 5-star quality 
rating system. In addition, section 1854(b)(1)(C) of the Act ties the 
share of savings that MA organizations must provide to enrollees as the 
beneficiary rebate to the level of an MA organization's QBP rating. The 
administrative review process for an MA contract to appeal its QBP 
status is laid out at Sec.  422.260(c). As described in the final rule 
titled ``Medicare Program; Changes to the Medicare Advantage and the 
Medicare Prescription Drug Benefit Programs for Contract Year 2012 and 
Other Changes,'' which was published in the Federal Register on April 
15, 2011 (76 FR 21490-91), Sec.  422.260(c)(1) and (2) create a two-
step administrative review process that includes a request for 
reconsideration and a request for an informal hearing on the record, 
and Sec.  422.260(c)(3) imposes limits on the scope of requests for an 
administrative review. We propose to revise the language at Sec.  
422.260(c)(2)(vii) to provide the CMS Administrator the opportunity to 
review and modify the hearing officer's decision within 10 business 
days of its issuance. We propose that if the Administrator does not 
review and issue a decision within 10 business days, the hearing 
officer's decision is final and binding. Under this proposal, if the 
Administrator does review and modify the hearing officer's decision, a 
new decision will be issued as directed by the Administrator. If 
finalized, this proposed amendment would be implemented for all QBP 
appeals after the effective date of the final rule.

VIII. Improvements for Special Needs Plans

A. Verification of Eligibility for C-SNPs (Sec.  422.52(f))

    Section 1859(b)(6) of the Act defines specialized MA plans for 
special needs individuals, as well as the term ``special needs 
individual.'' Section 1859(f)(1) of the Act provides that 
notwithstanding any other provision of Part C of the Medicare statute 
and in accordance with regulations of the Secretary, an MA special 
needs plan (SNP) may restrict the enrollment of individuals under the 
plan to individuals who are within one or more classes of special needs 
individuals. The regulation governing eligibility for MA SNPs is at 
Sec.  422.52. In addition to meeting the definition of a special needs 
individual in Sec.  422.2 and the general eligibility requirements for 
MA enrollment in Sec.  422.50, an individual must meet the eligibility 
requirements for the specific MA SNP in which the individual seeks to 
enroll. Currently, Sec.  422.52(f) provides that each MA SNP must 
employ a process approved by CMS to verify the eligibility of each 
individual enrolling in the SNP. CMS adopted this provision in 
paragraph (f) in the final rule with comment period ``Medicare Program; 
Medicare Advantage and Prescription Drug Benefit Programs: Negotiated 
Pricing and Remaining Revisions,'' which appeared in the Federal 
Register on January 12, 2009 (74 FR 1494). Historically, we have 
provided operational guidance related to eligibility criteria for 
enrollment in an MA SNP that exclusively enrolls individuals who meet 
the definition of special needs individual under Sec.  422.2 in our 
sub-regulatory manuals.\148\
---------------------------------------------------------------------------

    \148\ This guidance can be found at https://www.cms.gov/files/document/cy2021-ma-enrollment-and-disenrollment-guidance.pdf and 
https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/mc86c16b.pdf.
---------------------------------------------------------------------------

    We propose to revise paragraph Sec.  422.52(f) to codify, with 
minor modifications and clarifications, our longstanding guidance on 
procedural steps MA plans must take to verify an individual's 
eligibility for enrollment in a chronic condition SNP (C-SNP). C-SNPs 
are SNPs that restrict enrollment to special needs individuals with 
specific severe or disabling chronic conditions, defined at Sec.  
422.2. By codifying the verification requirements, we intend to provide 
transparency and stability for MA organizations offering C-SNPs and 
other interested parties

[[Page 78563]]

about this aspect of the MA program. It will also clarify the SNP's 
roles and responsibilities and further assist MA organizations in 
meeting the requirements pertaining to verification of eligibility for 
C-SNPs.
    Specifically, we propose in new Sec.  422.52(f)(1) to codify 
existing guidance stating that for enrollments into a C-SNP, the MA 
organization must contact the individual applicant's current physician 
to confirm that the enrollee has the specific severe or disabling 
chronic condition(s). Although the current sub-regulatory guidance in 
chapter 16-B, section 40.2.1 of the Medicare Managed Care Manual refers 
only to the applicant's existing provider, we believe that a 
physician--either the applicant's primary care physician or a 
specialist treating the qualifying condition(s)--should provide the 
required verification of the applicant's condition to ensure the 
accuracy and integrity of the verification process. Therefore, we are 
proposing to use the term ``physician'' throughout proposed new Sec.  
422.52(f).
    To further clarify the verification process, we also propose in new 
Sec.  422.52(f)(1)(i) that the physician must be the enrollee's primary 
care physician or specialist treating the chronic condition, or 
conditions in the case of an individual seeking enrollment in a multi-
condition C-SNP. The MA organization may either (1) as proposed at new 
Sec.  422.52(f)(1)(i), contact the applicant's physician or physician's 
office and obtain verification of the condition prior to enrollment, or 
(2) as proposed at new Sec.  422.52(f)(1)(ii), use a Pre-enrollment 
Qualification Assessment Tool (PQAT) prior to enrollment and 
subsequently (which can be after enrollment) obtain verification of the 
condition(s) from the enrollee's physician no later than the end of the 
individual's first month of enrollment in the C-SNP.\149\ Both proposed 
options are discussed in the current guidance. We continue to believe 
that these procedures will allow the MA organization to efficiently 
serve special needs populations while maintaining the integrity of SNP 
offerings under the MA program.
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    \149\ CMS provides an outline of the Pre-enrollment 
Qualification Assessment Tool in section 40.2.1 of chapter 16-B of 
the Medicare Managed Care Manual (MMCM). In 2017, CMS released a 
memo entitled, ``Discontinuation of CMS Approval Process for C-SNP 
Pre-Enrollment Qualification Assessment Tool,'' stating that we 
would no longer require chronic condition special needs plans (C-
SNPs) to seek CMS approval prior to using a Pre-Enrollment 
Qualification Assessment Tool. CMS approval is granted for tools 
that meet the standards articulated in section 40.2.1 of the MMCM 
and individual review and approval of plan-specific tools is not 
required. Therefore, MA organizations are no longer required to 
submit these tools individually to CMS for approval so long as the 
standards outlined in the guidance are met.
---------------------------------------------------------------------------

    As part of this process, we propose at new Sec.  422.52(f)(1)(i) 
that verification of the chronic condition(s) from the applicant's 
primary care physician or treating specialist must be in a form and 
manner authorized by CMS. Existing guidance states that this 
verification can be in the form of a note from a provider or the 
provider's office or documented telephone contact with the physician or 
physician's office confirming that the enrollee has the specific severe 
or disabling chronic condition. These would remain acceptable under 
this proposal. Performing this pre-enrollment verification with the 
applicant's primary care physician or specialist treating the 
qualifying condition will mean that the C-SNP may process the 
enrollment promptly.
    Use of the PQAT requires both pre-enrollment and post-enrollment 
actions by the C-SNP to conduct an assessment and subsequently confirm 
the information. The PQAT, per existing guidance,\150\ would collect 
information about the chronic condition(s) targeted by the C-SNP 
directly from the enrollee and must include a signature line for a 
physician to confirm the individual's eligibility for C-SNP enrollment. 
In order for the PQAT to be complete, a physician must be the person 
who goes through the PQAT with the enrollee. The physician that goes 
through the PQAT with the enrollee can be either the enrollee's 
physician or a physician employed or contracted by the plan. A 
physician must later review the document to confirm that the 
information supports a determination that the enrollee is eligible for 
the C-SNP, even without their presence at the time of the determination 
by the physician. The physician providing the review and signature must 
be the enrollee's physician. Ultimately, a physician's review of and 
signature on the completed PQAT provide verification of the applicant's 
special needs status with regards to the applicable chronic 
condition(s). Currently, C-SNPs are not required to submit the PQAT to 
CMS for review and approval before the PQAT is used by the C-SNP and 
CMS proposes to codify that policy. The PQAT must meet the standards 
articulated in proposed Sec.  422.52(f)(1)(ii)(A), and therefore review 
and approval of plan-specific tools by CMS are not required.
---------------------------------------------------------------------------

    \150\ This guidance can be found in chapter 16-B, Special Needs 
Plans, section 40.2 of the Medicare Managed Care Manual.
---------------------------------------------------------------------------

    <bullet> As proposed at Sec.  422.52(f)(1)(ii)(A)(1), the PQAT must 
include a set of clinically appropriate questions relevant to the 
chronic condition(s) on which the C-SNP focuses. For example, an MA 
organization sponsoring a Diabetes Mellitus C-SNP would perhaps include 
questions related to diagnoses of diabetes, such as blood glucose level 
or whether the enrollee is currently taking a medication for diabetes 
mellitus.
    <bullet> As proposed at Sec.  422.52(f)(1)(ii)(A)(2), the PQAT must 
gather information on the applicant's past medical history, current 
signs and/or symptoms, and current medications sufficient to provide 
reliable evidence that the applicant has the applicable condition(s).
    <bullet> As proposed at Sec.  422.52(f)(1)(ii)(A)(3), the PQAT must 
include the date and time of the assessment if completed during a face-
to-face interview with the applicant, or the receipt date if the C-SNP 
receives the completed PQAT by mail or by electronic means (if 
available).
    <bullet> As proposed at Sec.  422.52(f)(1)(ii)(A)(4), the PQAT must 
include a signature line for and be signed by a physician to confirm 
the individual's eligibility for C-SNP enrollment. (We are also 
proposing that this signature be from the applicant/enrollee's primary 
care physician or treating specialist.)
    <bullet> As proposed at Sec.  422.52(f)(1)(ii)(B), the C-SNP must 
conduct a post-enrollment confirmation of each enrollee's information 
and eligibility using medical information (medical history, current 
signs and/or symptoms, diagnostic testing, and current medications) 
provided by the enrollee's primary care physician or the specialist 
treating the enrollee's chronic condition.
    <bullet> As proposed at Sec.  422.52(f)(1)(ii)(C), the C-SNP must 
include the information gathered in the PQAT and used in this 
verification process in the records related to or about the enrollee 
that are subject to the confidentiality requirements in Sec.  422.118.
    <bullet> As proposed at Sec.  422.52(f)(1)(ii)(D), the C-SNP must 
track the total number of enrollees and the number and percent by 
condition whose post-enrollment verification matches the pre-enrollment 
assessment and the data and supporting documentation must be made 
available upon request by CMS.
    In addition, we propose to codify at Sec.  422.52(f)(1)(ii)(E) our 
longstanding

[[Page 78564]]

guidance \151\ to MA organizations offering C-SNPs that choose see to 
use a PQAT that the MA organization has until the end of the first 
month of enrollment to confirm that the individual has the qualifying 
condition(s) necessary for enrollment into the C-SNP. If the C-SNP 
cannot confirm that the enrollee has the qualifying condition(s) within 
that time, the C-SNP has the first seven calendar days of the following 
month (i.e., the second month of enrollment) in which to send the 
enrollee notice of disenrollment for not having the qualifying 
condition(s). Disenrollment is effective at the end of the second month 
of enrollment; however, as also outlined in current guidance, the C-SNP 
must continue the individual's enrollment in the C-SNP if confirmation 
of the qualifying condition(s) is obtained at any point prior to the 
end of the second month of enrollment. We propose to codify at Sec.  
422.52(f)(1)(ii)(F), consistent with existing guidance, that the C-SNP 
must continue the enrollment of the individual in the C-SNP if the C-
SNP confirms the qualifying condition(s) prior to the disenrollment 
effective date.
---------------------------------------------------------------------------

    \151\ This guidance can be found in chapter 2, section 20.10, 
and chapter 16-B, Special Needs Plans, section 40.2 of the Medicare 
Managed Care Manual.
---------------------------------------------------------------------------

    Lastly, we propose to codify at Sec.  422.52(f)(1)(iii) that the C-
SNP is required to have the individual's current physician (primary 
care physician or specialist treating the qualifying condition) 
administer the PQAT directly with the enrollee or provide confirmation 
(with or without the presence of the enrollee) that the information in 
the document supports a determination that the individual is eligible 
for the C-SNP. Once the physician has confirmed that the PQAT contains 
information that supports the applicant's chronic condition and signs 
it, the PQAT is complete. Without a physician's signature, the process 
is incomplete, and thus, the applicant must be denied enrollment if the 
enrollment has not yet happened or disenrolled by the end of the second 
month if the applicant had been enrolled. If the individual is 
disenrolled because the person's eligibility cannot be verified, SNPs 
must recoup any agent/broker compensation consistent with Sec.  
422.2274(d)(5)(ii).
    These proposals represent the codification of existing guidance 
outlining the procedural steps MA organizations currently take to 
verify an individual's eligibility for enrollment in a C-SNP, with 
minor modifications and clarifications. Therefore, we believe that this 
proposal would not result in a new or additional paperwork burden, as 
the policy to verify eligibility for C-SNPs has been in existence for 
some time. All burden impacts related to the SNP eligibility 
verification procedures have already been accounted for under OMB 
control number 0938-0753 (CMS-R-267). These requirements have been 
previously implemented and are currently being followed by MA 
organizations. Similarly, we do not believe the proposed changes would 
have any impact to the Medicare Trust Fund.

B. I-SNP Network Adequacy

    In accordance with Sec.  422.116, CMS conducts evaluations of the 
adequacy of provider networks of all MA coordinated care plans to 
ensure access to covered benefits for enrollees. For MA coordinated 
care plans, which generally base coverage or cost sharing on whether 
the provider that furnishes services to an MA enrollee is in-network or 
out-of-network, these evaluations are particularly important. All MA 
special needs plans (SNP) are coordinated care plans and subject to the 
current requirements for network adequacy. Within the MA program, SNPs 
are classified into three distinct types: Chronic Care special needs 
plan (C-SNP), Dual Eligible special needs plan (D-SNP), and 
Institutional special needs plan (I-SNP). An I-SNP is a SNP that 
restricts enrollment to MA-eligible individuals who meet the definition 
of institutionalized and institutionalized-equivalent. One specific 
subtype of I-SNP is the facility-based I-SNP. Here, we use the term 
(``facility-based I-SNP'') to refer to an I-SNP that restricts 
enrollment to MA-eligible individuals who meet the definition of 
institutionalized; owns or contracts with at least one institution, 
specified in the definition of institutionalized in Sec.  422.2, for 
each county within the plan's county-based service area; and owns or 
has a contractual arrangement with each institutional facility serving 
enrollees in the plan. Historically, the I-SNP industry has stated that 
CMS's current network adequacy criteria under Sec.  422.116 create 
challenges for facility-based I-SNPs because facility-based I-SNP 
enrollees access services and seek care in a different way than 
enrollees of other plan types.
    In the ``Medicare Program; Contract Year 2024 Policy and Technical 
Changes to the Medicare Advantage Program, Medicare Prescription Drug 
Benefit Program, Medicare Cost Plan Program, Medicare Parts A, B, C, 
and D Overpayment Provisions of the Affordable Care Act and Programs of 
All-Inclusive Care for the Elderly; Health Information Technology 
Standards and Implementation Specifications'' proposed rule, which 
appeared in the Federal Register on December 27, 2022 (87 FR 79452) 
(``the December 2022 proposed rule''), we explained in detail how I-
SNPs restrict enrollment to MA-eligible individuals who are 
institutionalized or institutionalized-equivalent, as those terms are 
defined in Sec.  422.2 and proposed new definitions for the different 
types of I-SNPs. As a result, the enrollees in I-SNPs are individuals 
who continuously reside in or are expected to continuously reside for 
90 days or longer in one of the specified facilities listed in the 
definition of ``institutionalized'' at Sec.  422.2 or individuals 
(``institutionalized-equivalent'') who are living in the community but 
require an institutional level of care. We refer readers to the 
December 2022 proposed rule for a more detailed discussion of the 
eligibility requirements for I-SNPs. (87 FR 79566 through 79568) See 
also chapter 16-B, section 20.3 of the Medicare Managed Care 
Manual.\152\ Our use of the term ``facility-based I-SNP'' in this 
proposed rule aligns with the proposed definition of ``Facility-based 
Institutional special needs plan (FI-SNP)'' in the December 2022 
proposed rule.
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    \152\ https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/mc86c16b.pdf.
---------------------------------------------------------------------------

    Per section 1859(f)(2) of the Act, I-SNPs restrict enrollment to 
MA-eligible individuals who, for 90 days or longer, have had or are 
expected to need the level of services provided in a long-term care 
(LTC) facility, which includes: a skilled nursing facility (SNF), a 
nursing facility (NF), an intermediate care facility for individuals 
with intellectual disabilities (ICF/IDD), an inpatient psychiatric 
hospital, a rehabilitation hospital, an LTC hospital, or a swing-bed 
hospital. See Sec.  422.2 for the definition of ``institutionalized'' 
for the details of the types of facilities. Facility-based I-SNPs serve 
a vulnerable cohort of Medicare beneficiaries with well over 95 percent 
of facility-based I-SNP enrollees being eligible for both Medicare and 
Medicaid. Generally, facility-based I-SNP enrollees reside either 
temporarily or permanently in an institution, therefore, these 
enrollees typically receive most of their health care services through 
or at the facility in which they reside, most often a SNF. As a result 
of the way that these enrollees receive covered services, CMS's 
established network adequacy time and distance standards under Sec.  
422.116 may

[[Page 78565]]

not be a meaningful way to measure provider network adequacy for and 
ensure access to covered benefits for enrollees of this plan type. Time 
and distance standards are created using several factors, including 
pattern of care. In order to comply with the network evaluation 
requirements in Sec.  422.116, a facility-based I-SNP must contract 
with sufficient providers of the various specialties within the time 
and distance requirements specified in that regulation. The I-SNP 
industry has indicated through public comments and in prior 
correspondence to CMS that many facility-based I-SNPs have difficulty 
contracting with providers outside their facilities, due to their model 
of care. This is because these providers know that enrollees of the I-
SNP will not routinely seek care with these providers since they 
generally do not travel away from the facility for care.
    The MA organizations offering and those that are interested in 
offering facility-based I-SNPs have raised questions about whether our 
network standards are appropriate considering the nature of the 
facility-based I-SNP coverage model. The residential nature of this 
model creates inherent differences in patterns of care for facility-
based I-SNP enrollees as compared to the prevailing patterns of 
community health care delivery in other MA plan types. For example, 
most residents of a facility receive their care from a provider at the 
facility rather than traveling to a provider outside the facility 
whereas individuals who live at home in the community would need to 
travel to a provider to receive health care services.
    To address these concerns, CMS is proposing to adopt a new 
exception for facility-based I-SNP plans from the network evaluation 
requirements. This provision would apply only to facility-based I-SNPs.
    CMS adopted minimum access requirements for MA coordinated care 
plans (which include all SNPs) in Sec.  422.112 and network evaluation 
criteria in Sec.  422.116 as means to implement and ensure compliance 
with section 1852(d)(1)(A) of the Act, which permits MA plans to limit 
coverage to items and services furnished by or through a network of 
providers subject to specific exceptions (such as emergency medical 
services) and so long as the MA organization makes benefits available 
and accessible to their enrollees. Currently, Sec.  422.116(f) allows 
an MA plan to request an exception to network adequacy criteria when 
both of the following occur: (1) certain providers or facilities are 
not available for the MA plan to meet the network adequacy criteria as 
shown in the Provider Supply file (that is, a cross-sectional database 
that includes information on provider and facility name, address, 
national provider identifier, and specialty type and is posted by State 
and specialty type); and (2) the MA plan has contracted with other 
providers and facilities that may be located beyond the limits in the 
time and distance criteria, but are currently available and accessible 
to most enrollees, consistent with the local pattern of care. In 
evaluating exception requests, CMS considers whether: (i) the current 
access to providers and facilities is different from the Health Service 
Delivery (HSD) reference file (as defined at 42 CFR 422.116(a)(4)(i)) 
and Provider Supply files for the year; (ii) there are other factors 
present, in accordance with Sec.  422.112(a)(10)(v), that demonstrate 
that network access is consistent with or better than the Traditional 
Medicare pattern of care; and (iii) the approval of the exception is in 
the best interests of beneficiaries.
    CMS has provided examples of situations that meet the first 
requirement for an exception to be requested in sub-regulatory 
guidance, specifically the Medicare Advantage and section 1876 Cost 
Plan Network Adequacy Guidance.\153\ The following examples of 
situations where providers or facilities are not available to contract 
with the MA plan do not account for the issues that are unique to 
facility-based I-SNPs:
---------------------------------------------------------------------------

    \153\ https://www.cms.gov/files/document/medicare-advantage-and-section-1876-cost-plan-network-adequacy-guidance08302022.pdf.
---------------------------------------------------------------------------

    <bullet> Provider is no longer practicing (for example, deceased, 
retired),
    <bullet> Provider does not contract with any organizations or 
contracts exclusively with another organization,
    <bullet> Provider does not provide services at the office/facility 
address listed in the supply file,
    <bullet> Provider does not provide services in the specialty type 
listed in the supply file,
    <bullet> Provider has opted out of Medicare, or
    <bullet> Provider is sanctioned and on the List of Excluded 
Individuals and Entities.

In addition, the use of Traditional Medicare telehealth providers or 
mobile providers and the specific patterns of care in a community that 
would be the basis for an approval exception do not account for the 
provider network issues unique to facility-based I-SNPs that we propose 
to address in this rule. Therefore, we are proposing to amend our 
network adequacy regulations at Sec.  422.116(f) to establish an 
additional exception to the current CMS network adequacy requirements 
outlined in Sec.  422.116 and we are proposing that this exception be 
specific to facility-based I-SNPs. Under this proposal, facility-based 
I-SNPs would not be required to meet the current two prerequisites to 
request an exception from the network adequacy requirements in Sec.  
422.116 but would have alternate bases on which to request an 
exception.
    First, CMS is proposing to broaden the acceptable rationales for an 
exception from the requirements in Sec.  422.116(b) through (e) for 
facility-based I-SNPs. We are proposing that a facility-based I-SNP may 
request an exception from the network adequacy requirements in Sec.  
422.116 when one of two situations occurs. To add these proposed new 
rationales to Sec.  422.116(f)(1), we are reorganizing the current 
regulation text; the two current requirements for an exception request 
will be moved to new paragraphs (f)(1)(i)(A) and (B) and the proposed 
new rationales for an exception request will be in new paragraphs 
(f)(1)(ii)(A) and (B). Second, we are proposing new considerations CMS 
will use when determining whether to grant an exception under Sec.  
422.116(f) that are specific to the proposed new acceptable rationales 
for an exception request. We are proposing to add a new paragraph 
(f)(2)(iv) to specify the proposed new considerations that will apply 
to the new exceptions for facility-based I-SNPs, which will be added to 
the existing considerations in Sec.  422.116(f)(2).
    Our proposal includes new bases on which only facility-based I-SNPs 
may request an exception from the network adequacy requirements, 
additional considerations for CMS when deciding whether to approve an 
exception request from a facility-based I-SNP, and a new contract term 
for facility-based I-SNPs that receive the exception from the Sec.  
422.116 network adequacy evaluation. Because we evaluate network 
adequacy and grant an exception at the contract level, the proposed new 
exception is limited to contracts that include only facility-based I-
SNPs.
    The first proposed new basis for an exception request is that a 
facility-based I-SNP is unable to contract with certain specialty types 
required under Sec.  422.116(b) because of the way enrollees in 
facility-based I-SNPs receive care. For purposes of this first proposed 
new basis for an exception, the inability to contract means the MA 
organization offering the facility-based

[[Page 78566]]

I-SNP could not successfully negotiate and establish a contract with a 
provider, including individual providers and facilities. This is 
broader than the existing condition for an exception that certain 
providers are unavailable for the MA plan. The non-interference 
provision at section 1854(a)(6) of the Act prohibits CMS from requiring 
any MA organization to contract with a particular hospital, physician, 
or other entity or individual to furnish items and services or require 
a particular price structure for payment under such a contract. As 
such, CMS cannot assume the role of arbitrating or judging the bona 
fides of contract negotiations between an MA organization and available 
providers or facilities. Currently, CMS does not regard an MA 
organization's inability to contract with a provider as a valid 
rationale for an exception from the network adequacy evaluation but 
interested parties have indicated through public comments and in prior 
correspondence to CMS that, historically, facility-based I-SNP plans 
have encountered significant struggles contracting with the necessary 
number of providers to meet CMS network adequacy standards due to their 
unique care model. We propose to add this new basis for an exception 
request to Sec.  422.116(f)(1)(ii)(A). CMS is also proposing that its 
decision whether to approve an exception for a facility-based I-SNP on 
this specific basis (that the I-SNP is unable to contract with certain 
specialty types required under Sec.  422.116(b) because of the way 
enrollees in facility-based I-SNPs receive care) will be based on 
whether the facility-based I-SNP submits evidence of the inability to 
contract with certain specialty types required under Sec.  422.116 due 
to the way enrollees in facility-based I-SNPs receive care. For 
example, an organization could submit letters or emails to and from the 
providers' offices demonstrating that the providers were declining to 
contract with any facility-based I-SNP. CMS proposes to add this 
requirement in a new paragraph (f)(2)(iv)(A). Under this proposal, CMS 
will also consider the existing factors in addition to the new factors 
proposed here that are unique to the specific new exception proposed 
for facility-based I-SNPs. We solicit comment on this proposed new 
rationale for an exception from the network adequacy requirements in 
Sec.  422.116(b) through (e) and on the type of evidence we should 
consider in determining whether to grant an exception.
    We are also proposing a second basis on which a facility-based I-
SNP may request an exception from the network adequacy requirements in 
Sec.  422.116(b) through (e) if:
    (1) A facility-based I-SNP provides sufficient and adequate access 
to basic benefits through additional telehealth benefits (in compliance 
with Sec.  422.135) when using telehealth providers of the specialties 
listed in paragraph (d)(5) in place of in-person providers to fulfill 
network adequacy standards in paragraphs (b) through (e).
    (2) Substantial and credible evidence that sufficient and adequate 
access to basic benefits is provided to enrollees using additional 
telehealth benefits (in compliance with Sec.  422.135) furnished by 
providers of the specialties listed in paragraph (d)(5) of this section 
and the facility-based I-SNP covers out-of-network services furnished 
by a provider in person when requested by the enrollee as provided in 
Sec.  422.135(c)(1) and (2), with in-network cost sharing for the 
enrollee.
    We believe it is appropriate to permit exceptions in these 
situations because enrollees in facility-based I-SNP plans do not 
generally travel to receive care, so the time and distance standards 
that apply to other plan types are not appropriate for I-SNP plans. As 
part of this proposal, we are proposing to add to the factors that CMS 
will consider whether to approve the exception request a new factor 
specifically related to this type of exception.
    Finally, we are proposing regulation text to ensure that the 
exception for facility-based I-SNPs is used by and available only to 
facility-based I-SNPs. We are proposing a new paragraph (f)(3) at Sec.  
422.116 to require any MA organization that receives the exception 
provided for facility-based I-SNPs to agree to offer only facility-
based I-SNPs on the contract that receives the exception. To support 
the provision outlined at Sec.  422.116(f)(3), CMS also proposes to 
add, at Sec.  422.504(a)(21), a new contract provision that MA 
organizations must not establish additional plans (or plan benefit 
packages, called PBPs) that are not facility-based I-SNPs to a contract 
that is within the scope of proposed Sec.  422.116(f)(3). This will 
ensure MA organizations that have received the exception do not submit 
additional PBPs that are not facility-based I-SNPs to their facility-
based I-SNP-only contracts. CMS reviews networks at the contract level 
which means if an MA organization were to add an MA plan (that is, a 
PBP) that is not a facility-based I-SNP to a contract, the exception we 
propose here would not be appropriate. We welcome comment on this 
aspect of our proposal and whether additional guardrails are necessary 
to ensure that the proposed new exception from network adequacy 
evaluations is limited to facility-based I-SNPs consistent with our 
rationale for it.
    Under our proposal, facility-based I-SNPs would still be required 
to adhere to Sec.  422.112 regarding access to covered benefits. For 
example, Sec.  422.112(a)(1)(iii) requires an MA coordinated care plan 
to arrange for and cover any medically necessary covered benefit 
outside of the plan provider network, but at in-network cost sharing, 
when an in-network provider or benefit is unavailable or inadequate to 
meet an enrollee's medical needs. Because all SNPs, including facility-
based I-SNPs, are coordinated care plans, this beneficiary protection 
applies to them. Similarly, the timeliness of access to care 
requirements newly adopted at Sec.  422.112(a)(6)(i) would apply. We 
believe that our proposal appropriately balances the need to ensure 
access to covered benefits for enrollees in facility-based I-SNPs while 
recognizing the unique way this type of MA plan furnishes benefits and 
how enrollees generally receive services at the institution where the 
enrollee resides. Expanding this proposed new exception from the Sec.  
422.116 network adequacy requirements to other I-SNPs that enroll 
special needs individuals that reside in the community or other SNPs or 
MA plans that are not designed to furnish services to institutionalized 
special needs individuals would not be appropriate or serve the best 
interests of the Medicare program or Medicare beneficiaries.
    We request comment on this proposal.

C. Increasing the Percentage of Dually Eligible Managed Care Enrollees 
Who Receive Medicare and Medicaid Services From the Same Organization 
(Sec. Sec.  422.503, 422.504, 422.514, 422.530, and 423.38)

    Dually eligible individuals face a complex range of enrollment 
options based on MA plan types (that is, HMOs, PPOs, private fee-for-
service plans, MA special needs plans, etc.), enrollment eligibility, 
and plan performance, but which do not consider the enrollee's Medicaid 
choice. Further, many of the coverage options available to dually 
eligible individuals--even including many dual eligible special needs 
plans (D-SNP)--do not meaningfully integrate Medicare and Medicaid, 
chiefly because the parent organization of the D-SNP does not also 
provide the enrollee's Medicaid services. The current managed care 
enrollment and eligibility policies have resulted in a proliferation of 
such D-SNPs and leave dually eligible

[[Page 78567]]

individuals susceptible to aggressive marketing tactics from agents and 
brokers throughout the year.
    Over the last decade, we have taken numerous steps to improve the 
experiences and outcomes for dually eligible individuals through 
various forms of Medicare-Medicaid integrated care. Despite progress, 
there remain a significant number of enrollees who receive Medicare 
services through one managed care entity and Medicaid services through 
a different entity (misaligned enrollment), rather than from one 
organization delivering both Medicare and Medicaid services (aligned 
enrollment \154\). In the 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 (CMS-4185-F) (hereinafter referred to 
as the April 2019 final rule), we expressed our belief that aligned 
enrollment, and especially exclusively aligned enrollment, is a 
critical part of improving experiences and outcomes for dually eligible 
individuals. Exclusively aligned enrollment (EAE) occurs when 
enrollment in a parent organization's D-SNP is limited to individuals 
who are also enrolled in that organization's Medicaid managed care 
organization. Congress' advisory commissions have emphasized similar 
themes: the Medicare Payment Advisory Commission (MedPAC) has ``long 
believed that D-SNPs should have a high level of integration so they 
have the proper incentives to coordinate care across Medicare and 
Medicaid.'' \155\ The Medicaid and CHIP Payment and Access Commission's 
(MACPAC's) ``long-term vision is for all dually eligible beneficiaries 
to be enrolled in an integrated model'' \156\ and has noted that a key 
feature of integrated care is ``financial alignment where a single 
entity receives a single payment to cover all Medicare and Medicaid 
services.'' \157\
---------------------------------------------------------------------------

    \154\ 42 CFR 422.2 (definition of ``aligned enrollment'').
    \155\ MedPAC response to Congressional request for information 
on dual-eligible beneficiaries, page 2, January 13, 2023.
    \156\ MACPAC response to proposed rule on policy and technical 
changes to Medicare Advantage and Medicare Part D for contract year 
2024 (CMS-4201-P), page 1, February 13, 2023.
    \157\ MACPAC response to request for information on data and 
recommendations to improve care for dually eligible beneficiaries, 
page 3, January 13, 2023.
---------------------------------------------------------------------------

    Longer term, for dually eligible individuals who are in Medicare 
and Medicaid managed care, we believe that we should continue to drive 
toward increasing aligned enrollment until it is the normative, if not 
only, managed care enrollment scenario. Our proposals here represent an 
incremental step in that direction, balancing our long-term policy 
vision with our interest in limiting disruption in the short term. For 
dually eligible individuals that elect MA plans, we are focused on 
increasing enrollment in integrated D-SNPs: fully integrated dual 
eligible special needs plans (FIDE SNPs),\158\ highly integrated dual 
eligible special needs plans (HIDE SNPs),\159\ and applicable 
integrated plans (AIPs).\160\ These D-SNP types more meaningfully 
integrate Medicare and Medicaid services than coordination-only D-SNPs 
\161\ that are not also AIPs.
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    \158\ Effective 2025, FIDE SNPs as defined in Sec.  422.2 are 
required to have EAE and would therefore be AIPs by definition. To 
receive the FIDE designation, a D-SNP would be required to provide 
nearly all Medicaid services, including long-term services and 
supports, Medicaid behavioral health services, home health and DME.
    \159\ HIDE SNPs as defined in Sec.  422.2 are required to cover 
long-term services and supports or behavioral health services but 
may have more Medicaid services carved out relative to plans with 
the FIDE designation. HIDE SNPs that also operate with EAE would 
meet the definition of an AIP, but there is no requirement for EAE 
for the HIDE designation.
    \160\ AIPs as defined in Sec.  422.561 are D-SNPs with EAE, 
where the companion Medicaid MCO covers Medicaid benefits including 
primary care and acute care, Medicare cost-sharing, and at a minimum 
one of the following: home health services, medical supplies, 
equipment and appliances (DME), or nursing facility services.
    \161\ Dual eligible special needs plans (D-SNPs) are defined at 
Sec.  422.2. ``Coordination-only'' D-SNPs are D-SNPs that neither 
meet the FIDE SNP nor HIDE SNP definition at Sec.  422.2 and for 
which there are no Federal requirements to cover any Medicaid 
benefits either directly or through an affiliated Medicaid managed 
care plan.
---------------------------------------------------------------------------

    In this section we describe interconnected proposals that would (1) 
replace the current quarterly special enrollment period (SEP) with a 
one-time-per month SEP for dually eligible individuals and other LIS 
eligible individuals to elect a standalone PDP, (2) create a new 
integrated care SEP to allow dually eligible individuals to elect an 
integrated D-SNP on a monthly basis, (3) limit enrollment in certain D-
SNPs to those individuals who are also enrolled in an affiliated 
Medicaid managed care organization (MCO), and (4) limit the number of 
D-SNPs an MA organization, its parent organization, or an entity that 
shares a parent organization with the MA organization, can offer in the 
same service area as an affiliated Medicaid MCO in order to reduce 
``choice overload'' of D-SNP options in certain markets. Affiliated 
Medicaid MCOs are Medicaid MCOs offered by the MA organization, the 
same parent organization, or another subsidiary of the parent 
organization. In combination, our proposals would create more 
opportunities for dually eligible individuals to elect integrated D-
SNPs, more opportunities to switch to Traditional Medicare, and fewer 
opportunities to enroll in MA-PD plans that do not integrate Medicare 
and Medicaid services. Table HC1 summarizes the combined effects of 
these proposals, then we describe each proposal in greater detail.

[[Page 78568]]

[GRAPHIC] [TIFF OMITTED] TP15NO23.020

1. Changes to the Special Enrollment Periods for Dually Eligible 
Individuals and Other LIS Eligible Individuals
---------------------------------------------------------------------------

    \162\ We propose that during AEP and other available enrollment 
periods, MA organizations would not be permitted to enroll dually 
eligible individuals into a D-SNP where such enrollment would not 
result in aligned enrollment with an affiliated Medicaid MCO offered 
in the same service area (that is, a Medicaid MCO offered by the MA 
organization, its parent organization, or another subsidiary of the 
parent organization).
---------------------------------------------------------------------------

    Section 1860D-1(b)(3)(D) of the Act directs the Secretary to 
establish a SEP for full-benefit dually eligible individuals under Part 
D. The SEP, subsequently referred to as the continuous dual SEP, 
codified at Sec.  423.38(c)(4), was later extended to all other 
subsidy-eligible beneficiaries by regulation.\163\ The continuous dual 
SEP allowed eligible beneficiaries to make Part D enrollment changes 
(that is, enroll in, disenroll from, or change Part D plans, including 
Medicare Advantage Prescription Drug (MA-PD) plans) throughout the 
year, unlike other Part D enrollees who generally may switch plans only 
during the AEP or via other applicable SEPs each year.
---------------------------------------------------------------------------

    \163\ Medicare Program; Policy and Technical Changes to the 
Medicare Advantage and the Medicare Prescription Drug Benefit 
Programs (CMS-4085-F) (75 FR 19720 (April 15, 2010)).
---------------------------------------------------------------------------

    In the April 2018 final rule, we cited concerns with usage of the 
continuous dual SEP related to enrollees changing plans frequently, 
hindering care coordination efforts by D-SNPs; plans having less 
incentive to innovate and invest in serving high-cost enrollees who may 
disenroll at any time; and agents and brokers targeting dually eligible 
individuals due to their ability to make enrollment elections 
throughout the year (83 FR 16514). We had considered limiting use of 
the SEP to once per calendar year, limiting use of the SEP to two or 
three uses per calendar year, or prohibiting use of the SEP for 
enrollment into non-integrated MA-PD plans, but allowing continuous use 
of the SEP to allow eligible beneficiaries to enroll into (a) 
integrated D-SNPs for dually eligible individuals or (b) standalone 
PDPs (83 FR 16515). We received a mix of concern and support from 
commenters on our proposals.

[[Page 78569]]

    Ultimately, the April 2018 final rule amended the continuous dual 
SEP to allow usage once per calendar quarter during the first nine 
months of the year (that is, one election during each of the following 
time periods: January-March, April-June, July-September). We noted that 
our changes struck a balance between allowing dually eligible 
individuals opportunities to change plans while also maintaining 
stability with care coordination and case management (83 FR 16515).
    The quarterly dual SEP reduced individuals moving from one Part D 
plan (including an MA-PD) to another Part D plan (including an MA-PD) 
as frequently. However, we have concerns with the quarterly dual SEP:
    <bullet> Marketing. We finalized numerous policies to reduce 
aggressive marketing tactics in the April 2023 final rule,\164\ but we 
remain concerned about marketing opportunities, especially when they 
focus on dually eligible individuals who, as a group, have lower levels 
of education, health literacy, and access to resources that could help 
overcome sub-optimal coverage decisions. Because the quarterly dual SEP 
still allows the vast majority of dually eligible individuals to enroll 
in almost any MA-PD plan, they remain a target for marketing activities 
from all types of plans throughout the year.
---------------------------------------------------------------------------

    \164\ Medicare Program; Contract Year 2024 Policy and Technical 
Changes to the Medicare Advantage Program, Medicare Prescription 
Drug Benefit Program, Medicare Cost Plan Program, and Programs of 
All-Inclusive Care for the Elderly (CMS-4201-F) (88 FR 22122 (April 
12, 2023)).
---------------------------------------------------------------------------

    <bullet> Ability to enroll in integrated D-SNPs. The quarterly dual 
SEP does not allow dually eligible individuals to enroll in integrated 
D-SNPs after those individuals have exhausted the opportunities allowed 
by the quarterly dual SEP.
    <bullet> Complexity for States. State Medicaid agencies have shown 
interest in opportunities to bring Medicare and Medicaid managed care 
enrollment policies into greater alignment and reduce complexity. The 
quarterly dual SEP has created some challenges related to aligning 
Medicare and Medicaid enrollment dates for dually eligible individuals 
seeking to enroll in integrated products. For example, California 
needed expenditure authority to waive Sec.  438.56(e)(1) under a 
section 1115(a) demonstration to allow for a Medicaid MCO disenrollment 
to be delayed during the last calendar quarter to maintain exclusively 
aligned enrollment with a corresponding D-SNP. This expenditure 
authority would not have been necessary if the dual SEP was available 
to make elections throughout the year. In the capitated financial 
alignment models of the Financial Alignment Initiative (FAI), we waived 
the quarterly dual SEP rules at State request to allow for monthly 
opportunities for individuals to enroll or disenroll. This alleviated 
the complexity of different Medicare and Medicaid enrollment periods 
and allows dually eligible individuals more opportunities to enroll in 
integrated products.
    <bullet> Complexity for enrollment counselors and individuals. 
Enrollment counselors such as State Health Insurance Assistance 
Programs (SHIPs) and State ombudsman programs have also noted that the 
once-per-quarter rule is complicated. Without any accessible central 
data source on who has already used the quarterly dual SEP, it is not 
clear to options counselors (or sometimes to beneficiaries themselves) 
what enrollment options are truly available to dually eligible 
individuals at any given time.
    To further protect Medicare beneficiaries, reduce complexity for 
States and enrollment counselors, and increasingly promote integrated 
care, we are proposing two SEP changes. Section 1860D-1(b)(3)(D) of the 
Act requires the Secretary to establish special enrollment periods for 
full-benefit dually eligible individuals, although it does not specify 
the frequency or mechanics of those SEPs. Further, section 1860D-
1(b)(3)(C) of the Act grants the Secretary the authority to create SEPs 
for individuals who meet other exceptional circumstances.\165\ Section 
1859(f)(1) of the Act permits the Secretary to set forth regulations 
related to how MA organizations restrict the enrollment of individuals 
who are within one or more classes of special needs individuals. 
Section 1859(f)(6) establishes the authority to adopt a transition 
process to move dually eligible individuals out of SNPs when they are 
not eligible for the SNP. Section 1859(f)(8) of the Act also reflects 
an interest in and goal of furthering the integration of D-SNPs; the 
requirement for us to establish procedures for unified grievance and 
appeals processes and requirement, in section 1859(f)(8)(D), for a 
mandatory minimum level of integration illustrate how efforts to 
increase integration in implementing and adopting standards for the MA 
program further the goals of the program. Based on these authorities, 
we propose to amend Sec.  423.38(c)(4)(i) to replace the quarterly dual 
SEP with a simpler new dual/LIS SEP. The proposed dual/LIS SEP would 
allow dually eligible and other LIS-enrolled individuals to enroll once 
per month into any standalone prescription drug plan.
---------------------------------------------------------------------------

    \165\ Medicare Program; Policy and Technical Changes to the 
Medicare Advantage and the Medicare Prescription Drug Benefit 
Programs (CMS-4085-F) (75 FR 19720 (April 15, 2010)).
---------------------------------------------------------------------------

    Functionally, the revised dual/LIS SEP would mean that such 
individuals could, in any month, switch PDPs or leave their MA-PD for 
Traditional Medicare plus a standalone PDP (plans that only offer 
prescription drug coverage). However, the dual/LIS SEP would no longer 
permit enrollment into MA-PD plans or changes between MA-PD plans, 
although such options would still be available where another election 
period permits.
    In conjunction, based on the statutory authorities described above, 
we also propose to create a new integrated care SEP at Sec.  
423.38(c)(35) for dually eligible individuals. This new integrated care 
SEP would allow enrollment in any month into FIDE SNPs, HIDE SNPs, and 
AIPs for those dually eligible individuals who meet the qualifications 
for such plans.
    In combination, our SEP proposals draw heavily from MedPAC's 2008 
recommendation to Congress, which proposed eliminating dually eligible 
individuals' ability to enroll in MA-PD plans, except special needs 
plans with State contracts, outside of open enrollment. MedPAC also 
recommended dually eligible individuals be able to disenroll from an 
MA-PD plan and return to Traditional Medicare at any time of the 
year.\166\
---------------------------------------------------------------------------

    \166\ Medicare Payment Advisory Commission, ``Report to 
Congress: Medicare Payment Policy,'' March 2008.
---------------------------------------------------------------------------

    For dually eligible individuals, our two SEP proposals would allow 
a monthly election to:
    <bullet> Leave an MA-PD plan for Traditional Medicare by enrolling 
in a standalone PDP,
    <bullet> Switch between standalone PDPs, or
    <bullet> Enroll in an integrated D-SNP such as a FIDE, HIDE, or 
AIP.
    If an eligible individual attempts to use, or uses, both the 
monthly dual/LIS SEP and the integrated care SEP within the same month, 
the application date of whichever SEP is elected last in time is the 
SEP effectuated the first of the following month.
    As a result of these proposals, dually eligible and other LIS-
eligible individuals, like other Medicare beneficiaries, would be able 
to enroll into non-AIP coordination-only D-SNPs \167\ or other MA plans 
only during

[[Page 78570]]

the ICEP, AEP, or where another SEP permits. While the proposed changes 
constrain some enrollment options at certain times of the year, dually 
eligible individuals and other LIS-eligible individuals would never 
have fewer choices than people who are not dually or LIS eligible.
---------------------------------------------------------------------------

    \167\ Dual eligible special needs plans (D-SNPs) are defined at 
Sec.  422.2. ``Coordination-only'' D-SNPs are D-SNPs that neither 
meet the FIDE SNP nor HIDE SNP definition at Sec.  422.2 and are not 
required to cover any Medicaid benefits.
---------------------------------------------------------------------------

    We believe the proposed SEP changes would:
    <bullet> Create more opportunity for dually eligible or LIS 
individuals to leave MA-PD plans if MA is not working well for them, by 
providing an opportunity to enroll in a standalone PDP, which results 
in disenrollment from the MA-PD plan and enrollment in Traditional 
Medicare.\168\
---------------------------------------------------------------------------

    \168\ We note that enrollment in a standalone PDP would not 
result in automatic disenrollment from a Medicare MA-only Private 
Fee-for-Service plan unless that plan also offers Part D.
---------------------------------------------------------------------------

    <bullet> Reduce the incentive for most plans to deploy aggressive 
sales tactics targeted at dually eligible or LIS-enrolled individuals 
outside of the AEP. Based on our review of 2023 plans, approximately 5 
percent of the plans that can currently enroll dually eligible 
individuals using the quarterly dual SEP would be available as options 
for dually eligible individuals using the proposed new monthly 
integrated care SEP.
    <bullet> Increase transparency for Medicare beneficiaries and 
enrollment counselors-such as SHIPs-on opportunities to change plans, 
by eliminating the need to determine whether the current once-per-
quarter SEP opportunity had already been used.
    <bullet> Create more opportunities for enrollment into integrated 
D-SNPs through which an individual could receive Medicare and Medicaid 
services and care coordination from the same organization.
    <bullet> Reduce the burden on States working to align Medicaid MCO 
enrollment to D-SNP enrollment, particularly for States transitioning 
their FAI demonstrations to integrated D-SNPs (all FAI demonstration 
States waived the implementation of the quarterly dual SEP as it proved 
too operationally challenging to implement for Medicare-Medicaid 
Plans).
    <bullet> Strengthen incentives for MA sponsors to also compete for 
Medicaid managed care contracts.
    While there are advantages to the new proposed SEP changes, we 
recognize there are potential challenges:
    <bullet> In States with few or no integrated D-SNPs, dually 
eligible individuals would not be able to change MA-PD plans outside of 
the AEP, MA-OEP, or other available SEPs, limiting their ability to 
change plans as their needs change. Choices outside of AEP, MA-OEP, or 
other available SEPs would similarly be limited in States where 
integrated D-SNPs only serve limited geographic regions.
    <bullet> MA plans may have marginally less incentive to innovate 
and invest in meeting the needs of high-cost dually eligible enrollees 
in a situation where these enrollees may disenroll at any time. This 
could exacerbate the phenomenon of higher-cost dually eligible 
individuals disenrolling from MA.<SUP>169 170 171</SUP>
---------------------------------------------------------------------------

    \169\ GAO Report to Congressional Requesters, Medicare Advantage 
Disenrollment, pages 19-20, June 2021.
    \170\ https://www.gao.gov/assets/gao-17-393.pdf.
    \171\ https://www.healthaffairs.org/doi/10.1377/hlthaff.2015.0272.
---------------------------------------------------------------------------

    <bullet> Some dually eligible individuals would be able to change 
between integrated care plans monthly, which could hinder care 
coordination and case management efforts by those plans.
    <bullet> Finally, since LIS individuals without Medicaid are 
ineligible for integrated D-SNPs, our proposal would limit how the 
dual/LIS SEP can be used for these individuals compared to the current 
scope of the SEP. LIS eligible individuals without full Medicaid and 
partial-benefit dually eligible individuals would have the opportunity 
to disenroll from an MA-PD plan (to Traditional Medicare) in any month 
throughout the year, and could switch between standalone PDPs on a 
monthly basis, but--with few exceptions--could not use the new 
integrated care SEP to enroll in an MA-PD.\172\ These individuals could 
elect an MA-PD or non-AIP coordination-only D-SNP for which they are 
eligible only during the ICEP, the AEP, the MA-OEP (as applicable), or 
by using a different SEP. We estimate approximately one million 
partial-benefit dually eligible individuals and other LIS eligible 
individuals, or 7.5 percent of all individuals with LIS, would no 
longer be able to make quarterly MA-PD elections.\173\ Dually eligible 
and other LIS-eligible individuals would also continue to be eligible, 
if applicable, for other SEPs outlined in Sec. Sec.  422.62(b) and 
423.38(c), which include circumstances like enrolling into a 5-star 
plan, change in residence, or enrollment in PACE.\174\
---------------------------------------------------------------------------

    \172\ There is no Federal prohibition on partial-benefit dually 
eligible individuals enrolling in HIDE SNPs. However, most States 
limit enrollment in HIDE SNPs to full-benefit dually eligible 
individuals.
    \173\ Section 11404 of the Inflation Reduction Act (IRA) amended 
section 1860D-14 of the Act to expand eligibility for the full LIS 
to individuals with incomes up to 150 percent of the Federal poverty 
level (FPL) beginning on or after January 1, 2024. See Medicare 
Program; Contract Year 2024 Policy and Technical Changes to the 
Medicare Advantage Program, Medicare Prescription Drug Benefit 
Program, Medicare Cost Plan Program, and Programs of All-Inclusive 
Care for the Elderly (CMS-4201-F) (88 FR 22123 (April 12, 2023)).
    \174\ 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 (CMS-4182-F) (83 FR 16516 (April 16, 2018)).
---------------------------------------------------------------------------

    Section 423.40(c) currently provides that the effective date of an 
enrollment change in Part D during a special enrollment period 
specified in Sec.  423.38(c), including the existing SEP for dually 
eligible and other LIS-eligible individuals, will be the first day of 
the calendar month following the month in which the election is made, 
unless otherwise noted. We are considering using flexibilities at 
section 1851(f)(4) of the Act (as cross-referenced at section 1860D-
1(b)(1)(B)(iv) of the Act) and at Sec.  423.40(c) to establish a 
Medicare enrollment effective date for the proposed integrated care SEP 
at Sec.  423.38(c)(35) that differs from the effective date in the 
current quarterly dual/LIS SEP at Sec.  423.38(c)(4). Establishing a 
different enrollment effective date could allow better alignment with 
Medicaid enrollment effective dates, for example, in situations where 
States are unable to enroll individuals on the first of the month 
following an enrollment request after a certain cut-off date and delay 
the effective date until the first of the following month. However, 
aligning with Medicaid enrollment effective dates may delay enrollment 
in integrated care plans and prevent dually eligible individuals from 
selecting an integrated D-SNP on a monthly basis.
    We welcome comments on utilizing these flexibilities to establish a 
different enrollment effective date for the proposed integrated care 
SEP. See section VIII.E. for further discussion of alignment of 
enrollment effective dates and a request for comments on this topic.
    We also welcome comments on the proposed changes to the dual SEP, 
the proposed integrated care SEP, and their combined impacts.
2. Enrollment Limitations for Non-Integrated Medicare Advantage Plans
    Aligned enrollment is a key feature of the FAI, PACE, and other 
long-standing integrated care programs such as the Massachusetts' 
Senior Care Options and Minnesota's Senior Health Options that started 
as demonstration programs that were precursors to D-SNPs. Individual 
States may also use their State Medicaid agency contracts (SMAC) to 
limit

[[Page 78571]]

enrollment in a D-SNP to the enrollees in an affiliated Medicaid MCO. 
Further, we have adopted, as part of the definition in Sec.  422.2, 
enrollment limits for FIDE SNPs that require, beginning January 1, 
2025, FIDE SNPs to have exclusively aligned enrollment.
    Separate from contracting with D-SNPs via SMACs, States have 
discretion in how they arrange their Medicaid managed care programs and 
may use Medicaid MCOs to cover a comprehensive scope of Medicaid 
benefits or use prepaid health plans to cover a smaller scope of 
Medicaid benefits.\175\ Many States with Medicaid managed care programs 
select a limited number of Medicaid MCOs through a competitive 
procurement process. State approaches vary regarding eligibility for 
Medicaid MCOs that are part of the State's managed care program (for 
example, whether plans cover just dually eligible enrollees or 
additional Medicaid populations), service areas, and carved-in benefits 
for dually eligible enrollees. While there may be some overlap in plan 
parent organizations operating both Medicaid MCOs and D-SNPs within a 
State, it is not always the case.\176\ Service areas are commonly 
misaligned between Medicaid MCOs and D-SNPs. States have the option to 
pursue EAE when it meets their own Medicaid managed care policy goals 
and objectives; however, placing responsibility solely on States to 
implement and facilitate EAE has often led to a complex market of D-
SNPs, many of which only meet minimum integration requirements, as well 
as a complex set of Federal and State enrollment policies for States, 
plans, advocates, and beneficiaries to navigate.
---------------------------------------------------------------------------

    \175\ See 42 CFR 438.2 for definitions of the terms managed care 
organization (MCO), prepaid ambulatory health plan, and prepaid 
inpatient health plan.
    \176\ MedPAC Report to Congress, Promoting integration in dual-
eligible special needs, table 12-6, page 436, June 2019.
---------------------------------------------------------------------------

    In many service areas, dually eligible individuals face complicated 
enrollment policies, overwhelming marketing, and an increasingly 
complex array of plans purportedly designed especially for them but 
that do not offer meaningful Medicare and Medicaid integration due to 
service area and enrollment misalignment. Enrollment in D-SNPs has 
increased rapidly and now exceeds five million. We estimate that 
approximately 1.26 million were in aligned enrollment as of July 2022, 
and this number has also grown over time.\177\ However, the majority of 
D-SNP enrollment remains in unaligned plans where the individual is 
either in a non-AIP coordination-only D-SNP or in one parent 
organization's D-SNP and another parent organization's Medicaid MCO, 
and the increases in enrollment in such plans has exceeded the 
increases in enrollment for integrated D-SNPs.\178\ Analysis by MedPAC 
in 2019 found that ``14 percent of [D-SNP] enrollees qualify for full 
Medicaid benefits and are in D-SNPs that have a companion managed long 
term services and supports (MLTSS) plan run by the same parent company, 
but they are not enrolled in that MLTSS plan.'' As MedPAC noted, ``some 
enrollees may not be required to enroll in an MLTSS plan, but for those 
who are, these cases of misaligned enrollment are unlikely to lead to 
any meaningful integration given the inherent challenges of 
coordinating the efforts of two separate managed care companies.'' 
\179\
---------------------------------------------------------------------------

    \177\ The FY22 CMS Medicare-Medicaid Coordination Office Report 
to Congress indicates that as of July 2022, 1.75 million full-
benefit dually eligible individuals were enrolled in managed care 
arrangements where the same organization covers both Medicare and 
Medicaid services. CMS utilized the underlying data to estimate that 
of the 1.75 million, 1.26 million were enrolled in a D-SNP and 
affiliated Medicaid MCO offered by the same organization. The 
remaining half million were enrolled in Medicare-Medicaid plans, 
PACE, and managed fee-for-service arrangements. The FY22 Medicare-
Medicaid Coordination Office Report to Congress can be accessed 
here: https://www.cms.gov/files/document/mmco-report-congress.pdf-0.
    \178\ Velasquez, David E., E. John Orav, and Jos[eacute] F. 
Figueroa. Enrollment and characteristics of dual-eligible Medicare 
and Medicaid beneficiaries in integrated care programs, Health 
Affairs 42, No. 5 (2023), 685.
    \179\ MedPAC Report to Congress, Promoting integration in dual-
eligible special needs plans, Chapter 12, page 422, June 2019. 
Retrieved from https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun19_ch12_medpac_reporttocongress_sec.pdf.
---------------------------------------------------------------------------

    While some States have utilized SMACs and selective contracting to 
limit the availability of D-SNPs in the State to those MA organizations 
that also have contracts with the State to cover Medicaid services, 
other D-SNP markets have grown without any limitations on non-
integrated plans. In some markets, parent organizations of MA 
organizations have acquired multiple D-SNPs by purchasing smaller plans 
and have not consolidated the various plans, resulting in one parent 
organization operating multiple D-SNPs within a single State, often 
with overlapping service areas. For States that do not require parent 
organizations to consolidate their plans, multiple D-SNPs of this type 
may continue to operate indefinitely. This creates a market with a 
large number D-SNP options that often do not offer significantly 
different benefits or networks, which creates confusion for plan 
selection and could lead to individuals choosing unaligned Medicare and 
Medicaid plans.
    One State provides a useful (but not necessarily unique) example. 
In this State, for 2023, there are 47 D-SNP plan benefit packages 
(PBPs) offered through 24 different plan contracts. A few parent 
organizations' D-SNPs account for a large share of the plans in this 
State: UnitedHealth Group operates 15 D-SNP PBPs across six different 
MA contracts, Humana offers eight D-SNP PBPs across two MA contracts, 
and Centene offers five D-SNP PBPs across three MA contracts. A search 
of available options in Medicare Plan Finder (MPF) for a dually 
eligible individual in a zip code in this State yields 69 MA-PD 
options, including 19 D-SNPs. Of the 19 D-SNPs, five are offered by 
Centene, three are offered by Elevance, three are offered by 
UnitedHealth Group, and two are offered by Humana. The large number of 
D-SNPs operated by a relatively small group of parent organizations in 
this State illustrates the ``choice overload'' faced by dually eligible 
individuals, their families, advocates, and enrollment counselors.
    Although Medicaid managed care in this State is mandatory for 
dually eligible individuals, and many of the same D-SNP parent 
organizations operate Medicaid MCOs in the State, there is currently no 
EAE required. Additionally, D-SNP and Medicaid MCO service areas are 
misaligned throughout the State, hindering meaningful integration and 
robust care coordination for enrollees despite a relatively small group 
of parent organizations. Further, the abundance of non-AIP 
coordination-only D-SNP options reduces the likelihood that a dually 
eligible individual would select a more integrated option. 
Additionally, numerous plan options in one service area increases the 
potential for marketing issues including agents and brokers targeting 
dually eligible individuals to switch into another plan.
    We recognize that States have policy interests and goals that shape 
their Medicaid managed care programs, and our intent is to help further 
support States interested in implementing EAE. We have historically 
deferred to States to use SMACs to align Medicare and Medicaid plan 
offerings consistent with State policy priorities. However, as the 
number of dually eligible individuals with misaligned enrollment and 
sheer number of D-SNPs have grown, we now believe that Federal 
rulemaking is warranted to promote greater alignment of D-SNPs and 
Medicaid MCOs and to begin to simplify the array of choices.

[[Page 78572]]

We have authority, per section 1857(e)(1) of the Act, to add MA 
contract terms and conditions not inconsistent with the MA statute 
(that is Part C of Title XVIII of the Act) as the Secretary may find 
necessary and appropriate. Given how section 1859(f)(8) of the Act 
reflects a goal of furthering the integration of D-SNPs and how our 
proposal is designed to reduce choice overload situations for dually 
eligible individuals while furthering opportunities for enrollment in 
integrated D-SNPs (that is, FIDE SNPs, HIDE SNPs, and AIPs), we believe 
that the standard in section 1857(e)(1) is met. Further, section 
1854(a)(5) of the Act is clear that we are not obligated to accept any 
and every MA plan bid.
    Based on these authorities, we are proposing new regulations (at 
Sec. Sec.  422.503(b)(8), 422.504(a)(20), 422.514(h), and 
422.530(c)(4)(iii)) related to how MA organizations offer and enroll 
eligible individuals into D-SNPs. Proposed Sec.  422.503(b)(8) would 
establish a new qualification for an MA organization (or new applicant 
to be an MA organization) to offer D-SNP(s) while proposed Sec.  
422.504(a)(20) would establish a new contract term for certain MA 
organizations; both are tied to the substantive limits we are proposing 
in Sec.  422.514(h). Proposed Sec.  422.514(h) would establish 
conditions for how certain MA organizations and D-SNPs may enroll 
dually eligible individuals and limit the number of D-SNPs that may be 
offered by certain MA organizations. Finally, proposed Sec.  
422.530(c)(4)(iii) would establish a new crosswalk to authorize MA 
organizations that are subject to these new enrollment limitations to 
crosswalk their enrollees to a single D-SNP to accomplish aligned 
enrollment.
    Together, our proposals at Sec. Sec.  422.503(b)(8), 
422.504(a)(20), and 422.514(h)(1) and (2) would require the following:
    <bullet> Beginning in plan year 2027, when an MA organization, its 
parent organization, or an entity that shares a parent organization 
with the MA organization, also contracts with a State as a Medicaid MCO 
that enrolls dually eligible individuals in the same service area, D-
SNPs offered by the MA organization, its parent organization, or an 
entity that shares a parent organization with the MA organization, must 
limit new enrollment to individuals enrolled in (or in the process of 
enrolling in) the D-SNP's affiliated Medicaid MCO. This would apply 
when any part of the D-SNP service area(s) overlaps with any part of 
the Medicaid MCO service area, even if the two service areas do not 
perfectly align. Additionally, only one D-SNP may be offered by an MA 
organization, its parent organization, or another MA organization with 
the same parent organization in the same service area as the aligned 
Medicaid MCO. We would only enter into a contract with one D-SNP for 
full-benefit dually eligible individuals in the same service area as 
that MA organization's affiliated Medicaid MCO (with limited exceptions 
as described below).
    <bullet> Beginning in 2030, such D-SNPs must only enroll (or 
continue to enroll) individuals enrolled in (or in the process of 
enrolling in) the affiliated Medicaid MCO. Therefore, by 2030, 
integrated D-SNPs would be required to disenroll individuals who are 
not enrolled in both the D-SNP and Medicaid MCO offered under the same 
parent organization (that is, offered by the parent organization or any 
subsidiary), except that D-SNPs would still be able to use a period of 
deemed continued eligibility to retain enrollees who temporarily lost 
Medicaid coverage as described in Sec.  422.52(d). This also means that 
where an enrollee is temporarily disenrolled from the affiliated 
Medicaid MCO but is expected to be re-enrolled in the affiliated 
Medicaid MCO within the period of deemed continued eligibility, the D-
SNP would not be required to disenroll that enrollee during that 
period.
    Consistent with how CMS believes MA organizations under the same 
parent organization share operational and administrative functions, we 
are proposing to apply the proposed regulations at the parent 
organization level.
    We are proposing a corresponding new provision at Sec.  
422.530(c)(4)(iii) that would provide a new crosswalk exception to 
allow one or more MA organizations that share a parent organization and 
offer D-SNPs subject to these proposed new limits to crosswalk 
enrollees (within the same parent organization and among consistent 
plan types) when the MA organization chooses to non-renew or 
consolidate its current D-SNPs to comply with the new rules in proposed 
Sec. Sec.  422.504(a)(20) and 422.514(h). Currently, Sec.  
422.530(a)(2) does not allow enrollee crosswalks across different 
contracts or plan types. The proposed new crosswalk exception would 
explicitly permit moving enrollments across contracts held by MA 
organizations with the same parent organization; because we are not 
including any explicit exception from the rule in Sec.  422.530(a)(2) 
prohibiting crosswalks to different plan types, the receiving D-SNP 
must be the same plan type as the D-SNP out of which the enrollees are 
crosswalked. We expect MA organizations who offer D-SNPs to leverage 
Sec.  422.530(c)(4)(iii)--as well as standard MA processes to add or 
remove service areas--to come into compliance with Sec.  422.514(h).
    We believe that allowing this crosswalk would limit enrollee 
disruption if MA organizations non-renew D-SNPs to comply with our 
proposal. In addition, we believe this new crosswalk is consistent with 
preserving the evergreen nature of enrollee elections given the 
differences in the benefits being offered by the D-SNPs that are owned 
or controlled by the same parent organization are generally not 
meaningful beyond the scope of annual changes explained in the Annual 
Notice of Change. For example, in contract year 2023, there is one 
parent organization with three MA organizations that offer a total of 
13 HMO D-SNP benefit packages in one State. Only five of those D-SNPs 
enroll full-benefit dually eligible individuals, and the benefits 
offered in each of the D-SNPs are substantively similar.
    We are proposing the following exceptions to our proposals at 
Sec. Sec.  422.504(a)(20) and 422.514(h)(1) and (2):
    <bullet> In certain circumstances, State D-SNP policy may require 
the need for more than one D-SNP for full-benefit dually eligible 
individuals to operate in the same service area. Under Sec.  
422.514(h)(3)(i), we propose to permit an MA organization, its parent 
organization, or an entity that shares a parent organization with the 
MA organization, offering more than one D-SNP for full-benefit dually 
eligible individuals in the same service area as that MA organization's 
affiliated Medicaid MCO only when a SMAC requires it. For example, 
where a SMAC limits enrollment for certain groups into certain D-SNPs 
(such as by age group), the MA organization may offer additional D-SNPs 
for different groups of full-benefit dually eligible individuals in the 
same service area accordingly. This exception allows for States that 
currently have different integrated D-SNP programs based on age or 
benefit design to continue to operate these programs and allows States 
the flexibility to design future integrated D-SNP programs with 
eligibility nuances should they so choose. This proposed exception 
would only be available where the SMAC requires different eligibility 
groups for the different D-SNPs that are offered by the same MA 
organization, its parent organization, or another MA

[[Page 78573]]

organization that shares the parent organization.
    <bullet> Numerous parent organizations operate both HMO and PPO D-
SNPs in States where they also contract with a State as a Medicaid MCO, 
and the proposed regulation at Sec. Sec.  422.504(a)(20) and 
422.514(h)(1) and (2) would apply to both HMO and PPO D-SNPs. However, 
as noted above, Sec.  422.530(a)(2) does not allow enrollee crosswalks 
across different plan types, and we are not including any exception 
from that existing rule in the new crosswalk exception proposed at 
Sec.  422.530(c)(4)(iii). To minimize enrollee disruption, our proposal 
would not prohibit an MA organization, its parent organization, or 
another MA organization that shares a parent organization with the MA 
organization, from continuing to operate both an HMO D-SNP and a PPO D-
SNP in a State where the proposed new policy applies. However, to 
achieve the goals of the new regulation, including simplification of 
the D-SNP market and promotion of integrated care through aligned 
Medicare and Medicaid products, we propose at Sec.  422.514(h)(3)(ii) 
that the MA organization, its parent organization, or another MA 
organization that shares a parent organization with the MA organization 
may offer (or continue to offer) both the HMO and PPO D-SNPs only if 
they no longer accept new full-benefit dually eligible enrollees in the 
same service area as the D-SNP affected by the new regulations at 
Sec. Sec.  422.504(a)(20) and 422.514(h). Under this proposal, the MA 
organization, its parent organization, and another MA organization that 
shares a parent organization with the MA organization may only accept 
new enrollment in one D-SNP for full-benefit dually eligible 
individuals in the same service area as an affiliated Medicaid MCO, and 
such new enrollment is limited to the full-benefit dually eligible 
individuals who are enrolled (or are enrolling) in the affiliated 
Medicaid MCO.
    We also propose at Sec.  422.503(b)(8) that in service areas in 
which a D-SNP limits enrollment to individuals enrolled in (or in the 
process of enrolling in) an affiliated Medicaid MCO, the MA 
organization, its parent organization, or entities that share a parent 
organization with the MA organization may not newly offer another D-SNP 
for full-benefit dually eligible individuals, if it would result in 
noncompliance with Sec.  422.514(h). Additionally, we propose at Sec.  
422.504(a)(20) to establish a new contract term for MA organizations 
that offer D-SNPs to require compliance with the enrollment limits we 
are proposing to add to Sec.  422.514(h). These proposals would apply 
regardless of any EAE requirements in State SMACs, unless the exception 
to accommodate State policy choices, described in proposed Sec.  
422.514(h)(3)(i), applies.
    Table HC2 summarizes enrollment scenarios to illustrate the 
combined effects of our proposed SEP changes and enrollment 
limitations. The term ``D-SNP's parent organization'' as used in the 
table includes the MA organization that offers the D-SNP, the MA 
organization's parent organization, and any other entity (MA 
organization or otherwise) that shares the parent organization with the 
MA organization that offers the D-SNP.
[GRAPHIC] [TIFF OMITTED] TP15NO23.021

    We look to a hypothetical example of how the proposed regulations 
would likely play out in the market. For this example, Parent 
Organization Alpha operates three MA organizations in Montgomery 
County. For the sake of this example, the service areas for all D-SNPs 
encompass Montgomery County, and each of the D-SNPs enrolls both full-
benefit and partial-benefit dually eligible individuals of all ages.

[[Page 78574]]

[GRAPHIC] [TIFF OMITTED] TP15NO23.022

    We anticipate that under proposed Sec.  422.514(h), for periods 
beginning on or after January 1, 2027, Parent Organization Alpha would 
have to choose one of the three D-SNPs offered by its MA organization 
subsidiaries to align with the Plan Omega Medicaid MCO. For this 
example, MA Organization Omega chooses HIDE D-SNP Omega 001 to serve as 
the D-SNP aligned with Medicaid MCO Omega and permitted to continue 
under proposed Sec.  422.514(h). Under the proposed crosswalk authority 
at Sec.  422.530(c)(4)(iii), MA Organization Omega and MA Organization 
Gamma would be able to move enrollees from Gamma 001 into Omega 001 on 
January 1, 2027. MA Organization Gamma could then convert HIDE D-SNP 
Gamma 001 to coordination-only D-SNP Gamma 001 and keep that plan open 
for partial-benefit dually eligible individuals, or elect to non-renew 
Gamma 001 and keep only Omega 001 as the plan aligned with the Omega 
Medicaid MCO into which full-benefit dually eligible individuals may 
enroll so long as they are also enrolled in the Omega Medicaid MCO. 
Further, under proposed Sec.  422.514(h)(3)(ii), MA Organization Omega 
could retain the HIDE PPO D-SNP, but it would be closed to new 
enrollment for full-benefit dually eligible individuals in Montgomery 
County.
[GRAPHIC] [TIFF OMITTED] TP15NO23.023

    Our proposals on enrollment limitations for non-integrated D-SNPs 
would apply based on an MA organization having an affiliated Medicaid 
MCO. However, we are considering whether our proposals should apply 
where an MA organization has other affiliated Medicaid managed care 
plan options as well, including prepaid inpatient health plans (PIHPs) 
and prepaid ambulatory health plans (PAHPs). PIHPs and PAHPs are 
limited in what they cover and do not have comprehensive risk 
contracts. Some States use PIHPs or PAHPs to deliver specific 
categories of services, like behavioral health, or a single benefit, 
such as non-emergency medical transportation, using a single 
contractor. The revenue for a PIHP or PAHP is usually less than the 
revenue for an MCO. As such, to the extent our proposal incentivizes an 
organization to end its Medicaid managed care contracts to avoid our 
new contracting limitations, that incentive would be stronger for a 
PIHP or PAHP than an MCO. Therefore, we are concerned that applying our 
proposals to PIHPs and PAHPs could create incentives that are 
disruptive yet do not significantly further the goals of our proposals. 
We welcome comments on this issue.
    If we finalize our proposals, we would consider updates to the 
systems and supports designed to aid individuals in

[[Page 78575]]

making Medicare choices. This would include MPF, HPMS, and other 
resources that help to outline available plan choices to individuals, 
SHIP counselors, and others. This may be especially important where 
dually eligible individuals have choices that would vary based on the 
type of plan and time of year. We would consider the best ways to show 
only those plans available to individuals and highlight options that 
align with Medicaid enrollment. We welcome recommendations on how the 
choice architecture could best support the proposals or objectives 
described in this section.
    Overall, we believe our proposals at Sec. Sec.  422.503(b)(8), 
422.504(a)(20), 422.514(h), and 422.530(c)(4)(iii) would:
    <bullet> Increase the percentage of D-SNP enrollees who are in 
aligned enrollment, and--over time--exclusively aligned enrollment 
(EAE), which would increase access to the comprehensive coordination of 
care, unified appeal processes across Medicare and Medicaid, 
continuation of Medicare services during an appeal, and integrated 
materials that come with enrollment in one or more of the various types 
of integrated D-SNPs. The impact would be concentrated in those States 
that have Medicaid managed care but do not have EAE requirements 
already. In such States, to comply with the proposals, MA organizations 
that have multiple D-SNP PBPs available to full-benefit dually eligible 
individuals and that also offer (or have parent organizations that 
offer) Medicaid MCOs in the same service area would likely choose to 
consolidate their PBPs down to a single PBP for full-benefit dually 
eligible individuals that is aligned with their Medicaid MCO that fully 
or partially overlaps the D-SNPs service area. Such MA organizations 
could operate non-AIP coordination-only D-SNPs both for service areas 
where they do not serve beneficiaries on the Medicaid side and for 
partial-benefit dually eligible individuals. (We believe that 
consolidation is more likely due to the potential administrative burden 
of offering multiple D-SNPs for which enrollment is restricted.)
    <bullet> Reduce the number of D-SNP options overall, and thus 
reduce choice overload and market complexity where parent organizations 
offer multiple D-SNP options in the same or overlapping service areas.
    <bullet> Remove some incentives for agents and brokers to target 
dually eligible individuals (especially among employed or captive 
agents affiliated with plans that do not offer integrated D-SNPs), thus 
lessening the assistance needed from advocates and SHIP counselors to 
correct enrollment issues.
    <bullet> Simplify provider billing and lower the risk of 
inappropriate billing, as more enrollees would be in D-SNPs with 
aligned enrollment.
    <bullet> Promote integrated care and create more opportunities to 
provide truly integrated experience for beneficiaries by requiring 
plans to align enrollment (for example, D-SNPs can better coordinate 
care across Medicare and Medicaid when plans are aligned).
    <bullet> In 2030, increase the number of D-SNPs with EAE, and 
therefore increase the number of D-SNPs that would be AIPs that are 
required to use unified appeals and grievance procedures and 
continuation of Medicare benefits pending appeal.
    <bullet> Potentially lead to more States requiring D-SNP-only 
contracts (see Sec.  422.107(e)) after 2030, as aligned enrollment and 
service areas for D-SNPs with affiliated Medicaid MCOs would be 
Federally required, allowing States to receive the benefits of D-SNP-
only contracts (like HPMS access for oversight and information sharing, 
greater transparency on Star Ratings specific to D-SNP enrollees in 
their State, increased transparency on health care spending, among 
other benefits).\180\
---------------------------------------------------------------------------

    \180\ MMCO memo on 42 CFR 422.107(e) available here: https://www.cms.gov/files/document/stateoppsintegratedcareprogs.pdf.
---------------------------------------------------------------------------

    While there are many benefits to our proposals, we acknowledge 
there are certain challenges:
    <bullet> Our proposals would reduce the number of D-SNP options for 
Medicaid MCO enrollees in some States. In general, we share MedPAC's 
assessment that cases of misaligned enrollment are unlikely to lead to 
any meaningful integration. However, it is plausible that some dually 
eligible individuals could benefit from the unique combinations of 
provider networks and supplemental benefits that could be possible only 
by enrolling in misaligned Medicare and Medicaid plans.
    <bullet> Making plan choices clear under our proposals to dually 
eligible individuals, SHIP counselors and others would require changes 
to MPF, HPMS, and other CMS public materials explaining Medicare 
coverage options. Systems changes often present unknown challenges and 
a learning curve for users while they become accustomed to new updates.
    <bullet> It also may seem that our proposal on limiting enrollment 
in D-SNPs offered by MA organizations with affiliated Medicaid MCOs, in 
isolation, would disadvantage parent organizations that choose to offer 
Medicaid MCOs as well as D-SNPs because such organizations would be 
limited in the number of D-SNP offerings and would be required to align 
their enrollment between D-SNP and MCO for full-benefit dually eligible 
individuals. However, our SEP proposals would have the opposite effect 
by permitting enrollment into integrated D-SNP options that cover both 
Medicare and Medicaid benefits using the new one-time-per month SEP. 
Therefore, we believe our proposals, in combination, would maintain a 
high level of competition and choice, even while imposing some new 
constraints.
    <bullet> MA organizations that operate both D-SNPs and Medicaid 
MCOs might elect to participate in fewer competitive Medicaid 
procurements (or exit Medicaid managed care in ``any willing provider'' 
States) to be exempted from the proposed restrictions on plan 
enrollment and number of plan offerings. This could adversely affect 
competition and the minimum choice requirements in Sec.  438.52 for 
Medicaid managed care programs. However, our SEP proposals would have 
the opposite effect, since only integrated D-SNPs could benefit from 
the new integrated care SEP, and overall, we believe our proposals, in 
combination, maintain strong incentives for organizations to compete 
for Medicaid managed care contracts.
    <bullet> The enrollment and eligibility restrictions--without the 
offsetting proposed SEP changes--could incentivize sponsors to create 
D-SNP look-alikes or other types of MA plans to build enrollment of 
dually eligible individuals without being subject to the enrollment 
limits and integration requirements associated with D-SNPs (although we 
plan to mitigate this risk with proposed revisions to Sec.  422.514(d) 
and (e) in section VIII.G of this proposed rule). Finally, beginning in 
2030, our proposal would no longer allow some enrollees to stay in 
their current D-SNPs, causing some enrollee disruption where the D-SNPs 
were unable to completely align their D-SNP and Medicaid MCO 
populations.
    We welcome comments on our overall policy direction, specific 
proposals, and analysis of their likely effects.

D. Comment Solicitation: Medicare Plan Finder and Information on 
Certain Integrated D-SNPs

    Medicare Plan Finder (MPF) is an online searchable tool located on 
the Medicare.gov website that allows individuals to compare options for 
enrolling in MA or Part D plans. Medicare beneficiaries can also enroll 
in a plan using MPF. Each year, we work

[[Page 78576]]

to improve its functionality by implementing enhancements to MPF.
    MPF users can find information on D-SNPs that also provide Medicaid 
benefits for dually eligible individuals. However, the extent to which 
MPF highlights those plans is currently limited. We are soliciting 
comment to inform our intent to improve MPF functionality in the future 
to make it easier for dually eligible MPF users to assess MA plans that 
cover their full array of Medicare and Medicaid benefits.
    One important consideration is how MPF displays benefits offered by 
MA and Part D plans. Currently, MPF only displays benefits that are 
included in the MA plan benefit package (PBP) (that is, Medicare Parts 
A and B benefits, Part D coverage, approved Medicare supplemental 
benefits, and Value Based Insurance Design (VBID)/Uniform Flexibility 
(UF)/Supplemental Benefits for Chronically Ill (SSBCI)). For most MPF 
users, this represents the totality of their coverage.
    However, for applicable integrated plans (AIPs), as defined at 
Sec.  422.561, D-SNP enrollment is limited to those individuals who 
also receive Medicaid benefits through the D-SNP or affiliated Medicaid 
managed care organization (MCO) under the same parent organization. For 
these D-SNPs, the benefits listed in MPF accurately reflect those 
covered by Medicare but do not reflect all the benefits available to 
all enrollees in the D-SNP.
    For example, in most States, all dually eligible individuals who 
qualify to enroll in an AIP would have access to Medicaid-covered non-
emergency medical transportation (NEMT). However, MPF currently only 
displays NEMT as a covered benefit for any MA plan if it is also 
covered as an MA supplemental benefit. As such, all other things equal, 
an MA plan that offers NEMT as an MA supplemental benefit appears in 
MPF to have more generous coverage than an AIP that does not cover NEMT 
as an MA supplemental benefit but does cover it under the affiliated 
Medicaid MCO contract.
    Information about only Medicare benefits covered by MA plans 
available to the individual, although accurate, may not provide as much 
information to dually eligible MPF users as would be beneficial, since 
the combination of available Medicare and Medicaid benefits available 
through some integrated D-SNPs may be greater than the Medicare 
benefits reflected in MPF. It may also create a perverse incentive for 
D-SNPs to offer certain types of supplemental benefits for Medicare 
marketing purposes even when the same services are already available to 
all enrollees in the plan through Medicaid.
    We believe there is an opportunity to better inform dually eligible 
MPF users. For AIPs, we are considering adding a limited number of 
specific Medicaid-covered benefits (for example, dental, NEMT, certain 
types of home and community-based services, or others) to MPF when 
those services are available to enrollees through the D-SNP or the 
affiliated Medicaid MCO. We would limit this functionality to AIPs, 
because in such plans all enrollees--by definition--receive Medicaid 
benefits through the AIP.
    We would not include in the MPF display any Medicaid benefits that 
are available but only through a separate carve-out. Consider, for 
example, a State in which NEMT is available to dually eligible 
individuals but through a Statewide vendor separate from the AIP. In 
this instance, displaying NEMT in MPF would accurately represent that 
all D-SNP enrollees have coverage for NEMT in Medicaid, but it would 
not accurately characterize the D-SNP's role (or the role of the 
affiliated Medicaid MCO offered by D-SNP parent organization) in 
delivering the service.
    We continue to consider whether to indicate which services are 
Medicare supplemental benefits and which are Medicaid, weighing whether 
the additional information would be worth the added complexity.
    Displaying Medicaid benefits in MPF, even with the limitations 
described above, would present new operational challenges for CMS. We 
do not currently capture the necessary information for AIPs or other D-
SNPs in a systematic manner to populate MPF with information about 
Medicaid benefits covered by D-SNPs. (Medicaid benefit information is 
included in State Medicaid agency contracts (SMACs) that D-SNPs submit 
annually to CMS, but the information is not standardized and can be 
inconsistent and difficult to retrieve. Also, the current timing of 
SMAC submissions by the first Monday in July may not allow CMS enough 
time to review the SMACs and make the Medicaid benefits information 
available to MPF for an early October release.) Another way to 
potentially capture the necessary information would be for us to 
provide a mechanism by which D-SNPs can report it to us annually. We 
solicit comment on the practicality and means for accomplishing this. 
Our experiences with integrated PBPs in the Medicare-Medicaid Financial 
Alignment Initiative would inform our implementation, but enhancements 
to MPF would require effort and some opportunity cost. Nonetheless, we 
believe we can better inform dually eligible MPF users about the 
benefits to which they are entitled and, in doing so, better integrate 
their experience across Medicare and Medicaid. With support from the 
Administration for Community Living and the National Council on Aging, 
the My Care My Choice website is currently available to showcase 
integrated care plan options (and more) for three States (California, 
Michigan, and Ohio).\181\ We are also interested in stakeholders 
submitting comments about any features from the My Care My Choice 
website that are particularly helpful for individuals in understanding 
and making plan choices.
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    \181\ The My Care My Choice website is available at: https://www.mycaremychoice.org/en.
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    Such enhancements to MPF would not require rulemaking. We are 
soliciting comments on the concepts described above to inform our 
decision about whether and how to implement changes to MPF along these 
lines.

E. Comment Solicitation: State Enrollment Vendors and Enrollment in 
Integrated D-SNPs

    We, along with our State partners, have worked to create integrated 
care options for dually eligible individuals. When individuals choose 
to enroll, we want the enrollment process to be easy to navigate. 
Unfortunately, there remain technical challenges that can impede the 
ease of enrollment in integrated D-SNPs, including misalignment of 
Medicare and Medicaid enrollment processes, start dates, and related 
operational challenges for States and plans, as well as potentially 
confusing non-integrated enrollee communication materials.
    In the FAI, CMS delegated eligibility and enrollment functions for 
Medicare-Medicaid Plans (MMPs) to States by waiving regulations at 42 
CFR part 422, subpart B, insofar as they were inconsistent with the 
passive enrollment process used for each demonstration and with 
limiting enrollment in MMPs to certain dually eligible individuals. 
Operationally, many States have leveraged their State Medicaid 
enrollment vendors to operationalize enrollment, eligibility, or both. 
Which functions FAI States have chosen to delegate to their enrollment 
vendors or keep in-house (for example, enrollment vendor call center, 
enrollment noticing, eligibility determinations and enrollment 
processing) vary depending on the State.
    Within the context of the FAI demonstrations, the use of a State 
enrollment vendor serves multiple purposes:

[[Page 78577]]

    <bullet> Effectuating Medicare and Medicaid enrollment 
simultaneously to avoid misalignment between enrollment start and end 
dates,
    <bullet> Serving as an unbiased source of information about 
integrated managed care plans and coverage options, and
    <bullet> Reducing the risk of real or perceived conflicts of 
interest when plans initiate enrollment directly.
    Outside of the FAI, dually eligible individuals elect MA plans, 
including D-SNPs, by enrolling directly with the plan, or Third-Party 
Marketing Organizations, or via 1-800-Medicare and the Medicare Online 
Enrollment Center. This creates special challenges for D-SNPs that have 
exclusively aligned enrollment (EAE) with affiliated Medicaid MCOs 
because these D-SNPs then need to separately coordinate enrollment of 
the dually eligible individual into the D-SNP's affiliated Medicaid 
MCO. Some States have expressed interest in leveraging State enrollment 
vendors, including enrollment brokers as described in section 
1903(b)(4) of the Act, to effectuate EAE for integrated D-SNPs and 
their affiliated Medicaid MCOs.
    Based on this experience, we are assessing ways to:
    <bullet> Promote enrollment in integrated D-SNPs and reduce the 
likelihood of misaligned Medicare and Medicaid managed care enrollment 
for beneficiaries,
    <bullet> Work toward an integrated D-SNP enrollment process that is 
operationally practical for both CMS and States,
    <bullet> Create alignment--to the extent feasible--between Medicare 
and Medicaid managed care enrollment start and end dates,
    <bullet> Protect beneficiaries from abusive enrollment practices 
without creating barriers to enrollment into a plan of choice, and
    <bullet> Streamline beneficiary messaging and communication related 
to enrollment.
1. Current Opportunity for Use of State Enrollment Vendors for 
Enrollment in Integrated D-SNPs
    States can utilize Medicaid enrollment vendors for enrollment in 
integrated D-SNPs through requirements in the SMAC required by Sec.  
422.107. States may thus require D-SNPs to contract directly with the 
State's enrollment vendor to verify D-SNP eligibility and effectuate D-
SNP enrollment transactions. While these contracts could govern the 
respective obligations of the broker and the D-SNP, they would have to 
be uniform for all D-SNPs in the State, and in order to avoid a 
violation of section 1903(b)(4) of the Act and Sec. Sec.  438.71(c)(2) 
and 438.810 regarding a broker having a financial interest in a 
provider or managed care plan in the State, the State would have to 
compensate its enrollment broker for performing these functions. D-SNPs 
would be in the position to provide the necessary information and 
oversight of the enrollment mechanisms and activities. D-SNPs would 
still be subject to existing regulations at Sec.  422.504(i), 
maintaining ultimate responsibility for adhering to and complying with 
all terms and conditions of their contract with CMS.
    States can implement, and require of D-SNPs, specific messaging 
directing dually eligible individuals to take enrollment actions via 
the State's enrollment vendor only, similar to the noticing and 
messaging that applies in the FAI demonstrations. States could choose 
which functions to direct the D-SNPs to contract with the enrollment 
vendor for via the SMAC. States could also choose to direct the D-SNPs 
via the SMAC to not elect use of the Medicare Online Enrollment Center.
    States could require D-SNPs to transfer prospective enrollees to 
the State's enrollment vendor for eligibility confirmation, as MMPs are 
required to do under the FAI demonstrations (for example, via warm 
transfer, in which the D-SNP staff transfers the prospective enrollee 
to the State's enrollment vendor but passes on the relevant information 
about the prospective enrollee). The enrollment vendor or the D-SNP--
depending upon the contractual arrangement--would then effectuate the 
enrollment or disenrollment for Medicare and Medicaid. States could 
also require plans to direct enrollees to their vendor for 
disenrollments. Currently, under FAI, MMPs cannot accept enrollment 
requests directly from an individual or process the request, but 
instead they must forward the request to the State or State's 
enrollment vendor within two business days.
    Under an arrangement in which a State requires D-SNPs to contract 
with the State's enrollment vendor, D-SNPs would retain the 
responsibility to oversee any functions delegated to the State's 
enrollment vendor under Sec.  422.504 provisions that require MA plans 
to oversee first tier, downstream, and related entities. However, as 
noted earlier, financial arrangements would need to be structured to 
avoid violating the independence and conflict of interest limitations 
that apply to enrollment brokers under section 1903(b)(4) of the Act 
and Sec. Sec.  438.71(c) and 438.810.
    Requiring D-SNPs to contract with a State's enrollment vendor for 
enrollment and eligibility functions could create a simpler, 
streamlined enrollment experience for dually eligible individuals and 
may reduce the risk of misaligned Medicare and Medicaid enrollment. As 
in the FAI demonstrations, the State's enrollment vendor would need to 
implement Medicare managed care eligibility and enrollment policies, 
such as Medicare special enrollment periods and Comprehensive Addition 
and Recovery Act provisions.
    Finally, like the FAI demonstrations, States can prohibit D-SNPs, 
via SMACs, from using agents and brokers to perform the activities 
described in Sec. Sec.  422.2274 and 423.2274.
2. Medicaid Managed Care Enrollment Cut-Off Dates
    One challenge of applying FAI enrollment processes outside the 
demonstration context is alignment of Medicaid and Medicare managed 
care enrollment start and end dates. Sections 1851(f)(2) and 1860D-
1(b)(1)(B)(iv) of the Social Security Act, and regulations codified at 
Sec. Sec.  422.68 and 423.40(c) respectively, generally require that 
Medicare enrollments become effective on the first day of the first 
calendar month following the date on which the election or change is 
made, although section 1851(f)(4) of the Act and Sec. Sec.  422.68(d) 
and 423.40(c) allow CMS flexibility to determine the effective dates 
for enrollments that occur in the context of special enrollment 
periods. Medicaid managed care regulations at Sec.  438.54 do not 
specify the timelines or deadlines by which any enrollment must be 
effective.
    Some States have cut-off dates after which enrollment in a Medicaid 
managed care plan is not effectuated until the first calendar day of 
the next month after the following month. (For example, an application 
received on March 28 would be effective May 1 in some States.) If a 
dually eligible individual is trying to enroll in an integrated D-SNP 
at the end of a month in a State with a Medicaid managed care 
enrollment cut-off date, there could be a monthlong lag between their 
Medicare managed care effective date and Medicaid managed care 
effective date. The lag in start dates between Medicare and Medicaid 
services for an integrated D-SNP can be confusing to enrollees, 
operationally challenging for integrated plans, and difficult to 
describe in plan materials, particularly in instances where the D-SNP 
and Medicaid MCO are described as a single integrated organization.

[[Page 78578]]

    We are interested in learning more about reasons for implementing 
Medicaid managed care enrollment cut-off dates and the barriers, as 
well as potential solutions, to aligning Medicare and Medicaid managed 
care enrollment start and end dates. We invite comment from interested 
parties, including States, D-SNPs, and Medicaid managed care plans, 
about their specific operational challenges related to potential 
changes to Medicaid cut-off dates to align them with the Medicare start 
date.
3. Comment Solicitation
    We are seeking feedback on the feasibility of the approach to 
enrollment outlined above (requiring integrated D-SNPs to contract with 
State enrollment brokers), as well as any specific concerns about 
States implementing it.
    We are soliciting comments on, but not limited to, the following 
topics:
    <bullet> What challenges do individuals face when trying to enroll 
in integrated D-SNPs?
    <bullet> What are States' reasons for having a specific Medicaid 
managed care enrollment cut off date in place?
    <bullet> What type of operational or systems barriers do States and 
Medicaid managed care plans face to making changes to their Medicaid 
enrollment cut-off date to align with the Medicare managed care 
enrollment start date?
    <bullet> What potential concerns would stakeholders have about CMS 
using flexibilities at section 1860D-1(b)(1)(B)(iv) of the Act and 
Sec.  423.40(c) to determine effective dates for Medicare enrollments 
that occur in the context of our proposed special enrollment period for 
integrated care? (For example, Medicare enrollment effective dates that 
align with Medicaid enrollment effective dates, even if they are not 
the first day of the first calendar month following the date on which 
the election or change is made.)
    <bullet> Are there operational or systems barriers for States and 
Medicaid managed care plans to align disenrollment dates with Medicare?
    <bullet> What concerns, if any, should we consider with States 
requiring D-SNPs to route enrollment through the State enrollment 
vendor via the SMAC? Are there any Federal regulations, other than or 
in addition to the limitations on enrollment brokers under section 
1903(b)(4) and Sec. Sec.  438.71(c) and 438.810, that interested 
parties view as an impediment to this option?
    <bullet> What type of technical assistance related to effectuating 
MA plan and D-SNP enrollment and eligibility processes would be helpful 
to States?
    <bullet> What concerns should we consider about potential abusive 
enrollment practices?
    <bullet> What are States' current requirements and policies related 
to agents and brokers?
    <bullet> Are there other aspects of the integrated enrollment and 
disenrollment processes in FAI that should apply to D-SNPs?

F. Clarification of Restrictions on New Enrollment Into D-SNPs via 
State Medicaid Agency Contracts (SMACs) (Sec. Sec.  422.52 and 422.60)

    To elect a specialized MA plan for special needs individuals as 
defined at Sec.  422.2 (special needs plans or SNPs), an individual 
must meet the eligibility requirements for the specific type of SNP in 
which the individual wishes to enroll. At Sec.  422.52(b), we define 
the eligibility requirements for individuals to enroll in a SNP. These 
eligibility requirements indicate that an individual must meet the 
regulatory definition of a special needs individual at Sec.  422.2, 
meet the eligibility requirements for the specific SNP they elect to 
enroll in, and be eligible to elect an MA plan under Sec.  422.50. For 
D-SNPs, we also require at Sec.  422.107(c)(2) that the categories and 
criteria for eligibility for dually eligible individuals to enroll in 
the SNP be included in the SMAC between the State and the D-SNP. D-SNPs 
must restrict enrollment eligibility categories or criteria consistent 
with the SMAC.
    Currently, numerous States add eligibility categories and criteria 
to their SMACs that restrict new D-SNP enrollment to prioritize and 
promote integrated care. For example, some States only allow D-SNPs to 
enroll full-benefit dually eligible individuals. Other States only 
allow D-SNPs to enroll individuals who are also in an affiliated 
Medicaid managed care plan, creating exclusively aligned enrollment. 
State restrictions serve an important purpose in maximizing the number 
of dually eligible individuals who receive coordinated services through 
the same organization for both Medicare and Medicaid; minimizing 
disruption for enrollees currently served by existing D-SNPs; and 
allowing for the creation of D-SNP benefit packages that are tailored 
to certain subsets of dually eligible individuals.
    State limitation of D-SNP enrollment to certain populations has 
been a feature throughout the history of D-SNPs. Nonetheless, we 
believe we can further clarify our regulations.
    We propose to revise Sec.  422.52(b)(2) to be explicit that to be 
eligible to elect a D-SNP, an individual must also meet any additional 
eligibility requirements established in the SMAC. We also propose to 
revise Sec.  422.60(a)(1) and add Sec.  422.60(a)(3) to be more 
explicit that MA organizations may restrict enrollment in alignment 
with Sec.  422.52(b)(2). Neither proposal is intended to change our 
longstanding policy. We do not expect any new burden associated with 
these proposed changes because States are already including eligibility 
categories and criteria in their SMACs and we are reviewing those 
accordingly.

G. Contracting Standards for Dual Eligible Special Needs Plan Look-
Alikes (Sec.  422.514)

    In 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 (85 FR 
33796) (hereinafter referred to as the June 2020 final rule), CMS 
finalized the contracting limitations for D-SNP look-alikes at Sec.  
422.514(d) and the associated authority and procedures for 
transitioning enrollees from a D-SNP look-alike at Sec.  422.514(e). 
For plan year 2022 \182\ and subsequent years, as provided in Sec.  
422.514(d)(1), CMS does not enter into a contract for a new non-SNP MA 
plan that projects, in its bid submitted under Sec.  422.254, that 80 
percent or more of the plan's total enrollment are enrollees entitled 
to medical assistance under a State plan under Title XIX. For plan year 
2023 and subsequent years, as provided in Sec.  422.514(d)(2), CMS will 
not renew a contract with a non-SNP MA plan that has actual enrollment, 
as determined by CMS using the January enrollment of the current year, 
consisting of 80 percent or more of enrollees who are entitled to 
medical assistance under a State plan under Title XIX, unless the MA 
plan has been active for less than 1 year and has enrollment of 200 or 
fewer individuals at the time of such determination.
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    \182\ CMS amended Sec.  422.514(d)(1) in the April 2023 final 
rule, so the regulation text now refers to plan year 2024 and 
subsequent years; however, the regulation was in effect, with the 
reference to 2022 and subsequent years, as described here.
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    We established these contract limitations to address the 
proliferation and growth of D-SNP look-alikes, which raised concerns 
related to effective implementation of requirements for D-SNPs 
established by section 1859 of the Act (including amendments made by 
the Medicare Improvements for Patients and Providers Act of 2008 (Pub. 
L. 110-275) and the Bipartisan Budget Act of

[[Page 78579]]

2018 (Pub. L. 115-123)). We adopted the regulation to ensure full 
implementation of requirements for D-SNPs, such as contracts with State 
Medicaid agencies, a minimum integration of Medicare and Medicaid 
benefits, care coordination through health risk assessments (HRAs), and 
evidence-based models of care. In addition, we noted how limiting these 
D-SNP look-alikes would address beneficiary confusion stemming from 
potentially misleading marketing practices by brokers and agents that 
market D-SNP look-alikes to dually eligible individuals. For a more 
detailed discussion of D-SNP look-alikes and their impact on the 
implementation of D-SNP Medicare and Medicaid integration, we direct 
readers to the June 2020 final rule (85 FR 33805 through 33820) and 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 (85 FR 9018 through 9021) (also known as the February 2020 
proposed rule).
    In the April 2023 final rule, we finalized amendments to close 
unforeseen loopholes in the scope of the regulation adopted to prohibit 
D-SNP look-alikes. Specifically, we finalized language at Sec.  
422.514(g) to apply the prohibitions on contracting with D-SNP look-
alikes to individual segments of an MA plan. We also finalized language 
at Sec.  422.514(d)(1) to apply the D-SNP look-alike contracting 
limitation to both new and existing (that is, renewing) MA plans that 
are not SNPs and submit bids with projected enrollment of 80 percent or 
more enrollees of the plan's total enrollment that are dually eligible 
for Medicare and Medicaid.
1. Reducing Threshold for Contract Limitation on D-SNP Look-Alikes
    Our contracting limitations at Sec.  422.514(d) mean that we do not 
contract with non-SNP MA plans that have enrollment consisting of 80 
percent or more of enrollees who are entitled to Medicaid. We set the 
threshold at 80 percent or higher based on a 2019 MedPAC analysis that 
showed the proportion of dually eligible individuals in most geographic 
areas did not exceed the 80-percent threshold; \183\ at that time, no 
MA plan service area had more than 50 percent dually eligible 
beneficiaries, and therefore dually eligible enrollment of 80 percent 
or greater would not be the result of any plan that had not intended to 
achieve high enrollment of dually eligible individuals (85 FR 33812). 
The 80-percent threshold also captured almost three-quarters of the 
non-SNP MA plans with more than 50 percent dually eligible enrollees 
(85 FR 33812). As described in the June 2020 final rule, we also 
considered two other approaches: (1) setting the threshold at the 
higher of 50 percent dually eligible enrollment or the proportion of 
dually eligible MA-eligible individuals in the plan service area plus 
15 percentage points; and (2) setting a lower threshold for dually 
eligible enrollment at a point between 50 and 80 percent (85 FR 33807). 
In addition to 80 percent or higher being an indicator that the plan is 
designed to attract disproportionate dually eligible enrollment, we 
believed this threshold would be easier for MA organizations to 
determine prospectively and operationally easier for CMS to implement 
than a threshold that varied across each service area.
---------------------------------------------------------------------------

    \183\ See June 2019 MedPAC Report to Congress, Chapter 12 at 
http://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun19_ch12_medpac_reporttocongress_sec.pdf.
---------------------------------------------------------------------------

    A number of commenters on the February 2020 proposed rule 
recommended that we set a threshold lower than 80 percent. These 
commenters expressed concern that a threshold of 80 percent could be 
``gamed'' by MA organizations to keep enrollment of dually eligible 
individuals just under the ceiling. Some commenters recommended that 
CMS set the ceiling for dually eligible enrollment at 50 percent with a 
commenter citing MACPAC analysis showing faster growth in projected 
enrollment among MA plans with dual eligible enrollment greater than 50 
percent than among those greater than 80 percent. Another commenter 
recommended a threshold of 60 percent.
    In the June 2020 final rule, we responded that we believed the 80-
percent threshold was reasonable because, based on the 2019 MedPAC 
analysis on 2017 data, it far exceeded the share of dually eligible 
individuals in any given MA plan service area--no MA plan service area 
had more than 50 percent dually eligible beneficiaries--and, therefore, 
would not be the result for any plan that had not intended to achieve 
high dually eligible enrollment. We also stated that we would monitor 
for potential gaming after implementation of the final rule by 
reviewing plan enrollment data and consider future rulemaking as needed 
(85 FR 33812).
    In response to our proposals to close unforeseen D-SNP look-alike 
loopholes in the April 2023 final rule, some commenters again 
recommended we lower the threshold to less than 80 percent (88 FR 
22131). A few commenters recommended we lower the threshold below 80 
percent without recommending a specific percentage, and other 
commenters recommended we lower the threshold to 50 percent. The 
commenters suggested that lowering the threshold further would promote 
integrated care and minimize beneficiary confusion. As one of these 
commenters, MACPAC noted that it ``remains concerned that while CMS's 
focus on plans where 80 percent or more of all enrollees are dually 
eligible addresses the most egregious instances, there could still be a 
real risk of growth in non-SNP MA plans falling below the 80-percent 
threshold and thus continuing to detract from Federal and State efforts 
to integrate care.'' We analyzed the percentage of non-SNP MA plans' 
dually eligible enrollment as a percentage of total enrollment from 
plan years 2017 through 2023. Our analysis shows that the number of 
non-SNP MA plans with high levels of dually eligible individuals has 
grown substantially.
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BILLING CODE 4120-01-C
    The rate of growth from 2017 to 2023 in the number of non-SNP MA 
plans with 50 to 60 percent (544 percent increase), 60 to 70 percent 
(900 percent), and 70 to 80 percent dually eligible individuals as a 
percent of total enrollment (1,400 percent) \184\ exceeded the rate of 
enrollment growth for all MA-PD plans (109 percent) over the same 
period of time.\185\ The increased growth in non-SNP MA plans with 
dually eligible individuals between 50 and 80 percent of total 
enrollment suggests to us that MA organizations are

[[Page 78581]]

offering plans for dually eligible individuals but circumventing rules 
for D-SNPs, including requirements from the Bipartisan Budget Act of 
2018, and detracting from Federal and State efforts to better integrate 
Medicare and Medicaid benefits. This growth in enrollment in these non-
SNP plans is likely also drawing enrollment from integrated care D-SNPs 
and similar integrated programs. Recent analysis found that almost one-
third of dually eligible individuals newly enrolled in D-SNP look-
alikes were previously enrolled in fully integrated dual eligible SNPs 
(FIDE SNPs), other D-SNPs, PACE plans, or MMPs.\186\
---------------------------------------------------------------------------

    \184\ CMS analysis of Integrated Data Repository (IDR) data for 
January of each respective year. Analysis conducted in April 2023, 
as shown in Table 1.
    \185\ CMS data from the Contract Year 2021 and 2023 Landscape 
Plan shows the total number of MA-PD plans in 2017 was 2,332 and the 
total number of MA-PD plans in 2023 is 4,875.
    \186\ Ma, Y., Austin F., Roberts, E., Johnston, K., Phelan, J., 
and Figueroa, J. ``Rapid Enrollment Growth In `Look-Alike' Dual-
Eligible Special Needs Plans: A Threat To Integrated Care'', Health 
Affairs (July 2023) 919-927. Retrieved from https://www.healthaffairs.org/doi/epdf/10.1377/hlthaff.2023.00103.
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    We also conducted analysis with 2023 data mimicking MedPAC's 2019 
analysis showing the share of dually eligible individuals enrolled in 
non-SNP MA plans against the share of beneficiaries in a plan service 
area who are dually eligible individuals.\187\ MedPAC's analysis showed 
that in most MA markets, the share of beneficiaries in a plan service 
area who are dually eligible was clustered in the 10 to 25 percent 
range and in no county exceeded 50 percent. Their analysis showed that 
dually eligible individuals generally represented 30 percent or less of 
non-SNP MA plans' total enrollment. MedPAC's analysis informed our 
decision to set the threshold for dually eligible enrollment at 80 
percent of a non-SNP MA plan's enrollment because it far exceeded the 
share of dually eligible individuals in any given market (by 30 
percentage points or more) at that point in time and, therefore, would 
not be the result for any plan that had not intended to achieve high 
dually eligible enrollment. Similar to the earlier MedPAC analysis, our 
analysis of 2023 data shows the share of beneficiaries in a plan 
service area who are dually eligible is clustered in the 10 to 30 
percent range and does not exceed 49 percent except in one county (at 
56 percent).\188\ Also like MedPAC, we found that for most non-SNP MA 
plans, dually eligible individuals generally represent 30 percent or 
less of the plan's total enrollment. However, whereas MedPAC found 13 
non-SNP MA plans with dually eligible enrollment between 50 percent and 
80 percent for 2017,\189\ we found 128 non-SNP MA plans with enrollment 
in that range for 2023.\190\
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    \187\ See June 2019 MedPAC Report to Congress, Chapter 12 at 
https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun19_ch12_medpac_reporttocongress_sec.pdf.
    \188\ CMS analysis of 2023 non-SNP MA plan data in the IDR. 
Analysis conducted in April 2023, as shown in Table 1.
    \189\ June 2019 MedPAC Report to Congress, Chapter 12, 
calculated from Table 12-9 at https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun19_ch12_medpac_reporttocongress_sec.pdf.
    \190\ CMS analysis of 2023 non-SNP MA plan data in the IDR. 
Analysis conducted in April 2023, as shown in Table 1.
---------------------------------------------------------------------------

    To address the substantial growth in non-SNP MA plans with 
disproportionately high enrollment of dually eligible individuals, we 
propose lowering the D-SNP look-alike threshold from 80 percent to 60 
percent incrementally over a two-year period. We propose to lower the 
threshold for dually eligible enrollment to 60 percent of a non-SNP MA 
plan's enrollment because it exceeds the share of dually eligible 
individuals in any given MA plan service area currently and, therefore, 
would not be the result for any plan that simply reflected the 
concentration of dually eligible enrollees in its service area.
    We propose a limitation on non-SNP MA plans with 70 or greater 
percent dually eligible individuals for contract year 2025. For 
contract year 2026, we propose to reduce the threshold from 70 percent 
to 60 percent or greater dually eligible enrollment as a share of total 
enrollment. This incremental approach would minimize disruptions to 
dually eligible individuals and allow MA organizations and CMS to 
operationalize these transitions over a two-year period. As discussed 
in more detail below, we would maintain processes to minimize 
disruption for the enrollees in plans affected by this proposed change.
    Based on 2023 data, we expect the lower threshold would impact 30 
non-SNP MA plans with dually eligible individuals representing 70 to 80 
percent of total enrollment and 40 non-SNP MA plans with dually 
eligible individuals representing 60 to 70 percent of total enrollment. 
Some of the plans that could be affected by our proposal are offered in 
States (that is, California, Massachusetts, Minnesota) that limit 
contracting to integrated D-SNPs, such as FIDE SNPs and AIPs. Based on 
2023 plan data, 12 non-SNP MA plans in California, Massachusetts, and 
Minnesota have shares of dually eligible enrollment between 60 and 80 
percent. These States have chosen to limit their markets to certain D-
SNPs to integrate Medicare and Medicaid for dually eligible 
individuals. Lowering the D-SNP look-alike contracting limitation to 60 
percent will help to simplify choices for dually eligible individuals 
in these States and promote Medicare and Medicaid integration 
objectives.
    We propose revisions to the rule on dually eligible enrollment at 
Sec.  422.514(d)(1) to apply the lower thresholds to new and existing 
non-SNP MA plan bids. Specifically, we propose amending paragraph 
(d)(1)(ii) such that CMS would not enter into or renew a contract for a 
new or existing non-SNP MA plan that projects enrollment in its bid of 
80 percent or more dually eligible individuals for plan year 2024 (as 
is already the case under current regulations); 70 percent or more 
dually eligible individuals for plan year 2025; and 60 percent or more 
dually eligible individuals for plan year 2026 and subsequent years. 
Consistent with our current practice, we would apply the proposed 
changes at Sec.  422.514(d)(1)(ii) to all bids for the next plan year, 
including any bids for non-SNP MA plans projected to exceed the 
threshold even if the actual enrollment for the current plan year is 
under the threshold at Sec.  422.514(d)(1).
    Similarly, we propose revisions to paragraph (d)(2) to apply the 
lower thresholds to non-SNP MA plan enrollment. Specifically, we 
propose to amend paragraph (d)(2)(ii) to state that we will not renew a 
contract with a non-SNP MA plan that has actual enrollment, using 
January enrollment of the current year, in which dually eligible 
individuals constitute 80 percent or more dually eligible individuals 
for plan year 2024 (as is already the case under current regulations); 
70 percent or more dually eligible individuals for plan year 2025; or 
60 percent or more dually eligible individuals for plan year 2026 or 
subsequent years. In operationalizing these proposed changes, for 
example, we would use January 2024 enrollment data to identify non-SNP 
MA plans that exceed the proposed 70-percent threshold, for purposes of 
determining whether to renew contracts with these plans for plan year 
2025. We would use January 2025 enrollment data to identify non-SNP MA 
plans that exceed the proposed 60-percent threshold for purposes of 
determining whether to renew contracts with these plans for plan year 
2026. Consistent with existing rules, we would not apply the 
contracting limitation in Sec.  422.514(d)(2) to any non-SNP MA plan 
that has been active for less than one year and has enrollment of 200 
or fewer individuals.
    We considered lowering the threshold to 50 percent, given the 
growth in the number of non-SNP MA plans between 50 and 60 percent 
dually eligible

[[Page 78582]]

individuals as a share of total enrollment. MedPAC's analysis of 2017 
data and our analysis of 2023 data showed that there are some service 
areas where the entire Medicare population is around 50 percent dually 
eligible individuals and 50 percent non-dually eligible individuals. As 
such, lowering the threshold to 50 percent could prohibit plans that 
reflect the distribution of eligibility in that community. Also, it is 
less clear that a plan is designed to target dually eligible 
individuals and circumvent the statutory D-SNP requirements when a plan 
appeals equally to dually eligible individuals and non-dually eligible 
individuals. Although we propose to lower the threshold to 60 percent, 
we solicit comments on whether the alternative to reduce the threshold 
to 50 percent is more appropriate to protect against plans 
circumventing the requirements for D-SNPs while enrolling a 
disproportionate number of dually eligible individuals.
2. Amending Transition Processes and Procedures for D-SNP Look-Alikes
    Section 422.514(e) establishes parameters for transitioning 
individuals who are enrolled in a D-SNP look-alike to another MA-PD 
plan (or plans) offered by the MA organization to minimize disruption 
as a result of the prohibition on contract renewal for existing D-SNP 
look-alikes. Under the existing processes and procedures, an MA 
organization with a non-SNP MA plan determined to meet the enrollment 
threshold in proposed paragraph (d)(2) could transition enrollees into 
another MA-PD plan (or plans) offered by the same MA organization, as 
long as any such MA-PD plan meets certain proposed criteria. This 
transition process allows MA enrollees to be transitioned at the end of 
the year from one MA plan offered by an MA organization to another MA-
PD plan (or plans) without having to complete an election form or 
otherwise indicate their enrollment choice as typically required, but 
it also permits the enrollee to make an affirmative choice for another 
MA plan or standalone Part D plan of his or her choosing during the 
annual election period (AEP) preceding the year for which the 
transition is effective. Consistent with our description of the 
transition process in the June 2020 final rule (85 FR 33816), if a 
transitioned enrollee elects to enroll in a different plan during the 
AEP, enrollment in the plan the enrollee selected would take precedence 
over the plan into which the MA organization transitioned the enrollee. 
Transitioned enrollees would also have additional opportunities to 
select another plan through the Medicare Advantage Open Enrollment 
Period described in Sec.  422.62(a)(3) from January 1 through March 31. 
Affected individuals may also qualify for a SEP, depending on the 
circumstances.
    Existing provisions at paragraphs (e)(1)(i) through (iv) outline 
specific criteria for any MA plan to receive enrollment through this 
transition process to ensure that enrollees receive coverage under 
their new MA plan that is similarly affordable as the plan that would 
not be permitted for the next year. At existing paragraph (e)(1)(i), we 
allow a non-renewing D-SNP look-alike to transition that plan's 
enrollment to another non-SNP plan (or plans) only if the resulting 
total enrollment in each of the MA plans receiving enrollment consists 
of less than the threshold established in paragraph (d)(2)(ii) (now, 80 
percent but with the proposed amendment, this would refer to the 
scheduled change in the threshold). SNPs receiving transitioned 
enrollment are not subject to this proposed limit on dually eligible 
individual enrollment. Under existing paragraph (e)(1)(ii), we require 
that any plan receiving transitioned enrollment be an MA-PD plan as 
defined in Sec.  422.2. Under existing paragraph (e)(1)(iii), any MA 
plan receiving transitioned enrollment from a D-SNP look-alike is 
required to have a combined Part C and D beneficiary premium of $0 
after application of the premium subsidy for full subsidy eligible 
individuals described at Sec.  423.780(a). Finally, paragraph 
(e)(1)(iv) requires that the receiving plan be of the same plan type 
(for example, HMO or PPO) of the D-SNP look-alike out of which 
enrollees are transitioned.
    At existing paragraph (e)(2)(ii), the current transition process 
requires MA organizations to describe changes to MA-PD benefits and 
provide information about the MA-PD plan into which the individual is 
enrolled in the Annual Notice of Change (ANOC) that the MA organization 
must send, consistent with Sec. Sec.  422.111(a), (d), and (e) and 
422.2267(e)(3). Consistent with Sec.  422.111(d)(2), enrollees receive 
this ANOC describing the change in plan enrollment and any differences 
in plan enrollment at least 15 days prior to the first day of the AEP.
    At existing paragraph (e)(4), the regulation addresses situations 
where the prohibition on contracting or renewing a D-SNP look alike is 
applied and the D-SNP look alike is terminated. In such situations 
where an MA organization does not transition some or all current 
enrollees from a D-SNP look-alike to one or more of the MA 
organization's other plans as provided in proposed paragraph (e)(1), 
the MA organization is required to send affected enrollees a written 
notice consistent with the non-renewal notice requirements at Sec.  
422.506(a)(2).
    This transition process is conceptually similar to ``crosswalk 
exception'' procedures at Sec.  422.530(c). However, in contrast to the 
crosswalk exceptions, our transition process at Sec.  422.514(e) 
permits transition across contracts and across MA organizations under 
the same parent organization, as well as from non-SNP plans to SNPs.
    We propose to apply the existing transition processes and 
procedures at Sec.  422.514(e) to non-SNP MA plans that meet the 
proposed D-SNP look-alike contracting limitation of 70 percent or more 
dually eligible individuals effective plan year 2025 and 60 percent or 
more dually eligible individuals effective plan year 2026. Consistent 
with the initial years of implementation of the D-SNP look-alike 
contract limitations with the 80-percent threshold, maintaining these 
transition processes and procedures will help to minimize disruption as 
a result of the prohibition on contract renewal for existing D-SNP 
look-alikes. However, for plan year 2027 and subsequent years, we 
propose to limit the Sec.  422.514(e) transition processes and 
procedures to D-SNP look-alikes transitioning dually eligible enrollees 
into D-SNPs. Based on our experience with D-SNP look-alike transitions 
effective plan year 2023, the vast majority of enrollees are 
transitioned to other MA-PDs under the same parent organization as the 
D-SNP look-alike. Based on our review of D-SNP look-alike transition 
plans thus far, we expect the experience for transitions effective plan 
year 2024 to follow a similar pattern. We propose this new limitation 
on the transition process at new paragraph (e)(1)(v).
    MA organizations can utilize other CMS processes to transition D-
SNP look-alike enrollees to non-D-SNPs. For example, an MA organization 
can utilize the CMS crosswalk process if it is transitioning the full 
D-SNP look-alike enrollment to one non-SNP plan benefit package (PBP) 
of the same type offered by the same MA organization under the same 
contract provided all requirements at Sec.  422.530 for a crosswalk are 
met. An MA organization moving the entire enrollment of the D-SNP look-
alike PBP to another PBP of the same type under the same contract may 
structure this action as a consolidation of PBPs and use the crosswalk 
for consolidated renewal process, under Sec.  422.530(b)(1)(ii). An MA 
organization

[[Page 78583]]

may utilize the crosswalk exception process at Sec.  422.530(c)(2) to 
request to transition the entire enrollment of the MA contract 
(including the D-SNP look-alike) to another MA contract offered by 
another MA organization with the same parent organization as part of a 
contract consolidation of separate MA contracts. As part of reviewing a 
request for a crosswalk exception under Sec.  422.530(c)(2), CMS 
reviews the contract consolidation to ensure compliance with the change 
of ownership regulations (Sec. Sec.  422.550 through 422.553).
    While multiple options exist for MA organizations to transition D-
SNP look-alike enrollees to other non-SNP MA plans, these pathways are 
not available for moving enrollees from D-SNP look-alikes to D-SNPs. We 
believe it is appropriate to limit the transition process in Sec.  
422.514(e) since although other options remain available to transition 
enrollees from the D-SNP look-alike, MA organizations do not have other 
options to transition D-SNP look-alike enrollees into D-SNPs, and 
movement into D-SNPs encourages enrollment in integrated plans. 
Furthermore, we are concerned that if D-SNP look-alikes continue to be 
allowed to transition enrollees into non-D-SNPs indefinitely, there is 
little incentive for MA organizations to avoid non-compliance with the 
D-SNP look-alike thresholds. Thus, for plan year 2027 and subsequent 
years, we propose to add new paragraph Sec.  422.514(e)(1)(v) to limit 
the existing D-SNP look-alike transition pathway to MA organizations 
with D-SNP look-alikes transitioning enrollees into D-SNPs.
    We are also considering an alternative to our proposal that would 
eliminate the 70-percent threshold applying for plan year 2025 but 
would involve additional conditions and changes related to the 
transition authority Specifically, this alternative would:
    <bullet> Apply the 60-percent threshold beginning in plan year 
2026;
    <bullet> Permit use of the transition authority into non-SNP MA 
plans (as currently permitted under Sec.  422.514(e)) for plan year 
2025; and
    <bullet> Limit use of transition authority under Sec.  422.514(e) 
to transition D-SNP look-alike enrollees into D-SNPs for plan year 2026 
and beyond.
    Relative to our proposal, this alternative would give plans with 
dually eligible individual enrollment between 70 and 80 percent of 
total enrollment (based on January 2024 enrollment data) one additional 
year to apply for a new D-SNP or service area expansion to an existing 
D-SNP, such that these plans could transition enrollees into a D-SNP 
for plan year 2026. The alternative would balance the additional year 
using the existing 80-percent enrollment threshold to identify 
prohibited D-SNP look-alikes with an earlier limitation on the Sec.  
422.514(e) transition authority to enrollees transitioning into non-
SNPs. We solicit comment on whether this alternative is a better 
balance of the goals of our policy to prohibit circumvention of the 
requirements for D-SNPs and to encourage and incentivize enrollment in 
integrated care plans. Among the factors we would consider in adopting 
the alternative instead of our proposal is the extent to which plans 
with between 70 and 80 percent dually eligible enrollment in plan year 
2024 expect to be able to establish a D-SNP in the same service area as 
the D-SNP look-alike if given an additional year (that is, 2026) to 
transition enrollees. Based on 2023 plan year data, approximately two-
thirds of the MA organizations with non-SNP MA plans with between 70 
and 80 percent dually eligible individuals already have a D-SNP under 
the same MA organization with the vast majority of those D-SNPs having 
a service area that covers the same service area as the non-SNP MA 
plan. The other approximately one-third of the MA organizations with 
non-SNP MA plans with between 70 and 80 percent dually eligible 
individuals do not have a D-SNP in the same service area in plan year 
2023. If given an additional year, these MA organizations would have 
more time in which to establish D-SNPs in the same service areas as 
non-SNP MA plans and transition the enrollees into a D-SNP.
    We also propose a technical edit at Sec.  422.514(e)(1)(i) to make 
the term ``specialized MA plan for special needs individuals'' 
lowercase, consistent with the definition of D-SNPs at Sec.  422.2.

H. For D-SNP PPOs, Limit Out-of-Network Cost Sharing (Sec.  422.100)

    MA organizations offer a range of health plan options including 
Medicare savings account (MSA) plans, private fee-for-service (PFFS) 
plans, preferred provider organizations (PPOs), health maintenance 
organizations (HMOs) and health maintenance organizations with point of 
services benefits (HMO/POS). (See Sec.  422.4.) The most common health 
plan options are HMOs and PPOs. HMOs generally require enrollees to use 
network providers. PPOs have a network of providers but also pay for 
services delivered by providers not contracted with the MA organization 
as a network provider. PPOs can be attractive to Medicare beneficiaries 
who want a broader choice of providers than would be available through 
an HMO or who have a specific preferred provider, like a psychiatrist, 
who is not in network. MA organizations offer PPOs that are open to all 
Medicare beneficiaries as well as D-SNP PPOs that enroll only 
individuals dually eligible for Medicare and Medicaid.\191\
---------------------------------------------------------------------------

    \191\ There are currently no D-SNP PFFS plans. MSA plans are 
prohibited from enrolling dually eligible individuals. HMO/POS plans 
have 1,423,000 enrollees as of July 2023.
---------------------------------------------------------------------------

    Enrollment in D-SNP PPOs has increased in recent years, rising to 
approximately 925,000 enrollees as of May 2023, accounting for about 17 
percent of total D-SNP enrollment. D-SNP PPO enrollment has increased 
by 38 percent from May 2022 to May 2023.\192\ Four national MA sponsors 
account for over 98 percent of D-SNP PPO enrollment.\193\
---------------------------------------------------------------------------

    \192\ D-SNP PPO enrollment was at approximately 668,000 as if 
May 2023.
    \193\ The four sponsors are UnitedHealth Group (69 percent of 
national D-SNP PPO enrollment), Humana (23 percent), Centene (4 
percent), and Elevance (2 percent).
---------------------------------------------------------------------------

    Like PPOs offered primarily to Medicare beneficiaries not entitled 
to Medicaid benefits, D-SNP PPOs generally have higher cost sharing for 
out-of-network services than for the same services obtained from 
network providers. For non-D-SNP PPOs, the higher out-of-network cost 
sharing is meant to incentivize use of in-network providers. In D-SNP 
PPOs, however, the large majority of enrollees are protected from being 
billed for covered Medicare services by Medicare providers, including 
out-of-network providers. Instead, when these enrollees access 
services, either State Medicaid agencies pay the cost sharing or, if 
State payment of cost sharing is limited by a Medicaid rate for the 
service that is lower than the amount the D-SNP paid the provider, the 
provider must forego receipt of the cost sharing amounts.
    Those cost sharing amounts for out-of-network services in D-SNP 
PPOs are often significantly higher than the cost sharing for the same 
services under original Medicare.
    Our review of D-SNP PPO out-of-network cost sharing shows that for 
some important services, the cost sharing applicable to out-of-network 
services far exceeds the Medicare FFS cost sharing for these Part A and 
B benefits. For example, as of 2023:
    <bullet> Primary care providers: 59 percent of D-SNP PPOs charge 
out-of-network coinsurance above 20 percent, with most ranging from 30 
to 40 percent.
    <bullet> Part B prescription drugs: 53 percent of D-SNP PPOs charge 
an out-of-network coinsurance above 20 percent, with most ranging from 
30 to 40 percent.

[[Page 78584]]

    <bullet> DME: 50 percent of D-SNP PPOs charge an out-of-network 
coinsurance above 20 percent, with most ranging from 30 to 50 percent.
    <bullet> Home health: 41 percent of D-SNP PPOs charge an out-of-
network coinsurance for home health services (original Medicare has no 
coinsurance). Out-of-network coinsurance ranged from 20 percent to 40 
percent.
    <bullet> Dialysis: Three percent of D-SNP PPOs charge an out-of-
network coinsurance above 20 percent for dialysis.
    <bullet> Skilled Nursing Facility (SNF): 46 percent of D-SNP PPOs 
charge between 20 and 50 percent coinsurance for out-of-network SNF 
stays, considerably more than Traditional Medicare, which charges 
nothing for the first 20 days of a stay and a per diem charge for days 
21-100.
    <bullet> Inpatient Hospital (Acute): 47 percent of D-SNP PPOs 
charged between 20 and 50 percent for an inpatient stay at an out-of-
network acute care hospital, which can be substantially more than the 
Part A deductible in Traditional Medicare.
    <bullet> Inpatient Hospital (Psychiatric): 46 percent of D-SNP PPOs 
charge between 20 and 50 percent coinsurance for out-of-network 
inpatient psychiatric services, substantially greater than the 
inpatient deductible charged under Traditional Medicare.
    By contrast, cost sharing for in-network services in these D-SNP 
PPOs largely tracks the cost sharing structure in Traditional Medicare. 
Seventy-nine percent charge a Part B deductible. Eighty-five percent 
charge 20 percent for professional services, like visits with primary 
care and specialist physicians, and 100 percent charge 20 percent 
coinsurance for Part B drugs and DME, consistent with Traditional 
Medicare. While this in-network benefit design is consistent with 
statutory and regulatory requirements for overall and service-specific 
limits under Sec.  422.100(f)(6) (which sets specific cost sharing 
limits for certain in-network services tied to the maximum out-of-
pocket (MOOP) limit used by the plan) and (j) (which identifies 
services for which in-network cost sharing must not exceed cost sharing 
in Traditional Medicare) for in-network benefits, it differs from non-
D-SNP PPOs which generally provide greater reductions in in-network 
cost sharing (compared to Traditional Medicare cost sharing) as 
supplemental benefits.
    This higher cost sharing for out-of-network services in D-SNP PPOs 
raises several concerns.
    First, when State Medicaid agencies pay the cost sharing for out-
of-network services, these levels of cost sharing raise costs for State 
Medicaid programs. This is especially true for those few States that, 
by policy, pay the full Medicare cost sharing amounts for all Medicare 
services, rather than for specific services in the Medicaid benefit.
    Second, certain dually eligible enrollees, specifically full-
benefit dually eligible enrollees who are not Qualified Medicare 
Beneficiaries (QMBs), are liable for cost sharing if they go out of 
network to providers not enrolled in Medicaid, as services from these 
providers are not covered by Medicaid unless the provider is enrolled 
in Medicaid. (QMBs, in contrast, have applicable Medicare cost-sharing 
amounts covered by Medicaid based on coverage of cost-sharing for 
Medicare covered services.) Non-QMB full-benefit dually eligible 
individuals are protected from cost sharing under Sec.  
422.504(g)(1)(iii) if they use in-network providers, including 
providers not enrolled in Medicaid. The regulation imposes obligations 
on MA organizations to ensure that their contracted--that is, in-
network--providers do not collect cost sharing from enrollees when the 
State is responsible for paying such amounts. However, this protection 
does not extend to out-of-network providers not enrolled in Medicaid.
    Third, the higher out-of-network cost sharing disadvantages out-of-
network safety net providers serving D-SNP PPO enrollees in States 
where limits established by Medicaid rates for the service result in no 
State payment of cost sharing.\194\ In such a scenario, the provider 
may receive 70 or 60 percent of the Traditional Medicare rate for the 
services rather than the 80 percent that the provider would receive 
under Traditional Medicare (or as an in-network provider). We are 
concerned that this effective payment cut disincentivizes providers 
from serving dually eligible enrollees, which may compromise access to 
services for these enrollees. In addition, we are concerned that such 
disincentives undermine the promise of out-of-network access that is a 
key component of how D-SNP PPOs are marketed to potential enrollees.
---------------------------------------------------------------------------

    \194\ For example, if the Medicare (or MA) rate for a service is 
$100, of which $20 is beneficiary coinsurance, and the Medicaid rate 
for the service is $90, the State would only pay $10. If the 
Medicaid rate is $80 or lower, the State would make no payment. This 
is often referred to as the ``lesser of'' policy. Under the ``lesser 
of'' policy, a State caps its payment of Medicare cost-sharing at 
the Medicaid rate for a particular service.
---------------------------------------------------------------------------

    In addition to the potential impact on States, safety net providers 
and dually eligible individuals of this cost sharing structure, we 
believe such higher cost sharing for out-of-network services may result 
in situations that are inconsistent with the policy goals underlying 
section 1852(a)(2) of the Act. Section 1852(a)(2)(A) of the Act 
describes how MA organizations can satisfy the requirement to cover 
Traditional Medicare services (that is, Part A and B benefits, with 
limited exceptions) under section 1852(a)(1)(A) when covered services 
are furnished by non-contracted (that is, out-of-network) providers. 
This statute provides that the MA organization has satisfied its 
coverage obligation for out-of-network services if the plan provides 
payment in an amount ``so that the sum of such payment and any cost 
sharing provided for under the plan is equal to at least the total 
dollar amount for payment for such items and services as would 
otherwise be authorized under parts A and B (including any balance 
billing permitted under such parts).''
    For a non-D-SNP PPO, in which the majority of plan enrollees must 
pay plan cost sharing, the total dollar amount for a service paid at 
the Medicare rate will equal the total dollar amount under parts A and 
B, even if the cost sharing exceeds the cost sharing under original 
Medicare.
    For a D-SNP PPO, however, the vast majority of plan enrollees are 
not liable for cost sharing for out-of-network services, just as they 
are not liable for such cost sharing under Traditional Medicare.\195\ 
Therefore, whenever State Medicaid limits on payment of Medicare cost 
sharing result in no payment of cost sharing or payment of only a 
portion of cost sharing, the total dollar amount of payment received by 
the out-of-network provider for these covered services is less than the 
provider would collect under Traditional Medicare whenever the plan 
out-of-network cost sharing exceeds the cost sharing for those services 
under Traditional Medicare.
---------------------------------------------------------------------------

    \195\ For more information on cost sharing protections 
applicable to dually eligible individuals, see: https://www.cms.gov/medicare-medicaid-coordination/medicare-and-medicaid-coordination/medicare-medicaid-coordination-office/qmb.
---------------------------------------------------------------------------

    For example, a provider in a State that capped its cost sharing 
payments at a Medicaid primary care rate that is 70 percent of the 
Medicare rate would receive just 70 percent of that Medicare rate when 
the provider is not in the PPO's network and the PPO's out-of-network 
cost sharing is 30 percent or higher. That provider would receive 80 
percent of the Medicare rate under

[[Page 78585]]

Traditional Medicare for the covered service.
    This lesser net out-of-network provider payment in a D-SNP PPO 
undermines the balance of obligations and benefits among MA 
organizations and Medicare providers that the statute creates to 
regulate out-of-network payments and beneficiary access for the MA 
program. While section 1852(a)(2)(A) of the Act requires the total 
dollar amount to be at least as much as would be authorized under 
Traditional Medicare, Medicare providers are required by sections 
1852(k)(1) and 1866(a)(1)(O) of the Act to accept such amounts as 
payment in full. When a D-SNP PPO imposes cost sharing greater than 
Traditional Medicare and that cost sharing is unpaid by the State and 
uncollectable from the beneficiary, the MA organization has, in effect, 
failed to fulfill the spirit of its side of this statutory scheme and 
the providers are in effect forced to accept less than they would 
receive under original Medicare if they agree to treat the D-SNP PPO 
enrollee.
    In a D-SNP PPO, therefore, we are concerned that the combination of 
these issues results in a situation frustrating the underlying intent 
of section 1852(a)(2)(A) of the Act because, for services furnished to 
many (if not all) enrollees in the D-SNP PPO, the out-of-network 
provider potentially receives a total payment that is less than the 
total payment available under Traditional Medicare. To address these 
concerns, we are proposing new limits on out-of-network cost sharing 
under D-SNP PPOs. We have authority under section 1856(b)(1) of the Act 
to establish standards for MA organizations and MA plans to carry out 
the MA statute (that is, Part C of Title XVIII of the Act) in addition 
to authority, under section 1857(e)(1) of the Act, to adopt additional 
terms and conditions for MA contracts that are not inconsistent with 
the Part C statute and that are necessary and appropriate for the MA 
program. Further, CMS is not obligated to accept any and every bid from 
an MA organization and is authorized to negotiate MA bids under section 
1854(a)(5)(C) and (a)(6)(B) of the Act. This proposal would establish 
minimum standards for D-SNP PPO plans that are consistent with and 
necessary and appropriate for the MA program to address our concerns.
    We propose at Sec.  422.100(o)(1) that an MA organization offering 
a local PPO plan or regional PPO plan that is a dual eligible special 
needs plan (that is, a D-SNP) cap out-of-network cost sharing for 
professional services at the cost sharing limits for such services 
established at Sec.  422.100(f)(6) when such services are delivered in 
network starting in 2026. The term ``professional services'' as used 
here means the same thing as it does in existing Sec.  
422.100(f)(6)(iii) and includes primary care services, physician 
specialist services, partial hospitalization, and rehabilitation 
services. Under this proposal, a D-SNP PPO with a catastrophic limit 
set at the mandatory MOOP limit in 2026 and subsequent years must have 
cost sharing for a visit with an out-of-network psychiatrist or other 
specialist (that is, cost sharing subject to paragraph (f)(6)(iii)) 
that is capped at 30 percent coinsurance. If the catastrophic limit is 
set at the intermediate MOOP limit in 2026 and subsequent years, the 
coinsurance cap would be set at 40 percent. If the catastrophic limit 
is set at the lower MOOP limit in 2026 and subsequent years, the 
coinsurance cap would be 50 percent. Under our proposal, the rules in 
Sec.  422.100(f)(6) and (j)(1) about how we assess that copayments that 
are actuarially equivalent to coinsurance would apply here as well.
    We propose to apply cost sharing limits on out-of-network 
professional services because this category of services includes the 
physician and psychiatry services most utilized out-of-network in D-SNP 
PPOs. In addition, physician services are among the services for which 
Medicaid rates will most commonly either result in no payment of cost 
sharing due to limits on Medicaid rates or will increase State 
liability for cost sharing but still not result in total payment of at 
least 80 percent of the Medicare rate.\196\
---------------------------------------------------------------------------

    \196\ Only 14 States have Medicaid primary care rates that are 
greater than 80 percent of the Medicare rate. See: https://www.kff.org/medicaid/state-indicator/medicaid-to-medicare-fee-index/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D.
---------------------------------------------------------------------------

    Our proposal at Sec.  422.100(o)(1) also would require that cost 
sharing for out-of-network acute and psychiatric inpatient services be 
limited by the cost sharing caps under Sec.  422.100(f)(6) that now 
apply only to in-network benefits. Using the same methodology to 
calculate comparable FFS cost sharing in Sec.  422.100(f)(6)(iv), the 
cost sharing limit for a D-SNP PPO with a catastrophic limit set at the 
mandatory MOOP limit could not exceed 100 percent of estimated Medicare 
FFS cost sharing, including the projected Part A deductible and related 
Part B costs, for each length-of-stay scenario in an out-of-network 
inpatient or psychiatric hospital. For catastrophic limits equivalent 
to the intermediate and lower MOOP amounts, higher cost sharing for 
out-of-network cost sharing for inpatient and psychiatric stays could 
be charged as described at Sec.  422.100(f)(6)(iv)(D)(2) and (3), 
respectively.
    We also propose at Sec.  422.100(o)(2), by cross-referencing Sec.  
422.100(j)(1), that cost sharing for out-of-network services under D-
SNP PPOs be limited to the existing cost sharing limits now applicable 
to specific in-network services for all MA plans:
    <bullet> Cost sharing for chemotherapy administration services, 
including chemotherapy/radiation drugs and radiation therapy integral 
to the treatment regimen, other Part B drugs, and renal dialysis 
services as defined at section 1881(b)(14)(B) of the Act, would be 
capped at the cost sharing applicable for those service under 
Traditional Medicare.
    <bullet> For skilled nursing care, defined as services provided 
during a covered stay in a skilled nursing facility (SNF) during the 
period for which cost sharing would apply under Traditional Medicare, 
cost sharing would be limited to the cost sharing amounts under 
Traditional Medicare when the MA plan establishes the mandatory MOOP 
catastrophic limit under Sec.  422.101(d)(3). When the MA plan 
establishes the lower MOOP catastrophic limit, the cost sharing could 
not be greater than $20 per day for the first 20 days of a SNF stay. 
When the MA plan establishes the intermediate MOOP catastrophic limit, 
the cost sharing could not be greater than $10 per day for the first 20 
days of a SNF stay.
    <bullet> Regardless of the MOOP amount established by the MA plan, 
the per-day cost sharing for days 21 through 100 could not be greater 
than one eighth of the projected (or actual) Part A deductible amount.

[[Page 78586]]

    <bullet> For home health services (as defined in section 1861(m) of 
the Act), when the MA plan establishes a mandatory or intermediate MOOP 
type, cost sharing could not be greater than Traditional Medicare. When 
the MA plan establishes the lower MOOP catastrophic limit, the cost 
sharing could not be greater than 20 percent coinsurance or an 
actuarially equivalent copayment.
    <bullet> Cost sharing could not be greater than the applicable cost 
sharing under Traditional Medicare, when the MA plan establishes the 
mandatory MOOP catastrophic limit for the following specific service 
categories of durable medical equipment (DME): equipment, prosthetics, 
medical supplies, diabetes monitoring supplies, diabetic shoes or 
inserts.
    For regional PPO D-SNPs, we propose to exclude paragraph 
(j)(1)(C)(2) and the last sentence of paragraph (j)(1)(E) regarding 
overall actuarial equivalence requirements to avoid conflict with 
section 1852(a)(1)(B)(ii) of the Act.
    We propose applying out-of-network cost sharing limits to those 
services enumerated at Sec.  422.100(f)(6) and (j)(1) because MA 
organizations and CMS have experience limiting cost sharing to 
Traditional Medicare for these categories of services when they are 
furnished in-network. In addition, this would establish alignment and 
consistency between the in-network and out-of-network cost sharing used 
by D-SNP PPOs for these services. We also note that section 
1852(a)(1)(B)(iv) of the Act limits cost sharing for some of these 
services, including chemotherapy administration and dialysis, to cost 
sharing levels in Traditional Medicare, which CMS has implemented in 
Sec.  422.100(j) to apply to in-network benefits. As noted above, these 
services are among those services for which D-SNP PPOs most often 
impose cost sharing greater than Traditional Medicare.
    We are considering a requirement to limit all D-SNP PPO out-of-
network cost sharing to no greater than Traditional Medicare, or using 
a limit specifically for physician services, including psychiatric and 
other mental health services, rather than using the cost sharing limits 
in Sec.  422.100(f)(6). These are among the most commonly accessed 
services out-of-network in D-SNP PPOs, and these safety net providers 
are most likely to see reduced payment compared to their Traditional 
Medicare patients, which weighs in favor of requiring cost sharing to 
align with Traditional Medicare. Although we continue to consider these 
alternatives and request comment on them, we decided to propose 
application of the cost sharing limits that are applicable for in-
network coverage for specific benefit categories, some of which are 
capped at Traditional Medicare cost sharing and some of which are 
higher. We propose to take this measured approach on the one hand to 
impose cost sharing limits on those services where the limits would 
have the most impact--those services most used out-of-network in D-SNP 
PPOs and where the greater cost sharing has the most impact on provider 
payment and, for those dually eligible beneficiaries liable for cost 
sharing, ability to pay. We also believe this approach, at least 
initially, would mitigate any negative impact on MA organizations and 
D-SNP PPO enrollees as MA organizations redirect funds from other 
supplemental benefits to reduce cost sharing for these out-of-network 
services. However, we seek comment on whether there are additional out-
of-network services for which cost sharing should be limited to the 
levels applicable in Traditional Medicare.
    We considered proposing out-of-network cost sharing limits for D-
SNP PPOs only for services for which the Medicaid payment of cost 
sharing did not result in a total payment that was at least equivalent 
to the payment under Traditional Medicare. That approach would address 
our concern about how high out-of-network costs sharing by D-SNP PPOs 
appears to circumvent the goal of section 1852(a)(2)(A) of the Act that 
the out-of-network providers that furnish covered services to enrollees 
in MA plans receive the amount that the provider would have received 
under Traditional Medicare. However, such an approach would create an 
overly complex and likely unworkable system of cost sharing limits that 
differed both by State (depending on whether State policy limited cost 
sharing for specific services), by service, and--in some cases--by 
individual provider. For example, a State may pay the full Medicare 
cost sharing for Part B drugs administered by an oncologist but set the 
rate for administration of those drugs at 50 percent of the Medicare 
rate, resulting in no payment of cost sharing. That would result in two 
parts of a single services--payment for chemotherapy drugs and 
administration of such drugs--being subject to different cost sharing 
limits. The services subject to cost sharing limits could also change 
over time as States changed the rates at which they reimbursed for such 
services.
    We also considered proposing out-of-network cost sharing limits 
only for services furnished out of network to QMBs because they are 
always protected from being billed cost sharing (see sections 
1848(g)(3), 1866(a)(1)(A), 1902(n), and 1905(p)(3) of the Act). 
However, this would not allow for the MA organization to apply its 
benefit uniformly to all its members, as required by 42 CFR 
422.100(d)(2)(i), unless the SMAC limits enrollment in the D-SNP PPO to 
QMBs. In addition, managing cost sharing benefits in a non-uniform way 
could be administratively burdensome for both MA organizations and 
providers or difficult to clearly and accurately explain to enrollees 
in the member materials.
    Finally, we believe our proposed uniform application of out-of-
network cost sharing limits for all PPO D-SNPs is the appropriate way 
to address our concerns about section 1852(a)(2)(A), the shifting of 
costs to States, the reduction in net payments to safety net providers, 
and the potential for excessive cost sharing for those dually eligible 
individuals, who, while low income, do not benefit from cost sharing 
protections out of network.
    To provide the industry time to adjust to and for CMS to 
operationalize these new requirements, we propose to implement these 
new limits starting for the 2026 plan year.
    Currently, D-SNP PPOs already submit out-of-network benefits for a 
limited review to ensure that cost sharing does not exceed 50 percent 
of the costs (as required by Sec.  422.100(f)(6)(i)) and in-network 
benefits for a review to ensure compliance with the cost sharing limits 
we propose to apply to out-of-network cost sharing. Therefore, we do 
not believe this proposed rule creates substantial information 
collection requirements.
    We do not expect any new burden to be associated with these 
proposed changes, as MA organizations are currently required to include 
information on MA cost sharing in their bids. Further, we do not expect 
any additional burden on CMS, as modifications to account for this 
proposed provision would be completed as part of normal business 
operations.

IX. Updates to Program of All-Inclusive Care for the Elderly (PACE) 
Policy

A. Corrective Action (Sec.  460.194)

    Sections 1894(e)(4) and 1934(e)(4) of the Act require CMS, in 
cooperation with the State administering agency (SAA), to conduct 
comprehensive reviews of PACE organizations' compliance with all 
significant program requirements. Additionally, sections 
18941(e)(6)(A)(i) and 1934(e)(6)(A)(i) of

[[Page 78587]]

the Act condition the continuation of the PACE program agreement upon 
timely execution of a corrective action plan if the PACE provider fails 
to substantially comply with the program requirements as set forth in 
the Act and regulation. In the 1999 PACE interim final rule, we 
specified at Sec.  460.194(a) and (c) that PACE organizations must take 
action to correct deficiencies identified by CMS or the SAA, or PACE 
organizations may be subject to sanction or termination (84 FR 66296). 
The 2019 PACE final rule amended Sec.  460.194(a) to expand the ways 
CMS or the SAA may identify deficiencies that the PACE organization 
must correct (84 FR 25677). These include ongoing monitoring, reviews, 
audits, or participant or caregiver complaints, and for any other 
instance in which CMS or SAA identifies programmatic deficiencies 
requiring correction (84 FR 25677).
    The 1999 PACE interim final rule also specified at Sec.  460.194(b) 
that CMS or the SAA monitors the effectiveness of PACE organizations' 
corrective actions. The burden on CMS and SAAs to always monitor the 
effectiveness of every corrective action taken by the organization 
after an audit is high, and the number of audits, and thus the number 
of instances in which monitoring is required, increases each year 
because the PACE program continues to rapidly grow, and CMS is required 
to conduct audits in each year of the three-year trial period for new 
PACE contracts. However, our experience overseeing this program has 
shown that it is not always necessary or worthwhile for CMS to monitor 
the effectiveness of every corrective action taken by an audited 
organization. For example, a PACE organization may implement a 
corrective action that impacts its unscheduled reassessments due to a 
change in participant status, but historically, these types of 
assessments are not conducted frequently, therefore, it may not be 
worthwhile for CMS or the states to spend resources monitoring the 
effectiveness of that correction due to limited data available for CMS 
or the SAA to monitor. Therefore, we propose to revise Sec.  460.194(b) 
to specify that, at their discretion, CMS or the SAA may monitor the 
effectiveness of corrective actions. This proposal would give CMS and 
the SAA the flexibility to determine how to use their oversight 
resources most effectively, which will be increasingly important as 
PACE continues to grow.
    This proposal would not change our expectation that PACE 
organizations expeditiously and fully correct any identified 
deficiencies, and CMS and the SAAs would continue to engage in 
monitoring efforts that prioritize participant health and safety and 
program integrity. In addition, as a part of a PACE organization's 
oversight compliance program, we require at Sec.  460.63 that PACE 
organizations adopt and implement effective oversight requirements, 
which include measures that prevent, detect and correct non-compliance 
with CMS's program requirements. A PACE organization's oversight 
compliance program must, at a minimum, include establishment and 
implementation of procedures and a system for promptly responding to 
compliance issues as they are raised. In addition, compliance oversight 
programs must ensure ongoing compliance with CMS requirements.
    Since the effect of the proposed change would be to provide CMS and 
the SAA more flexibility when monitoring the effectiveness of 
corrective actions without placing new requirements on CMS, the SAAs, 
or PACE organizations, we believe this change would create no 
additional burden for PACE organizations. Additionally, we do not 
expect this change to have economic impact on the Medicare Trust Fund.
    We solicit comment on this proposal.

B. Service Determination Requests Pending Initial Plan of Care (Sec.  
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. Along with the regulations at Sec.  460.120 related to 
grievances, and Sec.  460.122 related to appeals, CMS created a process 
for service determination requests, the first stage of an appeal, at 
Sec.  460.121.
    The PACE regulations define a service determination request as a 
request to initiate a service; modify an existing service, including to 
increase, reduce, eliminate, or otherwise change a service; or to 
continue coverage of a service that the PACE organization is 
recommending be discontinued or reduced (see Sec.  460.121(b)(1)(i) 
through (iii)). In the January 2021 final rule (86 FR 6024), we 
finalized an exception to the definition of service determination 
request at Sec.  460.121(b)(2), which, as amended, provides that 
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. When we 
proposed this exception in the February 2020 proposed rule, we noted 
that the exception would apply any time before the initial plan was 
finalized and discussions among the interdisciplinary team (IDT) ceased 
(85 FR 9125). We explained that we believed this change would benefit 
both participants and PACE organizations because it would allow the IDT 
and the participant and/or caregiver ``to 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'' (Id.). We 
also stated that ``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 determination request at that 
time'' (85 FR 9126).
    Our intention for this provision was that the IDT would discuss 
specific requests made by a participant and/or caregiver as part of the 
care planning process and determine whether these requests needed to be 
addressed in the plan of care. We stated in the February 2020 proposed 
rule that if a participant asked for a specific number of home care 
hours, that the request would not need to be processed as a service 
determination request because the IDT was actively considering how many 
home care hours the participant should receive as part of the 
development of the initial plan of care (85 FR 9125). This rationale is 
also consistent with our statement in the proposed rule titled 
``Medicare and Medicaid Programs; Programs of All-Inclusive Care for 
the Elderly (PACE),'' which appeared in the August 16, 2016 Federal 
Register, that ``CMS expects the plan of care to reflect that the 
participant was assessed for all services even where a determination is 
made that certain services were unnecessary at that time'' (81 FR 
54684).

[[Page 78588]]

    However, as part of our oversight and monitoring of PACE 
organizations, we have found that often requests made by participants 
and/or caregivers prior to the finalizing of the care plan are not 
discussed during the care planning process and are therefore not 
considered by the IDT. These requests are some of the first 
communications from participants related to the care they will be 
receiving from the PACE organization and would otherwise be considered 
service determination requests at any other stage of their enrollment. 
While we continue to believe that it is not prudent for the PACE 
organization to process these requests as service determination 
requests, it is important that the IDT consider these requests and 
determine whether they are necessary for the participant.
    Therefore, we propose to modify the regulation text at Sec.  
460.121(b)(2) to specify that service requests made prior to developing 
the participant's initial plan of care must either be approved and 
incorporated into the participant's initial plan of care, or the 
rationale for why it was not approved and incorporated must be 
documented. Specifically, we propose to add the add the following 
language at Sec.  460.121(b)(2). For all requests identified in this 
section, the interdisciplinary team must--
    <bullet> Document the request; and
    <bullet> Discuss the request during the care plan meeting and 
either--
    ++ Approve the requested service and incorporate it into the 
participant's initial plan of care; or
    ++ Document their rationale for not approving the service in the 
initial plan of care.
    We believe this change is consistent with existing plan of care 
requirements at Sec.  460.104(b) and aligns with our plan of care 
proposals in the December 2022 proposed rule (87 FR 79452).
    As the development of the plan of care is a typical responsibility 
for the IDT, any burden associated with this would be incurred by 
persons in their normal course of business. Therefore, the burden 
associated with documenting the determination of any assessment of a 
participant and/or caregiver service request during the initial care 
planning process is exempt from the PRA in accordance with 5 CFR 
1320.3(b)(2).

X. 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. 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:
    <bullet> The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
    <bullet> The accuracy of our estimate of the information collection 
burden.
    <bullet> The quality, utility, and clarity of the information to be 
collected.
    <bullet> Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment (see section VII.D. of this 
preamble for further information) on each of these issues for the 
following sections of this document that contain information collection 
requirements. Comments, if received, will be responded to within the 
subsequent final rule.

A. Wage Data

1. Private Sector
    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 (https://www.bls.gov/oes/2022/may/oes_nat.htm), which, at the time of publication of this 
proposed rule, provides May 2022 wages. In this regard, Table J1 
presents BLS' mean hourly wage, our estimated cost of fringe benefits 
and other indirect costs (calculated at 100 percent of salary), and our 
adjusted hourly wage.
[GRAPHIC] [TIFF OMITTED] TP15NO23.026

    As indicated, except for Insurance Sales Agents, 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 other 
indirect costs vary significantly from employer to employer and because 
methods of estimating these costs vary widely from study to study. In 
this regard, we believe that doubling the hourly wage to estimate costs 
is a reasonably accurate estimation method.
    However, the mean wage for Insurance Sales Agent is being applied

[[Page 78589]]

to Agent-Brokers who work on behalf of Medicare Advantage plans. We are 
not adjusting their mean hourly wage for fringe benefits and other 
indirect costs because this proposed rule includes a proposal which 
accounts for payments for certain administrative activities while 
explicitly precluding others. These proposed payments would have their 
own annual update.
2. Beneficiaries
    We believe that the cost for beneficiaries undertaking 
administrative and other tasks on their own time is a post-tax wage of 
$20.71/hr. The Valuing Time in U.S. Department of Health and Human 
Services Regulatory Impact Analyses: Conceptual Framework and Best 
Practices identifies the approach for valuing time when individuals 
undertake activities on their own time. To derive the costs for 
beneficiaries, a measurement of the usual weekly earnings of wage and 
salary workers of $998, divided by 40 hours to calculate an hourly pre-
tax wage rate of $24.95/hr. This rate is adjusted downwards by an 
estimate of the effective tax rate for median income households of 
about 17 percent, resulting in the post-tax hourly wage rate of $20.71/
hr. Unlike our private sector wage adjustments, we are not adjusting 
beneficiary wages for fringe benefits and other indirect costs since 
the individuals' activities, if any, would occur outside the scope of 
their employment.
    For valuing time spent outside of work, there is logic to this 
approach but also to using a fully loaded wage. In the past we have 
used occupational code 00-0000, the average of all occupational codes, 
which currently is $29.76/hr. Thus we propose a range for enrollees of 
$20.71/hr-$29.76/hr. Nevertheless, the upper limit is based on an 
average over all occupations while the lower limit reflects a detailed 
analysis by ASPE targeted at enrollees many of whom are over 65 and 
unemployed; consequently, in our primary estimates we will use the 
lower limit as we consider it more accurate. The effect of this range 
will be footnoted in Table J5 and the summary table. Since the impact 
to beneficiaries is approximately $54,000, increasing the wage by 50 
percent would result in a roughly $24,000 increase.

B. Proposed Information Collection Requirements (ICRs)

    The following ICRs are listed in the order of appearance within the 
preamble of this proposed rule.
1. ICRs Regarding Network Adequacy in Behavioral Health (Sec.  
422.116(b)(2) and (d)(2) and (5))
    The following proposed changes will be submitted to OMB for review 
under control number 0938-1346 (CMS-10636).
    To ensure that MA enrollees have access to provider networks 
sufficient to provide covered services, including behavioral health 
service providers, we are proposing to add one new facility-specialty 
type that will be subject to network adequacy evaluation under Sec.  
422.116. As discussed in the ``Expanding Network Adequacy Requirements 
for Behavioral Health'' section of the preamble, we are proposing to 
amend the network adequacy requirements to add one combined facility-
specialty category called ``Outpatient Behavioral Health'' under Sec.  
422.116(b)(2) and to add ``Outpatient Behavioral Health'' to the time 
and distance requirements in Sec.  422.116(d)(2). This new category can 
include, for network adequacy evaluation purposes, provider types 
including Marriage and Family Therapists (MFTs), Mental Health 
Counselors (MHCs), Opioid Treatment Program (OTP) providers Community 
Mental Health Centers or other behavioral health and addiction medicine 
specialists and facilities. Based on the current regulation at Sec.  
422.116(e)(2) for all facility-specialty types other than acute 
inpatient hospitals, the minimum provider number requirement for this 
proposed new provider type is one. Finally, we also propose to add the 
new ``Outpatient Behavioral Health'' facility-specialty type to the 
list at Sec.  422.116(d)(5) of the specialty types that will receive a 
10-percentage point credit towards the percentage of beneficiaries that 
reside within published time and distance standards for certain 
providers when the plan includes one or more telehealth providers of 
that specialty type that provide additional telehealth benefits, as 
defined in Sec.  422.135, in its contracted network. To determine the 
potential burden regarding this proposal, we considered cost estimates 
for MA organizations to update policies and procedures. However, the 
burden for updating the HPMS system is a burden to CMS and its 
contractors and hence not subject to COI review.
    Although there is a no cost for MA organizations to report new 
specialty types to CMS for their network adequacy reviews as this 
proposal requires, we have determined that there is a minimal one-time 
cost for MA organizations to update their policies and procedures 
associated with this proposal.
    First, regarding reporting the proposed new specialty types to CMS, 
MA organizations are already conducting ongoing work related to network 
adequacy reviews that happen during the initial or service area 
application, or every 3 years for the triennial review. This proposal 
would only require that the proposed specialty type be added to the 
Health Services Delivery (HSD) tables during any network adequacy 
evaluation requested by CMS. The time to conduct tasks related to 
adding additional specialty types on the HSD tables is negligible.
    We understand that MA organizations will need to update their 
policies and procedures related to submission of HSD tables to ensure 
that the new required behavioral health specialty type is included. We 
estimate that it would take 5 minutes (0.0833 hr) at $79.50/hr for a 
business operations specialist to update of policies and procedures 
related to this task. In aggregate we estimate a one-time burden of 62 
hours (742 MA contracts * 0.0833 hr) at a cost $4,929 (62 hr * $79.50/
hr).
2. ICRs Regarding Standards for Electronic Prescribing ((Sec.  423.160 
and 45 CFR 170.205 and 170.299)
    In section III.B. of this proposed rule, we propose updates to the 
standards to be used for electronic transmission of prescriptions and 
prescription-related information for Part D covered drugs for Part D 
eligible individuals. This includes: (1) after a transition period, 
requiring the National Council for Prescription Drug Plans (NDPDP) 
SCRIPT standard version 202301, proposed for adoption at 45 CFR 
170.205(b)(2), and retiring use of NCPDP SCRIPT standard version 
2017071 for communication of a prescription or prescription-related 
information supported by Part D sponsors; (2) requiring use of NCPDP 
RTPB standard version 13 for prescriber RTBTs implemented by Part D 
sponsors beginning January 1, 2027; and (3) requiring use of NCPDP 
Formulary and Benefit (F&B) standard version 60, proposed for adoption 
at 45 CFR 170.205(u), and retiring use of NCPDP F&B version 3.0 for 
transmitting formulary and benefit information between prescribers and 
Part D sponsors. These proposals update existing standards that have 
historically been exempt from the PRA, as explained in this section.
    The initial electronic prescribing standards for the Medicare Part 
D program were adopted in the final rule ``Medicare Program; Standards 
for E-

[[Page 78590]]

Prescribing Under Medicare Part D and Identification of Backward 
Compatible Version of Adopted Standard for E-Prescribing and the 
Medicare Prescription Drug Program (Version 8.1)'' (Initial Standards 
final rule), which appeared in the April 4, 2008, Federal Register (73 
FR 18917). The Initial Standards final rule implemented the first 
update to the electronic prescribing foundation standards in the Part D 
program that had been adopted in the final rule ``Medicare Program; E-
Prescribing and the Prescription Drug Program'' (Foundation Standards 
final rule), which appeared in the November 7, 2005, Federal Register 
(70 FR 67567). The Initial Standards final rule adopted the updated the 
National Council for Prescription Drug Programs (NCPDP) SCRIPT standard 
version 8.1 and retired the previous NCPDP SCRIPT standard version 5.0. 
With respect to ICRs in the Initial Standards final rule, CMS stated 
that as a third-party disclosure requirement subject to the PRA, 
Medicare Part D sponsors must support and comply with the adopted e-
prescribing standards relating to covered Medicare Part D drugs, 
prescribed for Medicare Part D eligible individuals. However, the 
requirement that Medicare Part D sponsors support electronic 
prescription drug programs in accordance with standards set forth in 
this section, as established by the Secretary, does not require that 
prescriptions be written or transmitted electronically by prescribers 
or dispensers. These entities are required to comply with the adopted 
standards when they electronically transmit prescription or 
prescription-related information for covered transactions. Testimony 
presented to the [National Committee on Vital and Health Statistics] 
indicates that most health plans/[pharmacy benefit managers] currently 
have [electronic] prescribing capability either directly or through 
contract with another entity. Therefore, we do not believe that 
utilizing the adopted standards will impose an additional burden on 
Medicare Part D sponsors. Since the standards that have been adopted 
are already familiar to industry, we believe the requirement to utilize 
them in covered [electronic] prescribing transactions constitutes a 
usual and customary business practice. As such, the burden associated 
with the requirements is exempt from the PRA as stipulated under 5 CFR 
1320.3(b)(2).
    Subsequent rules which have updated electronic prescribing 
standards in the Medicare Part D program have not included any burden 
estimates. Specifically--
    <bullet> The ``Medicare Program; Revisions to Payment Policies 
Under the Physician Fee Schedule, DME Face-to-Face Encounters, 
Elimination of the Requirement for Termination of Non-Random Prepayment 
Complex Medical Review and Other Revisions to Part B for CY 2013'' 
final rule, which appeared in the November 16, 2012, Federal Register 
(77 FR 68891). This final rule updated the electronic prescribing 
standards in Medicare Part D from NCPDP SCRIPT standard version 8.1 to 
version 10.6;
    <bullet> The ``Medicare Program; Revisions to Payment Policies 
Under the Physician Fee Schedule, Clinical Laboratory Fee Schedule & 
Other Revisions to Part B for CY 2014'' final rule, which appeared in 
the Federal Register December 10, 2013 (78 FR 74229). This final rule 
updated the electronic prescribing standards in Medicare Part D from 
NCPDP Formulary and Benefit (F&B) standard version 1.0 to 3.0; and
    <bullet> The ``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'' final rule, which appeared in the 
Federal Register April 16, 2018 (83 FR 16640). This final rule updated 
the electronic prescribing standards in Medicare Part D from NCPDP 
SCRIPT standard version 10.6 to 2017071.
    Rationale that further supports CMS's longstanding approach to not 
estimate burden associated with updating electronic prescribing 
standards is described in the proposed 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'' (November 
2017 proposed rule), which appeared in the November 28, 2017, Federal 
Register (82 FR 56336). When describing the proposed update of the 
NCPDP SCRIPT standard from version 10.6 to 2017071 in the November 2017 
proposed rule, CMS stated that we believe that transitioning to the new 
2017071 versions of the transactions already covered by the current 
Part D [electronic] prescribing standard (version 10.6 of the NCPDP 
SCRIPT) will impose de minimis cost on the industry as the burden in 
using the updated standards is anticipated to be the same as using the 
old standards for the transactions currently covered by the program. We 
believe that prescribers and dispensers that are now prescribing 
[electronically] largely invested in the hardware, software, and 
connectivity necessary to prescribe [electronically]. We do not 
anticipate that the retirement of NCPDP SCRIPT 10.6 in favor of NCPDP 
SCRIPT 2017071 will result in significant costs.
    Similarly, Part D sponsors have been required support real-time 
benefit tools (RTBTs) since January 1, 2021, as finalized in the 
``Modernizing Part D and Medicare Advantage to Lower Drug Prices and 
Reduce Out-of-Pocket Expenses'' final rule, which appeared in the 
Federal Register May 23, 2019 (84 FR 23832). Because Part D sponsors 
have invested in the hardware, software, and connectivity necessary to 
utilize RTBTs, we believe that adopting the NCPDP Real-Time 
Prescription Benefit (RTPB) standard version 13 will impose de minimis 
cost on the industry and that costs will be largely offset by the 
advantages and efficiencies associated with interoperability that a 
standard brings.
    The operations associated with updates to standards that we propose 
in this proposed rule are analogous to the operations associated with 
updates to standards in the prior rules described. Therefore, the 
proposals in section III.B. of this proposed rule are exempt from the 
PRA.
3. ICRs Regarding to Improvements to Drug Management Programs 
(Sec. Sec.  423.100 and 423.153)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-TBD (CMS-10874). At this time, the OMB 
control number has not been determined, but it will be assigned by OMB 
upon their clearance of our proposed collection of information request. 
We intend to identify the new control number in the subsequent final 
rule. The control number's expiration date will be issued by OMB upon 
their approval of our final rule's collection of information request. 
When ready, the expiration date can be found on reginfo.gov.
    Ordinarily, the proposed changes would be submitted to OMB for 
review under control number 0938-0964 (CMS-10141), where the current 
OMB-approved Part D drug management program (DMP) information 
collection and burden is located. However, based on internal review, we 
are removing the DMP information collection and related burden from 
CMS-10141 and submitting it under a new collection of information 
request (OMB 0938-TBD, CMS-10874). This change will streamline 
clearance processes and minimize duplicative administrative burden for 
CMS and other stakeholders. Although we are proposing to remove

[[Page 78591]]

DMP burden from CMS-10141, that collection will continue to include 
burden associated with many other aspects of the Part D program.
    As described in section III.E. of this proposed rule, we propose to 
amend regulations regarding Part D DMPs for beneficiaries at risk of 
abuse or misuse of frequently abused drugs (FADs). Specifically, we 
propose to amend the definition of ``exempted beneficiary'' at Sec.  
423.100 by replacing the reference to ``active cancer-related pain'' 
with ``cancer-related pain.'' This proposed change would reduce the 
overall burden associated with sponsors providing DMP case management 
and notices to potentially at-risk beneficiaries (PARBs) and at-risk 
beneficiaries (ARBs) because some beneficiaries identified as PARBs 
under the current definition would be excluded under the amended 
definition.
    Under Sec.  423.153(a), all Part D plan sponsors must have a DMP to 
address overutilization of FADs for enrollees in their prescription 
drug benefit plans. Based on 2023 data, there are 319 Part D parent 
organizations. The provisions codified at Sec.  423.153(f)(2) require 
that Part D sponsors conduct case management of beneficiaries 
identified by the minimum overutilization monitoring system (OMS) 
criteria through contact with their prescribers to determine if a 
beneficiary is at-risk for abuse or misuse of opioids and/or 
benzodiazepines. Case management must include informing the 
beneficiary's prescriber(s) of the beneficiary's potential risk for 
misuse or abuse of FADs and requesting information from the prescribers 
relevant to evaluating the beneficiary's risk, including whether they 
meet the regulatory definition of exempted beneficiary. Under current 
CMS regulations at Sec.  423.100, if a beneficiary meets the definition 
of an exempted beneficiary, the beneficiary does not meet the 
definition of a PARB. For this reason, exempted beneficiaries cannot be 
placed in a Part D sponsor's DMP.
    In 2022, the OMS identified 43,915 PARBs meeting the minimum 
criteria prior to applying exclusions and 30,411 after excluding 
exempted beneficiaries. Thus, 13,504 beneficiaries (43,915 - 30,411) 
met the definition of exempted beneficiary. Amending the definition of 
``exempted beneficiary'' at Sec.  423.100 by replacing the reference to 
``active cancer-related pain'' with ``cancer-related pain'' would 
result in 46 additional enrollees meeting the definition of exempted 
beneficiary, or 13,550 exempted beneficiaries total (13,504 + 46). This 
yields 30,365 (43,915 - 13,550) instead of 30,411 beneficiaries 
requiring case management under the amended definition.
    We estimate it takes an average of 5 hours for a sponsor to conduct 
case management for a PARB. We assume certain components of case 
management can be completed by staff of differing specialization and 
credentialing. Of the 5 hours, we assume that 2 hours at $124.44/hr 
would be conducted by a pharmacist (such as initial review of 
medication profiles, utilization, etc.), 2 hours at $38.70/hr would be 
conducted by a pharmacy technician, and 1 hour at $229.52/hr would be 
conducted by a physician to work directly with prescribers on 
discussing available options and determining the best course of action. 
The case management team would require 5 hours at a cost of $555.80 per 
PARB case managed ([2 hr x $124.44/hr] + [2 hr * $38.70/hr] + [1 hr * 
$229.52/hr]). Therefore, the case management team's average hourly wage 
is $111.16/hr ($555.80/5 hr). In aggregate, we estimate annual burden 
with the proposed changes for case management is 151,825 hours (30,365 
enrollees subject to case management * 5 hr/response) at a cost of 
$16,876,867 (30,365 enrollees * (5 hr * $111.16/hr); see case 
management row in Table J3. CMS 10141 included an estimate for the 
current case management burden of 178,855 hours and, with the hourly 
wage updated, a cost of $19,881,522; see case management row in Table 
J2. Thus, we calculate a savings of 27,033 hours (178,855 - 151,825) 
and $3,004,655 ($19,955,671 - $16,876,867) with this current proposed 
burden; see case management row in Table J4 and note that in Table J4 
we list savings as a negative number.
    As a result of case management, a portion of PARBs may receive 
notice from a plan sponsor, informing the beneficiary of the sponsor's 
intention to limit their access to coverage of opioids and/or 
benzodiazepines. Approximately 5 percent of PARBs identified by OMS 
criteria receive an initial and either a second notice or an alternate 
second notice. Amending the definition of ``exempted beneficiary'' 
would reduce the number of notices sent. Therefore, it follows that 2 
fewer PARBs would receive notices (46 additional individuals * 0.05) 
and there would be 4 fewer notices total (2 enrollees * 2 notices/
enrollee). Approximately 1,518 (30,365 * 0.05) PARBs overall would 
receive an initial and second notice (or alternate second notice) 
annually. We estimate it takes a pharmacy technician at $38.70/hr 
approximately 5 minutes (0.0833 hr) to send each notice and a total of 
10 minutes (0.1667 hr) per enrollee to send both notices. In aggregate, 
we estimate an annual burden with the proposed changes for sending 
notices of 253 hours (1,518 enrollees * 0.1667 hr) at a cost of $9,791 
(253 hr * $38.70/hr) to send both notices; see the row for notification 
for enrollees in Table J3. CMS 10141, presenting the current burden, 
includes an estimated notice burden of 1,319 hours and, with the hourly 
wage updated, a cost of $51,045; see the row for notification for 
enrollees in Table J2. Thus, we calculate a savings of 1,066 hours 
(1,319 - 253) and $41,254 ($51,045 - $9,791) with this current proposed 
burden; see the row for notification for enrollees in Table J4 and note 
that in Table J4 we list savings as a negative number.
    Amending the definition of ``exempted beneficiary'' would also 
reduce the burden of disclosure of DMP data to CMS based on the outcome 
of case management of PARBs. Using 30,365 beneficiaries requiring DMP 
data disclosure, we estimate that it would take (on average) 1 minute 
(0.0167 hr) at $38.70/hr for a sponsor's pharmacy technician to 
document the outcome of case management and any applicable coverage 
limitations in OMS and/or MARx. In aggregate, we estimate an annual 
burden with the proposed changes for notification to CMS of 507 hours 
(30,365 PARBs * 0.0167 hr) at a cost of $19,621 (507 hr * $38.70/hr); 
see the row for notification to CMS in Table J3. CMS-10141, presenting 
the current burden, includes an estimated data disclosure burden of 597 
hours and, with updated hourly wages, a cost of $23,104; see the row 
for notification to CMS of Table J2. Thus, we calculate a savings of 90 
hours (597 - 507) and $3,483 ($23,104 - $19,621) with this current 
proposed burden; see the row for notification to CMS in Table J4 and 
note that in Table J4 we list savings as a negative number.
    Table J2, presents information from the current package, CMS-10141, 
with wages adjusted to 2022 wages.
BILLING CODE 4120-01-P

[[Page 78592]]

[GRAPHIC] [TIFF OMITTED] TP15NO23.027

    Table J3 presents the estimated burden proposed in this rule which 
will be submitted with the new package, CMS-10874, which uses the 
currently approved burden from CMS-10141 as a baseline.
[GRAPHIC] [TIFF OMITTED] TP15NO23.028

    In aggregate, these proposed changes will result in an annual 
reduction of cost of $3,049,392 and reduction of 28,186 hours. The 
aggregate burden change (reduction) is presented in table J4, and will 
be submitted with the new package, CMS-10874.

[[Page 78593]]

[GRAPHIC] [TIFF OMITTED] TP15NO23.029

BILLING CODE 4120-01-C
4. ICRs Regarding Additional Changes to an Approved Formulary--
Biosimilar Biological Product Maintenance Changes and Timing of 
Substitutions (Sec. Sec.  423.4, 423.100, and 423.120(e)(2))
    In section III.F. of this proposal, we are proposing a limited 
number of changes to update regulatory text we originally proposed in 
section III.Q. Changes to an Approved Formulary of the December 2022 
proposed rule. In the December 2022 proposed rule, we proposed to 
reorganize current regulatory text to incorporate and as necessary 
conform with longstanding sub-regulatory guidance and operations with 
respect to changes to an approved formulary and associated notice 
provisions. We also proposed to permit the immediate substitution of 
interchangeable biological products. The proposals discussed in section 
III.Q. of the December 2022 proposed rule have not been finalized and 
remain under consideration.
    Specifically, in section III.F. of this proposed rule, we are now 
proposing to update the regulatory text proposed in December 2022 to 
the extent necessary to permit Part D sponsors to treat substitutions 
of biosimilar biological products other than interchangeable biological 
products as ``maintenance changes'' under Sec.  423.100 as proposed in 
the December 2022 rule. We also are proposing to revise paragraphs (1) 
and (2) of the Sec.  423.100 definition of ``maintenance changes'' to 
clarify that certain substitutions need not take place ``at the same 
time'' but that Part D sponsors can remove or make negative changes to 
a brand name drug or reference product within a certain time period 
after adding a corresponding drug or a biosimilar biological product 
other than an interchangeable biological product to the formulary. 
Lastly, we are proposing a few technical changes, including in support 
of the above specified proposals.
    In section VII.B.10. of the December 2022 proposed rule (87 FR 
79680), we outlined ICRs regarding the proposed provision ``Changes to 
an Approved Formulary.'' We described the methodology used to quantify 
burden, labor, and non-labor costs incurred by Part D plan sponsors 
related to making changes to their approved Part D formularies. The 
information collection responses included: (1) submitting a negative 
change request to CMS; (2) updating the formulary in CMS's Health Plan 
Management System (HPMS); (3) updating the formulary and providing 
online notice of changes on the plan website; and (4) providing direct 
written notice to affected enrollees. The burden estimates in the 
December 2022 proposed rule were based on actual formulary changes 
submitted to CMS since the ``Changes to an Approved Formulary'' 
proposals set out to codify existing guidance that Part D sponsors had 
already been following.
    We are not revising the December 2022 proposed rule's burden 
estimates for the purposes of this CMS-4205-P proposal which permits 
formulary substitutions of a biosimilar biological product other than 
an interchangeable biological product for the reference product as a 
maintenance change. New drugs and biological products are approved or 
licensed by the FDA and become available on the market at irregular 
intervals. Therefore, with respect to this provision, we cannot predict 
when new biosimilar biological products will enter the market or to 
what extent Part D sponsors will make formulary substitutions as a 
result. Several biosimilar biological products entered the market in 
2023,\197\ but CMS has not seen a corresponding influx of non-
maintenance negative change requests from Part D sponsors. It is 
unclear whether Part D sponsors are not requesting midyear formulary 
changes due to concerns about patient and provider hesitancy towards 
biosimilar biological products, or if the current policy that treats 
such formulary changes as non-maintenance changes disincentivizes Part 
D sponsors from making midyear formulary changes that will not apply to 
all enrollees currently taking the reference product.
---------------------------------------------------------------------------

    \197\ Billingsly A. Is There a Biosimilar for Humira? Yes, Here 
Are 9 Humira Biosimilars Launching in 2023. GoodRxHealth. July 12, 
2023. Available from: https://www.goodrx.com/humira/biosimilars.
---------------------------------------------------------------------------

    We will continue to base our burden estimates on CMS's internal 
data on formulary changes from a recent contract year, as described in 
section VII.B.10. of the December 2022 proposed rule and will consider 
comments received. We will revise our estimates, as appropriate, based 
on current data when finalizing the proposals from the December 2022 
proposed rule. The changes will also be posted for public review under 
control number 0938-0964 (CMS-10141) using the standard non-rule PRA 
process which includes the publication of 60- and 30-day Federal 
Register notices. The 60-day notice will publish soon

[[Page 78594]]

after the publication of the CMS-4205-F final rule.
5. ICRs Regarding Expanding Permissible Data Use and Data Disclosure 
for MA Encounter Data (Sec.  422.310)
    In section III.H. of this proposed rule, we discuss two proposals 
to improve access to MA encounter data for certain purposes. We noted 
that our current regulatory language limits CMS's ability to use and 
disclose MA encounter data to States for activities in support of 
administration or evaluation of the Medicaid program, including care 
coordination. Further, the regulation delays when CMS may share MA 
encounter data to State Medicaid agencies for care coordination and 
quality review and improvement activities for the Medicaid program, 
particularly with regard to dually eligible individuals. Our proposals 
to improve access to MA encounter data include all the following:
    <bullet> Adding ``and Medicaid programs'' to the current MA risk 
adjustment data use purposes codified at Sec.  422.310(f)(1)(vi) and 
(vii).
    <bullet> Adding Sec.  422.310(f)(3)(v) to allow for risk adjustment 
data to be released prior to reconciliation if the data will be 
released to States for the purpose of coordinating care for dually 
eligible individuals.
    Together, these proposals aim to clarify and broaden the allowable 
data uses for CMS and external entities (for data disclosed in 
accordance with Sec.  422.310(f)(2) and (3)). We discuss the regulatory 
impact on CMS review and fulfillment of new MA encounter data requests 
in section XI., explaining that we do not anticipate any significant 
impact to CMS.
    As discussed in sections III.H. and XI., these proposed provisions 
would allow States to voluntarily request MA encounter data from CMS 
for certain allowable purposes to support the Medicaid program. 
Currently, States can request MA encounter data to support the 
administration of the Medicare program or Medicare-Medicaid 
demonstrations, and to conduct evaluations and other analysis to 
support the Medicare program (including demonstrations). In addition, 
we interpret the regulation as permitting use and disclosure of the MA 
encounter data for quality review and improvement activities for 
Medicaid as well as Medicare.
    When determining the potential burden of these proposals on States, 
we considered our existing data sharing program for States to request 
Medicare data for initiatives related to their dually eligible 
population. We expect the process to request MA encounter data would be 
similar to the process that States currently undertake to request new 
Medicare FFS claims and events data files or to update allowable data 
uses. All States, including the District of Columbia, maintain 
agreements with CMS that cover operational data exchanges related to 
the Medicare and Medicaid program administration as well as optional 
data requests for Medicare claims and events data. Therefore, States 
interested in requesting MA encounter data would not need to complete 
and submit a new data agreement for MA encounter data; instead, they 
would submit a use justification for the new data request and update 
their existing data agreement form. We note that requesting Medicare 
data is voluntary and that not all States currently request Medicare 
FFS claims or prescription drug events data for coordinating care of 
dually eligible beneficiaries, and of those States that request 
Medicare data, not all States request the same Medicare data files. As 
with Medicare FFS claims and events data, States would maintain the 
ability to choose if and when they want to request MA encounter data 
for existing or newly expanded uses. We further note that the process 
for States to submit a request for data and for CMS to review these 
requests are part of standard operations for CMS and many States. 
Additionally, we have technical assistance support to help States 
navigate the data request process and help States maintain their data 
agreements.
    In the August 2014 final rule, when we established several of the 
current provisions around CMS disclosure of MA encounter data, we 
explained that we had determined that ``the proposed regulatory 
amendments would not impose a burden on the entity requesting data 
files.'' (79 FR 50445). Similarly, for the proposed refinements to the 
approved data uses and the data disclosure in this proposed rule, we do 
not anticipate a significant change in burden for States as a result of 
these proposals, which clarify and expand MA encounter data uses and 
timing of data release. We solicit comment on our analysis.
6. ICRs Regarding Standards for Determining Whether a Special 
Supplemental Benefit for the Chronically Ill Has a Reasonable 
Expectation of Improving the Health or Overall Function of an Enrollee 
(Sec.  422.102(f)(3)(iii) and (iv) and (f)(4))
    The following proposed changes will be submitted to OMB for review 
under control number 0938-0753 (CMS-R-267).
    As explained in section IV.B. of this rule, due to increased 
offering of SSCBI, we are proposing to: (1) require the MA organization 
to establish, by the date on which it submits its bid, a bibliography 
of ``relevant acceptable evidence'' related to the item or service the 
MA organization would offer as an SSBCI during the applicable coverage 
year; (2) require that an MA plan follow its written policies (that 
must be based on objective criteria) for determining eligibility for an 
SSBCI when making such determinations; (3) require the MA plan to 
document denials of SSBCI eligibility rather than approvals; and (4) 
codify CMS's authority to decline to accept a bid due to the SSBCI the 
MA organization includes in its bid and to review SSBCI offerings 
annually for compliance, taking into account the evidence available at 
the time. We now estimate burden.
    Item (4) is a burden specific to CMS and is therefore not subject 
to collection of information requirements. We choose to combine the 
burdens of: (1) and (2) as the evidence gathered under (1) will likely 
directly inform the criteria established under (2).
    In estimating the impact, we note the following: (i) Not all 
contracts offer SSBCI (only about 40 percent); (ii) not all plan 
benefit packages (PBP) offer them (only about 20 percent); (iii) the 
distribution of the number of SSBCI per PBP is highly skewed (for 
example, for 2023 the average is about 8 while the median is 2); and 
(iv) both the median and 3rd quartile of the number of SSBCI per PBP 
reflect only a handful of SSBCI offered.
    Based on internal CMS data we are using 10,000 SSBCI per year for 
the three-year estimates required by the Collection of Information 
requirements. To comply with the requirements of the provision that 
would require bibliography, a staff member knowledgeable in health 
should be deployed. We are using a registered nurse. Establishing a 
bibliography requires research, including reading papers and assessing 
their quality. Because the bibliography would contain only citations 
and copies of the necessary information, and not any narrative, we 
assume these activities would take a day of work (8 hours), which can 
refer to the aggregate activity of 1 nurse working 8 hours or 2 nurses 
working 4 hours each. A plan would need to review and update its 
bibliography annually. We assume that updating an existing bibliography 
would take less time than establishing an initial bibliography. We 
estimate that

[[Page 78595]]

it would take 8 hours each year to update existing bibliographies.
    To create a single line-item, we estimate that it would take 8 
hours at $85.60/hr for a registered nurse to create the bibliography 
for one plan. Thus, the median burden per plan is 16 hours (8/hr per 
SSBCI * a median of 2 SSBCI) at a cost of $1,397 ($85.60/hr *16 hr). 
The aggregate cost across all plans would be 80,000 hours (8 hours per 
SSBCI * 10,000 aggregate SSBCI) at a cost of $6,848,000 (80,000 * 
$85.60/hr).
    Regarding the requirement for plans to document denials of SSCBI, 
it is reasonable that plans already have this information stored in 
their systems. Thus, we assume that plans will need to compile data 
already collected into a report or other transmittable format. We 
estimate that it would take 2 hours at $98.84/hr for a programmer to 
complete the initial software update. In aggregate, we estimate a one-
time burden of 1,548 hours (774 plans x 2 hr) at a cost of $153,004 
(1,548 hr x $98.84/hr).
7. ICRs Regarding Mid-Year Notice of Unused Supplemental Benefits 
(Sec. Sec.  422.111 and 422.2267)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-0753 (CMS-R-267).
    As explained in section IV.C of this proposed rule, per CMS 
regulations at Sec.  422.101, MA organizations are permitted to offer 
mandatory supplemental benefits, optional supplemental benefits, and 
special supplemental benefits for the chronically ill (SSBCI). The 
number of supplemental benefit offerings has risen significantly in 
recent years, as observed through trends identified in CMS's annual PBP 
reviews. At the same time, CMS has received reports that MA 
organizations have observed low utilization for many of these benefits 
by their enrollees and it is unclear whether plans are actively 
encouraging utilization of these benefits by their enrollees. 
Currently, there is no requirement for MA organizations to conduct 
outreach to enrollees to encourage utilization of supplemental 
benefits.
    We have several concerns about this low utilization of some 
supplemental benefits. First, we are concerned that beneficiaries may 
be making enrollment decisions based on the allure of supplemental 
benefits that are extensively marketed by a given MA plan during the 
annual election period (AEP), but once enrolled in the plan the 
beneficiaries do not fully utilize, or utilize at all, those 
supplemental benefits during the plan year. Such under-utilization of 
supplemental benefits may hinder or nullify any potential health 
benefit value offered by these extra benefits. Additionally, section 
1854(b)(1)(C) of the Act requires MA plans to provide the value of the 
MA rebates to enrollees; per CMS regulations at Sec.  422.266, MA 
rebates must be provided to enrollees in the form of payment for 
supplemental benefits (including reductions in cost sharing for Part A 
and B benefits compared to Original Medicare), or payment of Part B or 
D premiums. Therefore, CMS has an interest in ensuring that the MA 
rebate is provided to enrollees in a way that they can benefit from the 
value of these rebate dollars.
    Hence, we are proposing to require plans engage in targeted 
outreach to inform enrollees of their unused supplemental benefits they 
have not yet accessed. This targeted outreach aims to increase 
utilization of these benefits, as it would increase enrollees' 
awareness of the supplemental benefits available to them.
    This proposed requirement would still ensure that a minimum 
outreach effort is conducted by MA organizations to inform enrollees of 
supplemental benefits available under their plans they have not yet 
accessed. We propose that, beginning January 1, 2026, MA organizations 
must mail a mid-year notice annually, but not sooner than June 30 and 
not later than July 31 of the plan year, to each enrollee with 
information pertaining to each supplemental benefit available through 
the plan year that the enrollee has not accessed, by June 30 of the 
plan year. For each covered mandatory supplemental benefit and optional 
supplemental benefit (if elected) the enrollee is eligible for but has 
not accessed, the MA organization must list in the notice the 
information about each such benefit that appears in the Evidence of 
Coverage (EOC). For SSBCI, the notice must also include the proposed 
new SSBCI disclaimer. Finally, we are proposing that all notices must 
include the scope of the supplemental benefit(s), applicable cost-
sharing, instructions on how to access the benefit(s), applicable 
information on use of any network providers application information for 
each available benefit consistent with the format of the EOC, and a 
toll free customer service number and, as required, corresponding TTY 
number to call if additional help is needed.
    In estimating the burden of this provision, we first note that 
plans already keep track of utilization patterns of benefits by 
enrollees. The primary burden is therefore dissemination of notices. In 
this regard there are three burdens: (1) a one-time update to software 
systems to produce reports; (2) a one-time update of policies and 
procedures; and (3) the printing and sending of notices to 
beneficiaries.
    <bullet> We estimate that a software developer working at $127.82/
hr would take about 4 hours to update systems. In aggregate we estimate 
a one-time burden of 3,096 hours (774 prepaid contracts * 4 hr/
contract) at a cost of $395,731 (3,096 hr * $127.82/hr).
    <bullet> We estimate that a business operations specialist working 
at $79.50/hr would take 1 hour to update of policies and procedures. In 
aggregate we estimate a one-time burden of 774 hours (774 prepaid 
contracts * 1 hour/contract) at a cost of $61,533 (774 hr * $79.50/hr).
    <bullet> The major cost would be printing and dissemination. There 
have been several recent CMS rules in which such printing and 
dissemination has been estimated.
    A recent estimate was presented in proposed rule, ``Medicare 
Program; Contract Year 2024 Policy and Technical Changes to the 
Medicare Advantage Program, Medicare Prescription Drug Benefit Program, 
Medicare Cost Plan Program, Medicare Parts A, B, C, and D Overpayment 
Provisions of the Affordable Care Act and Programs of All-Inclusive 
Care for the Elderly; Health Information Technology Standards and 
Implementation Specifications,'' CMS-4201-P, (87 FR 79452) published on 
December 27, 2022. We have checked the prices listed there for paper 
and toner and found them consistent with current pricing.
    <bullet> Cost of paper: We assume $3.50 for a ream of 500 sheets. 
The cost for one page is $0.007 ($3.50/500 sheets).
    <bullet> Cost of toner: We assume a cost of $70 for 10,000 pages. 
The toner cost per page is $0.007 ($70/10,000 pages).
    <bullet> Cost of postage: We estimate a bulk rate mailing of $0.12 
for 1,000 notices, or $0.00012. We particularly solicit stakeholder 
feedback on their experience in bulk rates. We note that the particular 
provision for which this estimate was provided in CMS-4201, DMP, had 
HIPPA requirements necessitating first class postage. However, 
notifications about the lack of use of supplemental benefits would be 
similar to EOBs which need not be sent by first class postage.
    We believe it reasonable that every MA enrollee has at least one 
supplemental benefit that they have not used. Since PDPs do not provide 
supplemental benefits, we would

[[Page 78596]]

require 32 million mailings for the 32 million enrollees in prepaid 
contracts. Thus, the expected price per page of mailing is $0.01412 
($0.007 for paper plus $0.007 for toner plus 0.00012 for postage). The 
aggregate non-labor cost for 32 million mailings of one page would be 
$451,840 (32,000,000 * $0.01412). We do not have a definite basis for 
estimating the average number of pages needed per enrollee. Some 
enrollees may only require 1 page listing 1 to 3 benefits with all 
information required by CMS. Some enrollees may require more. We are 
estimating 3 pages on average per enrollee but solicit stakeholder 
feedback. Thus, the total non-labor cost would be $1,355,520 (3 pages * 
$451,840/page).
8. ICRs Regarding New Requirements for the Utilization Management 
Committee (Sec.  422.137)
    As discussed in section IV.D. of this proposed rule, we are adding 
new requirements related to the Utilization Management (UM) Committee 
established at Sec.  422.137.
    The following proposed changes will be submitted to OMB for review 
under control number 0938-0964 (CMS-10141).
    We are proposing at Sec.  422.137(c)(5) to require a member of the 
UM committee have expertise in health equity. Reviewing UM policies and 
procedures is an important beneficiary protection, and adding a 
committee member with expertise in health equity will ensure that 
policies and procedures are reviewed from a health equity perspective. 
We estimate that a compliance officer working at $74.02/hr would take 
30 minutes for a one-time update of the policies and procedures. In 
aggregate, we estimate a one-time burden of 483 hours (966 plans * 0.5 
hr) at a cost of $35,752 (483 hr * $74.02/hr).
    The following proposed changes will be submitted to OMB for review 
under control number 0938-0964 (CMS-10141).
    We are proposing at Sec.  422.137(d)(6) to require the UM committee 
to conduct an annual health equity analysis of the use of prior 
authorization and publicly post the results of the analysis to the 
plan's website. The analysis would examine the impact of prior 
authorization, at the plan level, on enrollees with one or more of the 
following social risk factors: (i) receipt of the low-income subsidy 
for Medicare Part D, or being dually eligible for Medicare and 
Medicaid, or (ii) having a disability, as reflected in CMS's records 
regarding the basis for Medicare Part A entitlement. To gain a deeper 
understanding of the impact of prior authorization practices on 
enrollees with the specified SRFs, the proposed analysis must compare 
metrics related to the use of prior authorization for enrollees with 
the specified SRFs to enrollees without the specified SRFs. The metrics 
that must be stratified and aggregated for all items and services for 
this analysis are as follows:
    <bullet> The percentage of standard prior authorization requests 
that were approved.
    <bullet> The percentage of standard prior authorization requests 
that were denied.
    <bullet> The percentage of standard prior authorization requests 
that were approved after appeal.
    <bullet> The percentage of prior authorization requests for which 
the timeframe for review was extended, and the request was approved.
    <bullet> The percentage of expedited prior authorization requests 
that were approved.
    <bullet> The percentage of expedited prior authorization requests 
that were denied.
    <bullet> The average and median time that elapsed between the 
submission of a request and a determination by the MA plan, for 
standard prior authorizations.
    <bullet> The average and median time that elapsed between the 
submission of a request and a decision by the MA plan for expedited 
prior authorizations.
    We estimate that a software and web developer working at an hourly 
wage of $120.14/hr would take 8 hours at a cost of $961 (8 hr * 
$120.14/hr) for developing the software necessary to collect and 
aggregate the data required to produce the report. In aggregate, we 
estimate a one-time burden of 7,728 hr (966 plans * 8 hr/plan) at a 
cost of $928,442 (7,728 hr * $120.14/hr).
    The following proposed changes will be submitted to OMB for review 
under control number 0938-0753 (CMS-R-267).
    Annually, the report must be produced and posted to the plan's 
website. The health equity analysis and public reporting must be easily 
accessible, without barriers, including but not limited to ensuring the 
information is available: free of charge; without having to establish a 
user account or password; without having to submit personal identifying 
information (PII); to automated searches and direct file downloads 
through a link posted in the footer on the plan's publicly available 
website, and includes a txt file in the root directory that includes a 
direct link to the machine-readable file of public reporting and health 
equity analysis to establish and maintain automated access. We believe 
that making this information more easily accessible to automated 
searches and data pulls and capturing this information in a meaningful 
way across MA organizations will help third parties develop tools and 
researchers conduct studies that further aid the public in 
understanding the information. We assume the plans' programmers will 
make this an automated process accessing data already in the plans' 
systems; hence, we estimate minimal time to produce and inspect the 
report prior to posting. We estimate a Business Operations Specialist 
working at $79.50/hr would take 0.1667 hr (10 minutes) to produce, 
inspect, and post the report at a cost of $13 ($79.50/hr * 0.1667 hr). 
In the aggregate, we estimate an annual burden of 161 hours (966 plans 
* 0.1667 hr/plan) at a cost of $12,800 (161 hr * $79.50/hr).
9. ICRs Regarding Agent Broker Compensation (Sec.  422.2274)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-0753 (CMS-R-273).
    Currently, agents and brokers are compensated by MA plans at a base 
rate with a maximum of $601 per enrollee, plus administrative payments. 
In section VI.B. of this proposed rule, we are proposing to raise the 
maximum compensation rate to a fixed amount that covers two basic 
activities that agents and brokers perform: (1) training and testing; 
and (2) other necessary administrative activities such as recording and 
transcription. The training and testing focus on the information that 
agents and brokers may or may not disclose about the Medicare program 
and the plans they represent. The training and testing involve the 
transmission of information to agents and brokers about Medicare rules.
    Prior to stating our estimates, we emphasize that there are 
numerous data challenges in formulating an exact amount of 
compensation. Therefore, we especially invite stakeholder comments on 
all our assumptions and conclusions. More specifically, the estimates 
that follow address three areas where we have uncertainty: (1) the 
number of agent and brokers actively working in selling Medicare 
products; (2) the number of new enrollees in non-employer MA plans and 
PDPs; and (3) the percent of new enrollments effected by agent and 
brokers. Our assumptions and supportive data are presented in Table J5.

[[Page 78597]]

[GRAPHIC] [TIFF OMITTED] TP15NO23.030

    We now present estimates for the two activities listed previously: 
(1) training and testing per enrollee, and (2) other necessary 
administrative activities such as recording and transcription.
a. Cost of Training
    CMS requires that agents be certified, as evidenced by attending 
training and passing certain tests, in order to sell Medicare products. 
Many agents and brokers and many plans prefer the use of a recognized 
certification organization such as AHIP (https://www.ritterim.com/blog/what-is-ahip-certification-and-how-do-i-get-it/#pdp-ebook) for training 
and testing. The AHIP training and certification costs $175. However, 
some plans provide a discount of $50; and some plans will pay for the 
training. The training allows three attempts at passing. If the agent 
or broker fails three times, some plans will not recognize their 
certification even if they eventually pass. For those plans that do 
recognize continued attempts, the agent must pay an additional $175. 
Therefore, we believe it reasonable to set the average cost of training 
at $125 and assume that most agents and brokers pass within their first 
three attempts (we lack data on this and invite stakeholder comment). 
We are treating the $125 as a non-labor business expense (and invite 
comments on this assumption). Finally, we note that this $125 fee, 
corresponds to $12.50 per enrollee, since we estimate there are 2 
million new enrollees, half of which (1 million enrollees) are affected 
by the 100,000 agent and brokers, implying that on average each agent 
and broker recruits 10 enrollees. Therefore, the $125 cost when divided 
by the number of enrollees gives a $12.50/enrollee cost ($125/10).
b. Burden Associated With Transcription and Recording
    We are estimating 30 minutes (0.5 hr) to account for the time and 
expense of recording and storing calls (and solicit stakeholder comment 
on this assumption). As already noted, based on the occupational title 
``Insurance Sales agents'' we assume a mean hourly wage of $37.00/hr. 
Thus, the fair market value (FMV) per enrollee for transcription and 
recording would be $18.50 ($37.00/hr * 0.5 hr).
c. Total Cost
    Thus, the aggregate cost per enrollee is $31 ($18.50 for 
transcription and recording + $12.50 for training and testing). The 
aggregate cost over all new enrollees would be $31 million ($31/
enrollee x 1,000,000 new enrollees affected annually).
    We have focused on new enrollments, since the cost of the 
administrative activities discussed is predominantly overhead not 
closely connected with actual enrollments, and we are more accurately 
able to track new enrollments, so they serve as a better basis for 
attaching these payments.
10. ICRs Regarding Adding Proposed New Rationale for an Exception From 
the Network Adequacy Requirements in Sec.  422.116(b) Through (e)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-1346 (CMS-10636).
    Historically, the industry has stated that CMS's current network 
adequacy criteria under Sec.  422.116 create challenges for facility-
based Institutional Special Needs Plans (I-SNP) because facility-based 
I-SNP enrollees access services and seek care in a different way than 
enrollees of other plan types. Thus, we are proposing to broaden our 
acceptable rationales for facility-based I-SNPs when submitting a 
network exception under Sec.  422.116(f). The first proposed new basis 
for an exception request is that a facility-based I-SNP is unable to 
contract with certain specialty types required under Sec.  422.116(b) 
because of the way enrollees in facility-based I-SNPs receive care. 
Facility-based I-SNP may also request an exception from the network 
adequacy requirements in Sec.  422.116(b) through (e) if: The I-SNP 
covers Additional Telehealth Benefits (ATBs) consistent with Sec.  
422.135 and uses ATB telehealth providers of the specialties listed in 
paragraph (d)(5) to furnish services to enrollees; When substituting 
ATB telehealth providers of the specialties listed in paragraph (d)(5) 
for in-person providers, the facility-

[[Page 78598]]

based I-SNP would fulfill the network adequacy requirements in Sec.  
422.116(b) through (e); The I-SNP complies with Sec.  422.135(c)(1) and 
(2) by covering in-person services from an out-of-network provider at 
in-network cost sharing for the enrollee who requests in-person 
services instead of ATBs; and the I-SNP provides substantial and 
credible evidence that the enrollees of the facility-based I-SNP 
receive sufficient and adequate access to all covered benefits.
    To determine the potential burden regarding this proposal, we 
considered the one-time burden for MA organizations to update policies. 
The other burdens associated with this provision involve updates to the 
HPMS system, which is done by CMS and its contractors and not subject 
to COI review.
    MA organizations that offer Facility-based I-SNPs are already 
required to conduct work related to network adequacy reviews that 
happen during the initial or service area expansion application 
process, or every 3 years for the triennial review. Further, MA 
organizations that offer facility-based I-SNPs should already have 
measures in place to submit data to meet CMS network adequacy review 
requirements to CMS, so there is no additional burden.
    We understand that MA organizations will need to update their 
policies and procedures related to broadening our acceptable rationales 
for facility-based I-SNPs when submitting a network exception. We 
estimate that a business operations specialist working at $79.50/hr 
would take 5 minutes (0.0833 hr) to update policies and procedures 
related to this task. In aggregate, we estimate a one-time burden of 
0.8 hour (10 facility-based I-SNP contracts * 0.0833 hr) at a cost $64 
(0.8 hr * $79.50/hr).
11. ICRs Regarding Increasing the Percentage of Dually Eligible Managed 
Care Enrollees Who Receive Medicare and Medicaid Services From the Same 
Organization (Sec. Sec.  422.503, 422.504, 422.514, 422.530, and 
423.38)
    At Sec.  423.38(c)(4) we are proposing to replace the current 
quarterly special enrollment period (SEP) with a one-time-per month SEP 
for dually eligible individuals and others enrolled in the Part D low-
income subsidy program to elect a standalone PDP. At Sec.  
423.38(c)(35), we propose a new integrated care SEP to allow dually 
eligible individuals to elect an integrated D-SNP on a monthly basis. 
The burden associated with the current quarterly dual/LIS SEP at Sec.  
423.38(c)(4) is currently approved by OMB under control number 0938-
0964 (CMS-10141).
    The proposed changes related to a new integrated care SEP at Sec.  
423.38(c)(35) will be submitted to OMB for review under control number 
0938-0964 (CMS-10141).
    In section VIII.C. of this proposed rule, we propose amending 
Sec. Sec.  422.514(h), 422.503(b), 422.504(a), and 422.530(c). Proposed 
Sec.  422.514(h) would require an MA organization's parent 
organization, where that MA organization offers a D-SNP (and that 
parent organization also contracts with the State as a Medicaid managed 
care organization (MCO) in the same service area), to only offer one D-
SNP for full-benefit dually eligible individuals. The proposed 
regulation at Sec.  422.514(h) would also require the affected D-SNP to 
limit new enrollment to individuals enrolling in, or in the process of 
enrolling in, the affiliated Medicaid MCO effective 2027, and further 
require the D-SNP to limit all enrollment to individuals enrolled in, 
or in the process of enrolling in the affiliated MCO effective 2030. A 
new contract provision at Sec.  422.503(b)(8) would prohibit parent 
organizations from offering a new D-SNP when that D-SNP would result in 
noncompliance with the proposed regulation at Sec.  422.514(h). 
Additionally, the proposed regulation at Sec.  422.504(a)(20) would 
require compliance with Sec.  422.514(h). To support parent 
organizations seeking to consolidate D-SNPs, we also propose Sec.  
422.530(c)(4)(iii) that would provide a new crosswalk exception to 
allow D-SNP parent organizations to crosswalk enrollees (within the 
same parent organization and among consistent plan types) where they 
are impacted by the requirements at Sec.  422.514(h). The proposed 
changes related to MA organizations that offer multiple D-SNPs in a 
service area (Sec. Sec.  422.514(h), 422.503(b), 422.504(a), and 
422.530(c)) with a Medicaid MCO will be submitted to OMB for review 
under control number 0938-0753 (CMS-R-267).
a. MA Plan Requirements and Burden
    We are proposing to redesignate Sec.  423.38(c)(35) as Sec.  
423.38(c)(36) and proposing a new integrated care special enrollment 
period (SEP) at Sec.  423.38(c)(35) that would allow enrollment in any 
month into FIDE SNPs, HIDE SNPs, and AIPs for those dually eligible 
individuals who meet the qualifications for such plans. The proposed 
integrated care SEP at Sec.  423.38(c)(35) would require plans to 
update guidance and train staff. That new burden would be limited to 
FIDE SNPs, HIDE SNPs, and AIPs. We expect that plans would need one 
software engineer working 4 hours to update software and one business 
operations specialist working 4 hours to update plan policies and 
procedures and train staff in the first year with no additional burden 
in future years. In aggregate, we estimate a one-time burden (for plan 
year 2025) of 904 hours (113 plans * 8 hr/plan) at a cost of $93,709 
(113 plans x [(4 hr * $127.82/hr) + (4 hr * $79.50/hr)]). We do not 
anticipate any new burden to plans after the initial year. This will be 
submitted to OMB for review under control number 0938-0964 (CMS-10141).
    The proposed provisions at Sec. Sec.  422.514(h) and 
422.530(c)(4)(iii) would create burden for MA organizations where they 
offer multiple D-SNPs in a service area with a Medicaid MCO. Impacted 
MA organizations would need to non-renew or (more likely) combine plans 
and update systems as well as notify enrollees of plan changes. We 
expect that MA organizations would need two software engineers working 
4 hours to update software in the first year with no additional burden 
in future years and one business operations specialist working 4 hours 
to update plan policies and procedures in the first year with no 
additional burden in future years. In aggregate, we estimate a one-time 
burden (for plan year 2027) of 600 hours (50 plans * 12 hr/plan) at a 
cost of $67,028 (50 plans x [(8 hr * $127.82/hr) + (4 hr * $79.50/
hr)]). This will be submitted to OMB for review under control number 
0938-0753 (CMS-R-267).
b. Medicare Enrollee Requirements and Burden
    Proposed amendments to Sec.  423.38(c)(4) and (35) would affect the 
circumstances in which individuals can change plans. Individuals can 
complete an enrollment form to effectuate such changes, and we have 
previously estimated that the forms take 0.3333 hours (20 min) to 
complete as cited under OMB control number 0938-0964 (CMS-10141). 
However, Medicare beneficiaries make enrollment choices currently, and 
we do not expect the overall volume of enrollment selections to 
materially change if our proposals are finalized. Therefore, we do not 
believe the proposals at Sec.  423.38(c)(4) and (35) would impact the 
burden estimates that are currently approved under 0938-0964 (CMS-
10141). Similarly, we are not proposing any changes to that 
collection's currently approved forms.
    In the section XI. of this proposed rule, we describe the impacts 
related to the expected enrollment shift from non-

[[Page 78599]]

integrated MA-PDs into FIDE SNPs, HIDE SNPs, and AIPs over time as more 
D-SNPs align with Medicaid MCOs.
12. ICRs Regarding Contracting Standards for Dual Eligible Special 
Needs Plan (D-SNP) Look-Alikes (Sec.  422.514)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-0753 (CMS-R-267) consistent with burden on MA 
plans identified as D-SNP look-alikes under Sec.  422.514(d) through 
(e) (see section VIII.G. of this proposed rule).
    As described in section VIII.G. of this proposed rule, we propose 
lowering the D-SNP look-alike threshold from 80 percent to 60 percent 
over a two-year period. We propose a limitation on non-SNP MA plans 
with 70 or greater percent dually eligible individuals for CY 2025. For 
CY 2026, we are proposing to reduce the threshold from 70 percent to 60 
percent or greater dually eligible enrollment as a share of total 
enrollment. This incremental approach would minimize disruptions to 
dually eligible individuals and allow plans and CMS to operationalize 
these transitions over a two-year period.
    We would maintain processes to minimize disruption for the 
enrollees in plans affected by this proposed change. We propose to 
apply the existing transition processes and procedures at Sec.  
422.514(e) to non-SNP MA plans that meet the proposed D-SNP look-alike 
contracting limitation of 70 percent or greater dually eligible 
individuals effective plan year 2025 and 60 percent or greater dually 
eligible individuals effective plan year 2026. Consistent with the 
initial years of implementation of the D-SNP look-alike contract 
limitations with the 80-percent threshold, maintaining these transition 
processes and procedures would help to minimize disruption for current 
enrollees as a result of the prohibition on contract renewal for 
existing D-SNP look-alikes. For plan year 2027 and subsequent years, we 
propose to limit the Sec.  422.514(e) transition processes and 
procedures to D-SNP look-alikes transitioning dually eligible enrollees 
into D-SNPs. Based on our experience with D-SNP look-alike transitions 
through plan year 2023, the vast majority of enrollees transitioned to 
other MA-PDs under the same parent organization as the D-SNP look-
alike. Based on our review of D-SNP look-alike transition plans thus 
far, we expect the experience for transitions effective plan year 2024 
to follow a similar pattern.
    MA organizations can utilize other CMS processes to transition D-
SNP look-alike enrollees to other MA plans. For example, an MA 
organization can utilize the CMS crosswalk process if it is 
transitioning the full D-SNP look-alike enrollment to one non-SNP plan 
benefit package (PBP) of the same type offered by the same MA 
organization under the same contract and the requirements at Sec.  
422.530 for a crosswalk are met. An MA organization moving the entire 
enrollment of the D-SNP look-alike PBP to another PBP of the same type 
under the same contract may structure this action as a consolidation of 
PBPs and use the crosswalk for consolidated renewal process, under 
Sec.  422.530(b)(1)(ii). An MA organization may utilize the crosswalk 
exception process, subject to CMS approval, at Sec.  422.530(c)(2) to 
transition the entire enrollment of the MA contract (including the D-
SNP look-alike) to another MA contract (of the same type) offered by 
another MA organization with the same parent organization as part of a 
contract consolidation of separate MA contracts. While multiple options 
exist for MA organizations to transition D-SNP look-alike enrollees to 
other non-SNP MA plans, these pathways are not available for moving 
enrollees to D-SNPs.
    Using data from the 2023 contract year, we estimate that there are 
30 non-SNP MA plans \198\ that have enrollment of dually eligible 
individuals of 70 percent through 79.9 percent of total enrollment and 
40 non-SNP MA plans \199\ that have enrollment of dually eligible 
individuals of 60 percent through 69.9 percent of total enrollment. As 
of January 2023, the 30 non-SNP MA plans have total enrollment of 
53,334 enrollees and the 40 non-SNP MA plans have 92,100 enrollees 
collectively. Of the 30 non-SNP MA plans with 70-79.9 percent dually 
eligible enrollment, 28 are in States where for contract year 2023 
there are D-SNPs or comparable managed care plans and would be subject 
to Sec.  422.514(d).\200\ Of the 40 non-SNP MA plans with 60-69.9 
percent dually eligible enrollment, all are in States where for 
contract year 2023 there are D-SNPs or comparable managed care plans 
and would be subject to Sec.  422.514(d). As of January 2023, these 68 
plans have total enrollment of 145,434 for contract year 2023. If these 
plans all have the same enrollment pattern in 2024, MA organizations 
would need to non-renew for plan year 2025 those 28 plans that exceed 
our proposed criteria to lower the threshold to 70 percent for plan 
year 2025.\201\ Similarly, MA organizations with plans that exceed our 
proposed criteria to lower the threshold to 60 percent for plan year 
2026 would need to non-renew 40 plans for plan year 2026.\202\ Each MA 
organization would have the opportunity to make an informed decision to 
transition enrollees into another MA-PD plan (offered by it or by its 
parent organization) by: (1) identifying, or applying, or contracting 
for, a qualified MA-PD plan, including a D-SNP, in the same service 
area; or (2) creating a new D-SNP through the annual bid submission 
process. Consistent with our experience with D-SNP look-alikes non-
renewing for plan years 2021 through 2023, we expect the vast majority 
of D-SNP look-alike enrollees to be transitioned into a plan offered by 
the same parent organization as the D-SNP look-alike, and we expect in 
rare instances that the non-renewing plan may choose to not transition 
enrollees. Plan year 2023 was the only plan year when D-SNP look-alikes 
transitioned enrollees to Traditional Medicare rather than an MA plan 
under the same parent organization. In plan year 2023, 9 of the 47 D-
SNP look-alikes transitioned approximately 3,300 enrollees to 
Traditional Medicare, which accounted for less than 2 percent of total 
enrollees transitioned from D-SNP look-alikes. The changes required of 
MA organizations based on this proposed rule would impact D-SNP look-
alikes and their enrollees (see section VIII.G. of this proposed rule). 
While we cannot predict the actions of each affected MA organization 
with 100 percent certainty, we base our burden estimates on the current 
landscape of D-SNP look-alikes and our experience with transitions of 
D-SNP look-alikes through plan year 2023.
---------------------------------------------------------------------------

    \198\ These 30 non-SNP MA plans are located in Arizona, 
California, Connecticut, Idaho, Illinois, Louisiana, Nevada, New 
Hampshire, New Mexico, Oklahoma, Oregon, Pennsylvania, Tennessee, 
Vermont, and Virginia.
    \199\ These 40 non-SNP MA plans are located in Arkansas, 
California, Connecticut, Georgia, Illinois, Indiana, Iowa, Kansas, 
Kentucky, Maine, Massachusetts, Michigan, Minnesota, Mississippi, 
Missouri, Nevada, New Mexico, New York, Ohio, Oklahoma, Oregon, 
Pennsylvania, Rhode Island, and Tennessee.
    \200\ The 2 non-SNP MA plans are located in New Hampshire and 
Vermont, neither of which have a D-SNP as of contract year 2023.
    \201\ These 28 plans have total enrollment of 53,334 individuals 
as of January 2023.
    \202\ These 40 plans have total enrollment of 92,100 individuals 
as of January 2023.
---------------------------------------------------------------------------

a. MA Plan Requirements and Burden
    As indicated, the following proposed changes will be submitted to 
OMB for review under control number 0938-0753 (CMS-R-267).

[[Page 78600]]

    At Sec.  422.514(e), we established a process for an MA 
organization with a D-SNP look-alike to transition individuals who are 
enrolled in its D-SNP look-alike to another MA-PD plan offered by the 
MA organization, or by the same parent organization as the MA 
organization, to minimize disruption as a result of the prohibition on 
contract renewal for existing D-SNP look-alikes. This process allows, 
but does not require, the MA organization to transition dually eligible 
enrollees from D-SNP look-alikes into D-SNPs and other qualifying MA-PD 
plans for which the enrollees are eligible without the transitioned 
enrollees having to complete an election form. This transition process 
is conceptually similar to the proposed ``crosswalk exception'' 
procedures at Sec.  422.530(a) and (b); however, Sec.  422.514(e) 
allows the transition process to apply across contracts or legal 
entities and from non-SNP to SNPs provided that the receiving plan is 
otherwise of the same plan type (for example, HMO or PPO) as the D-SNP 
look-alike.
    Based on the experience of D-SNP look-alike transitions through 
plan year 2023, we believe 95 percent of D-SNP look-alikes for plan 
years 2025 and 2026 would be able to move enrollees into another MA-PD 
plan using the transition process established at Sec.  422.514(e) or 
existing crosswalk functionality at Sec.  422.530 and would choose to 
transition enrollment for plan years 2025 and 2026. All are in States 
where for contract year 2023 there are D-SNPs or comparable managed 
care plans that would be subject to Sec.  422.514(d). Therefore, we are 
assuming the burden of 27 of the 28 non-SNP MA plans with 70-79.9 
percent dually eligible enrollment and offered in a State with a D-SNP 
would transition enrollees for plan year 2025 (for a January 2025 
effective date) and 38 of the 40 non-SNP MA plans with 60-69.9 percent 
dually eligible enrollment would transition enrollees for plan year 
2026 (for a January 2026 effective date). Consistent with our estimates 
from the June 2020 final rule, we estimate each plan will take a one-
time amount of 2 hours at $79.50/hr for a business operations 
specialist to submit all enrollment changes to CMS necessary to 
complete the transition process. D-SNP look-alikes that transition 
enrollees into another non-SNP plan will take less time than D-SNP 
look-alikes that transition eligible beneficiaries into a D-SNP because 
they would not need to verify enrollees' Medicaid eligibility. The 2-
hour time estimate would account for any additional work to confirm 
enrollees' Medicaid eligibility for D-SNP look-alikes transitioning 
eligible enrollees to a D-SNP. Based on the previous discussion, the 
estimates for the burden for MA organizations to transition enrollees 
to other MA-PD plans during the 2025 to 2027 plan years is summarized 
in Table J6.
[GRAPHIC] [TIFF OMITTED] TP15NO23.031

    Based on our experience through plan year 2023, we expect the vast 
majority of MA organizations with non-SNP MA plans with dually eligible 
enrollment between 60 and 80 percent of total enrollment also have an 
MA-PD plan with a premium of $0 or a D-SNP in the same service area as 
the D-SNP look-alike. Based on 2023 plan year data, of the 30 non-SNP 
MA plans with 70 to 79.9 percent dually eligible enrollment, 19 of 
these plans (63 percent) have a D-SNP within the same service area or 
nearly the same service area. Also based on 2023 plan year data, of the 
40 non-SNP MA plans with 60 to 69.9 percent dually eligible enrollment, 
24 of these plans (60 percent) have a D-SNP within the same service 
area or nearly the same service area. An MA organization with one of 
these non-SNP MA plans could expand its service area for an existing 
MA-PD plan or D-SNP. The MA organizations with the non-SNP MA plans 
between 60 and 79.9 percent dually eligible enrollment already have the 
opportunity to establish a D-SNP and expand their service areas. Any 
burden associated with these MA organizations establishing new D-SNPs 
and/or expanding their service areas would already be captured under 
currently approved burden under control number 0938-0935 (CMS-10237) 
for creating a new MA-PD plan to receive non-SNP MA plan enrollees.
    Per Sec.  422.514(e)(2)(ii), in the Annual Notice of Change (ANOC) 
that the MA organization must send consistent with Sec.  422.111(a), 
(d), and (e), the MA organization would be required to describe changes 
to the MA-PD plan benefits and provide information about the MA-PD plan 
into which the individual is enrolled.
    Consistent with Sec.  422.111(d)(2), enrollees will receive this 
ANOC describing the change in plan enrollment and any differences in 
plan enrollment at least 15 days prior to the first date of the annual 
election period (AEP). As each MA plan must send out the ANOC to all 
enrollees annually, we do not estimate that MA organizations will incur 
additional burden for transitioned enrollees. The current burden for 
the ANOC is approved by OMB under control number 0938-1051 (CMS-10260).
    We expect 1 plan for plan year 2025 and 2 plans for plan year 2026 
would be required to send affected enrollees a written notice 
consistent with the non-renewal notice requirements at Sec.  
422.506(a)(2) and described at

[[Page 78601]]

Sec.  422.514(e)(4), as we anticipate--based on our experience with 
transitions through plan year 2023--not all D-SNP look-alikes would be 
able to transition their enrollees into another MA-PD plan (or plans).
b. Enrollee Requirements and Burden
    In 2027 and subsequent years, we estimate that 12 plans per year 
would be identified as D-SNP look-alikes under Sec.  422.514(d). We 
base our estimate on the fact that there are 12 D-SNP look-alikes for 
plan year 2024, which is the first year following the phase in of the 
80-percent threshold. We expect our proposal to lower the threshold for 
identifying D-SNP look-alikes from 80 percent to 60 percent would 
increase the number of plans identified as D-SNP look-alikes. However, 
we expect this increase to be offset by a reduction in D-SNP look-
alikes due to our proposed changes to the Sec.  422.514(e) transition 
process, which would limit use of the Sec.  422.514(e) transition 
process to D-SNP look-alikes transitioning dually eligible enrollees 
into D-SNPs. Under our proposal, D-SNP look-alikes transitioning 
effective for plan year 2025 and plan year 2026--including the newly 
identified D-SNP look-alikes based on the proposed threshold lowered to 
70 percent and then 60 percent--could continue to use the existing 
transition process under Sec.  422.514(e). Once the newly identified D-
SNP look-alikes at the lower thresholds complete their transitions for 
plan year 2025 and plan year 2026, the Sec.  422.514(e) transition 
process could only be used for D-SNP look-alike transitioning enrollees 
into D-SNPs. We believe this proposed limit would give MA organizations 
a stronger incentive to avoid creating D-SNP look-alikes, due to the 
more limited opportunity for these plans to transition enrollees to 
non-D-SNPs. The proposed limit on the Sec.  422.514(e) transitions 
would be effective for plan year 2027 and subsequent years. We believe 
that these 12 D-SNP look-alikes would non-renew and transition their 
enrollment into a D-SNP or other MA-PD plan. The annual burden is 
summarized in Table J6. We welcome comment on these assumptions.
    As indicated, the following proposed changes will be submitted to 
OMB for review under control number 0938-0753 (CMS-R-267).
    An individual transitioned from a D-SNP look-alike to another MA-PD 
plan may stay in the MA-PD plan receiving the enrollment or, using the 
AEP or another enrollment period (such as the MA OEP), make a different 
election. The enrollees may choose new forms of coverage for the 
following plan year, including a new MA-PD plan or receiving services 
through Traditional Medicare and enrollment in a stand-alone PDP. 
Because the enrollment transition process is effective on January 1 and 
notices would be provided during the AEP, affected individuals have 
opportunities to make different plan selections through the AEP (prior 
to January 1) or the MA open enrollment period (OEP) (after January 1). 
Affected individuals may also qualify for a special enrollment period 
(SEP), such as the SEP for plan non-renewals at Sec.  422.62(b)(1) or 
the SEP for dually eligible/LIS beneficiaries at Sec.  423.38(c)(4), 
which this rule proposes to revise as discussed in section VIII.C. of 
this proposed rule. Based on our experience with D-SNP look-alike 
transitions through plan year 2023, we estimate that 99 percent of the 
53,334 D-SNP look-alike enrollees (52,801 enrollees = 53,334 enrollees 
x 0.99) in the 30 non-SNP MA plans with dually eligible enrollment of 
70 to 79.9 percent and 99 percent of the 92,100 D-SNP look-alike 
enrollees (91,179 enrollees = 92,100 enrollees x 0.99) in the 40 non-
SNP MA plans with dually eligible enrollment of 60 to 69.9 percent 
would transition into another plan under the same parent organization 
as the D-SNP look-alike. Of these 143,980 transitioning enrollees 
(52,801 enrollees + 91,179 enrollees), our experience with D-SNP look-
alike transitions through plan year 2023 suggests that 14 percent would 
select a new plan or the Traditional Medicare and PDP option rather 
than accepting the transition into a different MA-PD plan or D-SNP 
under the same MA organization as the D-SNP in which they are currently 
enrolled. For plan year 2025, we estimate that 7,392 enrollees (52,801 
transitioning D-SNP look-alike enrollees * 0.14), would opt out of the 
new plan into which the D-SNP look-alike transitioned them. For plan 
year 2026, we estimate that 12,765 enrollees (91,179 transitioning D-
SNP look-alike enrollees * 0.14), would opt out of the new plan into 
which the D-SNP look-alike transitioned them. Consistent with the per 
response time estimate that is currently approved by OMB under control 
number 0938-0753 (CMS-R-267), we continue to estimate that the 
enrollment process requires 20 minutes (0.3333 hr).
    Based on the aforementioned discussion, Table J7, summarizes the 
hour and dollar burden for added enrollments for years 2025 to 2027.
[GRAPHIC] [TIFF OMITTED] TP15NO23.032

    As stated previously, we believe that in 2027 and subsequent years, 
12 plans would be identified as D-SNP look-alikes and therefore this 
proposed rule would have a much smaller impact on MA enrollees after 
the initial period of implementation. Since the current 70 non-SNP MA 
plans with dually eligible enrollment of 60.0 to 79.9 percent have

[[Page 78602]]

145,434 enrollees in 70 plans, we estimate 24,932 enrollees (145,434 
enrollees * 12/70 plans) in 12 plans. The burden is summarized in Table 
J6. The average annual enrollee burden over 3 years is also presented 
in Table J6.
13. ICRs Regarding Update to the Multi-Language Insert Regulation 
(Sec. Sec.  422.2267 and 423.2267)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-1421 (CMS-10802).
    The multi-language insert (MLI) required at Sec. Sec.  
422.2267(e)(31) and 423.2267(e)(33) is a standardized communications 
material that informs enrollees and prospective enrollees that 
interpreter services are available in Spanish, Chinese, Tagalog, 
French, Vietnamese, German, Korean, Russian, Arabic, Italian, 
Portuguese, French Creole, Polish, Hindi, and Japanese. These are the 
15 most common non-English languages in the United States. 
Additionally, Sec. Sec.  422.2267(e)(31)(i) and 423.2267(e)(33)(i) 
require plans to provide the MLI in any non-English language that is 
the primary language of at least 5 percent of the individuals in a PBP 
service area but is not already included on the MLI. These regulations 
also provide that a plan may opt to include the MLI in any additional 
languages that do not meet the 5 percent threshold, where it determines 
that including the language would be appropriate.
    As discussed in section III.G. of this proposed rule, we are 
proposing to update Sec. Sec.  422.2267(e)(31) and 423.2267(e)(33) to 
require that notice of availability of language assistance services and 
auxiliary aids and services be provided in English and the 15 languages 
most commonly spoken by individuals with limited English proficiency in 
a State and must be provided in alternate formats for individuals with 
disabilities who require auxiliary aids and services to ensure 
effective communication. Thus, under our proposal, MA organizations and 
Part D sponsors would send the Notice of Availability in English and 
the 15 most common non-English languages in a State instead of the 
current MLI in the 15 most common non-English languages nationally. 
This proposed policy is consistent with a proposed rule that OCR 
published in August 2022 (87 FR 47824). We also expect that this 
proposed policy would better align with the Medicaid translation 
requirements at Sec.  438.10(d)(2).\203\ We propose to modify the 
language to note that this is a model communication material rather 
than a standardized communication material because we are no longer 
specifying the exact text that must be used. Even though the MA 
organizations and Part D sponsors could change the Notice of 
Availability, we are not accounting for such changes because we do not 
expect any MA organizations or Part D sponsors to make such changes.
---------------------------------------------------------------------------

    \203\ We expect the 15 most common languages for a given State 
to include any language required by the Medicaid program at Sec.  
438.10(d)(2). Therefore, our proposed rule would not impose 
additional burden on fully integrated dual eligible special needs 
plans and highly integrated dual eligible special needs plans, as 
defined at Sec.  422.2, and applicable integrated plans, as defined 
at Sec.  422.561, to comply with regulations at Sec. Sec.  
422.2267(a)(4) and 423.2267(a)(4).
---------------------------------------------------------------------------

    We do not expect this proposed policy to create any new collection 
of information burden for MA organizations or Part D sponsors since the 
August 2022 proposed rule indicates that OCR would provide the 
translated language for the Notice of Availability in the 15 most 
common non-English languages in a State or States. Also, the MA 
organizations and Part D sponsors are already distributing the MLI and, 
under this proposal, would instead distribute the Notice of 
Availability, so we do not anticipate any new burden associated with 
printing or mailing. In addition, the Notice of Availability would be a 
one-page document that would never be sent alone and therefore does not 
create additional postage costs.
    We expect some new burden for MA organizations and Part D sponsors 
operating plans across multiple States. Rather than sending the same 
MLI with the same 15 non-English language translations to plans in any 
State, under the proposed rule the plans under these MA organizations 
or Part D sponsors would need to send the Notice of Availability with 
translations in the 15 most common non-English languages in each State 
in which the plan operates. Based on plan year 2023 data, we estimate 
there are approximately 20 MA parent organizations offering MA plans in 
multiple States with approximately 3,900 PBPs and approximately 20 Part 
D sponsors offering Part D plans in multiple States with approximately 
1,400 Part D plans. Since many of these parent organizations have MA 
organizations at the State level, we estimate that these 20 parent 
organizations have approximately 220 MA organizations covering PBPs by 
State. Similarly, we estimate that the 20 Part D sponsors have 
approximately 50 parent organizations covering PBPs by State. We 
believe the parent organizations would update systems software and plan 
policies and procedures as well as train staff at the MA organization 
and Part D sponsor level to cover all PBPs and Part D plans, 
respectively, offered in a State. We expect that MA organizations and 
Part D sponsors would need one software engineer working one hour to 
update systems software in the first year with no additional burden in 
future years and one business operations specialist working one hour to 
update plan policies and procedures and train staff in the first year 
with no additional burden in future years. For MA organizations, we 
estimate the burden for plan year 2025 at 440 hours (220 MA 
organizations * 2 hr/plan) at a cost of $56,241 (440 hr * $127.82/hr) 
for a software engineer to update systems to ensure the Notice of 
Availability with the correct State-specific languages is distributed 
with other communications and marketing materials. We estimate the 
burden for MA organizations for plan year 2025 to be 440 hours (220 MA 
organizations * 2 hr/plan) at a cost of $34,980 (440 hr * $79.50/hr) 
for a business operations specialist to update plan policies and 
procedures and train staff. For Part D sponsors, we estimate the burden 
for plan year 2025 at 100 hours (50 Part D sponsors * 2 hr/plan) at a 
cost of $12,782 (100 hr * $127.82/hr) for a software engineer to update 
systems to ensure the Notice of Availability with the correct State-
specific languages is distributed with other communications and 
marketing materials. We estimate the burden for Part D sponsors for 
plan year 2025 to be 100 hours (50 Part D sponsors * 2 hr/plan) at a 
cost of $7,950 (100 hr * $79.50/hr) for a business operations 
specialist to update plan policies and procedures and train staff. We 
do not anticipate any new burden to plans after the initial year. We 
will submit this burden to OMB for review under control number 0938-
1421 (CMS-10802).
    We also note that, as part of the current MLI required at 
Sec. Sec.  422.2267(e)(31) and 423.2267(e)(33), MA organizations and 
Part D sponsors must already include additional languages that meet the 
5 percent service area threshold as required under Sec. Sec.  
422.2267(a)(2) and 423.2267(a)(3). Thus, MA organizations and Part D 
sponsors must currently review the most frequently used languages in a 
service area beyond the top 15 national languages. As a result, we do 
not believe the burden will be greater than our estimate note 
previously. We welcome comment on our assumptions.

[[Page 78603]]

C. Summary of Proposed Information Collection Requirements and 
Associated Burden

BILLING CODE 4120-01-P
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[[Page 78604]]


[GRAPHIC] [TIFF OMITTED] TP15NO23.003

BILLING CODE 4120-01-C

[[Page 78605]]

D. Submission of PRA-Related Comments

    We have submitted a copy of this proposed rule to OMB for its 
review of the rule's information collection requirements. The 
requirements are not effective until they have been approved by OMB.
    To obtain copies of the supporting statement and any related forms 
for the proposed collections discussed previously, please visit the CMS 
website at https://www.cms.gov/regulations-and-guidance/legislation/paperworkreductionactof1995/pra-listing, or call the Reports Clearance 
Office at 410-786-1326.
    We invite public comments on these potential information collection 
requirements. If you wish to comment, please submit your comments 
electronically as specified in the DATES and ADDRESSES sections of this 
proposed rule and identify the rule (CMS-4205-P), the ICR's CFR 
citation, and the OMB control number.

XI. Regulatory Impact Analysis

A. Statement of Need

    The primary purpose of this proposed rule is to amend the 
regulations for the Medicare Advantage (Part C) program, Medicare 
Prescription Drug Benefit (Part D) program, Medicare cost plan program, 
and Programs of All-Inclusive Care for the Elderly (PACE). This 
proposed rule includes several new policies that would improve these 
programs beginning with contract year 2025 as well as codify existing 
Part C and Part D sub-regulatory guidance. This proposed rule also 
includes revisions to existing regulations in the Risk Adjustment Data 
Validation (RADV) audit appeals process and the appeal process for 
quality bonus payment determination that would take effect 60 days 
after publication of a final rule. Revisions to existing regulations 
for the use and release of risk adjustment data would also take effect 
60 days after publication of a final rule. Additionally, this proposed 
rule would implement certain sections of the following Federal laws 
related to the Parts C and D programs:
    <bullet> The Bipartisan Budget Act (BBA) of 2018.
    <bullet> Consolidated Appropriations Act (CAA) of 2023.

B. Overall Impact

    We have examined the impacts of this proposed 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), Executive Order 14094 entitled ``Modernizing 
Regulatory Review'' (April 6, 2023), the Regulatory Flexibility Act 
(RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the 
Social Security Act, section 202 of the Unfunded Mandates Reform Act of 
1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on 
Federalism (August 4, 1999) and the Congressional Review Act (5 U.S.C. 
804(2)).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). The 
Executive Order 14094, entitled ``Modernizing Regulatory Review'' 
(hereinafter, the Modernizing E.O.), amends section 3(f)(1) of 
Executive Order 12866 (Regulatory Planning and Review). The amended 
section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action that is likely to result in a rule: 
(1) having an annual effect on the economy of $200 million or more in 
any 1 year, or adversely affecting in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, territorial, or 
Tribal governments or communities; (2) creating a serious inconsistency 
or otherwise interfering with an action taken or planned by another 
agency; (3) materially altering the budgetary impacts of entitlement 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or (4) raising legal or policy issues for which 
centralized review would meaningfully further the President's 
priorities or the principles set forth in this Executive order.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with significant regulatory action/s and/or with significant effects as 
per section 3(f)(1) ($200 million or more in any 1 year). The total 
economic impact for this proposed rule exceeds $200 million in several 
years. Therefore, based on our estimates, OMB's Office of Information 
and Regulatory Affairs has determined this rulemaking is significant 
per section 3(f)(1)) as measured by the $200 million or more in any one 
year and also a major rule under Subtitle E of the Small Business 
Regulatory Enforcement Fairness Act of 1996 (also known as the 
Congressional Review Act). Accordingly, we have prepared a Regulatory 
Impact Analysis that to the best of our ability presents the costs and 
benefits of the rulemaking.
    Cost of reviewing the rule. Using the wage information from the BLS 
for medical and health service managers (Code 11-9111), we estimate 
that:
    <bullet> The hourly cost per reviewer for reviewing this proposed 
rule is $123.06 per hour, including overhead and fringe benefits 
https://www.bls.gov/oes/current/oes_nat.htm. Had a general business 
operations specialist been used (say for an entity without medical and 
health service managers) the cost per hour would be less than that for 
a medical and health services manager. Therefore, we are at most over-
estimating the cost per hour and will use $123.06/hr.
    <bullet> We estimate that there will be less than 2,000 reviewers 
of this proposed rule: There are currently less than 1,000 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, PBMs). 
We expect that each organization will designate one person to review 
the rule. Therefore, a reasonable maximal number is 2,000 total 
reviewers. We note that other assumptions are possible.
    <bullet> The rule is about 150,000 words. Average reading speeds 
vary from 180 to 240 words per minute. Since the rule is technical and 
presumably notes are being taken, we use the lower estimate. 
Furthermore, since in addition to notetaking, summaries would be 
submitted to leadership we are lowering the 180 words/minutes to 150. 
Accordingly, we assume it would take staff 17 hours to review this 
proposed rule (150,000 words/150 words per minute/60 minutes hour). 
This may be an overestimate since each entity will likely only read the 
provisions affecting them and not the entire rule.
    <bullet> Therefore, the estimated cost per reviewing entity for 
reading this entire rule is $2,100 (17 hr x $123.06/hr), and the total 
cost over all entities for reviewing this entire proposed rule is $4.2 
million ($2,100 x 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. 
Thus, it is very likely that on average only half or a quarter of the 
rule will be read resulting in a range of $2 million to $5 million.
    Note that this analysis assumes one reader per contract. Some 
alternatives include assuming one reader per parent organization. Using 
parent organizations instead of contracts will reduce the

[[Page 78606]]

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 proposed rule.
    In accordance with the provisions of Executive Order 12866, this 
proposed 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.
    A wide range of policies are being proposed in this rule. These 
policies codify, modify, and update current guidance governing MA 
organization bid requirements.
    This rule has several affected stakeholders. They include: (1) MA 
organizations such as HMOs, local and regional PPOs, MSAs, PFFS and 
Part D sponsors; (2) providers, including institutional providers, 
outpatient providers, clinical laboratories, and pharmacies; and (3) 
enrollees. Some descriptive data on these stakeholders are provided in 
Table K-1.
[GRAPHIC] [TIFF OMITTED] TP15NO23.033

    We are certifying that this proposed rule does not have a 
significant economic impact on a substantial number of small entities. 
To explain our position, we explain certain operational aspects of the 
Medicare program.
    Each year, MA plans submit a bid for furnishing Part A and B 
benefits and the entire bid amount is paid by the government to the 
plan if the plan's bid is below an administratively set benchmark. If 
the plan's bid exceeds that benchmark, the beneficiary pays the 
difference in the form of a basic premium (note that a small percentage 
of plans bid above the benchmark, whereby enrollees pay basic premium, 
thus this percentage of plans is not ``significant'' as defined by the 
RFA and as justified in this section of this proposed rule).
    MA plans can also offer extra benefits, that is, benefits not 
covered under Traditional Medicare Parts A and B, called supplemental 
benefits. These benefits are paid for through enrollee premiums, rebate 
dollars or a combination. Under the statutory payment formula, if the 
bid submitted by a Medicare Advantage plan for furnishing Parts A and B 
benefits is lower than the administratively set benchmark, the 
government pays a portion of the difference to the plan in the form of 
a rebate. The rebate must be used to provide supplemental benefits 
(that is benefits not covered under Traditional Medicare, including 
lower cost sharing) and or/lower beneficiary Part B or Part D premiums. 
Some examples of these supplemental benefits include vision, dental, 
and hearing, fitness and worldwide coverage of emergency and urgently 
needed services.
    To the extent that the government's payments to plans for the bid 
plus the rebate exceeds costs in Traditional Medicare, those additional 
payments put upward pressure on the Part B premium, which is paid by 
all Medicare beneficiaries, including those in Traditional Medicare who 
do not have the additional health services available in many MA plans.
    Part D plans, including MA-PD plans, submit bids and those amounts 
are paid to plans through a combination Medicare funds and beneficiary 
premiums. In addition, for enrolled low-income beneficiaries, Part D 
plans receive special government payments to cover most of the premium 
and cost sharing amounts those beneficiaries would otherwise pay.
    Thus, the cost of providing services by MA and Part D plans is 
funded by a variety of government funding sources and in some cases by 
enrollee premiums. As a result, MA and Part D plans are not expected to 
incur burden or losses since the private companies' costs are being 
supported by the government and enrolled beneficiaries. This lack of 
expected burden applies to both large and small health plans.
    Small entities that must comply with MA and Part D regulations, 
such as those in this proposed rule, are expected to include the costs 
of compliance in their bids, thus avoiding additional burden, since the 
cost of complying with any final rule is funded by payments from the 
government and, if applicable, enrollee premiums.
    For Direct Health and Medical Insurance Carriers, NAICS 524114, 
plans estimate their costs for the upcoming 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 
Traditional Medicare data; or (2) the benchmark, if the bid amount is 
greater than the benchmark.
    If an MA plan bids above the benchmark, section 1854 of the Act 
requires the MA plan to charge enrollees

[[Page 78607]]

a premium for that amount. Historically, at most 2 percent of plans bid 
above the benchmark, and they contain roughly 1 percent of all plan 
enrollees. The CMS threshold for what constitutes a substantial number 
of small entities for purposes of the RFA is 3 to 5 percent. Since the 
number of plans bidding above the benchmark is 2 percent, this is not 
considered substantial for purposes of the RFA.
    The preceding analysis only shows that MA plans, whether small or 
large, are not affected by this proposed rule since a significant 
number of them (all but at most 2 percent) will have their costs 
subsidized by the Government.
    Therefore, we next examine in detail each of the other stakeholders 
and explain how they can bear cost. Each of the following are providers 
(inpatient, outpatient, or pharmacy) that furnish plan-covered services 
to plan enrollees for:
    <bullet> Pharmacies and Drug Stores, NAICS 446110;
    <bullet> 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;
    <bullet> Hospitals, NAICS 622, including General Medical and 
Surgical Hospitals, Psychiatric and Substance Abuse Hospitals, and 
Specialty Hospitals; and
    <bullet> SNFs, NAICS 623110.
    Whether these providers are contracted or, in the case of PPOs and 
PFFS MA plans, not contracted with the MA plan, their aggregate payment 
for services is the sum of the enrollee cost sharing and plan payments.
    <bullet> For non-contracted providers, Sec.  422.214 and sections 
1852(k)(1) and 1866(a)(1)(O) of the Act require that a non-contracted 
provider that furnishes covered services to an MA enrollee accept 
payment that is at least what the provider would have been paid had the 
services been furnished to a Medicare FFS beneficiary.
    <bullet> For contracted providers, Sec.  422.520 requires that the 
payment is governed by a mutually agreed upon contract between the 
provider and the plan. CMS is prohibited from requiring MA plans to 
contract with a particular health care provider or to use a particular 
price structure for payment by section 1854(a)(6)(B)(iii) of the Act.
    Consequently, for providers, there is no additional cost burden 
above the already existing burden in Traditional Medicare. In other 
words, the provisions of this proposed rule do not create a significant 
burden for providers.
    Based on the previous discussion, the Secretary certifies that this 
proposed rule will not have a significant impact on a substantial 
number of small entities.
    There are certain indirect consequences of these provisions which 
also create impact. We have already explained that at least 98 percent 
of the plans bid below the benchmark. Thus, their estimated costs for 
the coming year are fully paid by the Federal Government. However, the 
government additionally pays the plan an MA ``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 or 
other supplemental benefits, or to lower the Part B or Part D premiums 
for enrollees. (Supplemental benefits may also be paid by enrollee 
premiums to the extent that the MA rebate is not sufficient to cover 
those costs.) However, as noted previously, the number of MA plans 
bidding above the benchmark to whom this burden applies does not meet 
the RFA criteria of a significant number of plans.
    It is possible that if the provisions of this proposed rule would 
otherwise cause MA plan bids to increase, plans will reduce their 
profit margins, rather than substantially change their benefit package. 
This may be in part due to market forces; a plan lowering supplemental 
benefits may lose its enrollees to competing plans that offer these 
supplemental benefits. Thus, it may, in certain cases, be advantageous 
for a plan to reduce profit margins, rather than reduce supplemental 
benefits. Most likely an increase in bids would result in a combination 
of reduction in supplemental benefits and reduction in profit margins 
(not 100 percent one or the other). Part of the challenge in 
pinpointing the effects of an increase in bids is that there are many 
other factors combining with the effects of proposed and final rules, 
making it effectively impossible to determine whether a particular 
policy had a long-term effect on supplemental benefits.
    We also note that we do not have definitive data on this. Plans do 
not report to CMS the strategies behind their bids. More specifically, 
when plans do reduce supplemental benefits, we have no way of knowing 
the cause for this reduction, whether it be new provisions, market 
forces, or other causes.

D. Anticipated Effects

    Many provisions of this proposed rule have negligible impact either 
because they are technical provisions, clarifications, or are 
provisions that codify existing guidance. Other provisions have an 
impact that cannot be quantified. Throughout the preamble, we have 
noted when we estimated that provisions have no impact either because 
they are codifying already existing practices, or, for example, because 
contractors for CMS have asserted that changes work within their 
current contract without the need for additional compensation. 
Additionally, this Regulatory Impact Statement discusses several 
provisions with either zero impact or impact that cannot be quantified. 
The remaining provisions' effects are estimated in section XXX of this 
proposed rule and in this RIA. Where appropriate, when a group of 
provisions have both paperwork and non-paperwork impact, this 
Regulatory Impact Statement cross-references impacts from section XXX 
of this proposed rule in order to arrive at total impact.
1. Effects of Expanding Permissible Data Use and Data Disclosure for MA 
Encounter Data (Sec.  422.310)
    In section III.H. of this proposed rule, we discussed two proposals 
to improve access to MA encounter data for certain purposes. We noted 
that our current regulatory language limits CMS's ability to use and 
disclose MA encounter data for activities in support of administration 
or evaluation of the Medicaid program, including care coordination. 
Further, the regulation delays when CMS may share MA encounter data to 
State Medicaid agencies for care coordination and quality review and 
improvement activities for the Medicaid program, particularly with 
regard to dually eligible individuals. Our proposals to improve access 
to MA data include the following:
    <bullet> Adding ``and Medicaid programs'' to the current MA risk 
adjustment data use purposes codified at Sec.  422.310(f)(1)(vi) and 
(vii).
    <bullet> Adding a new Sec.  422.310(f)(3)(v) to allow for risk 
adjustment data to be released prior to reconciliation if the data will 
be released to State Medicaid agencies for the purpose of coordinating 
care for dually eligible individuals.
    Together, these proposals aim to clarify and broaden the allowable 
data uses for CMS and external entities (for data disclosed in 
accordance with Sec.  422.310(f)(2) and (3)). These proposals do not 
change the external entities

[[Page 78608]]

allowed to request MA encounter data from CMS.
    As discussed in sections X and III.H., these proposed provisions 
would allow external entities to voluntarily request MA encounter data 
for allowable data uses to support the Medicare program, Medicaid 
program, and Medicare and Medicaid combined purposes. There is one area 
where this provision could impact the burden to CMS: CMS reviewing and 
fulfilling new MA encounter data requests. However, in the FY 2015 2015 
Hospital Inpatient Prospective Payment System (IPPS)/Long-term Care 
Hospital Prospective Payment System (LTCH PPS) final rule, when we 
initially established CMS disclosure of MA encounter data, we explained 
that we had determined that ``there are not any economically 
significant effects of the proposed provisions'' (79 FR 50445). The 
same applies for the proposed refinements to the approved data uses and 
the data disclosure in this proposed rule.
2. Increasing the Percentage of Dually Eligible Managed Care Enrollees 
Who Receive Medicare and Medicaid Services From the Same Organization 
(Sec. Sec.  422.503, 422.504, 422.514, 422.530, and 423.38)
    We discussed collection of information burden associated with this 
provision in section X.B.11 of this proposed rule. In this section, we 
describe the impacts of our proposed change to the dual/LIS SEP, new 
integrated care SEP, and contract limitations for non-integrated MA-PD 
plans.
    These proposals would impact dually eligible and other LIS eligible 
individuals that currently use the quarterly dual/LIS SEP to change 
their enrollment in MA-PD plans. We are proposing to change the 
quarterly dual/LIS SEP to a one-time-per month SEP for dually eligible 
individuals and other LIS eligible individuals to elect a standalone 
PDP. The proposal would allow individuals to switch PDPs or leave their 
MA-PD plans for Traditional Medicare (with a standalone PDP) in any 
month. The proposed dual/LIS SEP would no longer permit enrollment into 
MA-PD plans or changes between MA-PD plans (although such options would 
remain available through other enrollment periods and SEPs). In 
addition, we propose a new integrated care SEP that would allow 
enrollment in any month into a FIDE SNP, HIDE SNP, or AIP for dually 
eligible individuals who meet the qualifications of such plans.
    Proposed Sec. Sec.  422.504(a)(20) and 422.514(h) would establish a 
new requirement for an MA organization, that, beginning in plan year 
2027, when an MA organization, its parent organization, or an entity 
that shares a corporate parent organization with the MA organization, 
also contracts with a State as a Medicaid MCO that enrolls dually 
eligible individuals in the same service area, that the MA 
organization's D-SNPs must limit new enrollment to individuals enrolled 
in (or in the process of enrolling in) the D-SNP's aligned Medicaid 
MCO. Additionally, an MA organization (or its parent organization or 
another MA organization with the same parent organization) in this 
situation would only be able to offer one D-SNP for full-benefit dually 
eligible individuals in the same service area as that MA organization's 
affiliated Medicaid MCO (with limited exceptions as described in 
section VIII.C. of this proposed rule). Further, beginning in plan year 
2030, such D-SNPs must only enroll (or continue to enroll) individuals 
enrolled in (or in the process of enrolling in) the affiliated Medicaid 
MCO.
    Full-benefit dually eligible individuals enrolled in a D-SNP that 
consolidate due to our proposals at Sec. Sec.  422.504(a)(20) and 
422.514(h) would be moved into a new plan. The impacted enrollees would 
receive materials about the plan consolidation and materials associated 
with the new plan. We believe the plan benefit packages of the plans 
required to consolidate to be similar if not the same and do not expect 
impact to enrollees.
    We expect there to be an enrollment shift from MA-PDs into FIDE 
SNPs, HIDE SNPs, or AIPs over time as more D-SNPs align with Medicaid 
MCOs. Starting in plan year 2027, we expect new D-SNP enrollment to be 
limited and then we expect integrated D-SNP enrollment to accelerate in 
2030 when D-SNPs under a parent organization with an affiliated 
Medicaid MCO would need to disenroll individuals who are not enrolled 
in both the D-SNP and affiliated MCO.
    We examined contract year 2023 bid data for D-SNPs that enroll 
beneficiaries in States that also use Medicaid managed care to cover 
some or all benefits for dually eligible individuals. In general, the 
data shows that the more integrated D-SNPs have higher per capita MA 
rebates than those in less integrated plans. MA rebates are used to 
reduce beneficiary cost sharing, lower beneficiary premiums, and 
provide additional supplemental benefits. MA rebates are calculated by 
multiplying the difference in the risk-adjusted benchmarks and the 
risk-adjusted bids by a percentage called the rebate percentage. The 
Federal Government retains the complement of the rebate percentage (or 
1-rebate percentage) multiplied by the difference in the risk-adjusted 
benchmarks and bids. The (risk-adjusted) bid-to-benchmark ratios, in 
general, are smaller for the more integrated plans versus the less 
integrated plans. This suggests that the more integrated D-SNPs can 
provide Traditional Medicare benefits (represented by the risk adjusted 
bid) at a lower or more efficient level than the less integrated D-
SNPs. We have assumed that this provision's requirement for greater 
alignment between the D-SNP and the affiliated Medicaid MCO will lead 
to greater health benefit efficiencies and incur Federal Government 
savings since the Federal Government retains the complement of the 
difference between the submitted risk adjusted bids and benchmarks.
    In calculating our estimates, we assumed savings would begin in 
2027 when new D-SNPs enrollment would be limited. We expect integrated 
D-SNP enrollment and related savings to accelerate in 2030 when D-SNPs 
under a parent organization participating in Medicaid managed care 
would need to disenroll individuals who are not enrolled in both the D-
SNP and affiliated Medicaid MCO under the same parent organization. We 
estimated that the other elements of this proposal (including the 
proposed changes to the SEP) would have a negligible impact.
    To develop the savings projections, we calculated the bid-to-
benchmark ratios for the integrated D-SNPs based on the calendar year 
2023 plan data and applied them to the coordination-only D-SNPs that we 
assume would convert to aligned D-SNPs by 2030. We assumed that a large 
percentage of the coordination-only D-SNP enrollment would convert to 
integrated D-SNPs by 2030. For trending purposes, we used 2023 bid data 
and 2023 enrollment data as the starting point and trended those data 
points by values found in the 2023 Medicare Trustees Report. We 
calculated gross costs (savings are represented by negative dollar 
amounts) by multiplying the per member per month expenditure 
differences by the enrollment that is projected to switch to aligned 
plans. Then, we calculated the net cost by multiplying the gross costs 
by the net of Part B premium amount which averages between 85.1 percent 
and 84.6 percent from 2025-2034. This yields an overall annual estimate 
of net Part C costs ranging from -$6 million in contract year 2027 to -
$207 million in contract year 2034.

[[Page 78609]]

[GRAPHIC] [TIFF OMITTED] TP15NO23.034

    We performed a similar comparison of contract year 2023 bids for 
Part D on the same MA plans and their associated population. The data 
also suggests that the more integrated D-SNPs had lower combined bid 
and reinsurance amounts for contract year 2023. As a result, we also 
projected that there would be efficiencies when D-SNPs aligned more 
with the Medicaid MCOs. The observed 2023 difference (efficiency) in 
the combined bid and reinsurance amounts is projected with the 
corresponding D-SNP trend assumed in the 2023 Medicare Trustees' Report 
(not shown in that report). The Part D gross savings are the product of 
the efficiency and the associated switchers from Table K-3. Since the 
premiums for the Medicaid beneficiaries are subsidized, there would be 
no premium offset. As a result, the net savings would be the same as 
the gross savings. We estimated the net costs would range from -$7 
million in contract year 2027 to -$286 million in contract year 2034.
    We also have reviewed the impact to the Medicaid program and have 
concluded that the Medicaid impacts would be negligible. The majority 
of States have a ``lesser-of'' policy, under which the State caps its 
payment of Medicare cost sharing so that the sum of Medicare payment 
and cost-sharing does not exceed the Medicaid rate for a particular 
service. Under this proposed policy, the Medicare payment and the cost 
sharing are not expected to increase resulting in non-significant 
impacts to Medicaid payments. For Part D, given that the Medicaid 
liability is limited to the beneficiary cost sharing and that the vast 
majority of dually eligible individuals qualify for low-income cost 
sharing, we anticipate no significant impacts to Medicaid costs.
[GRAPHIC] [TIFF OMITTED] TP15NO23.035

    In addition to the estimated savings from limiting enrollment into 
certain D-SNPs starting in plan year 2027, these provisions require 
updates to a variety of CMS manual systems.
    The proposed change to Sec.  423.38(c)(4) and the proposed 
provision at Sec.  423.38(c)(35) would create burden for CMS to update 
MA-PD plan manual chapters, the plan communication user guide (PCUG), 
and model enrollment notices. Additionally, the MARx system would 
require coding changes for the proposed amended dual/LIS SEP at Sec.  
423.38(c)(4) and proposed integrated care SEP at Sec.  423.38(c)(35). 
The CMS call center 1-800-MEDICARE would need training on the proposed 
SEPs to be able to identify beneficiaries eligible for the SEPs. The 
updates and changes would require two GS-13 staff 20 hours to complete 
the necessary updates. We estimate the burden for plan year 2025, would 
be at 40 hours (2 GS-13 * 20 hrs) at a cost of $2,433 (40 hrs * $60.83) 
for two GS-13 staff to update manual chapters, the PCUG, enrollment 
notices, and complete coding for MARx. This is a one-time cost that 
would not create new burden in subsequent years.
    The new provision at Sec.  422.514(h)(3)(ii) would allow plans to 
continue operating a PPO and HMO in the same service area but not allow 
new enrollments of full-benefit dually eligible individuals into the 
plan (or plans) that are not aligned with the affiliated MCO as 
described Sec.  422.514(h)(1). This provision would not create new 
burden for CMS since CMS would use its existing process to suppress 
these plans from Medicare Plan Finder.
    The new provision at Sec.  422.530(c)(4)(iii) allowing a crosswalk 
exception for plans consolidating their D-SNPs would create burden for 
CMS. The coding to create the crosswalk exception would require one GS-
13 10 hours to complete the necessary updates. The burden for plan year 
2025, is estimated at 10 hours (1 GS-13 * 10 hrs) at a cost of $608.30 
(10 hrs * $60.83) for a GS-13 to complete coding for crosswalk 
exceptions. This is a one-time cost that would not create new burden in 
subsequent years. The burden

[[Page 78610]]

associated with crosswalks and plan consolidation could create 
additional burden such as breaking plans into different PBPs or having 
fewer PBPs to manage in the future. We cannot estimate these actions 
and associated burden but generally believe they would cancel each 
other out.
3. Effects of Additional Changes to an Approved Formulary--Biosimilar 
Biological Product Maintenance Changes and Timing of Substitutions 
(Sec. Sec.  423.4, 423.100, and 423.120(e)(2))
    We do not estimate any impact on the Medicare Trust Fund as a 
result of the proposal to treat substitutions of biosimilar biological 
products other than interchangeable biological products as a 
maintenance change. New biosimilar biological products are approved or 
licensed by the FDA and become available on the market at irregular 
intervals. Therefore, with respect to this provision, we cannot predict 
when new biosimilar biological products will enter the market or to 
what extent Part D sponsors will make formulary substitutions as a 
result. Several biosimilar biological products entered the market in 
2023,\204\ but CMS has not seen a corresponding influx of non-
maintenance negative change requests from Part D sponsors. It is 
unclear whether Part D sponsors are not requesting midyear formulary 
changes due to concerns about patient and provider hesitancy towards 
biosimilar biological products, or if the current policy that treats 
such formulary changes as non-maintenance changes disincentivizes Part 
D sponsors from making midyear formulary changes that will not apply to 
all enrollees currently taking the reference product. The introduction 
of biosimilar biological products to the market is relatively recent 
compared to generic small molecule drugs. We believe there is a 
potential for savings to the Medicare Trust Fund in the long term as 
acceptance of biosimilar biological products grows and increased 
competition drives down costs; however, a number cannot be estimated 
right now.
---------------------------------------------------------------------------

    \204\ Billingsly A. Is There a Biosimilar for Humira? Yes, Here 
Are 9 Humira Biosimilars Launching in 2023. GoodRxHealth. July 12, 
2023. Available from: https://www.goodrx.com/humira/biosimilars.
---------------------------------------------------------------------------

4. Mid-Year Notice of Unused Supplemental Benefits
    This proposal would require plans to notify enrollees about any 
supplemental benefit they have not used during the first half-year of 
the contract year. We lack data to quantify the effects of this 
provision. Therefore, we present a qualitative analysis below. The 
provision has 3 impacts on plans and the MA program.
    One impact is the burden to plans to notify enrollees. This burden 
has been quantified in the Collection of Information in section X. of 
this proposed rule. The burden consists of: (1) a system update to 
identify supplemental benefits not utilized by enrollees; and (2) the 
burden to notify enrollees.
    The second impact relates to the intent of the provision, which is 
to increase utilization of benefits when appropriate. This would 
initially involve a cost to both enrollees for their share of cost 
sharing, and to the plans for providing the benefit. In assessing the 
impact, there are several dimensions of impact for which we lack data: 
(1) how many plans offer these supplemental benefits; (2) which 
supplemental benefits are not being utilized at all by some enrollees; 
(3) for each plan offering supplemental benefits, how many enrollees do 
and do not utilize these benefits; (4) how many more enrollees would 
utilize these benefits as a result of the notification; and (5) what is 
the range and distribution of the cost to provide these supplemental 
benefits.
    The third impact relates to savings expected from increased 
utilization. Normally, such savings are considered consequences of a 
provision and not typically analyzed in an RIA. We use dental and gym 
benefits to show several complications and possibilities in this 
analysis.
    Enrollees who use their preventive supplemental dental benefits may 
uncover problems early, thus preventing unnecessary complications. For 
example, the filling of cavities may prevent a costlier root canal 
later. Also note that the filling may happen in one plan while the 
costlier root canal that was prevented refers to a possible event 
several years later possibly in another plan (or out of pocket for the 
enrollee).
    An interesting subtlety of this example is that enrollees who have 
preventive dental checkups may do so annually or semi-annually. The 
effect of the notification might be to increase annual checkups to 
semi-annual checkups. It is harder to quantify the savings from such a 
change in frequency.
    From discussions with plans, we know that enrollees may incur the 
cost of a gym membership benefit without utilizing it. The intent of 
the provision would be to increase gym utilization. In the case of gym 
benefits the savings from increased prevention is challenging to 
analyze since different frequencies of gym attendance have different 
effects on health. An enrollee, for example, who decides to visit the 
gym only once because of the notification might not have any 
significant health benefits generating savings; even enrollees who 
switch to monthly visits may not experience savings. The savings on 
enrollees who decide to continue gym visit on a regular basis might 
arise from varied consequences since increased exercise has the 
potential to ``reduce risk of chronic conditions like obesity, type 2 
diabetes, heart disease, many types of cancer, depression and anxiety, 
and dementia.'' \205\
---------------------------------------------------------------------------

    \205\ https://www.cdc.gov/chronicdisease/resources/infographic/physical-activity.htm#.
---------------------------------------------------------------------------

    In summary, this is the type of provision that has a savings impact 
that can be analyzed only after several years of experience with the 
provision.
    We solicit public comment on the economic cost and benefits of this 
proposal.
5. Agent Broker Compensation (Sec.  422.2274)
    In this rule we are proposing to: (1) generally prohibit contract 
terms between MA organizations and agents, brokers, or other TMPOs that 
may interfere with the agent's or broker's ability to objectively 
assess and recommend the plan which best fits a beneficiary's health 
care needs; (2) set a single agent and broker compensation rate for all 
plans, while revising the scope of what is considered ``compensation;'' 
and (3) eliminate the regulatory framework which currently allows for 
separate payment to agents and brokers for administrative services. We 
are also proposing to make conforming edits to the agent broker 
compensation rules at Sec.  423.2274.
    The proposed changes to the MA and Part D agent broker compensation 
regulations at 42 CFR 422.2274 and 423.2274 have potential economic 
effects on agents/brokers, plans, and Medicare beneficiaries. Since we 
lack the data to quantify these effects, we discuss them qualitatively. 
Agents and brokers may lose certain excess payments that would be 
prohibited under the proposed regulation; on the other hand, they would 
receive an increased FMV calculation for compensation per enrollment. A 
typical agent or broker might work on behalf of many insurance 
companies and their associated plans, including commercial, Medicare, 
Medicaid, Medigap etc. A reduction in net payment for Medicare 
Advantage enrollments may cause

[[Page 78611]]

agents or brokers to reapportion their time and focus instead on other 
areas of the industry, resulting in decreased MA plan enrollment; 
however, we believe this impact would swiftly be offset by increased 
marketing and other adjustments made by the MA plans, as discussed 
below.
    Another effect on agents and brokers from this provision is the 
requirement of uniform payment to agents and brokers and the resulting 
increased transparency. More specifically, agents and brokers who might 
have been receiving excess payments for targeting certain plans will no 
longer be financially incentivized to target these plans resulting in a 
more equitable distribution of efforts.
    Plans are already spending a standard amount of $601 per new 
enrollee on agents and brokers. We do not believe the increased 
compensations of $31 extra (about a 5 percent increase) per agent per 
enrollee would have any significant financial impact on plans given the 
proposal to prohibit excess payments in the form of administrative 
payments.
    On the other hand, if some agents and brokers withdraw or lower 
efforts for Medicare Advantage and Part D plans, resulting in possibly 
lower enrollment, plans may increase money allocated to outreach and 
advertising. Overall, we do not expect a decrease in enrollment because 
of the agent and broker compensation provisions since plans 
meticulously monitor enrollment trends and possess a variety of 
vehicles to counteract any significant changes. Indeed, in assessing 
the impact of the agent broker compensation provision it is important 
to emphasize that people join plans because of outreach from a wide 
variety of sources and therefore no single source is critical.
    We solicit public comment on the economic cost and benefits of this 
proposal.
6. Enhancing Enrollees' Right To Appeal an MA Plan's Decision To 
Terminate Coverage for Non-Hospital Provider Services (Sec.  422.626)
    In Sec.  422.626, we are proposing to (1) require the QIO instead 
of the MA plan, to review untimely fast-track appeals of an MA plan's 
decision to terminate services in an HHA, CORF, or SNF; and (2) fully 
eliminate the provision requiring the forfeiture of an enrollee's right 
to appeal a termination of services decision when they leave the 
facility or end home health, CORF, or home-based hospice services 
before the proposed terminate date.
    Currently, there is no data collected on the volume of fast-track 
appeals conducted by MA plans for untimely requests. The QIO conducts 
appeals for FFS fast-track appeals for untimely requests but does not 
formally collect data on appeals based on untimely requests from MA 
enrollees. Thus, the following estimates are speculative given the lack 
of precise data on the number of the fast-track appeals for untimely 
FFS requests.
    Anecdotal data from the QIOs conducting these fast-track appeals 
indicates that approximately 2.5 percent of all fee-for-service (FFS) 
fast-track appeal requests are untimely. In CY 2021 (most recent year 
available), there were 190,031 MA fast-track appeals to the QIO. Thus, 
we estimate that approximately 4,751 fast track appeals will be shifted 
from MA plans to the QIO (0.025 x 190,031).
    The shift of these untimely appeals from the QIOs to the MA plans 
will result in an increased burden. There is an estimated per case cost 
for QIOs to conduct these appeals (per the Financial Information and 
Vouchering System (FIVS) from 5/1/2019-7/31/2023), while MA plans are 
not specifically reimbursed for this activity. The average QIO appeal 
of this type takes 1.69 hours at $85.18/hr.
    In aggregate we estimate an annual burden of 8,029 hours (4,751 
responses * 1.69 hr/response) at a cost of $683,910 (8,029 hr x $85.18/
hr).
    We are unable to estimate how many new QIO reviews will be 
conducted under the proposed provision at Sec.  422.626(a)(3) to 
eliminate the provision requiring the forfeiture of an enrollee's right 
to appeal a termination of services decision when they leave the 
skilled nursing facility or end home health, CORF, or home-based 
hospice services before the proposed termination date. No entity tracks 
how many appeals are not conducted because the enrollee stopped the 
services at issue before the last day of coverage. Further, because 
this provision has never existed for FFS, we have no basis from which 
to derive an estimate.

E. Alternatives Considered

    In this section, CMS includes discussions of alternatives 
considered. Several provisions of this proposed rule reflect a 
codification of existing policy where we have evidence, as discussed in 
the appropriate preamble sections, that the codification of this 
existing policy would not affect compliance. In such cases, the 
preamble typically discusses the effectiveness metrics of these 
provisions for public health. Also, in these cases, traditional 
categories of alternative analysis such as different compliance dates, 
different enforcement methods, different levels of stringency, as 
outlined in section C of OMB's Circular A-4, are not fully relevant 
since the provision is already being complied with adequately. 
Consequently, alternative analysis is not provided for these 
provisions.
1. Contracting Standards for Dual Eligible Special Needs Plan Look-
Alikes (Sec.  422.514)
    We are proposing to lower the threshold for D-SNP look-alikes from 
80 percent to 60 percent over a 2-year period. We considered an 
alternative proposal to lower the D-SNP look-alike threshold to 60 
percent in 1 year, allowing an earlier phase-out of these non-SNP MA 
plans. But we are proposing the more incremental approach to minimize 
disruptions to dually eligible individuals and allow plans and CMS more 
time to operationalize these transitions.
    We are considering and soliciting comment on an alternative to our 
proposal that would eliminate the proposed 70 percent threshold for 
plan year 2025 but would involve additional conditions and changes 
related to the transition authority. Specifically, this alternative 
would--
    <bullet> Apply the 60 percent threshold beginning in plan year 
2026;
    <bullet> Permit use of the transition authority into non-SNP MA 
plans (as currently permitted under Sec.  422.514(e)) for plan year 
2025; and
    <bullet> Limit use of transition authority under Sec.  422.514(e) 
to transition D-SNP look-alike enrollees into D-SNPs for plan year 2026 
and subsequent plan years.
    Relative to our proposal, this alternative would give plans with 
dually eligible individual enrollment between 70 and 80 percent of 
total enrollment based on January 2024 enrollment data one additional 
year to apply for a new D-SNP or service area expansion to an existing 
D-SNP, such that these plans could transition enrollees into a D-SNP 
for plan year 2026. The alternative would balance the additional year 
using the existing 80 percent enrollment threshold to identify 
prohibited D-SNP look-alikes with an earlier limitation on the Sec.  
422.514(e) transition authority to enrollees transitioning into non-
SNPs. We solicit comment on whether this alternative is a better 
balance of the goals of our policy to prohibit circumvention of the 
requirements for D-SNPs and to encourage and incentivize enrollment in 
integrated care plans.
    Among the factors we would consider in adopting the alternative 
instead of

[[Page 78612]]

our proposal is the extent to which plans with 70 percent or more 
dually eligible enrollment in plan year 2024 expect to be able to 
establish a D-SNP in the same service area as the D-SNP look-alike if 
given an additional year (that is, 2026) to transition enrollees. Based 
on 2023 plan year data, approximately two-thirds of the MA 
organizations with non-SNP MA plans with between 70 and 80 percent 
dually eligible individuals already have a D-SNP under the same MA 
organization with the vast majority of those D-SNPs having a service 
area that covers the service area as the non-SNP MA plan. The other 
approximately one-third of the MA organizations with non-SNP MA plans 
with between 70 and 80 percent dually eligible individuals do not have 
a D-SNP in the same service area in plan year 2023. If given an 
additional year, these MA organizations would have more time in which 
to establish D-SNPs in the same service areas as non-SNP MA plans and 
transition the enrollees into a D-SNP.

F. Accounting Statement and Table

    As required by OMB Circular A-4 (available at https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/) in Table K-4, we 
have prepared an accounting statement showing the costs and transfers 
associated with the provisions of this proposed rule for calendar years 
2025 through 2034. Table K4 is based on Tables K-5a and Table K5-b 
which list savings and costs by provision and year. Tables K4, K5a and 
K5b with costs listed as positive numbers and savings listed as 
positive numbers. As can be seen, the net annualized savings of this 
proposed rule is between $150 and $200 million per year. The net 
savings reflect a mixture of several provisions that save and cost. 
Minor seeming discrepancies in totals in Tables K4, K5a, and K5b 
reflect use of underlying spreadsheets, rather than intermediate 
rounded amounts. A breakdown of these costs of this proposed rule by 
provision may be found in Tables K5a and K5b.
[GRAPHIC] [TIFF OMITTED] TP15NO23.036

    The following Tables K5a and K5b summarize costs, and savings by 
provision and year, and forms a basis for the accounting Table K4. In 
Tables K5a and K5b, costs and savings are expressed as positive numbers 
(except in the row with header ``Aggregate savings'' where positive 
numbers reflect savings and negative numbers reflect cost). The 
provisions increasing enrollment for D-SNPS Part C and Part D--effect 
the Medicare Trust Fund. In these rows, positive numbers reflect 
reduced dollar spending to the Trust Fund, that is savings. The savings 
(and costs) in these tables are true costs and savings reflecting 
increases or decreases in consumption of services and goods. Tables K5a 
and K5b combine related provisions. For example, all provisions related 
to the utilization management committee in the COI summary table are 
combined into one-line item in the RIA.
BILLING CODE 4120-01-P

[[Page 78613]]

[GRAPHIC] [TIFF OMITTED] TP15NO23.004


[[Page 78614]]


[GRAPHIC] [TIFF OMITTED] TP15NO23.005

BILLING CODE 4120-01-C

[[Page 78615]]

G. Conclusion

    In aggregate this proposed rule saves significantly. Two provisions 
reduce spending by the Medicare Trust Fund: (1) the effect on Part C 
plans from the provisions designed to increase enrollment D-SNPs; and 
(2) the effect on Part D plans from these D-SNP provisions. Over a 10-
year period they reduce spending of the Medicare Trust Fund of $28, 
$961, and $1,341 million respectively. The provisions for the Drug 
Management Program should reduce paperwork burden by $3 million 
annually saving $30 million over 10 years. The agent broker provision 
is expected to cost $31 million and $310 million over 10 years.

XII. Response to Comments

    Because of the large number of public comments that we normally 
receive on Federal Register documents, we are not able to acknowledge 
or respond to them individually. We will consider all comments we 
receive by the date and time specified in the DATES section of this 
preamble, and, when we proceed with a subsequent document, we will 
respond to the comments in the preamble to that document. In accordance 
with requirements this major rule has been reviewed by OMB.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on October 24, 2023.

List of Subjects

42 CFR Part 417

    Administrative practice and procedure, Grant programs-health, 
Health care, Health Insurance, Health maintenance organizations (HMO), 
Loan programs-health Medicare, 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, Health facilities, Health 
maintenance organizations (HMO), Incorporation by reference, Medicare, 
Penalties, Privacy, Reporting and recordkeeping requirements.

42 CFR Part 460

    Aged, Citizenship and naturalization, Civil rights, Health, Health 
care, Health records, Individuals with disabilities, Medicaid, 
Medicare, Religious discrimination, Reporting and recordkeeping 
requirements, Sex discrimination.

45 CFR Part 170

    Computer technology, Health, Health care, Health insurance, Health 
records, Hospitals, Incorporation by reference, Laboratories, Medicaid, 
Medicare, Privacy, Public health, Reporting and recordkeeping 
requirements, Security measures.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services proposes to amend 42 CFR chapter IV and the 
Department of Health and Human Services proposes to amend 45 CFR part 
170 as set forth below:

Title 42

PART 417--HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL 
PLANS, AND HEALTH CARE PREPAYMENT PLANS

0
1. The authority citation for part 417 continues to read as follows:

    Authority: 42 U.S.C. 1302 and 1395hh, and 300e, 300e-5, and 
300e-9, and 31 U.S.C. 9701.

Subpart L--Medicare Contract Requirements

0
2. Section 417.472 is amended by adding paragraph (l) to read as 
follows:


Sec.  417.472  Basic contract requirements.

* * * * *
    (l) Resolution of complaints in the complaints tracking module. The 
HMO or CMP must comply with requirements of Sec. Sec.  422.125 and 
422.504(a)(15) of this chapter to, through the CMS complaints tracking 
module as defined in Sec.  422.125(a), address and resolve complaints 
received by CMS against the HMO or CMP within the required timeframes. 
References to the MA organization or MA plan in those regulations shall 
be read as references to the HMO or CMP.
* * * * *

PART 422--MEDICARE ADVANTAGE PROGRAM

0
3. The authority citation for part 422 is revised to read as follows:

    Authority: 42 U.S.C. 1302, 1306, 1395w-21 through 1395w-28, and 
1395hh.

0
4. Section 422.2 is amended by revising the definition of ``Basic 
benefits'' to read as follows:


Sec.  422.2  Definitions.

* * * * *
    Basic benefits means Part A and Part B benefits except--
    (1) Hospice services; and
    (2) Beginning in 2021, organ acquisitions for kidney transplants, 
including costs covered under section 1881(d) of the Act.
* * * * *
0
5. Section 422.52 is amended by:
0
a. Revising paragraph (b)(2);
0
b. Redesignating paragraph (f) as paragraph (f) introductory text; and
0
c. Adding paragraph (f)(1) and reserved paragraph (f)(2).
    The revision and additions read as follows:


Sec.  422.52  Eligibility to elect an MA plan for special needs 
individuals.

* * * * *
    (b) * * *
    (2) Meet the eligibility requirements for that specific SNP, 
including any additional eligibility requirements established in the 
State Medicaid agency contract (as described at Sec.  422.107(a)) for 
dual eligible special needs plans; and
* * * * *
    (f) * * *
    (1) For enrollments into a SNP that exclusively enrolls individuals 
that have severe or disabling chronic conditions (C-SNP), the 
organization must contact the applicant's current physician to confirm 
that the applicant has the qualifying condition(s). The organization 
must obtain this information in one of the following two ways described 
in paragraph (f)(1)(i) or (ii) of this section:
    (i) Contact the physician or physician's office and obtain 
verification of the condition(s) prior to enrollment in a form and 
manner authorized by CMS from the applicant's primary care provider or 
specialist treating the qualifying condition(s).
    (ii) Through an assessment with the enrollee using a pre-enrollment 
qualification assessment tool (PQAT) where the assessment and the 
information gathered are verified (as described in paragraph 
(f)(1)(iii) of this section) before the end of the first month of 
enrollment in the C-SNP. Use of a PQAT requires the following:
    (A) The PQAT must do all of the following in paragraphs 
(f)(1)(i)(A)(1) through (4) of this section:
    (1) Include clinically appropriate questions relevant to the 
chronic condition(s) on which the C-SNP focuses.
    (2) Gather sufficient reliable evidence of having the applicable 
condition using the applicant's past medical history, current signs or 
symptoms, and current medications.
    (3) Include the date and time of the assessment completion if done 
face-to-

[[Page 78616]]

face with the applicant, or the receipt date if the C-SNP receives the 
completed PQAT by mail or by electronic means (if available).
    (4) Include a signature line for and be signed by a physician to 
confirm the individual's eligibility for C-SNP enrollment.
    (B) The C-SNP conducts a post-enrollment confirmation of each 
enrollee's information and eligibility using medical information 
(medical history, current signs or symptoms, diagnostic testing, and 
current medications) provided by the enrollee's primary care physician 
or the specialist treating the chronic condition.
    (C) The C-SNP must include the information gathered in the PQAT and 
used in this verification process in its records related to or about 
the enrollee that are subject to the confidentiality requirements in 
Sec.  422.118.
    (D)(1) The C-SNP tracks the total number of enrollees and the 
number and percent by condition whose post-enrollment verification 
matches the pre-enrollment assessment.
    (2) Data and supporting documentation are made available upon 
request by CMS.
    (E) If the organization does not obtain verification of the 
enrollees' required chronic condition(s) by the end of the first month 
of enrollment in the C-SNP, the organization must--
    (1) Disenroll the enrollee as of the end of the second month of 
enrollment; and
    (2) Send the enrollee notice of the disenrollment within the first 
7 calendar days of the second month of enrollment.
    (F) The organization must maintain the enrollment of the individual 
if verification of the required condition(s) is obtained at any point 
before the end of the second month of enrollment.
    (iii) To complete the PQAT, the C-SNP is required to have the 
individual's current physician (primary care physician or specialist 
treating the qualifying condition) or a physician employed or 
contracted by the plan administer the PQAT directly with the enrollee 
or provide confirmation (with or without the presence of the enrollee) 
that the information in the document supports a determination that the 
individual is eligible for the C-SNP. The enrollee's physician must 
sign the completed PQAT.
    (2) [Reserved]
0
6. Section 422.60 is amended by revising paragraph (a)(1) and adding 
paragraphs (a)(3) and (h) to read as follows:


Sec.  422.60  Election process.

    (a) * * *
    (1) Except for the limitations on enrollment in an MA MSA plan 
provided by Sec.  422.62(d)(1) and except as specified in paragraphs 
(a)(2) and (3) of this section, each MA organization must accept 
without restriction (except for an MA RFB plan as provided by Sec.  
422.57) individuals who are eligible to elect an MA plan that the MA 
organization offers and who elect an MA plan during initial coverage 
election periods under Sec.  422.62(a)(1), annual election periods 
under Sec.  422.62(a)(2), and under the circumstances described in 
Sec.  422.62(b)(1) through (4).
* * * * *
    (3) Dual eligible special needs plans must limit enrollments to 
those individuals who meet the eligibility requirements established in 
the State Medicaid agency contract, as specified at Sec.  422.52(b)(2).
* * * * *
    (h) Authorized representatives. As used in this subpart, an 
authorized representative is an individual who is the legal 
representative or otherwise legally able to act on behalf of an 
enrollee, as the law of the State in which the beneficiary resides may 
allow, in order to execute an enrollment or disenrollment request.
    (1) The authorized representative would constitute the 
``beneficiary'' or the ``enrollee'' for the purpose of making an 
election.
    (2) Authorized representatives may include court-appointed legal 
guardians, persons having durable power of attorney for health care 
decisions, or individuals authorized to make health care decisions 
under State surrogate consent laws, provided they have the authority to 
act for the beneficiary in this capacity.
0
7. Section 422.62 is amended by revising paragraphs (a)(1)(i) and 
(a)(4) to read as follows:


Sec.  422.62  Election of coverage under an MA plan.

    (a) * * *
    (1) * * *
    (i) The last day of the second month after the month in which they 
are first entitled to Part A and enrolled in Part B; or
* * * * *
    (4) Open enrollment period for institutionalized individuals. After 
2005, an individual who is eligible to elect an MA plan and who is 
institutionalized, as defined in Sec.  422.2, is not limited (except as 
provided for in paragraph (d) of this section for MA MSA plans) in the 
number of elections or changes he or she may make.
    (i) Subject to the MA plan being open to enrollees as provided 
under Sec.  422.60(a)(2), an MA eligible institutionalized individual 
may at any time elect an MA plan or change his or her election from an 
MA plan to Original Medicare, to a different MA plan, or from Original 
Medicare to an MA plan.
    (ii) The open enrollment period for institutionalized individuals 
ends on the last day of the second month after the month the individual 
ceases to reside in one of the long-term care facility settings 
described in the definition of ``institutionalized'' in Sec.  422.2.
* * * * *
0
8. Section 422.68 is amended by adding paragraph (g) to read as 
follows:


Sec.  422.68  Effective dates of coverage and change of coverage.

* * * * *
    (g) Beneficiary choice of effective date. If a beneficiary is 
eligible for more than one election period, resulting in more than one 
possible effective date, the MA organization must allow the beneficiary 
to choose the election period that results in the individual's desired 
effective date.
    (1) To determine the beneficiary's choice of election period and 
effective date, the MA organization must attempt to contact the 
beneficiary and must document its attempts.
    (2) If the MA organization is unable to obtain the beneficiary's 
desired enrollment effective date, the MA organization must assign an 
election period using the following ranking of election periods:
    (i) ICEP/Part D IEP
    (ii) MA-OEP
    (iii) SEP
    (iv) AEP
    (v) OEPI
    (3) If the MA organization is unable to obtain the beneficiary's 
desired disenrollment effective date, the MA organization must assign 
an election period that results in the earliest disenrollment.
0
9. Section 422.100 is amended by adding paragraph (o) to read as 
follows:


Sec.  422.100  General requirements.

* * * * *
    (o) Cost sharing standards for D-SNP PPOs. Beginning on or after 
January 1, 2026, a MA organization offering a local PPO plan or 
regional PPO plan that is a dual eligible special needs plan must 
establish cost sharing for out-of-network services that--
    (1) Complies with the limits described in paragraph (f)(6) of this 
section with the exception that references to the MOOP amounts refer to 
the total catastrophic limits under Sec.  422.101(d)(3) for local PPOs 
and MA regional plans; and

[[Page 78617]]

    (2) Complies with the limits described in paragraph (j)(1) of this 
section with the exception that references to the MOOP amounts that 
refer to the total catastrophic limits under Sec.  422.101(d)(3) for 
local PPOs and MA regional plans and, for regional PPO dual eligible 
special needs plans, excluding paragraph (j)(1)(i)(C)(2) and the last 
sentence of paragraph (j)(1)(i)(E) of this section.
0
10. Section 422.102 is amended by:
0
a. Revising paragraph (f)(1)(i)(A)(2);
0
b. Redesignating paragraph (f)(3) as paragraph (f)(4);
0
c. Adding a new paragraph (f)(3);
0
d. Revising newly redesignated paragraph (f)(4) introductory text and 
(f)(4)(iii) and (iv); and
0
e. Adding paragraph (f)(5).
    The additions and revision read as follows:


Sec.  422.102  Supplemental benefits.

* * * * *
    (f) * * *
    (1) * * *
    (i) * * *
    (A) * * *
    (2) Has a high risk of hospitalization or other adverse health 
outcomes; and
* * * * *
    (3) MA organization responsibilities. An MA organization that 
includes an item or service as SSBCI in its bid must be able to 
demonstrate through relevant acceptable evidence that the item or 
service has a reasonable expectation of improving or maintaining the 
health or overall function of a chronically ill enrollee. By the date 
on which an MA organization submits its bid, the MA organization must 
establish a written bibliography of relevant acceptable evidence 
concerning the impact that the item or service has on the health or 
overall function of its recipient. For each citation in the written 
bibliography, the MA organization must include a working hyperlink to 
or a document containing the entire source cited.
    (i) Relevant acceptable evidence includes large, randomized 
controlled trials or prospective cohort studies with clear results, 
published in a peer-reviewed journal, and specifically designed to 
investigate whether the item or service impacts the health or overall 
function of a population, or large systematic reviews or meta-analyses 
summarizing the literature of the same.
    (ii) An MA organization must include in its bibliography all 
relevant acceptable evidence published within the 10 years prior to the 
June immediately preceding the coverage year during which the SSBCI 
will be offered.
    (iii) If no evidence of the type described in paragraphs (f)(3)(i) 
and (ii) of this section exists for a given item or service, then MA 
organization may cite case studies, Federal policies or reports, 
internal analyses, or any other investigation of the impact that the 
item or service has on the health or overall function of its recipient 
as relevant acceptable evidence in the MA organization's bibliography.
    (iv) The MA organization must make its bibliography of relevant 
acceptable evidence available to CMS upon request.
    (4) Plan responsibilities. An MA plan offering SSBCI must do all of 
the following:
* * * * *
    (iii)(A) Have and apply written policies based on objective 
criteria for determining a chronically ill enrollee's eligibility to 
receive a particular SSBCI; and
    (B) Document the written policies specified in paragraph 
(f)(4)(iii)(A) of this section and the objective criteria on which the 
written policies are based.
    (iv) Document each determination that an enrollee is not eligible 
to receive an SSBCI and make this information available to CMS upon 
request.
    (5) CMS review of SSBCI offerings in bids. (i) CMS may decline to 
approve an MA organization's bid if CMS determines that the MA 
organization has not demonstrated, through relevant acceptable 
evidence, that an SSBCI has a reasonable expectation of improving or 
maintaining the health or overall function of the chronically ill 
enrollees that the MA organization is targeting.
    (ii) CMS may annually review the items or services that an MA 
organization includes as SSBCI in its bid for compliance with all 
applicable requirements, taking into account updates to the relevant 
acceptable evidence applicable to each item or service.
    (iii) This provision does not limit CMS's authority to review and 
negotiate bids or to reject bids under section 1854(a) of the Act and 
subpart F of this part nor does it limit CMS's authority to review plan 
benefits and bids for compliance with all applicable requirements.
0
11. Section 422.111 is amended by adding paragraph (l) to read as 
follows:


Sec.  422.111  Disclosure requirements.

* * * * *
    (l) Mid-year notice of unused supplemental benefits. Beginning 
January 1, 2026, MA organizations must send notification annually, no 
sooner than June 30 and no later than July 31, to each enrollee with 
unused supplemental benefits consistent with the requirements of Sec.  
422.2267(e)(42).
0
12. Section 422.116 is amended by:
0
a. Adding paragraph (b)(2)(xiv);
0
b. In table 1 to paragraph (d)(2), adding an entry for ``Outpatient 
Behavioral Health'' following the entry for ``Orthopedic Surgery'';
0
c. Adding paragraph (d)(5)(xv);
0
d. Revising paragraph (f)(1) introductory text; and
0
e. Adding paragraphs (f)(2)(iv) and (f)(3).
    The additions and revisions read as follows:


Sec.  422.116  Network adequacy.

* * * * *
    (b) * * *
    (2) * * *
    (xiv) Outpatient Behavioral Health, which can include Marriage and 
Family Therapists (as defined in section 1861(lll) of the Act), Mental 
Health Counselors (as defined in section 1861(lll) of the Act), Opioid 
Treatment Programs (as defined in section 1861(jjj) of the Act), 
Community Mental Health Centers (as defined in section 1861(ff)(3)(B) 
of the Act), or those of the following who regularly furnish or will 
regularly furnish behavioral health counseling or therapy services 
including, but not limited to, psychotherapy or prescription of 
medication for substance use disorders: physician assistants, nurse 
practitioners and clinical nurse specialists (as defined in section 
1861(aa)(5) of the Act); addiction medicine physicians; or outpatient 
mental health and substance use treatment facilities.
* * * * *
    (d) * * *
    (2) * * *

[[Page 78618]]



                                                               Table 1 to Paragraph (d)(2)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                        Large metro                Metro                   Micro                   Rural                   CEAC
                                 -----------------------------------------------------------------------------------------------------------------------
     Provider/Facility type                       Max                     Max                     Max                     Max                     Max
                                   Max time    distance    Max time    distance    Max time    distance    Max time    distance    Max time    distance
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
Outpatient Behavioral Health....         20          10          40          25          55          40          60          50         110         100
 
                                                                      * * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------

* * * * *
    (d) * * *
    (5) * * *
    (xv) Outpatient Behavioral Health, described in paragraph 
(b)(2)(xiv) of this section.
* * * * *
    (f) * * *
    (1) An MA plan may request an exception to network adequacy 
criteria in paragraphs (b) through (e) of this section when either 
paragraph (f)(1)(i) or (ii) of this section is met:
    (i)(A) Certain providers or facilities are not available for the MA 
plan to meet the network adequacy criteria as shown in the Provider 
Supply file for the year for a given county and specialty type; and
    (B) The MA plan has contracted with other providers and facilities 
that may be located beyond the limits in the time and distance 
criteria, but are currently available and accessible to most enrollees, 
consistent with the local pattern of care; or
    (ii)(A) A facility-based Institutional-Special Needs Plan (I-SNP) 
is unable to contract with certain specialty types required under 
paragraph (b) of this section because of the way enrollees in facility-
based I-SNPs receive care; or
    (B) A facility-based I-SNP provides sufficient and adequate access 
to basic benefits through additional telehealth benefits (in compliance 
with Sec.  422.135) when using telehealth providers of the specialties 
listed in paragraph (d)(5) of this section in place of in-person 
providers to fulfill network adequacy standards in paragraphs (b) 
through (e) of this section.
    (2) * * *
    (iv) As applicable, the facility-based I-SNP submits:
    (A) Evidence of the inability to contract with certain specialty 
types required under this section due to the way enrollees in facility-
based I-SNPs receive care; or
    (B) Substantial and credible evidence that sufficient and adequate 
access to basic benefits is provided to enrollees using additional 
telehealth benefits (in compliance with Sec.  422.135) furnished by 
providers of the specialties listed in paragraph (d)(5) of this section 
and the facility-based I-SNP covers out-of-network services furnished 
by a provider in person when requested by the enrollee as provided in 
Sec.  422.135(c)(1) and (2), with in-network cost sharing for the 
enrollee.
    (3) Any MA organization that receives the exception provided for 
facility-based I-SNPs must agree to offer only facility-based I-SNPs 
under the MA contract that receives the exception.
0
13. Section 422.125 is added to read as follows:


Sec.  422.125  Resolution of complaints in Complaints Tracking Module.

    (a) Definitions. For the purposes of this section, the terms have 
the following meanings:
    Assignment date is the date CMS assigns a complaint to a particular 
MA organization in the Complaints Tracking Module.
    Complaints Tracking Module means an electronic system maintained by 
CMS to record and track complaints submitted to CMS about Medicare 
health and drug plans from beneficiaries and others.
    Immediate need complaint means a complaint involving a situation 
that prevents a beneficiary from accessing care or a service for which 
they have an immediate need. This includes when the beneficiary 
currently has enough of the drug or supply to which they are seeking 
access to last for 2 or fewer days.
    Urgent complaint means a complaint involving a situation that 
prevents a beneficiary from accessing care or a service for which they 
do not have an immediate need. This includes when the beneficiary 
currently has enough of the drug or supply to which they are seeking 
access to last for 3 to 14 days.
    (b) Timelines for complaint resolution--(1) Immediate need 
complaints. The MA organization must resolve immediate need complaints 
within 2 calendar days of the assignment date.
    (2) Urgent complaints. The MA organization must resolve urgent 
complaints within 7 calendar days of the assignment date.
    (3) All other complaints. The MA organization must resolve all 
other complaints within 30 calendar days of the assignment date.
    (c) Timeline for contacting individual filing a complaint. 
Regardless of the type of complaint received, the MA organization must 
contact the individual who filed a complaint within 3 calendar days of 
the assignment date.
0
14. Section 422.137 is amended by adding paragraphs (c)(5) and (d)(6) 
and (7) to read as follows:


Sec.  422.137  Medicare Advantage Utilization Management Committee.

* * * * *
    (c) * * *
    (5) Beginning January 1, 2025, include at least one member with 
expertise in health equity. Expertise in health equity includes, but is 
not limited to, educational degrees or credentials with an emphasis on 
health equity; experience conducting studies identifying disparities 
amongst different population groups; experience leading organization-
wide policies, programs, or services to achieve health equity; or 
experience leading advocacy efforts to achieve health equity.
    (d) * * *
    (6) Beginning in 2025, annually conduct a health equity analysis of 
the use of prior authorization.
    (i) The final report of the analysis must be approved by the member 
of the committee with expertise in health equity before it is publicly 
posted.
    (ii) The analysis must examine the impact of prior authorization on 
enrollees with one or more of the following social risk factors:
    (A) Receipt of the low-income subsidy or being dually eligible for 
Medicare and Medicaid.
    (B) Having a disability. Disability status is determined using the 
variable original reason for entitlement code (OREC) for Medicare using 
the information from the Social Security Administration and Railroad 
Retirement Board record systems.
    (iii) The analysis must use the following metrics, calculated for 
enrollees with the specified social risk factors and enrollees without 
the

[[Page 78619]]

specified social risk factors, to conduct the analysis at the plan 
level using data from the prior contract year:
    (A) The percentage of standard prior authorization requests that 
were approved, aggregated for all items and services.
    (B) The percentage of standard prior authorization requests that 
were denied, aggregated for all items and services.
    (C) The percentage of standard prior authorization requests that 
were approved after appeal, aggregated for all items and services.
    (D) The percentage of prior authorization requests for which the 
timeframe for review was extended, and the request was approved, 
aggregated for all items and services.
    (E) The percentage of expedited prior authorization requests that 
were approved, aggregated for all items and services.
    (F) The percentage of expedited prior authorization requests that 
were denied, aggregated for all items and services.
    (G) The average and median time that elapsed between the submission 
of a request and a determination by the MA plan, for standard prior 
authorizations, aggregated for all items and services.
    (H) The average and median time that elapsed between the submission 
of a request and a decision by the MA plan for expedited prior 
authorizations, aggregated for all items and services.
    (7) By July 1, 2025, and annually thereafter, publicly post the 
results of the health equity analysis of the utilization management 
policies and procedures on the plan's website meeting the following 
requirements:
    (i) In a prominent manner and clearly identified in the footer of 
the website.
    (ii) Easily accessible to the general public, without barriers, 
including but not limited to ensuring the information is accessible:
    (A) Free of charge.
    (B) Without having to establish a user account or password.
    (C) Without having to submit personal identifying information.
    (iii) In a machine-readable format with the data contained within 
that file being digitally searchable and downloadable.
    (iv) Include a .txt file in the root directory of the website 
domain that includes a direct link to the machine-readable file to 
establish and maintain automated access.
0
15. Section 422.164 is amended by:
0
a. Revising paragraphs (g)(1)(iii) introductory text and 
(g)(1)(iii)(A);
0
b. Removing and reserving paragraphs (g)(1)(iii)(B) and (F);
0
c. Revising paragraph (g)(1)(iii)(H);
0
d. Removing and reserving paragraphs (g)(1)(iii)(I) and (J);
0
e. Revising paragraphs (g)(1)(iii)(K)(2) and (g)(1)(iii)(O); and
0
f. Adding paragraph (h)(3).
    The revisions and addition read as follows:


Sec.  422.164  Adding, updating, and removing measures.

* * * * *
    (g) * * *
    (1) * * *
    (iii) For the appeals measures, CMS uses statistical criteria to 
estimate the percentage of missing data for each contract using data 
from MA organizations, the independent review entity (IRE), or CMS 
administrative sources to determine whether the data at the IRE are 
complete. CMS uses scaled reductions for the Star Ratings for the 
applicable appeals measures to account for the degree to which the IRE 
data are missing.
    (A)(1) The data reported by the MA organization on appeals, 
including the number of reconsiderations requested, denied, upheld, 
dismissed, or otherwise disposed of by the MA organization, and data 
from the IRE or CMS administrative sources, that align with the Star 
Ratings year measurement period are used to determine the scaled 
reduction.
    (2) If there is a contract consolidation as described at Sec.  
422.162(b)(3), the data described in paragraph (g)(1)(iii)(A)(1) of 
this section are combined for the consumed and surviving contracts 
before the methodology provided in paragraphs (g)(1)(iii)(B) through 
(H) and (K) through (O) of this section is applied.
* * * * *
    (H) The Part C calculated error is determined using 1 minus the 
quotient of the total number of cases received by the IRE and the total 
number of cases that should have been forwarded to the IRE. The total 
number of cases that should have been forwarded to the IRE is 
determined by the sum of the partially favorable (adverse) 
reconsiderations and unfavorable (adverse) reconsiderations for the 
applicable measurement year.
* * * * *
    (K) * * *
    (2) The number of cases not forwarded to the IRE is at least 10 for 
the measurement year.
* * * * *
    (O) CMS reduces the measure rating to 1 star for the applicable 
appeals measure(s) if CMS does not have accurate, complete, and 
unbiased data to validate the completeness of the Part C appeals 
measures.
* * * * *
    (h) * * *
    (3) Beginning with the 2025 measurement year (2027 Star Ratings), 
an MA organization may request that CMS review its contract's 
administrative data for Patient Safety measures provided that the 
request is received by the annual deadline set by CMS for the 
applicable Star Ratings year.
* * * * *
0
16. Section 422.166 is amended by revising paragraph (f)(2)(i)(B) and 
adding paragraphs (f)(3)(viii)(A) and (B) to read as follows:


Sec.  422.166  Calculation of Star Ratings.

* * * * *
    (f) * * *
    (2) * * *
    (i) * * *
    (B) To determine a contract's final adjustment category, contract 
enrollment is determined using enrollment data for the month of 
December for the measurement period of the Star Ratings year.
    (1) For the first 2 years following a consolidation, for the 
surviving contract of a contract consolidation involving two or more 
contracts for health or drug services of the same plan type under the 
same parent organization, the enrollment data for the month of December 
for the measurement period of the Star Ratings year are combined across 
the surviving and consumed contracts in the consolidation.
    (2) The count of beneficiaries for a contract is restricted to 
beneficiaries that are alive for part or all of the month of December 
of the applicable measurement year.
    (3) A beneficiary is categorized as LIS/DE if the beneficiary was 
designated as full or partially dually eligible or receiving a LIS at 
any time during the applicable measurement period.
    (4) Disability status is determined using the variable original 
reason for entitlement (OREC) for Medicare using the information from 
the Social Security Administration and Railroad Retirement Board record 
systems.
* * * * *
    (3) * * *
    (viii) * * *
    (A) In the case of contract consolidations involving two or more 
contracts for health or drug services of the same plan type under the 
same parent organization, CMS calculates the HEI reward for the 
surviving contract accounting for both the surviving and consumed 
contract(s). For the first year following a consolidation, the HEI 
reward for the surviving contract is calculated as the enrollment-
weighted mean of the HEI reward of the consumed and surviving contracts 
using

[[Page 78620]]

enrollment from July of the most recent measurement year used in 
calculating the HEI reward. A reward value of zero is used in 
calculating the enrollment-weighted mean for contracts that do not meet 
the minimum percentage of enrollees with the SRF thresholds or the 
minimum performance threshold specified at paragraph (f)(3)(vii) of 
this section.
    (B) For the second year following a consolidation when calculating 
the HEI score for the surviving contract, the patient-level data used 
in calculating the HEI score will be combined from the consumed and 
surviving contracts and used in calculating the HEI score.
* * * * *
0
17. Section 422.260 is amended by revising paragraph (c)(2)(vii) to 
read as follows:


Sec.  422.260  Appeals of quality bonus payment determinations.

* * * * *
    (c) * * *
    (2) * * *
    (vii) After the hearing officer's decision is issued to the MA 
organization and the CMS Administrator, the hearing officer's decision 
is subject to review and modification by the CMS Administrator within 
10 business days of issuance. If the Administrator does not review and 
issue a decision within 10 business days, the hearing officer's 
decision is final and binding.
* * * * *
0
18. Section 422.310 is amended by:
0
a. Revising paragraphs (f)(1)(vi) and (vii);
0
b. Adding reserved paragraph (f)(3)(iv); and
0
c. Adding paragraph (f)(3)(v).
    The revisions and addition read as follows:


Sec.  422.310  Risk adjustment data.

* * * * *
    (f) * * *
    (1) * * *
    (vi) To conduct evaluations and other analysis to support the 
Medicare and Medicaid programs (including demonstrations) and to 
support public health initiatives and other health care-related 
research;
    (vii) For activities to support the administration of the Medicare 
and Medicaid programs;
* * * * *
    (3) * * *
    (iv) [Reserved]
    (v) CMS determines that releasing data to State Medicaid agencies 
before reconciliation for the purpose of coordinating care for dually 
eligible individuals is necessary and appropriate to support activities 
or authorized uses under paragraph (f)(1)(vii) of this section.
* * * * *
0
19. Section 422.311 is amended by:
0
a. Revising paragraphs (a) and (c)(5)(ii)(B);
0
b. Removing paragraph (c)(5)(ii)(C);
0
c. Revising paragraph (c)(5)(iii);
0
d. Adding paragraph (c)(5)(iv);
0
e. Revising paragraphs (c)(6)(i)(A) and (c)(6)(iv)(B);
0
f. Adding paragraph (c)(6)(v);
0
g. Revising paragraph (c)(7)(ix);
0
h. Revising paragraphs (c)(8)(iii), (c)(8)(iv) introductory text, 
(c)(8)(iv)(A), and (c)(8)(vi); and
0
i. Adding paragraphs (c)(8)(vii) and (c)(9).
    The revisions and additions read as follows:


Sec.  422.311  RADV audit dispute and appeal processes.

    (a) Risk adjustment data validation (RADV) audits. In accordance 
with Sec. Sec.  422.2 and 422.310(e), the Secretary conducts RADV 
audits to ensure risk-adjusted payment integrity and accuracy.
    (1) Recovery of improper payments from MA organizations is 
conducted in accordance with the Secretary's payment error 
extrapolation and recovery methodologies.
    (2) CMS may apply extrapolation to audits for payment year 2018 and 
subsequent payment years.
* * * * *
    (c) * * *
    (5) * * *
    (ii) * * *
    (B) Whether the MA organization requests a payment error 
calculation appeal, the issues with which the MA organization 
disagrees, and the reasons for the disagreements. MA organizations will 
forgo their medical record review determination appeal if they choose 
to file only a payment error calculation appeal because medical record 
review determinations need to be final prior to adjudicating a payment 
error calculation appeal.
    (iii) For MA organizations that intend to appeal both the medical 
record review determination and the RADV payment error calculation, an 
MA organization's request for appeal of its RADV payment error 
calculation may not be filed and will not be adjudicated until:
    (A) The administrative appeal process for the RADV medical record 
review determinations filed by the MA organization has been exhausted; 
or
    (B) The MA organization does not timely request a RADV medical 
record review determination appeal at the hearing stage and/or the CMS 
Administrator review stage, as applicable.
    (iv) An MA organization whose medical record review determination 
appeal has been completed as described in paragraph (c)(5)(iii) of this 
section has 60 days from the date of issuance of a revised RADV audit 
report, based on the final medical record review determination, to file 
a written request with CMS for a RADV payment error calculation appeal. 
This request for RADV payment error calculation appeal must clearly 
specify where the Secretary's RADV payment error calculation was 
erroneous, what the MA organization disagrees with, and the reasons for 
the disagreements.
    (6) * * *
    (i) * * *
    (A) Any and all HCC(s) that the Secretary identified as being in 
error that the MA organization wishes to appeal.
* * * * *
    (iv) * * *
    (B) The reconsideration official's decision is final unless it is 
reversed or modified by a final decision of the hearing officer as 
defined at paragraph (c)(7)(x) of this section.
* * * * *
    (v) Computations based on reconsideration official's decision. (A) 
Once the reconsideration official's medical record review determination 
decision is considered final in accordance with paragraph (c)(6)(iv)(B) 
of this section, the Secretary recalculates the MA organization's RADV 
payment error and issues a revised RADV audit report superseding all 
prior RADV audit reports to the appellant MA organization.
    (B) For MA organizations appealing the RADV payment error 
calculation only, once the reconsideration official's payment error 
calculation decision is considered final in accordance with paragraph 
(c)(6)(iv)(B) of this section, the Secretary recalculates the MA 
organization's RADV payment error and issues a revised RADV audit 
report superseding all prior RADV audit reports to the appellant MA 
organization.
* * * * *
    (7) * * *
    (ix) Computations based on Hearing Officer's decision. (A) Once the 
hearing officer's medical record review determination decision is 
considered final in accordance with paragraph (c)(7)(x) of this 
section, the Secretary recalculates the MA organization's RADV payment 
error and issues a revised RADV audit report superseding

[[Page 78621]]

all prior RADV audit reports to the appellant MA organization.
    (B) For MA organizations appealing the RADV payment error 
calculation only, once the hearing officer's payment error calculation 
decision is considered final in accordance with paragraph (c)(7)(x) of 
this section, the Secretary recalculates the MA organization's RADV 
payment error and issues a revised RADV audit report superseding all 
prior RADV audit reports to the appellant MA organization.
* * * * *
    (8) * * *
    (iii) After reviewing a request for review, the CMS Administrator 
has the discretion to elect to review the hearing officer's decision or 
to decline to review the hearing officer's decision. If the CMS 
Administrator does not decline to review or does not elect to review 
within 90 days of receipt of either the MA organization or CMS's timely 
request for review (whichever is later), the hearing officer's decision 
becomes final.
    (iv) If the CMS Administrator elects to review the hearing 
decision--
    (A) The CMS Administrator acknowledges the decision to review the 
hearing decision in writing and notifies CMS and the MA organization of 
their right to submit comments within 15 days of the date of the 
issuance of the notification that the Administrator has elected to 
review the hearing decision; and
* * * * *
    (v) The CMS Administrator renders his or her final decision in 
writing within 60 days of the date of the issuance of the notice 
acknowledging his or her decision to elect to review the hearing 
officer's decision.
    (vi) The decision of the hearing officer is final if the CMS 
Administrator--
    (A) Declines to review the hearing officer's decision; or
    (B) Does not decline to review or elect to review within 90 days of 
the date of the receipt of either the MA organization or CMS 's request 
for review (whichever is later); or
    (C) Does not make a decision within 60 days of the date of the 
issuance of the notice acknowledging his or her decision to elect to 
review the hearing officer's decision.
* * * * *
    (vii) Computations based on CMS Administrator decision. (A) Once 
the CMS Administrator's medical record review determination decision is 
considered final in accordance with paragraph (c)(8)(vi) of this 
section, the Secretary recalculates the MA organization's RADV payment 
error and issues a revised RADV audit report superseding all prior RADV 
audit reports to the appellant MA organization.
    (B) For MA organizations appealing the RADV payment error 
calculation only, once the CMS Administrator's payment error 
calculation decision is considered final in accordance with paragraph 
(c)(8)(vi) of this section, the Secretary recalculates the MA 
organization's RADV payment error and issues a revised and final RADV 
audit report superseding all prior RADV audit reports to the appellant 
MA organization.
    (9) Final agency action. In cases when an MA organization files a 
payment error calculation appeal subsequent to a medical record review 
determination appeal that has completed the administrative appeals 
process, the medical record review determination appeal final decision 
and the payment error calculation appeal final decision will not be 
considered a final agency action until the payment error calculation 
appeal has completed the administrative appeals process and a final 
revised audit report superseding all prior RADV audit reports has been 
issued to the appellant MA organization.
0
20. Section 422.502 is amended by:
0
a. Revising paragraphs (b)(1)(i)(A) through (C); and
0
b. Removing paragraphs (b)(1)(i)(E)(2)(A) and (B).
    The revisions read as follows.


Sec.  422.502  Evaluation and determination procedures.

* * * * *
    (b) * * *
    (1) * * *
    (i) * * *
    (A) Was under intermediate sanction under subpart O of this part or 
a determination by CMS to prohibit the enrollment of new enrollees in 
accordance with Sec.  422.2410(c), with the exception of a sanction 
imposed under Sec.  422.752(d).
    (B) Failed to maintain a fiscally sound operation consistent with 
the requirements of Sec.  422.504(a)(14).
    (C) Filed for or is currently in Federal or State bankruptcy 
proceedings.
* * * * *
0
21. Section 422.503 is amended by adding paragraph (b)(8) to read as 
follows:


Sec.  422.503  General provisions.

* * * * *
    (b) * * *
    (8) Not newly offer a dual eligible special needs plan that would 
result in noncompliance with Sec.  422.514(h).
* * * * *
0
22. Section 422.504 is amended by revising paragraph (a)(15) and adding 
paragraphs (a)(20) and (21) to read as follows.


Sec.  422.504  Contract provisions.

* * * * *
    (a) * * *
    (15) As described in Sec.  422.125, address and resolve complaints 
received by CMS against the MA organization in the Complaints Tracking 
Module.
* * * * *
    (20) To comply with the requirements established in Sec.  
422.514(h).
    (21) Not to establish additional MA plans that are not facility-
based ISNPs to contracts described in Sec.  422.116(f)(3).
* * * * *
0
23. Section 422.510 is amended by adding paragraph (e) to read as 
follows:


Sec.  422.510  Termination of contract by CMS.

* * * * *
    (e) Intermediate sanctions imposed with CMS termination. If CMS 
makes a determination to terminate a MA organization's contract under 
paragraph (a) of this section, CMS also imposes the intermediate 
sanctions at Sec.  422.750(a)(1) and (3) in accordance with the 
following procedures:
    (1) The sanction goes into effect 15 days after the termination 
notice is sent.
    (2) The MA organization has a right to appeal the intermediate 
sanction in the same proceeding as the termination appeal specified in 
paragraph (d) of this section.
    (3) A request for a hearing does not delay the date specified by 
CMS when the sanction becomes effective.
    (4) The sanction remains in effect--
    (i) Until the effective date of the termination; or
    (ii) If the termination decision is overturned on appeal, when a 
final decision is made by the hearing officer or Administrator.
0
24. Section 422.514 is amended by:
0
a. Revising paragraphs (d)(1) introductory text, (d)(1)(ii), (d)(2) 
introductory text, and (d)(2)(ii);
0
b. In paragraph (e)(1)(i), removing the phrase ``Specialized MA Plan 
for Special Needs Individuals'' and adding in its place the phrase 
``specialized MA plan for special needs individuals'';
0
c. In paragraph (e)(1)(iii), removing the phrase ``chapter; and'' and 
adding in its place ``chapter;'';
0
d. In paragraph (e)(1)(iv), removing the phrase ``of this section.'' 
and adding in its place ``of this section; and''; and
0
e. Adding paragraphs (e)(1)(v) and (h).
    The revisions and additions read as follows:


Sec.  422.514  Enrollment requirements.

* * * * *

[[Page 78622]]

    (d) * * *
    (1) Enter into or renew a contract under this subpart for a MA plan 
that--
* * * * *
    (ii) Projects enrollment in its bid submitted under Sec.  422.254 
in which enrollees entitled to medical assistance under a State plan 
under title XIX constitute a percentage of the plan's total enrollment 
that meets or exceeds one of the following:
    (A) For plan year 2024, 80 percent.
    (B) For plan year 2025, 70 percent.
    (C) For plan year 2026 and subsequent years, 60 percent.
    (2) Renew a contract under this subpart for an MA plan that--
* * * * *
    (ii) Unless the MA plan has been active for less than 1 year and 
has enrollment of 200 or fewer individuals at the time of such 
determination, has actual enrollment, as determined by CMS using the 
January enrollment of the current year in which enrollees who are 
entitled to medical assistance under a State plan under title XIX, 
constitute a percentage of the plan's total enrollment that meets or 
exceeds one of the following:
    (A) For renewals for plan year 2024, 80 percent.
    (B) For renewals for plan year 2025, 70 percent.
    (C) For renewals for plan year 2026 and subsequent years, 60 
percent.
    (e) * * *
    (1) * * *
    (v) For transitions for plan year 2027 and subsequent years, is a 
dual eligible special needs plan as defined in Sec.  422.2.
* * * * *
    (h) Rule on dual eligible special needs plans in relation to 
Medicaid managed care. (1) Beginning in 2027, where an MA organization 
offers a dual eligible special needs plan and the MA organization, its 
parent organization, or any entity that shares a parent organization 
with the MA organization also contracts with a State as a Medicaid 
managed care organization (MCO) (as defined in Sec.  438.2 of this 
chapter) that enrolls dually eligible individuals as defined in Sec.  
423.772 of this chapter, during the effective dates and in the same 
service area (even if there is only partial overlap of the service 
areas) of that Medicaid MCO contract, the MA organization--
    (i) May only offer, or have a parent organization or share a parent 
organization with another MA organization that offers, one D-SNP for 
full-benefit dually eligible individuals, except as permitted in 
paragraph (h)(3) of this section; and
    (ii) Must limit new enrollment in the D-SNP to individuals enrolled 
in, or in the process of enrolling in, the Medicaid MCO.
    (2) Beginning in 2030, such D-SNPs may only enroll (or continue to 
enroll) individuals enrolled in (or in the process of enrolling in) the 
Medicaid MCO, except that such D-SNPs may continue to implement deemed 
continued eligibility requirements as described in Sec.  422.52(d).
    (3)(i) If a State Medicaid agency's contract with the MA 
organization limits enrollment for certain groups into D-SNPs (such as 
by age group or other criteria), the MA organization, its parent 
organization or an entity that shares a parent organization with the MA 
organization may offer one or more additional D-SNPs for full-benefit 
dually eligible individuals in the same service area in accordance with 
the group (or groups) eligible for D-SNPs based on provisions of the 
contract with the State Medicaid agency under Sec.  422.107 of this 
chapter.
    (ii) If the MA organization, its parent organization or an entity 
that shares a parent organization with the MA organization offers more 
than one D-SNP of any type (HMOs and/or PPOs), and one or more of the 
plans is subject to paragraph (h)(1) of this section, the plan (or 
plans) not subject to paragraph (h)(1) of this section may continue if 
they no longer accept new enrollment of full-benefit dually eligible 
individuals in the same service area as the plan (or plans) subject to 
paragraph (h)(1) of this section.
0
25. Section 422.516 is amended by revising paragraphs (a) introductory 
text and (a)(2) to read as follows:


Sec.  422.516  Validation of Part C reporting requirements.

    (a) Required information. Each MA organization must have an 
effective procedure to develop, compile, evaluate, and report to CMS, 
to its enrollees, and to the general public, at the times and in the 
manner that CMS requires, and while safeguarding the confidentiality of 
the doctor-patient relationship, information with respect to the 
following:
* * * * *
    (2) The procedures related to and utilization of its services and 
items.
* * * * *
0
26. Section 422.530 is amended by adding paragraph (c)(4)(iii) to read 
as follows:


Sec.  422.530  Plan crosswalks.

* * * * *
    (c) * * *
    (4) * * *
    (iii) For contract year 2027 and subsequent years, where one or 
more MA organizations that share a parent organization seek to 
consolidate D-SNPs in the same service area down to a single D-SNP 
under one MA-PD contract to comply with requirements at Sec. Sec.  
422.514(h) and 422.504(a)(20), CMS permits enrollees to be moved 
between different contracts.
* * * * *
0
27. Section 422.582 is amended by revising paragraph (b) to read as 
follows:


Sec.  422.582  Request for a standard reconsideration.

* * * * *
    (b) Timeframe for filing a request. Except as provided in paragraph 
(c) of this section, a request for reconsideration must be filed within 
60 calendar days after receipt of the written organization 
determination notice.
    (1) The date of receipt of the organization determination is 
presumed to be 5 calendar days after the date of the written 
organization determination, unless there is evidence to the contrary.
    (2) For purposes of meeting the 60-calendar day filing deadline, 
the request is considered as filed on the date it is received by the 
plan or delegated entity specified in the MA organization's written 
organization determination.
* * * * *
0
27. Section 422.584 is amended by revising the paragraph (b) heading 
and adding paragraphs (b) introductory text and (b)(3) and (4) to read 
as follows:


Sec.  422.584  Expediting certain reconsiderations.

* * * * *
    (b) Procedure and timeframe for filing a request. A request for 
reconsideration must be filed within 60 calendar days after receipt of 
the written organization determination notice.
* * * * *
    (3) The date of receipt of the organization determination is 
presumed to be 5 calendar days after the date of the written 
organization determination, unless there is evidence to the contrary.
    (4) For purposes of meeting the 60-calendar day filing deadline, 
the request is considered as filed on the date it is received by the 
plan or delegated entity specified in the MA organization's written 
organization determination.
* * * * *
0
28. Section 422.626 is amended by:
0
a. Revising paragraph (a)(2); and
0
b. Removing paragraph (a)(3).
    The revision reads as follows:


Sec.  422.626  Fast-track appeals of service terminations to 
independent review entities (IREs).

    (a) * * *
    (2) If an enrollee makes an untimely request to an IRE, the IRE 
accepts the

[[Page 78623]]

request and makes a determination as soon as possible, but the 
timeframe under paragraph (d)(5) of this section and the financial 
liability protection under paragraph (b) of this section do not apply.
* * * * *
0
29. Section 422.633 is amended by revising paragraph (d)(1) to read as 
follows:


Sec.  422.633  Integrated reconsiderations.

* * * * *
    (d) * * *
    (1) Timeframe for filing. An enrollee has 60 calendar days after 
receipt of the adverse organization determination notice to file a 
request for an integrated reconsideration with the applicable 
integrated plan.
    (i) The date of receipt of the adverse organization determination 
is presumed to be 5 calendar days after the date of the integrated 
organization determination notice, unless there is evidence to the 
contrary.
    (ii) For purposes of meeting the 60-calendar day filing deadline, 
the request is considered as filed on the date it is received by the 
applicable integrated plan.
* * * * *
0
30. Section 422.2267 is amended by:
0
a. Revising paragraph (e)(31) and paragraph (e)(34) introductory text;
0
b. Redesignating paragraph (e)(34)(iii) as paragraph (e)(34)(v);
0
c. Redesignating paragraph (e)(34)(ii) as paragraph (e)(34)(iii);
0
d. Adding a new paragraph (e)(34)(ii);
0
e. Revising newly redesignated paragraph (e)(34)(iii);
0
f. Adding paragraph (e)(34)(iv);
0
g. Revising newly redesignated paragraph (e)(34)(v); and
0
h. Adding paragraph (e)(42).
    The revisions and additions read as follows:


Sec.  422.2267  Required materials and content.

* * * * *
    (e) * * *
    (31) Notice of availability of language assistance services and 
auxiliary aids and services (notice of availability). This is a model 
communications material through which MA organizations must provide a 
notice of availability of language assistance services and auxiliary 
aids and services that, at a minimum, states that the MA organization 
provides language assistance services and appropriate auxiliary aids 
and services free of charge.
    (i) This notice of availability of language assistance services and 
auxiliary aids and services must be provided in English and at least 
the 15 languages most commonly spoken by individuals with limited 
English proficiency of the relevant State and must be provided in 
alternate formats for individuals with disabilities who require 
auxiliary aids and services to ensure effective communication.
    (ii) If there are additional languages in a particular service area 
that meet the 5-percent service area threshold, described in paragraph 
(a)(2) of this section, beyond the languages described in paragraph 
(e)(31)(i) of this section, the notice of availability of language 
assistance services and auxiliary aids and services must also be 
translated into those languages. MA organizations may also opt to 
translate the notice in any additional languages that do not meet the 
5-percent service area threshold, where the MA organization determines 
that this inclusion would be appropriate.
    (iii) The notice must be provided with all required materials under 
this paragraph (e).
    (iv) The notice may be included as a part of the required material 
or as a standalone material in conjunction with the required material.
    (v) When used as a standalone material, the notice may include 
organization name and logo.
    (vi) When mailing multiple required materials together, only one 
notice is required.
    (vii) The notice may be provided electronically when a required 
material is provided electronically as permitted under paragraph (d)(2) 
of this section.
* * * * *
    (34) SSBCI disclaimer. This is model content and must be used by MA 
organizations that offer CMS-approved SSBCI as specified in Sec.  
422.102(f). In the SSBCI disclaimer, MA organizations must include the 
information required in paragraphs (e)(34)(i) through (iii) of this 
section. MA organizations must--
* * * * *
    (ii) List the chronic condition(s) the enrollee must have to be 
eligible for the SSBCI offered by the MA organization.
    (A) If the number of condition(s) is five or fewer, then list all 
condition(s).
    (B) If the number of conditions is more than five, then list the 
top five conditions, as determined by the MA organization.
    (iii) Convey that even if the enrollee has a listed chronic 
condition, the enrollee will not necessarily receive the benefit 
because coverage of the item or service depends on the enrollee being a 
``chronically ill enrollee'' as defined in Sec.  422.102(f)(1)(i)(A) 
and on the MA organization's coverage criteria for a specific SSBCI 
item or service required by Sec.  422.102(f)(4).
    (iv) Meet the following requirements for the SSBCI disclaimer in 
ads:
    (A) For television, online, social media, radio, or other voice-
based ads, either read the disclaimer at the same pace as or display 
the disclaimer in the same font size as the advertised phone number or 
other contact information.
    (B) For outdoor advertising (as defined in Sec.  422.2260), display 
the disclaimer in the same font size as the advertised phone number or 
other contact information.
    (v) Include the SSBCI disclaimer in all marketing and 
communications materials that mention SSBCI.
* * * * *
    (42) Mid-year supplemental benefits notice. This is a model 
communications material through which plans must inform each enrollee 
of the availability of any supplemental benefit the enrollee has not 
begun to use by June 30 of the plan year.
    (i) The notice must be sent on an annual basis, no earlier than 
June 30 of the plan year, and no later than July 31 of the plan year.
    (ii) The notice must include the following content:
    (A) Mandatory supplemental benefits. For each mandatory 
supplemental benefit an enrollee has not used, the MA organization must 
include the same information about the benefit that is provided in the 
Evidence of Coverage.
    (B) Optional supplemental benefits. For each optional supplemental 
benefit an enrollee has not used, the MA organization must include the 
same information about the benefit that is provided in the Evidence of 
Coverage.
    (C) SSBCI. For plans that include SSBCI--
    (1) The MA organization must include an explanation of SSBCI 
available under the plan (including eligibility criteria and 
limitations and scope of the covered items and services) and must 
include point-of-contact information for eligibility assessments, 
including providing point-of-contact information (which can be the 
customer service line or a separate dedicated line), with trained staff 
that enrollees can contact to inquire about or begin the SSBCI 
eligibility determination process and to address any other questions 
the enrollee may have about the availability of SSBCI under their plan;
    (2) When an enrollee has been determined eligible for SSBCI but has 
not used SSBCI, the MA organization must include a description of the 
unused SSBCI for which the enrollee is eligible, and must include a 
description of any limitations on the benefit; and

[[Page 78624]]

    (3) The disclaimer specified at paragraph (e)(34) of this section.
    (D) Additional notice information. The information about all 
supplemental benefits listed in the notice must include all of the 
following:
    (1) Scope of benefit.
    (2) Applicable cost-sharing.
    (3) Instructions on how to access the benefit.
    (4) Any applicable network information.
    (5) Supplemental benefits listed consistent with the format of the 
EOC.
    (6) A customer service number, and required TTY number, to call for 
additional help.
0
31. Section 422.2274 is amended by:
0
a. In paragraph (a)--
0
i. Revising paragraph (i) of the definition of ``Compensation''; and
0
ii. Revising the definition of ``Fair market value (FMV)''; and
0
b. Revising paragraphs (c)(5), (d)(1)(ii), (d)(2) introductory text, 
(d)(3) introductory text, and (e)(1) and (2).
    The revisions read as follows:


Sec.  422.2274  Agent, broker, and other third-party requirements.

* * * * *
    (a) * * *
    Compensation. (i) Includes monetary or non-monetary remuneration of 
any kind relating to the sale, renewal, or services related to 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.
    (E) Payment of fees to comply with State appointment laws, 
training, certification, and testing costs.
    (F) Reimbursement for mileage to, and from, appointments with 
beneficiaries.
    (G) Reimbursement for actual costs associated with beneficiary 
sales appointments such as venue rent, snacks, and materials.
    (H) Any other payments made to an agent or broker that are tied to 
enrollment, related to an enrollment in an MA plan or product, or for 
services conducted as a part of the relationship associated with the 
enrollment into an MA plan or product.
* * * * *
    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.
    (i) 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.
    (ii) Beginning in 2025, the FMV will be increased to account for 
administrative payments included under the compensation rate, beginning 
at $31 and updated annually in compliance with this section.
    (iii) For subsequent years, FMV is calculated by adding the current 
year FMV and the produce 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 in accordance with Sec.  
422.312.
* * * * *
    (c) * * *
    (5) Ensure that no provision of a contract with an agent, broker, 
or other TPMO has a direct or indirect effect of creating an incentive 
that would reasonably be expected to inhibit an agent or broker's 
ability to objectively assess and recommend which plan best fits the 
health care needs of a beneficiary.
* * * * *
    (d) * * *
    (1) * * *
    (ii) MA organizations are limited to the compensation amounts 
outlined in this section.
    (2) Initial enrollment year compensation. For each enrollment in an 
initial enrollment year, MA organizations may pay compensation at FMV.
* * * * *
    (3) Renewal compensation. For each enrollment in a renewal year, MA 
plans may pay compensation at a rate of 50 percent of FMV.
* * * * *
    (e) * * *
    (1) For plan years through 2024, Payments 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) Beginning in 2025, administrative payments are included in the 
calculation of enrollment-based compensation.
* * * * *

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

0
32. The authority citation for part 423 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1306, 1395w-101 through 1395w-152, 
and 1395hh.

0
33. Section 423.4 is amended by adding definitions for ``Biosimilar 
biological product'' and ``Interchangeable biological product'' in 
alphabetical order to read as follows:


Sec.  423.4  Definitions.

* * * * *
    Biosimilar biological product means a biological product licensed 
under section 351(k) of the Public Health Service Act (42 U.S.C. 
262(k)) that, in accordance with section 351(i)(2) of the Public Health 
Service Act (42 U.S.C. 262(i)(2)), is highly similar to the reference 
product, notwithstanding minor differences in clinically inactive 
components, and has no clinically meaningful differences between the 
biological product and the reference product, in terms of the safety, 
purity, and potency of the product.
* * * * *
    Interchangeable biological product means a product licensed under 
section 351(k) of the Public Health Service Act (42 U.S.C. 262(k)) that 
FDA has determined meets the standards described in section 351(k)(4) 
of the Public Health Service Act (42 U.S.C. 262(k)(4)).
* * * * *
0
34. Section 423.32 is amended by adding paragraph (h) to read as 
follows:


Sec.  423.32  Enrollment process.

* * * * *
    (h) Authorized representatives. As used in this subpart, an 
authorized representative is an individual who is the legal 
representative or otherwise legally able to act on behalf of an 
enrollee, as the law of the State in which the beneficiary resides may 
allow, in order to execute an enrollment or disenrollment request.
    (1) The authorized representative would constitute the 
``beneficiary'' or the ``enrollee'' for the purpose of making an 
election.
    (2) Authorized representatives may include court-appointed legal 
guardians, persons having durable power of attorney for health care 
decisions, or individuals authorized to make health care decisions 
under State surrogate consent laws, provided they have the authority to 
act for the beneficiary in this capacity.
0
34. Section 423.38 is amended by:
0
a. Revising paragraph (c)(4)(i);
0
b. Redesignating paragraph (c)(35) as paragraph (c)(36); and
0
c. Adding new paragraph (c)(35).
    The revision and addition read as follows:

[[Page 78625]]

Sec.  423.38  Enrollment periods.

* * * * *
    (c) * * *
    (4) * * *
    (i) Except as provided in paragraph (c)(4)(ii) of this section, the 
individual is a full-subsidy eligible individual or other subsidy-
eligible individual as defined in Sec.  423.772, who is making a one-
time-per month election into a PDP.
* * * * *
    (35) The individual is making a one-time-per month election into a 
fully integrated dual eligible special needs plan as defined in Sec.  
422.2 of this chapter, a highly integrated dual eligible special needs 
plan as defined in Sec.  422.2, or an applicable integrated plan as 
defined in Sec.  422.561 of this chapter.
* * * * *
0
35. Section 423.40 is amended by adding paragraph (f) to read as 
follows:


Sec.  423.40  Effective dates.

* * * * *
    (f) Beneficiary choice of effective date. If a beneficiary is 
eligible for more than one election period, resulting in more than one 
possible effective date, the Part D plan sponsor must allow the 
beneficiary to choose the election period that results in the 
individual's desired effective date.
    (1) To determine the beneficiary's choice of election period and 
effective date, the Part D plan sponsor must attempt to contact the 
beneficiary and must document its attempts.
    (2) If the Part D plan sponsor is unable to obtain the 
beneficiary's desired enrollment effective date, the Part D plan 
sponsor must assign an election period using the following ranking of 
election periods:
    (i) ICEP/Part D IEP.
    (ii) MA-OEP.
    (iii) SEP.
    (iv) AEP.
    (v) OEPI.
    (3) If the Part D plan sponsor is unable to obtain the 
beneficiary's desired disenrollment effective date, the Part D plan 
sponsor must assign an election period that results in the earliest 
disenrollment.
0
36. Section 423.100 is amended by:
0
a. Adding in alphabetical order a definition for ``Corresponding 
drug'';
0
b. Revising paragraph (3) of the definition of ``Exempted 
beneficiary''; and
0
c Adding in alphabetical order a definition for ``Maintenance change''.
    The additions and revision read as follows:


Sec.  423.100  Definitions.

* * * * *
    Corresponding drug means, respectively, a generic or authorized 
generic of a brand name drug, an interchangeable biological product of 
a reference product, or an unbranded biological product marketed under 
the same biologics license application (BLA) as a brand name biological 
product.
    Exempted beneficiary * * *
    (3) Is being treated for cancer-related pain; or
* * * * *
    Maintenance change means one of the following negative formulary 
changes with respect to a covered Part D drug:
    (1) Making any negative formulary changes to a drug within 90 days 
of adding a corresponding drug to the same or a lower cost-sharing tier 
and with the same or less restrictive prior authorization (PA), step 
therapy (ST), or quantity limit (QL) requirements (other than immediate 
substitutions that meet the requirements of Sec.  423.120(e)(2)(i)).
    (2) Making any negative formulary changes to a reference product 
within 90 days of adding a biosimilar biological product other than an 
interchangeable biological product of that reference product to the 
same or a lower cost-sharing tier and with the same or less restrictive 
PA, ST, or QL requirements.
    (3) Removing a non-Part D drug.
    (4) Adding or making more restrictive PA, ST, or QL requirements 
based upon a new FDA-mandated boxed warning.
    (5) Removing a drug deemed unsafe by FDA or withdrawn from sale by 
the manufacturer if the Part D sponsor chooses not to treat it as an 
immediate negative formulary change.
    (6) Removing a drug based on long term shortage and market 
availability.
    (7) Making negative formulary changes based upon new clinical 
guidelines or information or to promote safe utilization.
    (8) Adding PA to help determine Part B versus Part D coverage.
* * * * *
0
37. Section 423.120 (as proposed to be amended at 87 FR 79727, December 
27, 2022) is amended by revising paragraph (e)(2)(i) to read as 
follows:


Sec.  423.120  Access to covered Part D drugs.

* * * * *
    (e) * * *
    (2) * * *
    (i) Immediate substitutions. A Part D sponsor may make negative 
formulary changes to a brand name drug, a reference product, or a brand 
name biological product within 30 days of adding a corresponding drug 
to its formulary on the same or lower cost sharing tier and with the 
same or less restrictive formulary prior authorization (PA), step 
therapy (ST), or quantity limit (QL) requirements, so long as the Part 
D sponsor previously could not have included such corresponding drug on 
its formulary when it submitted its initial formulary for CMS approval 
consistent with paragraph (b)(2) of this section because such drug was 
not yet available on the market, and the Part D sponsor has provided 
advance general notice as specified in paragraph (f)(2) of this 
section.
* * * * *
0
38. Section 423.129 is added to read as follows:


Sec.  423.129  Resolution of complaints in complaints tracking module.

    (a) Definitions. For the purposes of this section, the following 
terms have the following meanings:
    Assignment date is the date CMS assigns a complaint to a particular 
Part D sponsor in the Complaints Tracking Module.
    Complaints Tracking Module is an electronic system maintained by 
CMS to record and track complaints submitted to CMS about Medicare 
health and drug plans from beneficiaries and others.
    Immediate need complaint is a complaint involving a situation that 
prevents a beneficiary from accessing care or a service for which they 
have an immediate need. This includes when the beneficiary currently 
has enough of the drug or supply to which they are seeking access to 
last for 2 or fewer days.
    Urgent complaint is a complaint involving a situation that prevents 
a beneficiary from accessing care or a service for which they do not 
have an immediate need. This includes when the beneficiary currently 
has enough of the drug or supply to which they are seeking access to 
last for 3 to 14 days.
    (b) Timelines for complaint resolution--(1) Immediate need 
complaints. The Part D sponsor must resolve immediate need complaints 
within 2 calendar days of the assignment date.
    (2) Urgent complaints. The Part D sponsor must resolve urgent 
complaints within 7 calendar days of the assignment date.
    (3) All other complaints. The Part D sponsor must resolve all other 
complaints within 30 calendar days of the assignment date.
    (c) Timeline for contacting individual filing a complaint. 
Regardless of the type of complaint received, the Part D sponsor must 
contact the individual who filed a complaint within 3 calendar days of 
the assignment date.
0
39. Section 423.153 is amended by:
0
a. Removing the phrase ``paragraph (f)(8)(ii)'' and adding in its place

[[Page 78626]]

``paragraphs (f)(8)(ii) and (iii)'' in paragraph (f)(8)(i) introductory 
text;
0
b. Revising paragraph (f)(8)(i)(A);
0
c. Redesignating paragraph (f)(8)(ii) as paragraph (f)(8)(iii); and
0
d. Adding a new paragraph (f)(8)(ii).
    The revision and addition read as follows:


Sec.  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.

* * * * *
    (f) * * *
    (8) * * *
    (i) * * *
    (A) Within 3 days of the date the sponsor makes the relevant 
determination.
* * * * *
    (ii) In the case of a beneficiary who is determined by a Part D 
sponsor to be exempt, the sponsor must provide the alternate second 
notice within 3 days of the date the sponsor makes the relevant 
determination, even if such determination is made less than 30 days 
from the date of the initial notice described in paragraph (f)(5) of 
this section.
* * * * *
0
40. Section 423.160 is amended by:
0
a. Revising paragraphs (a)(2) and (3), (b), and (c); and
0
b. Removing the section-level authority citation.
    The revisions read as follows:


Sec.  423.160  Standards for electronic prescribing.

    (a) * * *
    (2) Except as provided in paragraph (a)(3) of this section, 
prescribers and dispensers that transmit, directly or through an 
intermediary, prescriptions and prescription-related information using 
electronic media (including entities transmitting prescriptions or 
prescription-related information where the prescriber is required by 
law to issue a prescription for a patient to a non-prescribing 
provider, such as a nursing facility, that in turn forwards the 
prescription to a dispenser), must comply with the applicable standards 
in paragraph (b) of this section when e-prescribing for covered Part D 
drugs for Part D eligible individuals.
    (3)(i) Entities transmitting prescriptions or prescription-related 
information must utilize the NCPDP SCRIPT standard, consistent with 
paragraph (b)(1) of this section, in all instances other than 
temporary/transient network transmission failures.
    (ii) Electronic transmission of prescriptions or prescription-
related information by means of computer-generated facsimile is only 
permitted in instances of temporary/transient transmission failure and 
communication problems that would preclude the use of the NCPDP SCRIPT 
Standard adopted by this section.
    (iii) Entities may use either HL7 messages or the NCPDP SCRIPT 
Standard to transmit prescriptions or prescription-related information 
internally when the sender and the recipient are part of the same legal 
entity. If an entity sends prescriptions outside the entity (for 
example, from an HMO to a non-HMO pharmacy), it must use the adopted 
NCPDP SCRIPT Standard or other applicable adopted standards. Any 
pharmacy within an entity must be able to receive electronic 
prescription transmittals for Medicare beneficiaries from outside the 
entity using the adopted NCPDP SCRIPT Standard. This exemption does not 
supersede any HIPAA requirement that may require the use of a HIPAA 
transaction standard within an organization.
* * * * *
    (b) Standards--(1) Prescriptions, electronic prior authorization, 
and medication history. The communication of a prescription or 
prescription-related information must comply with a standard in 45 CFR 
170.205(b) (incorporated by reference, see paragraph (c) of this 
section) for the following transactions, as applicable to the version 
of the standard in use:
    (i)(A) GetMessage.
    (B) Status.
    (C) Error.
    (D) RxChangeRequest and RxChangeResponse.
    (E) RxRenewalRequest and RxRenewalResponse.
    (F) Resupply.
    (G) Verify.
    (H) CancelRx and CancelRxResponse.
    (I) RxFill.
    (J) DrugAdministration.
    (K) NewRxRequest.
    (L) NewRx.
    (M) NewRxResponseDenied.
    (N) RxTransferInitiationRequest.
    (O) RxTransfer.
    (P) RxTransferConfirm.
    (Q) RxFillIndicatorChange.
    (R) Recertification.
    (S) REMSInitiationRequest and REMSInitiationResponse.
    (T) REMSRequest and REMSResponse.
    (U) RxHistoryRequest and RxHistoryResponse.
    (V) PAInitiationRequest and PAInitiationResponse.
    (W) PARequest and PAResponse.
    (X) PAAppealRequest and PAAppealResponse.
    (Y) PACancelRequest and PACancelResponse.
    (Z) PANotification.
    (ii) [Reserved]
    (2) Eligibility. Eligibility inquiries and responses between the 
Part D sponsor and prescribers and between the Part D sponsor and 
dispensers must comply with 45 CFR 162.1202.
    (3) Formulary and benefits. The National Council for Prescription 
Drug Programs Formulary and Benefits Standard, Implementation Guide, 
Version 3, Release 0 (Version 3.0), April 2012 (incorporated by 
reference, see paragraph (c) of this section) or comply with a standard 
in 45 CFR 170.205(u) (incorporated by reference, see paragraph (c) of 
this section) for transmitting formulary and benefits information 
between prescribers and Medicare Part D sponsors. Beginning January 1, 
2027, transmission of formulary and benefit information between 
prescribers and Medicare Part D sponsors must comply with a standard in 
45 CFR 170.205(u) (incorporated by reference, see paragraph (c) of this 
section).
    (4) Provider identifier. The National Provider Identifier (NPI), as 
defined at 45 CFR 162.406, to identify an individual health care 
provider to Medicare Part D sponsors, prescribers and dispensers, in 
electronically transmitted prescriptions or prescription-related 
materials for Medicare Part D covered drugs for Medicare Part D 
eligible individuals.
    (5) Real-time benefit tools. Part D sponsors must implement one or 
more electronic real-time benefit tools (RTBT) that are capable of 
integrating with at least one prescriber's e-Prescribing (eRx) system 
or electronic health record (EHR) to provide complete, accurate, 
timely, clinically appropriate, patient-specific formulary and benefit 
information to the prescriber in real time for assessing coverage under 
the Part D plan. Such information must include enrollee cost-sharing 
information, clinically appropriate formulary alternatives, when 
available, and the formulary status of each drug presented including 
any utilization management requirements applicable to each alternative 
drug. Beginning January 1, 2027, Part D sponsors' RTBT must comply with 
a standard in 45 CFR 170.205(c) (incorporated by reference, see 
paragraph (c) of this section).
    (c) Incorporation by reference. The material listed in this 
paragraph (c) is incorporated by reference into this section with the 
approval of the Director of the Federal Register under 5 U.S.C.

[[Page 78627]]

552(a) and 1 CFR part 51. All approved incorporation by reference (IBR) 
material is available for inspection at the Centers for Medicare & 
Medicaid Services (CMS) and at the National Archives and Records 
Administration (NARA). Contact CMS at: CMS 7500 Security Boulevard, 
Baltimore, Maryland 21244; phone: (410) 786-4132 or (877) 267-2323; 
email: <a href="/cdn-cgi/l/email-protection#efbf8e9d9babbf8083868c96af8c829cc187879cc1888099"><span class="__cf_email__" data-cfemail="306051424474605f5c59534970535d431e5858431e575f46">[email protected]</span></a>. For information on the availability of 
this material at NARA, visit www.archives.gov/federal-register/cfr/ibr-locations or email <a href="/cdn-cgi/l/email-protection#b5d3c79bdcdbc6c5d0d6c1dcdadbf5dbd4c7d49bd2dac3"><span class="__cf_email__" data-cfemail="6204104c0b0c11120701160b0d0c220c0310034c050d14">[email protected]</span></a>. The material may be obtained 
from National Council for Prescription Drug Programs, Incorporated, 
9240 E. Raintree Drive, Scottsdale, AZ 85260-7518; phone: (480) 477-
1000; email: <a href="/cdn-cgi/l/email-protection#0a63646c654a366b2a62786f6c37" http: ncpdp.org">ncpdp.org</a>">info@ncpdp.org</a>; website: www.ncpdp.org.
    (1) The National Council for Prescription Drug Programs Formulary 
and Benefits Standard, Implementation Guide, Version 3, Release 0 
(Version 3.0), published April 2012.
    (2) National Council for Prescription Drug Programs SCRIPT 
Standard, Implementation Guide Version 2017071, approved July 28, 2017.
    (3) National Council for Prescription Drug Programs SCRIPT 
Standard, Implementation Guide Version 2023011, published April 2023, 
(Approval Date for American National Standards Institute [ANSI]: 
January 17, 2023).
    (4) National Council for Prescription Drug Programs Real-Time 
Prescription Benefit Standard, Implementation Guide Version 13, 
published July 2023 (Approval Date for ANSI: May 19, 2022).
    (5) National Council for Prescription Drug Programs Formulary and 
Benefit Standard, Implementation Guide Version 60, published April 2023 
(Approval Date for ANSI: April 12, 2023).
0
40. Section 423.184 is amended by:
0
a. Removing and reserving paragraph (g)(1)(ii); and
0
b. Adding paragraph (h)(3).
    The addition reads as follows:


Sec.  423.184  Adding, updating, and removing measures.

* * * * *
    (h) * * *
    (3) Beginning with the 2025 measurement year (2027 Star Ratings), 
Part D sponsor may request that CMS review its contract's 
administrative data for Patient Safety measures provided that the 
request is received by the annual deadline set by CMS for the 
applicable Star Ratings year.
* * * * *
0
41. Section 423.186 is amended by revising paragraph (f)(2)(i)(B) and 
adding paragraphs (f)(3)(viii)(A) and (B) to read as follows:


Sec.  423.186  Calculation of Star Ratings.

* * * * *
    (f) * * *
    (2) * * *
    (i) * * *
    (B) To determine a contract's final adjustment category, contract 
enrollment is determined using enrollment data for the month of 
December for the measurement period of the Star Ratings year.
    (1) For the first 2 years following a consolidation, for the 
surviving contract of a contract consolidation involving two or more 
contracts for health or drug services of the same plan type under the 
same parent organization, the enrollment data for the month of December 
for the measurement period of the Star Ratings year are combined across 
the surviving and consumed contracts in the consolidation.
    (2) The count of beneficiaries for a contract is restricted to 
beneficiaries that are alive for part or all of the month of December 
of the applicable measurement year.
    (3) A beneficiary is categorized as LIS/DE if the beneficiary was 
designated as full or partially dually eligible or receiving a LIS at 
any time during the applicable measurement period.
    (4) Disability status is determined using the variable original 
reason for entitlement (OREC) for Medicare using the information from 
the Social Security Administration and Railroad Retirement Board record 
systems.
* * * * *
    (3) * * *
    (viii) * * *
    (A) In the case of contract consolidations involving two or more 
contracts for health or drug services of the same plan type under the 
same parent organization, CMS calculates the HEI reward for the 
surviving contract accounting for both the surviving and consumed 
contract(s). For the first year following a consolidation, the HEI 
reward for the surviving contract is calculated as the enrollment-
weighted mean of the HEI reward of the consumed and surviving contracts 
using enrollment from July of the most recent measurement year used in 
calculating the HEI reward. A reward value of zero is used in 
calculating the enrollment-weighted mean for contracts that do not meet 
the minimum percentage of enrollees with the SRF thresholds or the 
minimum performance threshold specified at paragraph (f)(3)(vii) of 
this section.
    (B) For the second year following a consolidation when calculating 
the HEI score for the surviving contract, the patient-level data used 
in calculating the HEI score will be combined from the consumed and 
surviving contracts and used in calculating the HEI score.
* * * * *
0
42. Section 423.503 is amended by revising paragraph (b)(1)(i)(A) and 
(C) to read as follows:


Sec.  423.503  Evaluation and determination procedures.

* * * * *
    (b) * * *
    (1) * * *
    (i) * * *
    (A) Was under an intermediate sanction under subpart O of this 
part, or a determination by CMS to prohibit the enrollment of new 
enrollees under Sec.  423.2410(c).
* * * * *
    (C) Filed for or is currently in Federal or State bankruptcy 
proceedings.
* * * * *
0
43. Section 423.505 is amended by revising paragraph (b)(22) to read as 
follows:


Sec.  423.505  Contract provisions.

* * * * *
    (b) * * *
    (22) As described in Sec.  423.129, address and resolve complaints 
received by CMS against the Part D sponsor in the Complaints Tracking 
Module.
* * * * *
0
44. Section 423.509 is amended by adding paragraph (f) to read as 
follows:


Sec.  423.509  Termination of contract by CMS.

* * * * *
    (f) Intermediate sanctions imposed with CMS termination. If CMS 
makes a determination to terminate a Part D sponsor's contract under 
paragraph (a) of this section, CMS also imposes the intermediate 
sanctions at Sec.  423.750(a)(1) and (3) in accordance with the 
following procedures:
    (1) The sanction will go into effect 15 days after the termination 
notice is sent.
    (2) The Part D sponsor will have a right to appeal the intermediate 
sanction in the same proceeding as the termination appeal specified in 
paragraph (d) of this section.
    (3) A request for a hearing does not delay the date specified by 
CMS when the sanction becomes effective.
    (4) The sanction will remain in effect--
    (i) Until the effective date of the termination; or
    (ii) If the termination decision is overturned on appeal, when a 
final decision is made by the hearing officer or Administrator.

[[Page 78628]]

0
45. Section 423.514 is amended by revising paragraph (a) introductory 
text and paragraph (a)(2) to read as follows:


Sec.  423.514  Validation of Part D reporting requirements.

    (a) Required information. Each Part D plan sponsor must have an 
effective procedure to develop, compile, evaluate, and report to CMS, 
to its enrollees, and to the general public, at the times and in the 
manner that CMS requires, information indicating the following--
* * * * *
    (2) The procedures related to and utilization of its services and 
items.
* * * * *
    46. Section 423.582 is amended by revising paragraph (b) to read as 
follows:


Sec.  423.582  Request for a standard redetermination.

* * * * *
    (b) Timeframe for filing a request. Except as provided in paragraph 
(c) of this section, a request for a redetermination must be filed 
within 60 calendar days after receipt of the written coverage 
determination notice or the at-risk determination under a drug 
management program in accordance with Sec.  423.153(f).
    (1) The date of receipt of the coverage determination or at-risk 
determination is presumed to be 5 calendar days after the date of the 
written coverage determination or at-risk determination unless there is 
evidence to the contrary.
    (2) For purposes of meeting the 60-calendar day filing deadline, 
the request is considered as filed on the date it is received by the 
Part D plan sponsor or delegated entity specified in the Part D plan 
sponsor's written coverage determination or at-risk determination.
* * * * *
    47. Section 423.584 is amended by revising the paragraph (b) 
heading and adding paragraphs (b) introductory text and (b)(3) and (4) 
to read as follows:


Sec.  423.584  Expediting certain redeterminations.

* * * * *
    (b) Procedure and timeframe for filing a request. A request for 
redetermination must be filed within 60 calendar days after receipt of 
the written coverage determination notice or at-risk determination 
notice.
* * * * *
    (3) The date of receipt of the coverage determination or at-risk 
determination is presumed to be 5 calendar days after the date of the 
written coverage determination or at-risk determination unless there is 
evidence to the contrary.
    (4) For purposes of meeting the 60-calendar day filing deadline, 
the request is considered as filed on the date it is received by the 
Part D plan sponsor or delegated entity specified the Part D plan 
sponsor's written coverage determination or at-risk determination.
* * * * *
0
48. Section 423.600 is amended by revising paragraph (a) to read as 
follows:


Sec.  423.600  Reconsideration by an independent review entity (IRE).

    (a) An enrollee who is dissatisfied with the redetermination of a 
Part D plan sponsor has a right to a reconsideration by an independent 
review entity that contracts with CMS. The prescribing physician or 
other prescriber (acting on behalf of an enrollee), upon providing 
notice to the enrollee, may request an IRE reconsideration. The 
enrollee, or the enrollee's prescribing physician or other prescriber 
(acting on behalf of the enrollee) must file a written request for 
reconsideration with the IRE within 60 calendar days after receipt of 
the written redetermination by the Part D plan sponsor.
    (1) The date of receipt of the redetermination is presumed to be 5 
calendar days after the date of the Part D plan sponsor's written 
redetermination, unless there is evidence to the contrary.
    (2) For purposes of meeting the 60-calendar day filing deadline, 
the request is considered as filed on the date it is received by the 
IRE specified in the Part D plan sponsor's written redetermination.
* * * * *
0
49. Section 423.2267 is amended by revising paragraph (e)(33) to read 
as follows:


Sec.  423.2267  Required materials and content.

* * * * *
    (e) * * *
    (33) Notice of availability of language assistance services and 
auxiliary aids and services (notice of availability). This is a model 
communications material through which Part D sponsors must provide a 
notice of availability of language assistance services and auxiliary 
aids and services that, at a minimum, states that the Part D sponsor 
provides language assistance services and appropriate auxiliary aids 
and services free of charge.
    (i) This notice of availability of language assistance services and 
auxiliary aids and services must be provided in English and at least 
the 15 languages most commonly spoken by individuals with limited 
English proficiency of the relevant state and must be provided in 
alternate formats for individuals with disabilities who require 
auxiliary aids and services to ensure effective communication.
    (ii) If there are additional languages in a particular service area 
that meet the 5-percent service area threshold, described in paragraph 
(a)(2) of this section, beyond the languages described in paragraph 
(e)(33)(i) of this section, the notice of availability of language 
assistance services and auxiliary aids and services must also be 
translated into those languages. Part D sponsors may also opt to 
translate the notice in any additional languages that do not meet the 
5-percent service area threshold, where the Part D sponsor determines 
that this inclusion would be appropriate.
    (iii) The notice must be provided with all required materials under 
this paragraph (e).
    (iv) The notice may be included as a part of the required material 
or as a standalone material in conjunction with the required material.
    (v) When used as a standalone material, the notice may include 
organization name and logo.
    (vi) When mailing multiple required materials together, only one 
notice is required.
    (vii) The notice may be provided electronically when a required 
material is provided electronically as permitted under paragraph (d)(2) 
of this section.
* * * * *
0
50. Section 423.2274 is amended by:
0
a. In paragraph (a):
0
i. Revising paragraph (i) of the definition of ``Compensation''; and
0
ii. Revising the definition of ``Fair market value (FMV)''; and
0
b. Revising paragraphs (c)(5), (d)(1)(ii), (d)(2) introductory text, 
(d)(3) introductory text, and (e)(1) and (2).
    The revisions read as follows:


Sec.  423.2274  Agent, broker, and other third-party requirements.

* * * * *
    (a) * * *
    Compensation. (i) Includes monetary or non-monetary remuneration of 
any kind relating to the sale, renewal, or services related to 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.
    (E) Payment of fees to comply with State appointment laws, 
training, certification, and testing costs.
    (F) Reimbursement for mileage to, and from, appointments with 
beneficiaries.

[[Page 78629]]

    (G) Reimbursement for actual costs associated with beneficiary 
sales appointments such as venue rent, snacks, and materials.
    (H) Any other payments made to an agent or broker that are tied to 
enrollment, related to an enrollment in a Part D plan or product, or 
for services conducted as a part of the relationship associated with 
the enrollment into a Part D plan or product.
* * * * *
    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 a Part D plan.
    (i) Beginning January 1, 2021, the national FMV is 81.
    (ii) Beginning in 2025, the FMV will be increased to account for 
administrative payments included under the compensation rate, beginning 
at $31 and updated annually in compliance with this section.
    (iii) For subsequent years, FMV is calculated by adding the current 
year FMV and the produce of the current year FMV and Annual Percentage 
Increase for Part D, which is published for each year in the rate 
announcement issued under Sec.  422.312 of this chapter.
* * * * *
    (c) * * *
    (5) Ensure that no provision of a contract with an agent, broker, 
or other TPMO has a direct or indirect effect of creating an incentive 
that would reasonably be expected to inhibit an agent or broker's 
ability to objectively assess and recommend which plan best fits the 
health care needs of a beneficiary.
* * * * *
    (d) * * *
    (1) * * *
    (ii) Part D sponsors are limited to the compensation amounts 
outlined in this section.
    (2) Initial enrollment year compensation. For each enrollment in an 
initial enrollment year, Part D sponsors may pay compensation at FMV.
* * * * *
    (3) Renewal compensation. For each enrollment in a renewal year, 
Part D sponsors may pay compensation at a rate of 50 percent of FMV.
* * * * *
    (e) * * *
    (1) For plan years through 2024, Payments 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) Beginning in 2025, administrative payments are included in the 
calculation of enrollment-based compensation.
* * * * *

PART 460--PROGRAMS OF ALL-INCLUSIVE CARE FOR THE ELDERLY (PACE)

0
51. The authority citation for part 460 continues to read as follows:

    Authority: 42 U.S.C. 1302, 1395, 1395eee(f), and 1396u-4(f).

0
52. Section 460.119 is added to read as follows:


Sec.  460.119  Resolution of complaints in the complaints tracking 
module.

    The PACE organization must comply with requirements of Sec. Sec.  
422.125 and 422.504(a)(15) of this chapter to, through the CMS 
complaints tracking module as defined in Sec.  422.125(a) of this 
chapter, address and resolve complaints received by CMS against the 
PACE organization within the required timeframes. References to the MA 
organization or MA plan in those regulations must be read as references 
to the PACE organization. Nothing in this section should be construed 
to affect the PACE organization's obligation to resolve grievances as 
described in Sec.  460.120.
0
53. Section 460.121 is amended by revising paragraph (b)(2) to read as 
follows:


Sec.  460.121  Service determination process.

* * * * *
    (b) * * *
    (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. For all 
requests identified in this section, the interdisciplinary team must--
    (i) Document the request; and
    (ii) Discuss the request during the care planning meeting, and 
either:
    (A) Approve the requested service and incorporate it into the 
participant's initial plan of care; or
    (B) Document their rationale for not approving the service in the 
initial plan of care.
* * * * *
0
54. Section 460.194 is amended by revising paragraph (b) to read as 
follows:


Sec.  460.194  Corrective action.

* * * * *
    (b) At their discretion, CMS or the State administering agency may 
monitor the effectiveness of corrective actions.
* * * * *

Title 45

PART 170--HEALTH INFORMATION TECHNOLOGY STANDARDS, IMPLEMENTATION 
SPECIFICATIONS, AND CERTIFICATION CRITERIA AND CERTIFICATION 
PROGRAMS FOR HEALTH INFORMATION TECHNOLOGY

0
55. The authority citation for part 170 continues to read as follows:

    Authority: 42 U.S.C. 300jj-11; 42 U.S.C 300jj-14; 5 U.S.C. 552.

0
56. Section 170.205 is amended by:
0
a. Revising paragraph (b);
0
b. Adding paragraph (c);
0
c. Adding a reserved paragraph (t); and
0
d. Adding paragraph (u).
    The revision and additions read as follows:


Sec.  170.205  Content exchange standards and implementation 
specifications for exchanging electronic health information.

* * * * *
    (b) Electronic prescribing--(1) Standard. National Council for 
Prescription Drug Programs (NCPDP): SCRIPT Standard Implementation 
Guide; Version 2017071 (incorporated by reference in Sec.  170.299). 
The Secretary's adoption of this standard expires on January 1, 2027.
    (2) Standard. NCPDP SCRIPT Standard, Implementation Guide, Version 
2023011 (incorporated by reference in Sec.  170.299).
    (c) Real-time prescription benefit--(1) Standard. NCPDP Real-Time 
Prescription Benefit Standard, Implementation Guide, Version 13 
(incorporated by reference in Sec.  170.299).
    (2) [Reserved]
* * * * *
    (t) [Reserved]
    (u) Formulary and benefit--(1) Standard. NCPDP Formulary and 
Benefit Standard, Implementation Guide, Version 60 (incorporated by 
reference in Sec.  170.299).
    (2) [Reserved]
0
57. Section 170.299 is amended by revising paragraph (k) to read as 
follows:


Sec.  170.299  Incorporation by reference.

* * * * *
    (k) National Council for Prescription Drug Programs (NCPDP), 
Incorporated, 9240 E. Raintree Drive, Scottsdale, AZ 85260-7518; phone 
(480) 477-1000;

[[Page 78630]]

email: <a href="/cdn-cgi/l/email-protection#076e696168473b66276f7562613a" http: ncpdp.org">ncpdp.org</a>">info@ncpdp.org</a>; website: www.ncpdp.org.
    (1) NCPDP SCRIPT Standard, Implementation Guide, Version 2017071 
(Approval Date for ANSI: July 28, 2017); IBR approved for Sec.  
170.205(b).
    (2) NCPDP SCRIPT Standard, Implementation Guide, Version 2023011, 
April 2023, (Approval Date for ANSI: January 17, 2023); IBR approved 
for Sec.  170.205(b).
    (3) NCPDP Real-Time Prescription Benefit Standard, Implementation 
Guide, Version 13, July 2023 (Approval Date for ANSI: May 19, 2022); 
IBR approved for Sec.  170.205(c).
    (4) NCPDP Formulary and Benefit Standard, Implementation Guide, 
Version 60, April 2023 (Approval Date for ANSI: April 12, 2023); IBR 
approved for Sec.  170.205(u).
* * * * *

Xavier Becerra
Secretary, Department of Health and Human Services.
[FR Doc. 2023-24118 Filed 11-6-23; 4:15 pm]
BILLING CODE 4120-01-P


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