22290 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 422 

[CMS–4190–FC4] 

RIN 0938–AT97 

Medicare Program; Maximum Out-ofPocket (MOOP) Limits and Service 

Category Cost Sharing Standards 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), Department 

of Health and Human Services (HHS). 

ACTION: Final rule with comment period. 

SUMMARY: This final rule with comment 

period (FC) will finalize the two 

remaining proposals from the proposed 

rule titled ‘‘Medicare and Medicaid 

Programs; Contract Year 2021 and 2022 

Policy and Technical Changes to the 

Medicare Advantage Program, Medicare 

Prescription Drug Benefit Program, 

Medicaid Program, Medicare Cost Plan 

Program, and Programs of All-Inclusive 

Care for the Elderly’’ which appeared in 

the Federal Register on February 18, 

2020 (February 2020 proposed rule). 

The two proposals being finalized here 

from the February 2020 proposed rule 

include the maximum out-of-pocket 

(MOOP) limits for Medicare Parts A and 

B services and cost sharing limits for 

Medicare Parts A and B services, 

including service category cost sharing 

limits and per member per month 

actuarial equivalence cost sharing. In 

addition, CMS is requesting comments 

in section III of this FC on new or 

different ways to update and change 

cost sharing limits in future years for 

service categories subject to the 

regulations, including mental health 

services. 

DATES: 

Effective date: These regulations are 

effective on June 13, 2022. 

Applicability date: The provisions in 

this rule will apply to coverage 

beginning January 1, 2023. 

Comment date: To be assured 

consideration, comments on section III. 

of this FC must be received at one of the 

addresses provided below, by July 13, 

2022. 

ADDRESSES: In commenting, please refer 

to file code CMS–4190–FC4. 

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 http://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– 

4190–FC4, P.O. Box 8013, Baltimore, 

MD 21244–8013. 

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– 

4190–FC4, 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: Cali 

Diehl, (410) 786–4053 or Cali.Diehl@

cms.hhs.gov. 

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: http://

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 individual will take actions to 

harm the 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. 

Table of Contents 

I. Executive Summary and Background 

A. Executive Summary 

B. Background 

II. Codifying Existing Part C and D Program 

Policy 

A. Maximum Out-of-Pocket (MOOP) Limits 

for Medicare Parts A and B Services 

(§§ 422.100 and 422.101) 

B. Service Category Cost Sharing Limits for 

Medicare Parts A and B Services and per 

Member per Month Actuarial 

Equivalence Cost Sharing (§§ 422.100 

and 422.113) 

III. Request for Comment Regarding the 

Methodology for CMS To Update and 

Change Service Category Cost Sharing 

Limits (§ 422.100(f)(6)(i), (iii), and 

422.100(j)(1)) 

IV. Collection of Information Requirements 

V. Regulatory Impact Analysis 

A. Statement of Need 

B. Overall Impact 

C. Impact on Small Businesses—Regulatory 

Flexibility Analysis (RFA) 

D. Executive Order 13132 (Federalism) 

E. Consultation and Coordination With 

Indian Tribal Governments 

F. National Environmental Policy Act 

(NEPA) 

G. Anticipated Effects of Maximum Out-ofPocket (MOOP) Limits for Medicare Parts 

A and B Services (§§ 422.100 and 

422.101) and Service Category Cost 

Sharing Limits for Medicare Parts A and 

B Services and per Member per Month 

Actuarial Equivalence Cost Sharing 

(§§ 422.100 and 422.113) 

H. Alternatives Considered 

I. Accounting Statement 

J. Conclusion 

I. Executive Summary and Background 

A. Executive Summary 

1. Purpose 

This final rule with comment period 

(FC) makes policy changes in alignment 

with federal laws related to the 

Medicare Advantage (MA or Part C) 

program from the 21st Century Cures 

Act (Pub. L. 114–255). The rule also 

includes regulatory changes to 

strengthen and improve the Part C 

program by codifying in regulation 

several CMS policies previously 

adopted through the annual Call Letter 

and other guidance documents to 

interpret and implement rules regarding 

benefits in MA plans. 

In this FC, we are addressing the two 

remaining proposals from the February 

2020 proposed rule that were not 

addressed in the June 2020 final rule (85 

FR 33796) and the January 2021 final 

rule (86 FR 5864): (1) Maximum Out-ofPocket (MOOP) Limits for Medicare 

Parts A and B Services (§§ 422.100 and 

422.101); and (2) Service Category Cost 

Sharing Limits for Medicare Parts A and 

B Services and per Member per Month 

Actuarial Equivalence Cost Sharing 

(§§ 422.100 and 422.113). The changes 

to the proposals we are finalizing in this 

FC range from minor edits, 

reorganizations, corrections, and 

clarifications to substantive 

modifications based on the comments 

received, operational considerations 

(such as, changes stemming from the 

timing of this FC), and additional 

implementation of antidiscrimination 

requirements (such as, to support 

equitable access to plans for 

beneficiaries with high health needs). In 


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so doing, this FC addresses the 

following needs for federal regulatory 

action: 

• The provisions relating to MOOP 

and cost sharing limits improve the 

operation of the MA program by making 

updates to reflect changes in Medicare 

FFS data projections (thereby ensuring 

the government program does not use 

outdated data) and clarifying existing 

policies (thereby answering questions 

regulated parties may have). Given the 

context of these provisions is a federal 

program, a federal regulatory approach 

is appropriate with respect to these 

provisions. 

• The provisions also codify 

subregulatory guidance, which is an 

improvement in that regulated parties 

and CMS will have greater clarity 

regarding the application of these 

policies as a rule. Given the context of 

these provisions is a federal program, a 

federal regulatory approach is 

appropriate with respect to these 

provisions. 

2. Summary of the Major Provisions 

a. Maximum Out-of-Pocket (MOOP) 

Limits for Medicare Parts A and B 

Services (§§ 422.100 and 422.101) 

Section 1852(b)(1) of the Act prohibits 

discrimination by MA organizations on 

the basis of health status-related factors 

and directs that CMS may not approve 

an MA plan if CMS determines that the 

design of the plan and its benefits are 

likely to substantially discourage 

enrollment by certain MA eligible 

individuals. In a 2010 final rule, under 

the authority of sections 1852(b)(1)(A), 

1856(b)(1), and 1857(e)(1) of the Act, 

CMS added §§ 422.100(f)(4) and (5) and 

422.101(d)(2) and (3), effective for 

coverage in 2011, to require all MA 

plans (including employer group waiver 

plans (EGWPs) and special needs plans 

(SNPs)) to establish limits on enrollee 

out-of-pocket cost sharing for Parts A 

and B services that do not exceed the 

annual limits set by CMS (75 FR 19709 

and 19711). Setting MOOP limits is an 

important step to ensure plan designs 

are not discriminatory and protect 

beneficiaries from significant changes in 

out-of-pocket costs regardless of the MA 

plan they choose. MA EGWPs must 

follow all relevant MA regulations and 

guidance unless CMS has specifically 

waived a requirement using its statutory 

authority under section 1857(i) of the 

Act. Section 1858(b)(2) of the Act 

requires a limit on in-network and outof-pocket expenses for enrollees in 

Regional Preferred Provider 

Organization (RPPO) MA plans. MA 

Local PPO (LPPO) plans, under 

§ 422.100(f)(5), and RPPO plans, under 

section 1858(b)(2) of the Act and 

§ 422.101(d)(3), are required to have two 

maximum out-of-pocket (MOOP) limits 

(also called catastrophic limits) 

calculated by CMS annually, 

including—(1) an in-network limit; and 

(2) a total catastrophic (combined) limit 

that includes both in-network and outof-network items and services covered 

under Parts A and B. Relying on the 

same statutory authority, we proposed 

amendments to the regulations at 

§ 422.100(f)(4) and (5) and 

§ 422.101(d)(2) and (3) to specify how 

these MOOP limits will be set for 2022 

and subsequent years. In addition, our 

proposals made adjustments to current 

policy based on statutory changes that 

are relevant to how CMS calculates 

benefit category cost sharing limits. 

We proposed to codify our current 

practices for setting MOOP limits with 

some revisions, including explicitly 

addressing authority to set up to three 

different MOOP limits. In addition, we 

proposed to conduct a multiyear 

transition of end-stage renal disease 

(ESRD) costs into the methodology for 

setting MOOP limits. Section 1851(a)(3) 

of the Act, as amended by section 17006 

of the 21st Century Cures Act, amended 

the Medicare statute to permit Medicare 

beneficiaries with diagnoses of ESRD to 

enroll in MA plans beyond the previous 

enrollment limitations, beginning in 

contract year 2021. Enrollment impacts 

from section 17006 of the Cures Act are 

addressed in sections III.A., VII.B.3., 

and VIII.D.1. of the June 2020 final rule 

(85 FR 33796). Before the amendments 

made by the Cures Act were effective for 

contract year 2021, individuals 

diagnosed with ESRD could not enroll 

in a MA plan, subject to limited 

exceptions. Generally, those exceptions 

included the following circumstances: 

An individual that developed ESRD 

while enrolled in a MA plan could 

remain in that plan; an ESRD individual 

enrolled in a plan which was terminated 

or discontinued had a one-time 

opportunity to join another plan; or, an 

individual could enroll in a special 

needs plan that had obtained a waiver 

to enroll individuals with ESRD. We 

explained that the data we use to 

calculate the MOOP limits should also 

incorporate the out-of-pocket 

expenditures of beneficiaries with 

diagnoses of ESRD, which we are 

referring to in this FC as ‘‘ESRD costs,’’ 

to reflect this statutory change. Finally, 

we proposed safeguards to protect 

against excessive changes in the MOOP 

limit during and after the ESRD cost 

transition. 

We are finalizing these MOOP 

proposals generally as proposed with 

changes to apply the provisions 

beginning in contract year 2023 rather 

than 2022, make modifications to be 

responsive to comments (including 

adoption of a transition schedule), and 

improve and clarify the methodology. A 

complete discussion of changes from the 

February 2020 proposed rule is 

available in section II.A. of this FC. 

b. Service Category Cost Sharing Limits 

for Medicare Parts A and B Services and 

per Member per Month Actuarial 

Equivalence Cost Sharing (§§ 422.100 

and 422.113) 

Section 1852 of the Act imposes a 

number of requirements that apply to 

the cost sharing and benefit design of 

MA plans. First, section 1852(a)(1)(B) of 

the Act specifies that MA plans may not 

charge enrollees higher cost sharing 

than is charged under original Medicare 

for chemotherapy administration 

services (which we have implemented 

as including Part B—chemotherapy/ 

radiation drugs integral to the treatment 

regimen), skilled nursing care, and renal 

dialysis services. This provision is 

currently reflected in §§ 417.454(e) (for 

cost plans) and 422.100(j) (for MA 

plans). We proposed to restructure 

paragraph (j) and codify additional cost 

sharing limits for other services. We did 

not propose to change cost plan cost 

sharing standards. In addition, after 

publication of the February 2020 

proposed rule, the Families First 

Coronavirus Response Act (Pub. L. 116– 

127) amended section 1852 of the Act to 

prohibit MA plans from charging 

enrollees higher cost sharing than is 

charged under original Medicare for 

COVID–19 testing and testing-related 

services identified in section 1833(cc)(1) 

for which payment would be payable 

under a specified outpatient payment 

provision described in section 

1833(cc)(2) during the period from 

March 18, 2020 through to the end of 

the emergency period described in 

section 1135(g)(1)(B) (namely, the 

COVID–19 public health emergency). 

The Coronavirus Aid, Relief, and 

Economic Security Act (Pub. L. 116– 

136) amended section 1852(a)(1)(B) to 

require MA plans have cost sharing that 

does not exceed cost sharing in Original 

Medicare for a COVID–19 vaccine and 

its administration described in section 

1861(s)(10)(A) of the Act. 

Second, section 1852(a)(1)(B)(i) of the 

Act provides that the MA organization 

must cover, subject to limited 

exclusions, the benefits under Parts A 

and B (that is, basic benefits as defined 

in § 422.100(c)) with cost sharing that 

does not exceed or is at least actuarially 

equivalent to cost sharing in original 

Medicare in the aggregate; this is 

repeated in a bid requirement under 


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section 1854(e)(4) of the Act. We have 

addressed and implemented this 

requirement in several regulations, 

including §§ 422.101(e), 422.102(a)(4), 

and 422.254(b)(4). 

Third, section 1852(a)(1)(B)(iv) of the 

Act authorizes CMS to add to the list of 

items and services for which MA cost 

sharing may not exceed the cost sharing 

levels in original Medicare. 

Fourth, section 1852(b)(1) of the Act 

prohibits discrimination by MA 

organizations on the basis of health 

status-related factors and directs that 

CMS may not approve an MA plan if 

CMS determines that the design of the 

plan and its benefits are likely to 

substantially discourage enrollment by 

certain MA eligible individuals. The 

requirements under § 422.100(f)(4) and 

(5) that impose MOOP limits on MA 

plans are based on this antidiscrimination provision by requiring 

MA local plans to have limits on out of 

pocket spending by enrollees in order to 

ensure that beneficiaries with high 

health needs are not dissuaded from 

enrolling in an MA plan; while the 

requirements under § 422.101(d)(2) and 

(3) implement the statutory catastrophic 

limits imposed on regional MA plans 

under section 1858(b) of the Act, those 

limits similarly protect enrollees with 

high health needs and avoid 

discouraging them from enrollment in 

MA plans. Paragraph (f)(6) provides that 

cost sharing must not be discriminatory 

by imposing cost sharing limits. 

Imposing limits on cost sharing for 

covered services is an important way to 

ensure that the cost sharing aspect of an 

MA plan design does not discriminate 

against or discourage enrollment of 

beneficiaries who have high health care 

needs and who need specific services. 

CMS issued annual limits on cost 

sharing for covered services and 

guidance addressing discriminatory cost 

sharing, as applied to specific benefits 

and to categories of benefits, in the 

annual Call Letter (prior to 2020) and in 

bidding instructions. In addition, 

Chapter 4 of the Medicare Managed Care 

Manual (MMCM) has contained longstanding polices regarding 

discriminatory cost sharing based on the 

requirements under paragraphs (f)(4) 

and (5). 

We proposed to codify our current 

and longstanding practice and 

methodology for interpreting and 

applying the limits on MA cost sharing, 

with some modifications. Our cost 

sharing proposal as a whole, in 

combination with the MOOP limit 

proposal in section VI.A. of the 

February 2020 proposed rule, aimed to 

provide MA organizations incentives to 

offer plans with favorable benefit 

designs for beneficiaries. As noted in 

the February 2020 proposed rule, 

organizations must also comply with 

applicable Federal civil rights laws that 

prohibit discrimination, including those 

that prohibit discrimination on the basis 

of race, color, national origin, sex 

(including sexual orientation and 

gender identity), age, and disability, 

such as section 1557 of the Affordable 

Care Act, Title VI of the Civil Rights Act 

of 1964, section 504 of the 

Rehabilitation Act of 1973, and the Age 

Discrimination Act of 1975. None of the 

proposals in the February 2020 

proposed rule limited application of 

such anti-discrimination requirements. 

Overall, our proposal aimed to clarify 

how we use the most relevant and 

appropriate information to determine 

whether specific cost sharing is 

discriminatory and to calculate 

standards and thresholds above which 

we believe cost sharing is 

discriminatory. We shared our intent to 

communicate, similar to our current 

practice prior to bid submission, how 

we apply the proposed methodologies 

each year, such as through HPMS 

memoranda, as appropriate. We 

solicited comment on the following cost 

sharing proposals: 

• Codifying a long-standing 

interpretation of the current antidiscrimination provision of section 

1852(b)(1) that payment of less than 50 

percent of the total MA plan financial 

liability discriminates against enrollees 

who need those services; 

• Establishing a range of cost sharing 

limits for basic benefits furnished on an 

in-network basis based on the MOOP 

type established by the MA plan; 

• Codifying the methodology used to 

calculate the limits for MA cost sharing 

for inpatient hospital acute and 

psychiatric services and incorporate 

ESRD costs into that methodology; 

• Updating the cost sharing limits for 

emergency and post-stabilization 

services and codifying a new rule for 

cost sharing limits for urgently needed 

services; 

• Codifying and adding specific 

benefits for which MA plans may not 

charge enrollees higher cost sharing 

than is charged under original Medicare; 

and 

• Codifying our existing policy 

regarding the specific benefit categories 

for which an MA plan must not exceed 

the cost sharing in original Medicare on 

a PMPM actuarially equivalent basis. 

The changes to the cost sharing 

proposals we are finalizing in this FC 

range from minor edits, corrections, and 

clarifications to substantive 

modifications based on the comments 

received, operational considerations 

(such as, changes stemming from the 

timing of this FC), and improvements to 

the methodology. CMS’s goal in 

finalizing the cost sharing proposals as 

described in this FC is to adopt 

standards and require compliance that 

further antidiscriminatory requirements 

(such as, by supporting equitable access 

to plans for beneficiaries with high 

health needs). A complete discussion of 

changes from the February 2020 

proposed rule is available in section 

II.B. of this FC. 

3. Summary of Costs and Benefits 

BILLING CODE 4120–01–P 


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Provision Description Primary Impact to MA 

Organizations, Enrollees, and 

Medicare Trust Fund (as 

applicable) 

a. Maximum Out-of- CMS is fmalizing policies (with some modifications and While individual or groups of 

Pocket (MOOP) Limits changes in implementation schedule) to: beneficiaries using specific 

for Medicare Parts A • Codify the approximate Medicare FFS percentiles which are categories of services and items 

and B Services(§§ used to determine the mandatory and lower MOOP limits and may have possibly significant 

422.100 and 422.101) calculate an intermediate MOOP limit representing the numeric savings or losses, there is no 

midpoint between mandatory and lower limits. aggregate cost impact to either the 

• Incorporate costs related to beneficiaries with diagnoses of government or MA organizations 

End-Stage Renal Disease (ESRD) into the methodology to for two reasons: (1) there is a 

calculate MOOP limits, because of the eligibility changes statutory requirement for submitted 

permitting broader enrollment in MA plans by beneficiaries bids to be actuarially equivalent to 

with ESRD beginning in contract year 2021. original Medicare, implying that 

• Establish guardrails to mitigate disruptive changes in MOOP plans can shift costs, but not create 

additional costs (that is, even if 

limits, including a cap on how much MOOP limits can increase submitted bids proposed shifts in 

from year to year. cost sharing of particular service • Adopt a provision regarding the release of annual guidance categories there will be no dollar 

that identifies the MOOP and cost sharing limits and includes a impact in the aggregate); and (2) to 

description of how the regulation standards are applied. the extent that provisions of this • Clarify the use of generally accepted actuarial principles and FC codify existing practice, we are 

practices for the projections and calculations used for the certain of no cost impact because 

MOOP and cost sharing limits, including specific principles for of the annual review of bids which 

how discretion in applying the actuarial standards will be used. confirms compliance. 

• Codify additional standards for combined/catastrophic 

MOOP limits, updating the ESRD cost transition based on 

comments and operational considerations stemming from the 

timing of this FC, adopting a simpler methodology than 

proposed to protect against disruptive annual changes in 

MOOP limits, clarifying the methodology CMS uses to 

calculate MOOP limits, and making additional clarifications. 

• Sets the specific MOOP limits for contract year 2023 using 

the methodology and standards in§§ 422.lO0(f) and 

422.l0l(d) in addition to adopting the rules for 2024 and 

subsequent years. 
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BILLING CODE 4120–01–C 

B. Background 

We received approximately 44 timely 

pieces of correspondence containing 

multiple comments for the provisions 

implemented in this FC from the 

February 2020 proposed rule. 

Comments were submitted by health 

plans, provider associations, beneficiary 

and other advocacy organizations, and 

pharmaceutical companies. 

We are finalizing the policies from the 

February 2020 proposed rule in more 

than one final rule. The first final rule 


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Provision Description Primary Impact to MA 

Organizations, Enrollees, and 

Medicare Trust Fund (as 

applicable) 

b. Service Category CMS is fmalizing policies (with some modifications and While individual or groups of 

Cost Sharing Limits for changes in implementation schedule) to: beneficiaries using specific 

Medicare Parts A and B • Codify the long-standing CMS policy that enrollee cost categories of services and items 

Services and per sharing greater than 50 percent of the total MA plan fmancial may have possibly significant 

Member per Month liability or Medicare FFS allowed amount in the plan service savings or losses, there is no 

Actuarial Equivalence area for Parts A and B benefits is discriminatory. aggregate cost impact to either the 

Cost Sharing(§§ • Set cost sharing limits for seven inpatient length of stay government or MA organizations 

422.100 and 422.113) scenarios based on a percentage of estimated Medicare FFS for two reasons: (1) there is a 

cost sharing projected for the applicable contract year, statutory requirement for submitted 

including applying a transition schedule to incorporate costs bids to be actuarially equivalent to 

incurred by beneficiaries with diagnoses ofESRD. original Medicare, implying that 

• Revise long-standing CMS policy that limits cost sharing for plans can shift costs, but not create 

additional costs (that is, even if 

several professional services to be no greater than 50 percent of submitted bids proposed shifts in 

the plan's financial liability regardless of the type ofMOOP cost sharing of particular service 

limit by updating the standard to: 50 percent coinsurance for categories there will be no dollar 

lower MOOP limit, 40 percent for intermediate MOOP limit, impact in the aggregate); and (2) to 

and 30 percent for mandatory MOOP limit. the extent that provisions of this • Increase the maximum per visit cost sharing for emergency FC codify existing practice, we are 

care ($90 to $115 for a mandatory MOOP and $120 to $150 for certain of no cost impact because 

a lower MOOP) based on 15 and 20 percent of the Medicare of the annual review of bids which 

FFS median allowed amount for emergency services and confirms compliance. 

establish a $130 cost sharing limit for an intermediate MOOP 

limit. 

• Adopt a requirement that MA plans must use cost sharing 

that does not exceed cost sharing in original Medicare for 

home health services, durable medical equipment for plans 

with a mandatory MOOP amount, and Part B drugs other than 

chemotherapy, in addition to the current limit for 

chemotherapy administration services, skilled nursing care 

(that is, SNF), and renal dialysis services. 

• Codify CMS's long-standing policy of evaluating cost 

sharing limits on a PMPM actuarially equivalent basis for the 

following service categories: Inpatient hospital, SNF, DME, 

and Part B drugs. 

• Transition the contract year 2022 cost sharing standards for 

professional service categories, emergency services, and 

benefits for which cost sharing may not exceed original 

Medicare to the cost sharing limits established using the 

methodology adopted by this FC. 

• Clarify current policies for cost sharing, such as scope of the 

emergency services cost sharing limit. For example, CMS is 

not including post-stabilization inpatient acute care services for 

purposes of setting the cost sharing limits for emergency 

services. 

• Sets the specific cost sharing limits for contract year 2023 

using the methodology and standards in§§ 422.100(±) and G) 

and 422.113(b) in addition to adopting the rules for 2024 and 

subsequent years. 
Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22295 

titled ‘‘Medicare Program; Contract Year 

2021 Policy and Technical Changes to 

the Medicare Advantage Program, 

Medicare Prescription Drug Benefit 

Program, and Medicare Cost Plan 

Program’’ appeared in the Federal 

Register on June 2, 2020 (85 FR 33796) 

(June 2020 final rule), and contained a 

subset of regulatory changes that 

impacted MA organizations and Part D 

sponsors more immediately. The second 

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’’ appeared in the 

Federal Register on January 19, 2021 

(86 FR 5864) (January 2021 final rule), 

and contained the majority of the 

remaining provisions from the February 

2020 proposed rule. This FC addresses 

the two remaining provisions from the 

February 2020 proposed rule. 

The changes to the proposals we are 

finalizing in this FC range from minor 

edits, reorganizations, corrections, and 

clarifications to substantive 

modifications based on the comments 

received, operational considerations 

(such as, changes stemming from the 

timing of this FC), and improvements to 

the methodology. CMS’s goal in 

finalizing the cost sharing proposals as 

described in this FC is to adopt 

standards and require compliance that 

further antidiscriminatory requirements 

(such as, by supporting equitable access 

to plans for beneficiaries with high 

health needs). Summaries of the public 

comments received and our responses to 

those public comments are set forth in 

the various sections of this FC under the 

appropriate headings. We also note that 

some of the public comments received 

for the provisions implemented in this 

FC were outside of the scope of the 

February 2020 proposed rule. 

Summaries of the out-of-scope public 

comments made in relation to the 

provisions in this FC are provided in the 

various sections of this FC under the 

appropriate headings. 

The Code of Federal Regulations 

(CFR) will be updated consistent with 

the respective effective date of each 

provision. Because CMS is finalizing 

these regulations as applicable for the 

contract year and coverage beginning 

January 1, 2023, the requirements in this 

FC will apply to MA bid submissions 

occurring in calendar year 2022 for 

contracts effective January 1, 2023. 

II. Codifying Existing Part C and D 

Program Policy 

A. Maximum Out-of-Pocket (MOOP) 

Limits for Medicare Parts A and B 

Services (§§ 422.100 and 422.101) 

Section 1852(b)(1) of the Act prohibits 

discrimination by MA organizations on 

the basis of health status-related factors 

and directs that CMS may not approve 

an MA plan if CMS determines that the 

design of the plan and its benefits are 

likely to substantially discourage 

enrollment by certain MA eligible 

individuals. Under the authority of 

sections 1852(b)(1)(A), 1856(b)(1), and 

1857(e)(1) of the Act, CMS added 

§§ 422.100(f)(4) and (5) and 

422.101(d)(2) and (3), effective for 

coverage in 2011, to require all MA 

plans (including employer group waiver 

plans (EGWPs) and special needs plans 

(SNPs)) to establish limits on enrollee 

out-of-pocket cost sharing for Parts A 

and B services that do not exceed the 

annual limits established by CMS (75 

FR 19709 through 19711). MA EGWPs 

must follow all relevant MA regulations 

and guidance unless CMS has 

specifically waived a requirement under 

its section 1857(i) of the Act statutory 

authority. Section 1858(b)(2) of the Act 

requires a limit on in-network and outof-pocket expenses for enrollees in 

Regional Preferred Provider 

Organization (RPPO) MA plans. In 

addition, MA Local PPO (LPPO) plans, 

under § 422.100(f)(5), and RPPO plans, 

under section 1858(b)(2) of the Act and 

§ 422.101(d)(3), are required to have two 

maximum out-of-pocket (MOOP) limits 

(also called catastrophic limits) 

established by CMS annually, including 

(a) an in-network and (b) a total 

catastrophic (combined) limit that 

includes both in-network and out-ofnetwork items and services covered 

under Parts A and B. Relying on the 

same authority, we proposed 

amendments to the regulations at 

§§ 422.100(f)(4) and (5) and 

422.101(d)(2) and (3) to specify how 

these MOOP limits (‘‘MOOP amounts’’ 

when referring to the limit established 

by an MA plan) will be set for 2022 and 

subsequent years. In addition, our 

proposals considered statutory changes 

that are relevant to how CMS sets cost 

sharing limits. 

Under our current policy, MA 

organizations are responsible for 

tracking out-of-pocket spending 

incurred by the enrollee (that is, cost 

sharing includes deductibles, 

coinsurance, and copayments, pursuant 

to § 422.2) and to alert enrollees and 

contracted providers when the MOOP 

limit is reached. Health Maintenance 

Organization-Point of Service (POS) 

plans may offer out-of-network benefits 

as supplemental benefits, but are not 

required to have these services 

contribute to the in-network MOOP 

limit or to a combined in- and out-ofnetwork MOOP limit. Although the 

MOOP limits apply to Parts A and B 

benefits, an MA organization can apply 

the MOOP limit to supplemental 

benefits as well. 

As discussed in the February 2020 

proposed rule, CMS currently sets 

MOOP limits based on a beneficiarylevel distribution of Parts A and B cost 

sharing for individuals enrolled in 

Medicare Fee-for-Service (FFS). The 

CMS Office of the Actuary (OACT) 

conducts an annual analysis to 

determine the MOOP limits using the 

most recent Medicare FFS data and by 

projecting cost sharing using trend 

factors, such as enrollment changes and 

enrollment shifts between MA and 

original Medicare. The OACT bases its 

projections on actual claims data for 

Parts A and B benefits from the National 

Claims History files. MOOP limits for 

2020, 2021 and 2022 were set under the 

current regulation text at 

§§ 422.100(f)(4) and (5) and 

422.101(d)(2) and (3) that authorizes 

CMS to set MOOP limits that strike a 

balance between limiting costs (meaning 

cost sharing and premiums) to enrollees 

and changes in benefits, with the goal of 

ensuring beneficiary access to affordable 

and sustainable benefit packages. The 

mandatory MOOP limit represents 

approximately the 95th percentile of 

projected Medicare FFS beneficiary outof-pocket spending for the year to which 

the MOOP limit will apply. Stated 

differently, using the contract year 2020 

MOOP limits as examples, 5 percent of 

Medicare FFS beneficiaries are expected 

to incur approximately $6,700 or more 

in Parts A and B deductibles, 

copayments, and coinsurance; the 

voluntary MOOP limit of $3,400 

represents approximately the 85th 

percentile of projected Medicare FFS 

out-of-pocket costs. 

A strict application of the thresholds 

at the 95th and 85th percentile to set the 

MOOP limits, since adoption of the 

MOOP regulations for 2011, would have 

resulted in MOOP limits for MA LPPO 

and RPPO plans fluctuating from yearto-year. Therefore, CMS exercised 

discretion in order to maintain stable 

MOOP limits from year-to-year, when 

the established MOOP limits were 

approximately equal to the appropriate 

percentile. CMS took this approach in 

an effort to avoid enrollee confusion 

(which may result from annual MOOP 

fluctuations year over year), allow MA 

plans to provide stable benefit packages 

year over year, and not discourage MA 


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22296 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

1See the HPMS memorandum titled ‘‘Final 

Contract Year 2021 Part C Benefits Review and 

Evaluation,’’ issued April 8, 2020, for information 

on MOOP and cost sharing limits for contract year 

2021 and the HPMS memorandum titled ‘‘Final 

Contract Year 2022 Part C Benefits Review and 

Evaluation,’’ issued May 20, 2021, for information 

on MOOP and cost sharing limits for contract year 

2022. 

2CMS. ‘‘Benefits Policy and Operations Guidance 

Regarding Bid Submissions; Duplicative and Low 

Enrollment Plans; Cost Sharing Standards; General 

Benefits Policy Issues; and Plan Benefits Package 

(PBP) Reminders for Contract Year (CY) 2011’’ 

(2010). Retrieved from https://www.cms.gov/ 

Medicare/Health-Plans/HealthPlans/downloads/ 

dfb_policymemo041610final.pdf. 

organizations from adopting the lower 

voluntary MOOP limit because of year 

to year fluctuations in the MOOP limits 

set by CMS. 

MA plans may establish MOOP 

amounts that are lower than the CMSestablished maximum limits. As 

discussed in the February 2020 

proposed rule, for 2020, we considered 

any MOOP amount within the $0– 

$3,400 range as a voluntary MOOP limit 

and any MOOP amount within the 

$3,401–$6,700 range as a mandatory 

MOOP limit. These amounts were 

updated to $0–$3,450 for the voluntary 

MOOP and $3,451–$7,550 for coverage 

in 2021 and 2022.1 The in-network 

MOOP limit dictates the combined 

MOOP range for PPOs (that is, PPOs are 

not permitted to offer a combined 

MOOP amount within the mandatory 

range, while having an in-network 

MOOP amount within the voluntary 

range). The combined MOOP limit for 

PPOs is calculated by multiplying the 

respective in-network MOOP limits by 

1.5 for the relevant year and rounding, 

if necessary, similar to what we 

proposed at § 422.100(f)(4)(iii).2 For 

example, the voluntary combined 

MOOP limit for PPOs in contract year 

2020 was calculated as $3,400 × 1.5 = 

$5,100 (that is, an MA plan that 

establishes a dollar limit within the $0– 

$5,100 range is using a lower, voluntary 

combined MOOP limit). Similarly, the 

mandatory combined MOOP limit for 

PPOs in contract year 2020 was 

calculated as $6,700 × 1.5 = $10,050, 

rounded down to the nearest $100 

($10,000) and MA plans that establish a 

dollar amount within the $5,101– 

$10,000 range are using a mandatory 

combined MOOP limit. 

As noted in the February 2020 

proposed rule, CMS affords greater 

flexibility in establishing Parts A and B 

cost sharing to MA plans that adopt a 

lower, voluntary MOOP amount 

(including PPO plans with a combined 

MOOP limit in the voluntary range) 

than is available to plans that adopt the 

higher, mandatory MOOP amount. The 

percentage of MA plans (excluding 

employer, dual eligible special needs 

plans (D–SNPs), and Medicare Medical 

Savings Accounts plans (MSAs)) 

offering a voluntary MOOP limit and the 

proportion of total enrollees in a plan 

with a voluntary MOOP limit (at or 

below $3,400) have decreased 

considerably from contract year 2011 to 

contract year 2020. Based on plan data 

from March 2021, this trend has 

continued through contract year 2021 

with approximately 18.5 percent of 

plans (21.5 percent of enrollees) having 

an in-network MOOP amount within the 

range of the prior voluntary MOOP limit 

(at or below $3,400), as shown in Table 

1. This percentage access to the 

voluntary MOOP increases to 

approximately 23.3 percent of plans 

(24.8 percent of enrollees) for contract 

year 2021 after taking into consideration 

the increase to the voluntary MOOP 

limit for that year (at or below $3,450). 


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TABLE 1: PERCENT ACCESS TO MA PLANS (EXCLUDING EMPLOYER, D-SNP, 

AND MSA PLANS) WITH VOLUNTARY/LOWER MOOP AMOUNTS FROM 2011 TO 

2021 BASED ONMARCH2021 PLAN DATA 

Year1 Percent of MA plans with Percent of Enrollees in an 

Voluntary/Lower MOOP MA Plan with a 

Amounts Voluntary/Lower MOOP 

Amount 

2011 51.9% 51.2% 

2012 48.4% 48.9% 

2013 46.4% 43.8% 

2014 38.0% 32.3% 

2015 31.0% 25.6% 

2016 25.2% 22.3% 

2017 20.6% 20.7% 

2018 20.1% 22.8% 

2019 23.1% 26.0% 

2020 24.7% 26.4% 

2021 2 23.3% 24.8% 1The voluntary MOOP limit was $3,400 for contract years 2011 through 2020; in contract year 2021 the amount 

increased to $3,450 based on incorporating a percentage of the costs incurred by beneficiaries with diagnoses of 

ESRD. 

2 These values reflect the percent access to a MOOP limit at or below $3,450. Access to a MOOP limit at or below 

$3,400 in 2021 is approximately 18.5 percent of plans (21.5 percent of enrollees). 
Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22297 

CMS explained in the February 2020 

proposed rule that we intend to 

continue using more than one MOOP 

limit with a goal of encouraging plan 

offerings that result in favorable benefit 

designs for beneficiaries. In addition, we 

explained that by codifying the 

methodology for how these MOOP 

limits will be set, we aimed to increase 

the level of transparency for the MOOP 

and cost sharing policies, and provide 

more stability and predictability to the 

MA program. For example, CMS expects 

implementing more than two levels of 

MOOP and cost sharing limits may 

increase beneficiary access to plans with 

MOOP limits below the mandatory 

MOOP limit or with lower cost sharing. 

CMS also discussed in the February 

2020 proposed rule how section 17006 

of the 21st Century Cures Act amended 

section 1851(a)(3) of the Act to allow 

Medicare eligible beneficiaries with 

diagnoses of end-stage renal disease 

(ESRD) to choose a MA plan for 

Medicare coverage starting January 1, 

2021, without the restrictions on such 

enrollment that previously applied. 

Based on these prior enrollment 

restrictions, we explained how the data 

historically used by CMS to set the 

MOOP limits excluded the projected 

out-of-pocket spending for beneficiaries 

with diagnoses of ESRD, which we are 

referring to also in this FC as ‘‘ESRD 

costs,’’ but that we believed the data 

used to set the MOOP limits for future 

years should align with this change in 

eligibility for the MA program. The 

February 2020 proposed rule also 

identified CMS authority for its 

proposal related to MOOP limits for MA 

plans as flowing from sections 

1852(b)(1)(A), 1856(b)(1), 1857(e)(1), 

and 1858(b) of the Act. We proposed to 

codify our current practice, with some 

revisions, substantially revising and 

restructuring §§ 422.100(f)(4) and (5) 

and 422.101(d)(2) and (3) as described 

in the following subsections. 

We are finalizing, for 2023 and 

subsequent years, the majority of our 

MOOP proposals with some changes. 

The changes include: 

• Codifying explicit ranges used to 

determine if a MA plan’s in-network 

(catastrophic) and combined (total 

catastrophic) MOOP limits are a 

mandatory, intermediate, or lower 

MOOP limit for purposes of 

§ 422.100(f)(6) and (j) and §§ 422.101(d) 

and 422.113(b)(2)(v). 

• Improving clarity in the regulations 

regarding how CMS will set the MOOP 

limits for 2023 and subsequent years, 

including how we will use actuarial 

principles and practices in making the 

projections required by the methodology 

to set MOOP limits and calculate the 

intermediate MOOP limit. 

• Modifying the transition schedule 

for incorporating ESRD costs (that is, the 

out-of-pocket spending for beneficiaries 

with diagnoses of ESRD) into the 

methodology CMS uses to set MOOP 

limits. 

• Simplifying the maximum 

threshold of the guardrails which was 

proposed to protect MA enrollees from 

potentially significant changes in out of 

pocket costs resulting from changes to 

the plan’s MOOP amount (during and 

after the ESRD cost transition is 

completed). 

• Removing the proposed 

requirement of a 3-year trend to update 

the MOOP limits, after the ESRD cost 

transition is completed, to avoid 

duplicating the OACT practice of 

trending years of data to project costs for 

an applicable year (which will ensure 

MOOP limits are updated to reflect 

changes in Medicare FFS costs in future 

years). 

• Adopting explicit procedures for 

annually announcing the MOOP limits 

with a process for notice and comment 

by the public beginning for contract year 

2024. 

These changes are discussed in detail 

in section II.A.4. of this FC. This FC sets 

the specific MOOP limits for contract 

year 2023 using the methodology and 

standards in §§ 422.100(f) and 

422.101(d) in addition to adopting the 

rules for 2024 and subsequent years. 

1. Authorize Setting Up to Three MOOP 

Limits on Basic Benefits 

(§§ 422.100(f)(4) and (5) and 

§ 422.101(d)(2) and (3)) 

CMS proposed to codify our current 

practices for setting MOOP limits with 

some revisions, including explicitly 

addressing authority to set up to three 

MOOP limits. In addition to the 

proposals specific to the methodology 

for setting the MOOP limits and how to 

incorporate ESRD costs into that 

methodology, we proposed specific 

rules for the MOOP limits. These 

proposals were to do all of the 

following: 

• Use the term ‘‘basic benefits’’ 

instead of referring to Medicare Part A 

and B benefits in our proposed revisions 

to the regulations at §§ 422.100(f)(4) and 

(5) and § 422.101(d)(2) and (3) because 

the term ‘‘basic benefits’’ is now defined 

in § 422.100(c). 

• Amend § 422.100(f)(4) to state the 

general rule that, except as provided in 

paragraph (f)(5), MA local plans must 

establish MOOP limits for basic 

benefits; as in the current regulation, 

proposed paragraph (f)(5) addressed 

how the MOOP limits apply to the outof-network coverage provided by local 

PPO plans. 

• Codify the rules for PPOs in 

establishing in-network and combined 

(or catastrophic) MOOP limits for basic 

benefits furnished in-network and outof-network in §§ 422.100(f)(5) and 

422.101(d)(2) and (d)(3). 

• Add cross-references to codify the 

same limits under both § 422.100(f)(5) 

(for MA local PPOs) and § 422.101(d)(3) 

(for MA regional plans) for combined 

MOOP limits that apply to in-network 

and out-of-network cost sharing and to 

codify the same MOOP limit under 

§ 422.100 (f)(4) (for MA local plans) and 

§ 422.101(d)(2) (for in-network MA 

regional plans) to avoid repetitive 

regulation text. 

• Codify in §§ 422.100(f)(4) and (5) 

and 422.101(d)(2) and (3) the 

responsibility MA organizations have to 

track enrolled beneficiaries’ out-ofpocket spending and to alert enrollees 

and contracted providers when the 

MOOP limit is reached. This is implicit 

in how a MOOP limit works, but we 

believe codifying these responsibilities 

emphasizes for MA organizations that 

these requirements are integral to the 

administration of basic benefits. 

• Amend § 422.100(f)(4) to authorize 

CMS, for 2022 and subsequent years, to 

set up to three MOOP limits using 

projections of beneficiary spending that 

are based on the most recent, complete 

Medicare FFS data, including the 

current mandatory and voluntary MOOP 

limits and a third, intermediate MOOP 

limit. CMS proposed to use these terms 

(lower, intermediate, and mandatory) in 

referencing MOOP limits instead of only 

‘‘voluntary’’ and ‘‘mandatory’’ MOOP 

limits. 

• Codify the current rule for using 

ranges to identify the type of MOOP 

amount an MA plan has established and 

applying that rule to the three proposed 

types of MOOP limits: The mandatory 

MOOP limit, the intermediate MOOP 

limit, and the lower MOOP limit in 

§ 422.100(f)(4)(ii). Specifically, 

establishing that: (1) The mandatory 

MOOP limit is any dollar limit that is 

above the intermediate MOOP limit and 

at or below the mandatory MOOP limit 

threshold established each year; (2) the 

intermediate MOOP limit is any dollar 

limit that is above the lower MOOP 

limit and at or below the intermediate 

MOOP limit threshold established each 

year; and (3) the lower MOOP limit is 

any dollar limit that is between $0.00 

and up to and including the lower 

MOOP limit threshold established each 

year. 

• Codify specific cost sharing limits 

and flexibilities tied to using the 

intermediate and lower (previously 


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22298 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

‘‘voluntary’’) MOOP limits by MA plans 

(see section II.B. of this FC for the 

specific proposals). 

2. Codify the Methodology for the Three 

MOOP Limits for 2022 and Subsequent 

Years (§ 422.100(f)(4)) 

CMS proposed to codify generally our 

current methodology for how we set 

MOOP limits with several revisions at 

§ 422.100(f)(4) and to use crossreferences in §§ 422.100(f)(5), 

422.101(d)(2) and 422.101(d)(3) to 

establish how MOOP limits are set for 

local and regional plans. These 

proposals were to do all of the 

following: 

• Amend § 422.100(f)(4) to impose 

general rules for setting the MOOP 

limits and codify the current practice of 

setting the MOOP limits based on a 

percentile of projected Medicare FFS 

beneficiary out-of-pocket spending, 

which would be developed based on the 

most recent, complete Medicare FFS 

data. 

• Codify rounding each MOOP limit 

to the nearest whole $50 increment, or 

the lower $50 increment in cases where 

the MOOP limit is projected to be 

exactly in between two $50 increments, 

in § 422.100(f)(4)(iii). 

• Codify our current policy of setting 

the combined MOOP limits (that is, the 

MOOP limits that cover both in-network 

and out-of-network benefits) by 

multiplying the respective in-network 

MOOP limits by 1.5 for the relevant year 

with rounding, if necessary, for MA 

regional plans in § 422.101(d)(3) and 

using a cross-reference to that rule for 

MA local PPOs in § 422.100(f)(5)(i). 

• Establish the rules for setting the 

MOOP limits for contract years 2022, 

2023, 2024, 2025, and subsequent years 

in § 422.100(f)(4)(iv), (v), and (vi). The 

proposal was, in effect, that the MOOP 

limits for contract year 2022 would be 

a recalibration of the MA MOOP limits 

by using a methodology adjusted from 

current practice. For contract year 2022, 

we proposed to set the MOOP limits as 

follows: 

• The mandatory MOOP limit is set at 

the 95th percentile of projected 

Medicare FFS beneficiary out-of-pocket 

spending. 

• The intermediate MOOP is set at 

the numeric midpoint of mandatory and 

lower MOOP limits. 

• The lower MOOP limit is set at the 

85th percentile of projected Medicare 

FFS beneficiary out-of-pocket spending. 

These MOOP limits would be set 

subject to the rounding rules at 

§ 422.100(f)(4)(iii). CMS proposed to use 

projections for the applicable contract 

year of out-of-pocket expenditures for 

Medicare FFS beneficiaries that are 

based on the most recent, complete 

Medicare FFS data that incorporates a 

percentage of the costs incurred by 

beneficiaries with diagnoses of ESRD 

(called ‘‘ESRD costs’’ in this FC), using 

the ESRD cost transition schedule 

proposed in paragraph (f)(4)(vii). In the 

following subsection, II.A.3. of this FC, 

we summarize that transition schedule 

and the data we proposed to use for 

setting MOOP limits. 

For future contract years, we 

proposed to set the MOOP limits using 

a methodology that considers the 

amount of change from the prior year’s 

MOOP limits to minimize disruption 

and change for enrollees and plans. Our 

proposed methodology was designed to 

allow MA plans to provide stable 

benefit packages year over year by 

minimizing MOOP limit fluctuations 

unless a consistent pattern of increases 

or decreases in beneficiary out-of-pocket 

costs emerges over time. Again, we 

proposed that these MOOP limits would 

be set subject to the rounding rules and 

using projections based on the most 

recent, complete Medicare FFS data that 

incorporates a percentage of the costs 

incurred by beneficiaries with diagnoses 

of ESRD, using the transition schedule 

at § 422.100(f)(4)(vii). In addition, the 

proposed methodology for MOOP limits 

for years 2023 until the end of this 

transition schedule was designed to 

balance the incorporation of increased 

costs incurred by beneficiaries with 

diagnoses of ESRD into the Medicare 

FFS data projections used to calculate 

the MOOP limits with the goal of 

providing stability in the MOOP limits. 

For example, we proposed to delay the 

ESRD cost transition in years where the 

change in the MOOP limit might 

otherwise be too significant, specifically 

when projections for the upcoming 

contract year were outside the range of 

two percentiles above, or below, the 

applicable percentile of Medicare FFS 

beneficiary out-of-pocket spending 

(including costs incurred by Medicare 

FFS beneficiaries with and without 

diagnoses of ESRD) from the prior year. 

Similarly, the proposed methodology for 

establishing MOOP limits for the years 

following the completion of the 

transition schedule was intended to 

provide stability in the MOOP limits by 

placing a cap on how much limits can 

increase from one year to the next when 

certain conditions are met. 

To set the mandatory and lower 

MOOP limits for contract years 2023 

and 2024 or, if later, until the end of the 

ESRD cost transition, we explained that 

under our proposal, CMS would— 

• Review OACT projections of out-ofpocket spending for the applicable year 

that is based on updated Medicare FFS 

data, including all spending regardless 

of ESRD diagnoses; 

• Compare the applicable year’s 

projection of the 95th percentile and 

85th percentile to the prior year’s 

projections; 

• Determine if the prior year’s 

projections for the 95th percentile and 

85th percentile are within a range, 

above or below, of two percentiles of the 

applicable percentile in that updated 

projection. For example, for the contract 

year 2023 mandatory MOOP limit, we 

would determine if the contract year 

2022 95th percentile projection is 

between or equal to the 93rd and 97th 

percentiles of the projections for 2023 

out-of-pocket expenditures; 

• If the prior year’s 95th and 85th 

percentile projections are between or 

equal to the two percentile ranges above 

or below, we would continue the ESRD 

cost transition schedule proposed at 

§ 422.100(f)(4)(vii) for one or both of the 

MOOP limits; 

• If one or both of the prior year’s 

95th and 85th percentile projections are 

not within the two percentile ranges 

above or below, we would increase or 

decrease one or both of the MOOP limits 

up to 10 percent of the prior year’s 

MOOP limit annually until the MOOP 

limit reaches the projected 95th 

percentile for the applicable year, 

subject to the rounding rules as 

proposed at § 422.100 (f)(4)(iii). For 

example, if the dollar amount that needs 

to be transitioned represents 15 percent, 

then 10 percent would be addressed 

during the upcoming contract year, 

while any remaining amount would be 

addressed during the following contract 

year (if applicable based on updated 

data projections from the OACT). 

During this period of time, we would 

delay implementation of the next step in 

the ESRD cost transition schedule 

proposed in paragraph (f)(4)(vii). The 

ESRD cost transition schedule would 

resume at the rate that was scheduled to 

occur once the prior year’s projected 

95th and 85th percentile remains within 

the range of two percentiles above or 

below the projected 95th percentile for 

the upcoming contract year. For 

example, for the contract year 2023 

mandatory MOOP limit, if the 2023 

projected 95th percentile corresponds to 

the projected 98th percentile for 

contract year 2022 out-of-pocket 

expenditures, we would set the contract 

year 2023 mandatory MOOP by 

increasing the contract year 2022 

mandatory MOOP limit by up to 10 

percent and rounding as proposed at 

paragraph (f)(4)(iii); and 

• The intermediate MOOP limit 

would be set by either maintaining it as 

the prior year’s intermediate MOOP 


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Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22299 

3The Fiscal Year President’s Budgets may be 

accessed at https://www.govinfo.gov/app/ 

collection/BUDGET/ and the annual Advance 

Notice and Rate Announcements may be accessed 

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

MedicareAdvtgSpecRateStats/Announcements-andDocuments. In addition, see page 14 from the 2020 

Rate Notice and Final Call Letter, retrieved from 

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

MedicareAdvtgSpecRateStats/Downloads/ 

Announcement2020.pdf. 

4See the HPMS memorandum titled ‘‘Final 

Contract Year 2021 Part C Benefits Review and 

Evaluation,’’ issued April 8, 2020, for information 

on MOOP and cost sharing limits for contract year 

2021. See the HPMS memorandum titled ‘‘Final 

Contract Year 2022 Part C Benefits Review and 

Evaluation,’’ issued May 20, 2021, for information 

on MOOP and cost sharing limits for contract year 

2022. 

limit (if the mandatory and lower 

MOOP limits are not changed), or 

updating it to the new numerical 

midpoint of the mandatory and lower 

MOOP limits, and rounding as proposed 

at § 422.100(f)(4)(iii). 

We proposed regulation text to 

implement this process for setting the 

mandatory, intermediate, and lower 

MOOP limits at § 422.100(f)(4)(v), with 

paragraphs (f)(4)(v)(A), (B) and (C) 

addressing the mandatory, intermediate, 

and lower MOOP limits respectively. 

For contract year 2025 (or the year 

following the conclusion of the ESRD 

cost transition schedule proposed at 

§ 422.100(f)(4)(vii)) and for subsequent 

years, we proposed to include in the 

methodology a process to consider 

trends that are consistent for 3 years. 

The proposed regulation text included 

‘‘or following the ESRD cost transition’’ 

to clarify that the ESRD cost transition 

schedule may end in 2025 or extend 

longer due to how we proposed to 

handle any sudden increases or 

decreases in costs. For example, if for 

contract year 2023, the projected 95th 

percentile amount represents the 98th 

percentile from the prior year’s (contract 

year 2022) projections, then we would 

only increase the MOOP limit for 

contract year 2023 by up to 10 percent 

of the prior year’s MOOP amount and 

extend the ESRD cost transition 

schedule past 2025 by the number of 

years it takes until the upcoming year’s 

projected 95th percentile amount was 

within two percentiles above or below 

the prior year’s projection of the 95th 

percentile. We also proposed the 

methodology for the mandatory and 

lower MOOP limits for contract year 

2025 or following the ESRD cost 

transition schedule. Specifically, CMS 

proposed that the prior year’s 

corresponding MOOP limit is 

maintained for the upcoming contract 

year if: (1) The prior year’s MOOP limit 

amount is within the range of two 

percentiles above or below the projected 

95th or 85th percentile of Medicare FFS 

beneficiary out-of-pocket spending 

incurred by beneficiaries with and 

without diagnoses of ESRD; and (2) the 

projected 95th or 85th percentile did not 

increase or decrease for 3 consecutive 

years in a row. If the prior year’s 

corresponding MOOP limit is not 

maintained because either (1) or (2) 

occur, CMS would increase or decrease 

the MOOP limit by up to 10 percent of 

the prior year’s MOOP limit amount 

annually until the MOOP limit reaches 

the projected applicable percentile for 

the applicable year, based on the most 

recent, complete Medicare FFS data 

projections from the OACT. The 

intermediate MOOP limit would be set 

by either maintaining it as the prior 

year’s intermediate MOOP limit (if the 

mandatory and lower MOOPs are not 

changed), or updating it to the new 

numerical midpoint of the mandatory 

and lower MOOP limits, and rounding 

as proposed in paragraph (f)(4)(iii). We 

proposed regulation text to implement 

this process for setting the mandatory, 

intermediate, and lower MOOP limits 

for contract year 2025 or following the 

data transition schedule and subsequent 

years at paragraph (f)(4)(vi), with 

paragraphs (f)(4)(vi)(A), (B), and (C) 

addressing the mandatory, intermediate, 

and lower MOOP limits respectively. 

We explained that the principal goals 

of our proposal were to outline clearly 

the methodology for establishing the 

MOOP limits, to provide stability in 

MOOP limits and benefit packages, 

minimize fluctuations in the MOOP 

limits from year-to-year, and to 

minimize the potential for enrollee 

confusion that may result from 

fluctuations from year-to-year in the 

MOOP limit. We solicited comment on 

whether the February 2020 proposed 

rule would accomplish those things. 

3. Multiyear Transition of ESRD Costs 

Into the Methodology for MOOP Limits 

(§ 422.100(f)(4)) 

Section 1851(a)(3) of the Act, as 

amended by section 17006 of the 21st 

Century Cures Act, permits Medicare 

beneficiaries with diagnoses of ESRD to 

enroll in MA plans beyond the previous 

enrollment limitations, beginning in 

contract year 2021. As discussed in the 

February 2020 proposed rule, CMS 

expected this change will result in 

Medicare beneficiaries with diagnoses 

of ESRD to begin transitioning to or 

choosing MA plans in greater numbers 

than previously. Specifically, the OACT 

expected ESRD enrollment in MA plans 

to increase by 83,000 beneficiaries as a 

result of the 21st Century Cures Act 

provision. The OACT assumed the 

increase would be phased in over 6 

years, with half of those beneficiaries 

(41,500) enrolling during 2021. Based 

on actual 2021 enrollment data, the 

OACT continues to project that 83,000 

beneficiaries with diagnoses of ESRD 

will enroll in the MA program over 6 

years. We explained that the data we 

use to set the MOOP limits should also 

incorporate the out-of-pocket 

expenditures of beneficiaries with 

diagnoses of ESRD to reflect this 

statutory change. 

For 2020 and prior years, CMS set 

MOOP limits using projected Medicare 

FFS beneficiary out-of-pocket spending 

for the year, based on a beneficiary-level 

distribution of Parts A and B cost 

sharing for individuals enrolled in 

Medicare FFS and excluding all costs 

for beneficiaries with ESRD. For 

example, for contract year 2020 MOOP 

limits, we used projected out-of-pocket 

costs for Medicare FFS beneficiaries 

(excluding out-of-pocket costs from 

beneficiaries with diagnoses of ESRD) 

prepared by the OACT, based on the 

most recent Medicare FFS data (from 

2014 to 2018). We excluded the costs for 

individuals with diagnoses of ESRD 

because of the limits on when and how 

a Medicare beneficiary with diagnoses 

of ESRD could enroll in an MA plan 

under section 1851(a) of the Act. In the 

February 2020 proposed rule we stated 

that in contract year 2018, 0.6 percent 

of the MA enrollee population, or 

approximately 121,000 beneficiaries, 

have diagnoses of ESRD. This statistic 

was based on the statutory definition of 

ESRD and CMS data. Using more recent 

enrollment data, the number of 

beneficiaries enrolled in MA in contract 

year 2018 with diagnoses of ESRD is 

lower than previously stated, 

approximately 120,100 (which does not 

impact the 0.6 percent of the MA 

enrollee population figure).3 For 2021 

and 2022, CMS set the voluntary and 

mandatory MOOP limits by applying 

the standard in §§ 422.100(f)(4) and (5) 

and 422.101(d)(2) and (3). Because of 

the expected changes in enrollment in 

MA plans by beneficiaries with 

diagnoses of ESRD beginning in 2021, 

we incorporated 40 percent of the ESRD 

cost differential (the difference between 

projected out-of-pocket costs for 

Medicare FFS beneficiaries with and 

without diagnoses of ESRD and only 

those without diagnoses of ESRD) for 

2021 which increased both types of 

MOOP limits from 2020. These MOOP 

limits were maintained for contract year 

2022.4

CMS developed the approach to 

conduct a multiyear transition of ESRD 

costs into the methodology for how 

CMS establishes MOOP limits with 

input from the OACT. CMS did not 


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expect that those Medicare beneficiaries 

with diagnoses of ESRD that were 

expected to switch from FFS to MA 

would enroll in the MA program 

immediately after the enrollment 

limitations were lifted and as such, CMS 

did not propose to integrate all of the 

costs associated with all beneficiaries 

with diagnoses of ESRD within one 

contract year. 

As part of developing the proposal, 

CMS looked at the impact of factoring 

in 100 percent of the costs of 

beneficiaries with ESRD into the data 

used to set MA MOOP limits. Using the 

most recent Medicare FFS data available 

at the time of the February 2020 

proposed rule (2015 to 2019 data, with 

2018 being the most heavily weighted), 

the OACT projected the out-of-pocket 

costs for Medicare FFS beneficiaries. 

Based on this data, we compared the 

95th and 85th percentiles of the 

projected out-of-pocket costs for all 

Medicare FFS beneficiaries for the 2021 

contract year to the $7,175 and $3,360 

dollar amounts (calculated using the 

95th and 85th percentiles of the 

projections without ESRD costs) to 

calculate the cost difference, which we 

consistently refer to as an ESRD cost 

differential. CMS calculated the $999 

95th percentile ESRD cost differential 

by comparing the $7,175 to $8,174 with 

related ESRD costs, a difference of $999. 

As discussed in the February 2020 

proposed rule, our goal is to strike a 

balance between potential increases in 

plan costs and enrollee costs (meaning 

cost sharing and premiums) by 

scheduling adjustments to the MOOP 

limits (that is, adjustments to include 

data about the costs incurred by 

beneficiaries with diagnoses of ESRD 

into the data used to set the MOOP 

limits) to reflect a reasonable transition 

of ESRD beneficiaries into the MA 

program. Accordingly, our proposed 

revisions to the current methodology for 

setting MOOP limits included a 

scheduled transition for incorporating 

ESRD costs to allow MA organizations 

to plan for the change and mitigate 

sudden changes in MOOP limits, benefit 

designs, and premiums that could be 

disruptive to enrollees and MA 

organizations. To accomplish this, we 

proposed to do all of the following: 

• Codify at § 422.100(f)(4)(vii) a 

multiyear transition schedule from our 

current practice of excluding all costs 

incurred by beneficiaries with diagnoses 

of ESRD to including all related costs 

into the Medicare FFS data that is used 

to set the MOOP limits. 

• Add § 422.100(f)(4)(vii) to define 

the term ‘‘ESRD cost differential’’ to 

refer to the difference between: (1) 

Projected out-of-pocket costs for 

beneficiaries using Medicare FFS data 

excluding the costs incurred by 

beneficiaries with ESRD diagnoses for 

contract year 2021 and (2) the projected 

out-of-pocket costs for all beneficiaries 

using Medicare FFS data (including the 

costs incurred by beneficiaries with 

ESRD diagnoses) for each year of the 

ESRD cost transition. 

• Identify the specific dollar amounts 

in the regulation text defining the ESRD 

cost differential at § 422.100(f)(4)(vii), as 

$7,175 for the 95th percentile and 

$3,360 for the 85th percentile based on 

the projected costs incurred by 

beneficiaries without ESRD diagnoses 

for the 2021 contract year. 

• Add § 422.100(f)(4)(vii)(A), 

(f)(4)(vii)(B), and (f)(4)(vii)(C) to 

establish a specific schedule for 

factoring in an increasing percentage of 

the ESRD cost differential annually until 

2024 or, if later, the final year of the 

transition and beyond. 

• Begin the regulatory ESRD cost 

transition with the 2022 contract year, 

factoring in 60 percent of the ESRD cost 

differential and increasing that 

percentage by 20 percentage points for 

each successive year of the transition, as 

follows: 

—For 2023 (or the next year of the 

transition), factor in 80 percent of the 

ESRD cost differential. 

—For 2024 (or the final year of the 

transition), factor in 100 percent of 

the ESRD cost differential. 

While we proposed to factor in the 

ESRD cost differential for contract year 

2022 through contract year 2024, CMS 

initially started incorporating ESRD 

costs into the MOOP limits for contract 

year 2021. Specifically, CMS calculated 

the MOOP limits for contract year 2021, 

under the current regulations, using 

projections of Medicare FFS cost data 

from 2015 to 2019 for beneficiaries 

without diagnoses of ESRD. The OACT 

determined the Medicare FFS 

percentiles for 2021 by applying 

Medicare FFS cost sharing trends 

(consistent with the 2019 Medicare 

Trustees Report) to project contract year 

2021 costs. CMS then added in 40 

percent of the ESRD cost differential to 

the projected Medicare FFS percentiles. 

A more complete discussion on how 

CMS set MOOP limits for contract year 

2021 is available in the HPMS 

memorandum titled ‘‘Final Contract 

Year 2021 Part C Benefits Review and 

Evaluation,’’ issued April 8, 2020. In the 

February 2020 proposed rule, CMS also 

proposed a methodology to prevent 

excessive changes in the MOOP limit. 

Taking into consideration both the 2021 

MOOP limits and our proposal for 

contract years 2022 through 2024, 

CMS’s proposed policy would have 

effectively used a 4-year period to 

transition to full incorporation of ESRD 

costs. 

CMS included in the February 2020 

proposed rule two tables (Table 4, 

‘‘Illustrative Example of In-Network 

MOOP Limits Based on Most Recent 

Medicare FFS Data Projections’’ and 

Table 5, ‘‘Illustrative Example of 

Combined MOOP Limits for LPPO and 

Catastrophic (MOOP) Limits for RPPO 

Plans Based on Most Recent Medicare 

FFS Data Projections’’) to show the 

potential impact of incorporating the 

out-of-pocket costs of Medicare FFS 

beneficiaries with diagnoses of ESRD 

into the methodology for the MOOP 

limits proposed at §§ 422.100(f)(4) and 

(5) and 422.101(d)(2) and (3) (85 FR 

9077). These tables were developed to 

project 2021 costs using Medicare FFS 

data from 2015–2019, which was the 

most recent Medicare FFS data available 

at the time of the February 2020 

proposed rule. In developing Tables 4 

and 5 from the February 2020 proposed 

rule, we applied the proposed 

methodology, including not only the 

multiyear transition for incorporating 

the ESRD cost differential but also the 

rounding rules, and illustrated the 

ranges for the three MOOP limits. We 

explained that the tables were only 

illustrative MOOP limits for contract 

years 2022 through 2024 based on the 

most, recent complete Medicare FFS 

data at the time the February 2020 

proposed rule was developed. As a 

result, we noted actual MOOP limits for 

these contract years may be different 

from the illustrative limits based on 

updated Medicare FFS data and 

projections. As part of our proposal, we 

explained that we would apply the 

methodology as codified and publish 

the resulting MOOP limits for each year 

on a timely basis, such as through an 

HPMS memorandum, with a description 

of how the regulation standard was 

applied, but we did not propose to 

codify the timeframe or a requirement 

for that publication. 

In conclusion, we proposed to amend 

§§ 422.100(f)(4) and (5) and 

422.101(d)(2) and (3) as described to 

allow plans to provide stable benefit 

packages year over year by minimizing 

MOOP limit fluctuations unless a 

consistent pattern of increases or 

decreases in costs emerges over time. 

We solicited comment on this approach 

in light of our goal of avoiding enrollee 

confusion and maintaining stable 

benefit packages. We also solicited 

comments whether our proposed 

regulation text adequately and clearly 

specified the methodology that would 

be used to set the MOOP limits each 


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year. We noted our intention to issue 

annual guidance applying these rules, in 

advance of the bid deadline so that MA 

organizations know and understand the 

MOOP limits for the upcoming year. 

4. Comments Received and Responses 

for All MOOP Limit Provisions 

We received feedback from 27 

commenters on this proposal. The 

majority of comments were from health 

plans, provider associations, beneficiary 

and other advocacy organizations, and 

pharmaceutical companies. A summary 

of the comments (generally by issue) 

and our responses follows: 

Comment: Several commenters 

supported CMS’s proposals related to 

MOOP limits overall and some 

additional commenters supported 

codifying longstanding policies in 

regulation, including the Medicare FFS 

percentiles used to determine the 

MOOP limits. A few commenters that 

supported codifying longstanding 

policies in regulation noted that the 

standardization, transparency, and 

predictability of formal rulemaking 

provides program stability. A few other 

commenters specifically appreciated the 

additional transparency in how CMS 

sets the MOOP limits. A commenter was 

supportive of the MOOP limit proposal 

to codify the methodology CMS uses to 

set the MOOP limits and the addition of 

the third intermediate MOOP limit for 

the flexibility it would provide for MA 

organizations to innovate, improve 

available benefit offerings, and provide 

beneficiaries with affordable MA plans 

tailored to their unique healthcare needs 

and financial situation. Another 

commenter appreciated the opportunity 

to provide feedback to guide 

implementation processes. 

Response: We thank commenters for 

their support. CMS believes codifying 

these flexibilities in regulation will 

encourage MA organizations to develop 

plan designs to take advantage of the 

flexibilities as well as provide 

transparency and stability for the MA 

program. In addition, we expect MA 

organizations will have a greater 

understanding about how the MOOP 

limits are calculated and be better 

prepared to anticipate changes in MOOP 

limits in future years as a result of this 

provision. As we discussed in the 

February 2020 proposed rule and in 

more detail in our responses to 

comments, the goals of this rulemaking 

touch on several issues and we believe 

that this FC will result in positive 

outcomes for the MA program. 

The changes to the proposals we are 

finalizing in this FC range from minor 

edits, reorganizations, corrections, and 

clarifications to substantive 

modifications based on the comments 

received, operational considerations 

(such as, changes stemming from the 

timing of this FC), and improvements to 

the methodology. Our goal in finalizing 

the cost sharing proposals as described 

in this FC is to adopt standards and 

require compliance that further 

antidiscriminatory requirements (such 

as, by supporting equitable access to 

plans for beneficiaries with high health 

needs). Because of the timing of this FC, 

operational considerations, and to help 

ensure that MA organizations have 

sufficient implementation time, the 

provisions in this FC will be applicable 

for coverage beginning January 1, 2023. 

This reflects a one-year delay from the 

proposed implementation schedule. 

When MA bids for contract year 2023 

are submitted for review and approval 

by the statutory deadline (June 6, 2022 

for contract year 2023), the regulations 

and final MOOP and cost sharing limits 

in this FC will be used to evaluate those 

bids for approval as well as applying to 

the coverage provided beginning 

January 1, 2023. Several modifications 

to the proposed regulation text (for 

example, changing a reference from 

January 1, 2022 to January 1, 2023 in 

§ 422.100(f)(4)) are because of this 

change in the implementation of the 

MOOP provisions. Therefore, to avoid 

repetitive text in responses to comments 

in this section II.A. of this FC, we 

explain here that the proposed 

regulation text in §§ 422.100 and 

422.101 was modified to change 

implementation by 1 year. Changes to 

the implementation of the proposed 

policies that are more nuanced are 

explained in detail (for example, section 

II.A.4.c. of this FC addresses the multiyear transition schedule of ESRD costs 

into MOOP limits). For the same reason, 

to avoid repetitive text, where there is 

no distinction made about the Medicare 

FFS data projections used, CMS means 

the data includes out-of-pocket costs 

from beneficiaries with and without 

diagnoses of ESRD. Specifically, the 

term ‘‘Medicare FFS data projections’’ is 

used as defined in § 422.100(f)(4)(i). 

We take this opportunity to clarify, in 

addition to the discussion in the 

February 2020 proposed rule, which 

costs are tracked and accumulate toward 

the MOOP limit. As discussed 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’’ that appeared in the 

Federal Register on April 15, 2011 (76 

FR 21431) (April 2011 final rule), the innetwork (catastrophic) and combined 

(total catastrophic) MOOP limits 

consider only the enrollee’s actual outof-pocket spending for purposes of 

tracking out of pocket spending relative 

to its MOOP limit. This approach also 

applies to D–SNPs. Thus, for any D– 

SNP enrollee, MA plans are only 

required to count those amounts the 

individual enrollee is responsible for 

paying net of any State responsibility or 

exemption from cost sharing toward the 

MOOP limit rather than the cost sharing 

amounts for services the plan has 

established in its plan benefit package 

(PBP). (MA plans are permitted to count 

toward the MOOP any cost sharing that 

is exempted from collection because the 

enrollee is dually eligible for Medicare 

and Medicaid or that has been paid by 

Medicaid, but are not required to do so.) 

We did not propose in the February 

2020 proposed rule to change the policy 

adopted in the April 2011 final rule 

regarding which cost sharing amounts 

must be counted toward the MOOP 

limit. We are finalizing the amended 

regulations at § 422.100(f)(4) and (f)(5) 

using the phrase ‘‘incurred by the 

enrollee’’ to be consistent with current 

§ 422.101(d)(4), which refers to costs 

‘‘incurred by’’ the enrollee in describing 

the MOOP limit. In the proposed rule 

titled, ‘‘Medicare Program; Contract 

Year 2023 Policy and Technical 

Changes to the Medicare Advantage and 

Medicare Prescription Drug Benefit 

Programs’’ that appeared in the Federal 

Register on January 12, 2022 (87 FR 

1842) (January 2022 proposed rule), 

CMS is proposing that the MOOP limit 

in an MA plan (after which the plan 

pays 100 percent of MA costs for Part A 

and Part B services) be applied based on 

the accrual of all cost-sharing in the 

plan benefit, regardless of whether that 

cost sharing is paid by the beneficiary, 

Medicaid, other secondary insurance, or 

remains unpaid because of State limits 

on the amounts paid for Medicare costsharing and dually eligible individuals’ 

exemption from Medicare cost-sharing. 

Throughout this FC and in the various 

regulations adopted here, we use 

‘‘incurred by’’ in referring to out-ofpocket costs of an MA enrollee that are 

counted toward accumulation of the MA 

plan’s MOOP amount to avoid 

suggesting this FC adopts an 

unproposed change in the policy from 

the April 2011 final rule or distinction 

in the data we use regarding out-ofpocket costs in the Medicare FFS 

program. In light of the January 2022 

proposed rule, we note that the 

amendments regarding the phrase 

‘‘incurred by the enrollee’’ described in 

this response may be subject to change 

if a final rule for the MOOP attainment 

proposal is published. However, other 


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than in the specific cases related to an 

MA organization’s obligation to track 

the MOOP limit for enrollees, the term 

is used in a more general sense that does 

not specifically incorporate this aspect 

of the current regulations for MOOP 

limits as applied to dually eligible 

individuals. 

Under this FC, MA organizations are 

responsible for tracking out-of-pocket 

spending incurred by the enrollee, and 

must alert enrollees and contracted 

providers when the applicable MOOP 

amount is reached (for § 422.100(f)(4) 

the in-network MOOP; for paragraph 

(f)(5)(iii) the combined MOOP). In 

addition, we are not finalizing the 

regulations at § 422.101(d)(2)(ii) and 

(d)(3)(iii) as proposed (which 

substantively addressed the same 

requirement for the catastrophic (innetwork) MOOP and the total 

catastrophic (combined) MOOP) to 

avoid repeating text that is in paragraph 

(d)(4). Existing § 422.101(d)(4) requires 

MA regional plans to track the 

deductible (if any) and catastrophic 

limits in paragraphs (d)(1) through (d)(3) 

based on incurred out-of-pocket 

beneficiary costs for original Medicare 

covered services and to notify members 

and health care providers when the 

deductible (if any) or a limit has been 

reached; we are not making any 

revisions to that specific provision. As 

finalized, the regulations at 

§ 422.100(f)(4) and (f)(5)(iii) require MA 

organizations to track out-of-pocket 

spending incurred by the enrollee in a 

local MA plan and alert enrollees and 

contracted providers when the 

applicable MOOP amount (in-network, 

combined, catastrophic, or total 

catastrophic) is reached. This FC 

maintains the ability for D–SNPs to 

establish zero cost sharing for enrollees 

who are dually enrolled in both 

Medicare and Medicaid. For example, in 

a Zero-Dollar Cost Sharing D–SNP, 

Medicare inpatient hospital stays and 

doctor visits are available at no cost to 

the enrollee. A Medicare Non-Zero 

Dollar Cost Sharing D–SNP is a D–SNP 

under which the cost sharing for 

Medicare Part A and B services varies 

depending on the enrollee’s category of 

Medicaid eligibility. 

Comment: A few commenters 

requested that CMS educate 

beneficiaries with diagnoses of ESRD 

about their costs and plan choices in the 

MA program. Related to this topic, 

another commenter noted that dialysis 

providers may make special efforts to 

educate their patients about the option 

to enroll in a MA plan, so that the 

beneficiary may benefit from potential 

reductions in out-of-pocket costs 

because of the MOOP limit and the 

value of supplemental benefits in 

addition to the dialysis provider 

potentially being paid higher than 

Medicare FFS rates due to provider 

concentration and network adequacy 

requirements in the MA program. 

Response: We agree with the 

commenters in that all beneficiaries 

should have access to the information 

they need to make informed decisions 

about what health plan best fits their 

needs. Enrollment of beneficiaries with 

diagnoses of ESRD in MA increased in 

the years prior to 2021 while the 

limitations on enrollment were in place. 

This suggests that this patient 

population is knowledgeable about 

Medicare plan choices. In addition, MA 

organizations, providers, and other 

stakeholders have been aware of the 

program change to allow (beyond the 

previous enrollment exceptions) 

Medicare beneficiaries with diagnoses 

of ESRD to enroll in MA beginning with 

contract year 2021 since the enactment 

of section 17006 of the 21st Century 

Cures Act in December 2016. CMS 

expects that MA organizations, 

providers, State Health Insurance 

Assistance Programs, and other 

stakeholders have and will continue to 

communicate information about MA 

plan options to all Medicare eligible 

beneficiaries, including those with 

diagnoses of ESRD. Section 422.111 

requires that MA plans make materials 

available to existing and prospective 

enrollees, including provider networks, 

benefit coverage, and cost sharing. We 

believe that those requirements will also 

ensure that eligible beneficiaries, 

including those with diagnoses of ESRD, 

receive plan-level information they need 

to make an enrollment election. In 

addition, CMS provides a Medicare & 

You handbook to all beneficiaries 

annually which includes information 

about MA plan options and eligibility 

(including for those with diagnoses of 

ESRD). We agree with the comment that 

dialysis and other specialty providers 

typically involved in caring for patients 

with diagnoses of ESRD may choose to 

make special efforts to educate their 

patients about the MA program. (We 

remind MA organizations that they and 

their downstream entities must comply 

with applicable marketing and 

communication regulations, including 

the limits on MA marketing activities 

with healthcare providers and in 

healthcare settings in § 422.2266.) CMS 

also expects beneficiaries with 

diagnoses of ESRD will evaluate all 

available health care plan options, 

including MA plans. 

Comment: Several commenters had 

general concerns about beneficiaries 

with diagnoses of ESRD being 

discouraged from enrollment or having 

a lack of access to MA plans due to 

discriminatory benefit designs. For 

example, some commenters noted that 

enrollees with diagnoses of ESRD are 

more expensive and will reach the 

MOOP amount more quickly than 

enrollees without diagnoses ESRD, so 

MA organizations may have an 

incentive to discourage enrollment of 

beneficiaries with diagnoses of ESRD. In 

addition, commenters suggested MA 

plans may tier or use different out of 

pocket costs based on certain 

conditions, or limit benefits for ESRD 

enrollees compared to other enrollees. A 

commenter noted concerns about ESRD 

enrollees having adequate access to MA 

plan options based on the MOOP limits 

and network adequacy time and 

distance requirements (another 

provision from the February 2020 

proposed rule). 

Response: MA plans may not use 

higher MOOP amounts or limit benefits 

for enrollees with diagnoses of ESRD 

and CMS’s review of bids will evaluate 

for and deny benefit packages that CMS 

determines are designed to discourage 

enrollment by beneficiaries with 

diagnoses of ESRD. As noted in the 

February 2020 proposed rule, section 

1852(b)(1) of the Act prohibits 

discrimination by MA organizations on 

the basis of health status-related factors 

and directs that CMS may not approve 

an MA plan if CMS determines that the 

design of the plan and its benefits are 

likely to substantially discourage 

enrollment by certain MA eligible 

individuals. In addition, as stated in 

section VI.B. of the February 2020 

proposed rule (page 9079), MA 

organizations must comply with 

applicable Federal civil rights laws that 

prohibit discrimination on the basis of 

race, color, national origin, sex 

(including sexual orientation and 

gender identity), age, disability, 

including section 1557 of the Affordable 

Care Act, title VI of the Civil Rights Act 

of 1964, section 504 of the 

Rehabilitation Act of 1973, and the Age 

Discrimination Act of 1975. The 

regulation at § 422.110 provides that an 

MA organization may not deny, limit, or 

condition the coverage or furnishing of 

benefits to individuals eligible to enroll 

in an MA plan offered by the 

organization on the basis of any factor 

that is related to health status. MA 

organizations discouraging or 

preventing enrollment in an MA plan by 

beneficiaries on the basis of their ESRD 

diagnoses after January 1, 2021, would 

be prohibited by § 422.110. CMS relies 

on the MA anti-discrimination 

provision, the agency’s authority under 


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5Available at: https://www.cms.gov/Medicare/ 

Health-Plans/MedicareAdvtgSpecRateStats/ 

Announcements-and-Documents. 

6The online Medicare Compliant Form may be 

accessed and submitted at: https://

www.medicare.gov/medicarecomplaintform/ 

home.aspx. 

7 Julia M. Friedman, Brett L. Swanson, Mary G. 

Yeh, and Jordan Cates, Milliman Inc., ‘‘State of the 

2020 Medicare Advantage industry: As strong as 

ever.’’ February 14, 2020 https://at.milliman.com/ 

en/insight/state-of-the-2020--medicare-advantageindustry-as-strong-as-ever. 

section 1856(b) of the Act to adopt 

standards for MA organizations, and the 

agency’s authority under section 1857(e) 

of the Act to add terms and conditions 

that are necessary, appropriate, and not 

inconsistent with the Medicare statute 

in setting the requirements under 

§ 422.100(f)(4) and (5) that impose 

MOOP limits on local MA plans in 

alignment with the statutory 

catastrophic limits imposed on regional 

MA plans under section 1858(b) of the 

Act. We believe that requiring the 

inclusion of a MOOP limit in plan 

benefit design is necessary in order not 

to discourage enrollment by individuals 

who utilize higher than average levels of 

health care services (that is, in order for 

a plan not to be discriminatory in 

violation of section 1852(b)(1) of the 

Act). None of the provisions in this FC 

limit application of other antidiscrimination requirements. 

As we discussed in the CY 2019 Call 

Letter 5 and April 2018 final rule (83 FR 

16440), the flexibility we have adopted 

for how MA plans must offer uniform 

benefits is premised on MA plans 

furnishing additional benefits to 

improve treatment and outcomes for a 

specific health condition; that flexibility 

may not be used to lower or restrict 

benefits based on health status (83 FR 

16480 through 16481). Therefore, the 

flexibility to offer additional 

supplemental benefits based on a 

connection with a particular health 

condition may not be used as a means 

to discourage enrollment by or 

discriminate against beneficiaries with 

diagnoses of ESRD. We encourage 

beneficiaries and other stakeholders to 

bring to our attention marketing and 

communications materials or other 

activities that may indicate that an MA 

organization is violating the antidiscrimination requirements applicable 

in the Medicare Advantage program by 

contacting 1–800–MEDICARE or by 

submitting a Medicare Complaint Form 

online.6

a. Authorize Setting Three MOOP 

Limits on Basic Benefits 

(§§ 422.100(f)(4) and (5) and 

422.101(d)(2) and (3)) 

Comment: Several commenters 

supported CMS’s proposal to add a 

third, intermediate MOOP limit. 

Commenters who supported the 

proposal noted that an intermediate 

MOOP limit will provide MA 

organizations the flexibility to innovate, 

improve benefit designs to offer highvalue plan options to beneficiaries, and 

provide beneficiaries with affordable 

MA plans tailored for their unique 

healthcare needs and financial situation. 

A commenter stated this flexibility is 

increasingly important, as CMS has 

allowed MA organizations to develop 

specialized plans designed to address 

beneficiaries with chronic conditions. 

Another commenter was supportive and 

stated lower MOOP limits provide 

critical affordability protection for MA 

beneficiaries as actuarial firm modeling 

has shown that the voluntary MOOP 

limit provides substantial value to MA 

enrollees without driving higher 

member premiums.7 Several 

commenters supported CMS monitoring 

over time whether changes from the 

provisions in this FC result in 

beneficiaries having access to plan 

offerings with MOOP limits below the 

mandatory MOOP limit or lower cost 

sharing. A commenter noted that this 

monitoring is critically important to 

ensuring that CMS can effectively 

enforce the anti-discrimination 

provision of the statute. 

Response: We appreciate the support. 

By implementing more than two types 

of MOOP limits and providing increased 

flexibility in the cost sharing limits for 

MA organizations with a lower MOOP 

amount, we expect to encourage MA 

plan offerings with favorable benefit 

designs so that beneficiaries can choose 

plans that meet their needs. CMS 

compared the percentage of contract 

year 2021 plans with MOOP amounts 

within the final dollar range of each 

MOOP type for contract year 2023 (as 

calculated using the methodology set 

through this FC) to determine the 

proportion of plans that established a 

MOOP amount that would be 

considered one of the three MOOP types 

we are finalizing for use beginning in 

contract year 2023. Based on plan data 

from March 2021 (excluding employer, 

D–SNPs, and MSA plans), the 

percentage of contract year 2021 plans 

(and enrollees) with an in-network 

MOOP amount within the final dollar 

range of each MOOP type for contract 

year 2023 (as shown in Table 5, which 

incorporates ESRD costs as discussed in 

section II.A.4.c. of this FC) is 

approximately: 

• 24.9 percent of plans (25.8 percent 

of enrollees) have an in-network MOOP 

amount between $0 and $3,650 (the 

contract year 2023 lower MOOP limit); 

• 36.9 percent of plans (41.7 percent 

of enrollees) have an in-network MOOP 

amount between $3,651 and $6,000 (the 

contract year 2023 intermediate MOOP 

limit); and 

• 38.2 percent of plans (32.6 percent 

of enrollees) have an in-network MOOP 

amount between $6,001 (the lowest 

range amount for the contract year 2023 

mandatory MOOP limit) and $7,550 (the 

highest allowable contract year 2021 

mandatory MOOP amount). 

This distribution shows that the 

smallest proportion of contract year 

2021 plans established a MOOP amount 

that would qualify for a lower MOOP 

type in contract year 2023 (see Table 5 

for the final contract year 2023 MOOP 

limits). A contributing factor to this 

distribution may be how most cost 

sharing standards for professional 

services have been historically set at the 

same amount regardless of the MOOP 

type (mandatory or lower, previously 

‘‘voluntary’’ MOOP limit) established by 

the MA plan. In section VI.B. of the 

February 2020 proposed rule, we 

proposed differentiating cost sharing 

limits for highly utilized services (for 

example, primary care physician and 

physician specialist PBP service 

categories) and various other cost 

sharing services categories by the MOOP 

type, with lower MOOP limits receiving 

the most cost sharing flexibility. By 

establishing the maximum permitted 

cost sharing limit at different amounts 

(that is, by using a range of 

differentiated cost sharing limits for 

most services) across the three MOOP 

types, this FC is expected to promote 

greater differences between plans and 

provide MA organizations with 

meaningful cost sharing flexibilities if 

they choose to use the lower MOOP 

limits in their benefit design. 

As discussed further in section II.B. of 

this FC, plan designs with mandatory 

MOOP types will have less flexibility in 

cost sharing and therefore less ability to 

use cost sharing as a means to 

incentivize enrollee behavior and 

manage medical costs beginning in 

contract year 2023. For example, MA 

organizations that establish a mandatory 

MOOP type for contract year 2026 will 

be subject to a 30 percent coinsurance 

limit for certain professional services 

and those that establish an intermediate 

MOOP type will be subject to a 40 

percent coinsurance limit (as finalized 

in section II.B. of this FC). As discussed 

in the February 2020 proposed rule, the 

30 percent coinsurance amount is most 

closely related to the cost sharing limit 

amounts stated in the CY 2020 Call 

Letter. Stated another way, we expect 


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8The online Medicare Compliant Form may be 

accessed and submitted at: https://

www.medicare.gov/medicarecomplaintform/ 

home.aspx. 

MA plans that establish a mandatory 

MOOP type will have lower or 

comparable copayment amounts when 

compared to existing benefit packages 

because the copayment limits set by 

CMS in past years for MA plans were, 

based on 2015 through 2019 Medicare 

FFS data projections available at the 

time of the February 2020 proposed 

rule, close to the 30 percent limit being 

set in this FC for several professional 

standards. In addition, by offering the 

intermediate MOOP type, we will be 

providing a mid-level MOOP option 

which is currently projected (for 

contract year 2023) to represent 

approximately 37 percent of plan innetwork MOOP amounts in contract 

year 2021. We expect the combination 

of the three MOOP types and 

proportional cost sharing flexibilities for 

each type will encourage plans to adopt 

lower or intermediate MOOP amounts 

and adopt cost sharing that is lower or 

comparable when compared to existing 

benefit packages. Without the 

intermediate MOOP type as an option, 

plans may be more likely to adopt 

higher MOOP limits as a result of being 

afforded less cost sharing flexibility. 

Plans could design their plan benefits in 

ways that also meet enrollee needs by 

focusing on other benefit features, such 

as, zero premium and supplemental 

benefits, rather than lower MOOP 

amounts. 

CMS will monitor whether changes 

from this FC result in beneficiaries 

having access to MA plan offerings with 

lower or intermediate MOOP types and 

cost sharing that is lower or comparable 

when compared to existing benefit 

packages over time. Specifically, we 

will conduct these analyses annually 

and communicate concerns through the 

subregulatory process finalized at 

§ 422.100(f)(7)(iii) and may consider 

whether changes are necessary in future 

rulemaking based on the results of these 

analyses. 

Comment: A commenter had concerns 

about the potential beneficiary impact of 

having up to three MOOP limits for 

local and regional plans, such as the 

possibility of MA plans varying costs by 

beneficiary health status and tiering or 

targeting higher MOOP limits towards 

beneficiaries with diagnoses of ESRD. 

The commenter explained that if MA 

plans tiered or targeted higher MOOP 

limits that it would create a significant 

financial burden for beneficiaries with 

diagnoses of ESRD. In addition, the 

commenter believed these increased 

costs and benefit designs would 

discourage beneficiaries with diagnoses 

of ESRD and other chronic illnesses 

from enrolling in the MA program and 

ultimately result in the de facto 

elimination (or lack of access to 

meaningful coverage options) of MA 

plans, contrary to the intent of Congress. 

The commenter requested CMS clarify 

that MA plans may not target higher 

MOOP limits to only ESRD patients. 

This commenter also noted that the 

strong protections CMS applies for all 

other beneficiaries that prohibit 

discrimination on the basis of health 

status, should be applied fairly to 

beneficiaries with diagnoses of ESRD to 

prevent MA plans from discriminating 

against and discouraging beneficiaries 

with diagnoses of ESRD from enrolling 

in the MA program. 

Response: We disagree that adding a 

third, intermediate MOOP limit will 

allow MA organizations to design plans 

that discriminate against beneficiaries 

with diagnoses of ESRD or other chronic 

conditions and discourage them from 

enrolling in the MA program. Nothing 

in the MOOP regulations, as proposed 

or finalized, permits an MA plan to have 

higher MOOP amounts for certain 

enrollees in the plan based on health 

status. Specifically, MA plans are not 

permitted to create tiered MOOP 

amounts based on chronic conditions, 

such as kidney failure or the need for 

dialysis services, and if a MA 

organization submitted a plan bid with 

tiered MOOP amounts based on chronic 

conditions, that benefit design would 

not be approved. MOOP limits are and 

must be applied uniformly to all plan 

enrollees and our proposal to add a 

third, intermediate MOOP limit did not 

change this requirement. In addition, 

MA plans are required to provide all 

medically necessary Medicare Parts A 

and B services to enrollees. We reiterate 

that the benefits for all enrollees in an 

MA plan must be uniform, subject to the 

waiver of uniformity that may be 

provided for an MA plan to target 

specific Special Supplemental Benefits 

for the Chronically Ill (SSBCI) under 

§ 422.102(f) and how optional 

supplemental benefits are only provided 

for enrollees who elect to pay the extra 

premium for that coverage under 

§ 422.101(c)(2). The ability to offer 

supplemental benefits that have a 

connection with a specific health 

condition is permitted only for 

reductions in cost sharing and 

additional benefits, not for decreasing 

benefits, and requires the supplemental 

benefit to be available to all similarly 

situated enrollees. Therefore, MOOP 

amounts are applied uniformly to all 

plan enrollees, while MA plans are 

allowed to offer different additional 

supplemental benefits, including 

additional reductions in cost sharing, 

for similarly situated individuals based 

on disease state or chronic health 

condition as part of a uniform benefit 

package. As proposed and finalized, the 

MOOP limits cannot be applied so that 

enrollees with diagnoses of ESRD have 

a higher or otherwise different MOOP 

amount. In addition, a more complete 

discussion about the statutes and 

regulations preventing MA plans from 

discriminating against beneficiaries 

with diagnoses of ESRD or other chronic 

conditions is provided in section II.A.4. 

of this FC in response to other similar 

concerns about discrimination. 

Finally, CMS will also continue 

evaluations based on enforcement of the 

current authority prohibiting plans from 

misleading beneficiaries in their 

marketing and communication materials 

and continue efforts to improve plan 

comparison tools and resources (for 

example, Medicare Plan Finder, 

Medicare & You, and 1–800– 

MEDICARE) in order to monitor 

whether plan communications give the 

impression that MOOP amounts are not 

applied uniformly for all enrollees. We 

encourage beneficiaries and other 

stakeholders to bring to our attention 

marketing and communication materials 

or other activities that may indicate that 

an MA organization is violating the antidiscrimination requirements applicable 

in the MA program, by contacting 1– 

800–MEDICARE or by submitting a 

Medicare Complaint Form online.8

Comment: A commenter believed a 

third MOOP limit may create choice 

confusion for new and existing enrollees 

when evaluating their plan options. 

Response: We disagree that adding a 

third, intermediate MOOP limit will 

confuse beneficiaries when they are 

evaluating their plan options. CMS 

expects that all beneficiaries reviewing 

their plan options for the upcoming 

contract year will continue to consider 

a number of factors when choosing an 

MA plan, such as plan type, benefits, 

per-service cost sharing, provider 

network, and the MOOP amount. This 

information will continue to be 

available to beneficiaries in Medicare 

Plan Finder and MA plan 

communication materials. We also 

expect that MA organizations, 

providers, State Health Insurance 

Assistance Programs, and other 

stakeholders have and will continue to 

communicate information about MA 

plan options to all Medicare eligible 

beneficiaries. Although beneficiaries 

make their plan choice based on a 

number of factors, such as the MOOP 


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amount and premium, they are typically 

not aware if the plan’s MOOP amount 

qualifies as a lower, intermediate, or 

mandatory MOOP limit based on MA 

regulations. 

Comment: A commenter opposed a 

third, intermediate MOOP limit because 

it may result in higher MOOP limits for 

all MA beneficiaries. 

Response: While there may be more 

variation in the MOOP amounts and 

cost sharing structures used by MA 

plans as a result of this FC, we believe 

that beneficiaries have the tools and 

resources to evaluate their expected outof-pocket costs, compare cost sharing 

amounts charged by different MA plans, 

and determine whether a particular plan 

design would benefit them. For 

example, these comparisons may be 

assisted by using Medicare Plan Finder 

and communications materials. We 

expect the MOOP limit and cost sharing 

flexibilities finalized in this FC will 

allow MA organizations to design 

benefits that encourage positive enrollee 

decision-making about their health care 

needs and manage medical costs more 

effectively without producing plan 

options that are confusing for 

beneficiaries. 

Under section 1854(a)(5)(C)(ii) of the 

Act, CMS is authorized to deny a plan 

bid if the bid proposes significant 

increases in enrollee costs or decrease in 

benefits from one plan year to the next. 

A plan’s Total Beneficiary Cost (TBC) is 

the sum of the plan-specific Part B 

premium, plan premium, and estimated 

beneficiary out-of-pocket costs. CMS 

uses a standardized TBC evaluation for 

each bid to evaluate year over year 

changes when bids are submitted for the 

upcoming contract year. The TBC 

standard is applied at the plan level to 

ensure enrollees in each applicable plan 

are not subject to too significant an 

increase in costs or decrease in benefits 

from one plan year to the next. CMS has 

observed that MA organizations tend to 

reduce their profit margins, rather than 

substantially change their benefit 

package from one year to the next. We 

believe this tendency may be to ensure 

that a bid does not exceed the TBC 

threshold and also due to marketing and 

competitive forces; for example, an MA 

plan with fewer or less generous 

supplemental benefits, even for one 

year, may lose its enrollees to competing 

plans that offer these supplemental 

benefits. Thus, it may be advantageous 

for the MA organization to temporarily 

reduce its margin, rather than reduce 

benefits. MA organizations have a range 

of cost sharing flexibilities for a few 

service categories now (such as, 

inpatient hospital acute and psychiatric 

length of stay scenarios) and typically 

do not establish the highest allowable 

cost sharing for the MOOP amount used 

by the MA plan. In fact, CMS has found 

that MA organizations typically offer 

benefits with lower cost sharing 

amounts than the maximum cost 

sharing limits for the vast majority of 

service categories we have permitted in 

past years (such as primary care 

physician). While we do not have 

definitive data, we believe this is due to 

multiple factors, including the 

principles and incentives inherent in 

managed care, effective negotiations 

between MA organizations and 

providers, and competition. Further, 

MA plan must, at a minimum, offer plan 

designs where the cost sharing for basic 

benefits is at least actuarially equivalent 

to the cost sharing in the original 

Medicare program. In addition, we 

expect beneficiary choice will continue 

to act as an incentive for MA 

organizations to offer favorable benefit 

designs. Considering these factors, CMS 

expects that differentiating cost sharing 

standards by the three MOOP types, and 

in some cases limiting the cost sharing 

flexibility for MA plans that establish a 

mandatory MOOP type, will encourage 

MA organizations to establish a lower 

MOOP type (that is, lower or 

intermediate) and/or lower cost sharing 

amounts for enrollees in order to 

maintain a competitive position in the 

market. 

Comment: A commenter opposing the 

proposal was concerned that a third, 

intermediate MOOP limit would not 

provide a strong actuarial incentive for 

more MA plans to establish lower 

MOOP limits and that MA organizations 

may find it difficult to determine which 

MOOP limit offers the best value. 

Response: We disagree with the 

comment that MA organizations may 

find it difficult to determine which 

MOOP amount offers the best value for 

their purposes as a result of this 

provision. CMS expects MA 

organizations have, and will use, 

business tools and actuarial resources to 

effectively structure benefit designs, 

including MOOP amounts. 

Comment: A commenter opposing the 

proposal to add a third, intermediate 

MOOP limit suggested CMS encourage 

MA organizations to offer plans with 

lower MOOP limits through alternative 

means. The commenter suggested some 

alternative ways to incentivize MA 

plans to establish a voluntary, lower 

MOOP limit including that CMS: (1) 

Raise the 85th percentile that 

determines the voluntary MOOP limit to 

the 87th or 88th percentile while 

maintaining the 95th percentile for the 

mandatory MOOP limit; or (2) provide 

higher ratings in the Part C and D Star 

Rating program for MA plans that 

establish the lower, voluntary MOOP 

limit. The commenter’s rationale for 

increasing the percentile that 

determines the lower, voluntary MOOP 

limit was that MA plans could increase 

their cost sharing over time while the 

voluntary MOOP limit increases 

simultaneously, which would not 

encourage MA plans to switch to the 

mandatory MOOP limit. 

Response: We appreciate the 

suggestions of other options to 

incentivize MA organizations to offer 

plans with lower MOOP amounts. 

While the commenter’s suggestion to 

raise the percentile that we use to 

calculate the lower, voluntary MOOP 

limit might produce some incentive for 

MA plans to choose a lower MOOP 

type, it may also likely mean that 

enrollees face increased cost 

responsibility with the lower MOOP 

options than they would under our 

proposal and this FC. We believe 

maintaining the lower (previously 

‘‘voluntary’’) MOOP limit at the 85th 

percentile is beneficial to enrollees and 

provides incentive to MA plans to offer 

lower MOOP amounts when the cost 

sharing flexibilities unique to each 

MOOP type are considered. The cost 

sharing provisions, addressed in section 

II.B. of this FC, provide incentives for 

MA organizations to offer lower MOOP 

amounts by permitting higher cost 

sharing when a lower (or intermediate) 

MOOP type is used. For example, CMS’s 

longstanding policy has been to allow 

MA plans to establish up to 50 percent 

coinsurance for most in-network 

professional services (subject to 

exceptions, such as for inpatient 

hospital acute and psychiatric services, 

skilled nursing facility, chemotherapy 

administration including chemotherapy 

drugs and radiation therapy, and renal 

dialysis), regardless of the MOOP limit. 

In this FC, we limit this degree of 

flexibility of having up to 50 percent 

coinsurance for in-network professional 

services, beginning in contract year 

2023, to MA plans that establish lower 

MOOP amounts (40 percent coinsurance 

for intermediate MOOP amounts and 30 

percent coinsurance for mandatory 

MOOP amounts after the transition 

period). The cost sharing flexibilities 

adopted in this rule apply to highly 

utilized services (for example, 

professional and inpatient hospital 

service categories) and, thus, afford the 

most flexibility to MA plans that have 

lower MOOP amounts. As a result, this 

flexibility will encourage MA 

organizations to establish MOOP 

amounts at or below the lower MOOP 

limit because they will have more 


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flexibility in establishing cost sharing. 

Overall, we aim to prevent 

discriminatory benefit designs with the 

adoption of the methodologies and rules 

for setting MOOP and cost sharing 

limits and by capping the amount of 

financial responsibility the MA 

organization can transfer to enrollees. 

Limits on out-of-pocket costs prevent 

plan designs that deter or discourage 

enrollment by beneficiaries that are high 

utilizers of health care services or that 

have higher-cost medical needs. 

In regard to a commenter’s suggestion 

to provide additional star rating value 

for MA plans offering the lower 

voluntary MOOP amount, we believe 

this request is outside of the scope of 

our proposal. Our Star Ratings proposals 

did not include adding a quality 

measure or a quality rating 

methodological change tied to MOOP 

type and were finalized in section IV.D. 

of the January 2021 final rule (86 FR 

5864). 

We are finalizing our proposal for 

three MOOP limits. We take this 

opportunity to explain the use of 

terminology in this FC and the 

regulations; we use consistent language 

when referring to MOOP limits 

(calculated by CMS by applying the 

methodologies finalized here), MOOP 

amounts (established by MA 

organizations), and MOOP types (lower, 

intermediate, and mandatory) in 

§§ 422.100(f)(4) and (5) and 

422.101(d)(2) and (3). We are also 

finalizing the regulations at 

§§ 422.100(f)(4) and (5) and 

422.101(d)(2) and (3) with slight 

changes from the February 2020 

proposed rule to be clearer that: (1) 

§ 422.100(f)(4) applies to an in-network 

MOOP limit for local MA plans and, 

consistent with our current policy and 

practice, that in-network MOOP limit 

applies to private fee-for-service (PFFS) 

plans; (2) § 422.100(f)(5) applies to a 

combined MOOP limit (for basic 

benefits that are provided in-network 

and out-of-network) for MA local PPO 

plans; (3) § 422.101(d)(2) applies to a 

catastrophic limit (in-network MOOP 

limit) for regional MA plans; and (4) 

§ 422.101(d)(3) applies to a total 

catastrophic limit (combined MOOP) for 

regional MA plans. In addition, we 

made edits throughout these provisions 

to ensure clarity and consistency in 

referencing in-network, combined, 

catastrophic, and total catastrophic 

MOOP limits, amounts, or types. For 

example, in § 422.101(d)(3)(i) we clarify 

that the total catastrophic limit may not 

be used to increase the catastrophic 

limit described in paragraph (d)(2). 

CMS is finalizing § 422.100(f)(4) with 

a clearer statement that MA local plans 

must have an enrollee in-network 

MOOP amount for basic benefits that is 

no greater than the annual limit 

calculated by CMS using Medicare FFS 

data projections (as defined in 

paragraph (f)(4)(i)). We believe this 

change clarifies a point from the 

February 2020 proposed rule that HMO– 

POS plans may offer out-of-network 

benefits as supplemental benefits, but 

are not required to have these services 

contribute to the in-network MOOP 

amount or to a combined in- and outof-network MOOP amount. Currently, 

and with the change proposed and 

finalized in this rule, paragraph (f)(5) 

requires MA local PPO plans to have a 

combined MOOP amount for basic 

benefits that are provided in network 

and out-of-network. This change 

compared to our proposed text for 

paragraph (f)(4) also improves the 

regulation text by making the 

requirement to not exceed MOOP limits 

calculated by CMS more definitive and 

transparent than the general reference to 

paragraph (f)(4) in the February 2020 

proposed rule. In addition, we added a 

statement to paragraph (f)(4) to codify 

CMS’s longstanding policy (since 2012) 

that PFFS plans must use the innetwork MOOP limit for all covered 

basic benefits, regardless of whether the 

provider is contracted with the PFFS 

plan or whether the PFFS plan has a 

partial or full provider network. 

Specifically, PFFS plans have been 

subject to the in-network MOOP limits 

for in- and out-of-network benefits 

because of the complexities of their 

provider network designs and ability to 

use balance billing. We also modified 

paragraph (f)(4)(i) to clarify that CMS 

will calculate three in-network MOOP 

limits. Additional changes to paragraph 

(f)(4)(i) (namely, defining a consistent 

term that describes the data CMS uses 

in the methodology to calculate MOOP 

limits and specifying the dollar ranges 

for each MOOP type) are discussed 

more completely in section II.A.4.b. of 

this FC. 

We thank commenters for all of their 

input. In this FC, we are finalizing the 

proposed addition of a third, 

intermediate MOOP type at 

§§ 422.100(f)(4) and (f)(5) and 

422.101(d)(2) and (d)(3). The three 

MOOP types will apply to MA local and 

regional plans and to in-network and, 

for PPO plans, out-of-network basic 

benefits. The methodology for 

calculating the MOOP limits, including 

that the calculations are subject to the 

rounding rules in paragraph (f)(4)(iii) 

and the ESRD cost transition schedule 

in paragraph (f)(4)(vii), is discussed in 

sections II.A.4.b. and c. of this FC. 

Among the modifications we are 

finalizing are a change in the scope of 

data used to calculate the MOOP and 

cost sharing limits (discussed in section 

II.A.4.b. of this FC) and a change in the 

transition schedule for the ESRD cost 

differential (discussed in section 

II.A.4.c. of this FC). Further, we are 

finalizing the addition of descriptive 

headings to § 422.100(f)(1)—(9) to orient 

the reader to the content in each 

paragraph. While we did not propose 

updates to paragraphs (f)(1)–(3), the 

addition of headings will improve the 

clarity of the regulations, does not 

change the substance of the regulations, 

and results in a consistent approach for 

paragraph (f). Paragraph (f)(6) and new 

paragraphs (f)(7)–(9) are discussed in 

detail in section II.B. of this FC. 

b. Codify the Methodology for the Three 

MOOP Limits for 2023 and Subsequent 

Years (§ 422.100(f)(4)) 

Comment: A few commenters 

responded to the solicitation from the 

February 2020 proposed rule on 

whether a specific rule requiring CMS to 

issue subregulatory guidance applying 

the methodology in these regulations by 

a specific date each year should be 

codified. The commenters requested 

CMS provide guidance well in advance 

of the upcoming plan year that the 

MOOP limit changes are effective. A 

commenter requested CMS release 

annual guidance no later than 60 days 

prior to the first Monday in April with 

a minimum 30-day comment period to 

align with the Advance Notice of 

Methodological Changes for the 

upcoming Calendar Year for Medicare 

Advantage Capitation Rates and Part C 

and Part D Payment Policies. 

Response: CMS will apply the 

finalized regulations each year to 

calculate the MOOP limits for contract 

year 2023 and future years using the 

methodology adopted in this FC and the 

most recent Medicare FFS data 

projections. The final contract year 2023 

MOOP limits in Table 5 are calculated 

using the methodology and formulas in 

§ 422.100(f)(4). These calculations using 

contract year 2023 Medicare FFS data 

projections (based on 2017 to 2021 

Medicare FFS data) are provided in 

Tables 2 through 4. We are adopting at 

§ 422.100(f)(7)(iii) a provision regarding 

the release of annual subregulatory 

guidance beginning for contract year 

2024. The guidance will identify the 

contract year MOOP limits that are set 

and calculated using the methodology 

and standards in §§ 422.100(f) and 

422.101(d). This guidance may include 

a description of how CMS calculated the 

ESRD cost differential to set the MOOP 

limits. This annual guidance will be 


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9 Individuals and organizations may request 

placement on the HPMS listserv at https://

hpms.cms.gov/app/ng/home/. 

issued prior to bid submission to allow 

sufficient time for MA organizations to 

prepare and submit plan bids. We 

expect this date will typically be by the 

first Monday in April, which aligns with 

the deadline for the Rate Announcement 

for MA rates and the risk adjustment 

factors under section 1853(b) of the Act 

and § 422.312. Coordinating these 

MOOP and other cost sharing limit 

changes with the announcement of MA 

payment policies for the year is 

important to CMS and means that the 

final annual guidance of how the 

regulations we are adopting in this FC 

will be applied with updated data is 

unlikely to be issued prior to the first 

Monday in April. However, we are not 

adopting this date as a deadline for the 

final issuance of annual guidance 

specifying the MOOP limits and cost 

sharing standards as CMS may not 

always be able to meet this timeline as 

competing priorities, particularly those 

with statutory deadlines such as the 

Rate Announcement, may take 

precedence. For contract year 2024, we 

expect to issue the final MOOP limits 

and cost sharing standards sometime in 

April, 2023. As finalized in 

§ 422.100(f)(7)(iii), CMS will provide a 

public notice and comment period on 

the projected MOOP limits and cost 

sharing limits for the upcoming contract 

year unless a public comment period is 

impracticable, unnecessary, or contrary 

to the public interest. We believe these 

situations will be rare and intend to 

solicit comment annually, but believe 

that aligning the availability of prior 

notice and an opportunity to comment 

with rulemaking standards, which 

include authority to waive prior notice 

and a comment period when it is 

impracticable, unnecessary, or contrary 

to the public interest, is appropriate. To 

the extent necessary and appropriate, 

CMS may solicit and consider public 

comment on actuarial approaches before 

releasing the final MOOP limits and cost 

sharing standards as required in 

paragraph (f)(7)(iii). The exercise of 

actuarial judgment by the OACT may be 

a topic on which the public, or MA 

organizations, wish to comment when 

reviewing how CMS has applied the 

regulations adopted in this FC to 

calculate the benefit parameters for MA 

plans. As appropriate, we will consider 

such comments and may revise the 

decisions made in developing the 

projections and calculations of the 

MOOP and other cost sharing limits. In 

addition to using set departmental 

methods of posting guidance (for 

example, the HHS guidance repository), 

CMS may also release this annual 

subregulatory guidance through 

communication vehicles CMS has used 

in the past to deliver certain guidance, 

such as HPMS memoranda.9 We believe 

stakeholders are used to annual 

guidance for the MA program being 

released through these additional 

avenues and continuing this practice 

will encourage comment submissions as 

received in prior years. 

We did not codify a deadline or a 

specific minimum time frame for the 

comment period on the MOOP and cost 

sharing standards for the upcoming 

contract year to ensure flexibility when 

necessary in future situations. As 

highlighted by the COVID–19 pandemic, 

maintaining a certain level of flexibility 

in regulation can be beneficial for the 

agency to better serve our stakeholders. 

For example, we may consider a 

comment period less than 30 days in the 

event of delays from external variables 

(such as, public health emergencies) 

when it is necessary in order to release 

final MOOP and cost sharing limits on 

a timeframe that is sufficient for MA 

organizations to prepare and submit 

plan bids. This approach will support 

the release of subregulatory guidance 

that addresses MOOP limits and cost 

sharing standards in advance of the 

upcoming plan year. 

We are finalizing the proposal that the 

three MOOP types will be calculated 

using the 95th and 85th percentiles of 

projected Medicare FFS beneficiary outof-pocket spending and the mid-point 

between those with the specific 

provisions as provided in 

§ 422.100(f)(4). In addition, we are 

finalizing additional changes in the 

codification of the methodology that 

CMS uses to calculate MOOP limits in 

paragraph (f)(4). First, the ESRD cost 

transition (which was proposed in 

paragraph (f)(4)(vii)) is finalized in 

paragraph (f)(4)(vi) with changes from 

the proposal and we are finalizing the 

rules for calculating the in-network 

MOOP limits for 2023 in 

§ 422.100(f)(4)(iv) and for 2024 and 

subsequent years in § 422.100(f)(4)(v) (as 

more completely addressed in section 

II.A.4.c. of this FC). 

Second, we are not finalizing the term 

‘‘complete’’ in various provisions that 

describe the data used to develop the 

cost projections that are the basis for 

calculating the MOOP limits to more 

accurately reflect current practice in 

calculating MOOP limits and cost 

sharing limits. The February 2020 

proposed rule stated that the OACT uses 

the most recent, complete Medicare FFS 

data to project costs for the applicable 

year. Upon reflection, CMS realizes that 

the word ‘‘complete’’ may be subject to 

different interpretations. For example, 

‘‘complete’’ could be interpreted as 

meaning that the data for that year being 

used to project costs is missing no 

information or that only one year of data 

would be used by the OACT to project 

costs. To ensure clarity in the regulation 

text on this point, we are removing the 

reference of ‘‘complete’’ and explaining 

here how the OACT approaches 

developing the projections to be used in 

calculating cost sharing limits. In 

developing the projections that CMS 

uses to determine cost sharing limits, 

the OACT uses several years of 

Medicare data (generally 99 percent 

complete) that apply trend factors 

(consistent with the most recent 

Medicare Trustees Report). The trend 

factors give the most weight to the more 

recent calendar years of data. 

Projections are then modified using 

actuarial judgement. This is considered 

an actuarially acceptable approach in 

determining and projecting Medicare 

FFS percentiles and is consistent with 

longstanding policy. As a result, we are 

updating the references to the data CMS 

uses to calculate MOOP and cost 

sharing limits throughout the 

regulations at §§ 422.100(f) and (j) and 

422.101(d). Specifically, in paragraph 

(f)(4)(i) we are defining the term, 

‘‘Medicare FFS data projections’’ as 

meaning the projections of beneficiary 

out-of-pocket costs for the applicable 

contract year, based on recent Medicare 

FFS data, including data for 

beneficiaries with and without 

diagnoses of ESRD, that are consistent 

with generally accepted actuarial 

principles and practices as outlined in 

paragraph (f)(7)(i) (discussed 

subsequently in this response). The 

Medicare FFS data and resulting 

Medicare FFS data projections 

necessarily include cost and utilization 

data associated with the projected outof-pocket costs. As defined and used 

throughout the regulations, the term 

‘‘Medicare FFS data projections’’ 

concisely and consistently describes the 

data CMS uses to calculate MOOP and 

cost sharing limits. In addition, we 

believe using the term ‘‘Medicare FFS 

data projections’’ in describing the data 

is consistent with past practice and our 

intent for this aspect of the methodology 

(that is, data are from calendar years but 

the data are not fully complete, data 

from more than one calendar year may 

be used, trend factors are used, and 

projections are made to the contract year 

for which the MOOP limits are set). 

Based on the definition and how we 

have used the term, the Medicare FFS 


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data projections reflect full 

incorporation of the ESRD cost 

differential. 

Third, we are finalizing the substance 

of proposed § 422.100(f)(4)(ii)(A) 

through (C) in paragraphs (f)(4)(i)(A) 

through (C) with clarification. 

Specifically, we are clarifying in 

paragraphs (f)(4)(i)(A) and (B), 

consistent with Table 4 (Illustrative 

Example of In-Network MOOP Limits 

Based on Most Recent Medicare FFS 

Data Projections) in the February 2020 

proposed rule, that the ranges 

determining in a plan’s MOOP amount 

is considered a mandatory or 

intermediate MOOP type are as follows: 

• Mandatory MOOP limit: One dollar 

above the intermediate MOOP limit and 

up to and including the mandatory 

MOOP limit. 

• Intermediate MOOP limit: One 

dollar above the lower MOOP limit and 

up to and including the intermediate 

MOOP limit. 

We are finalizing the description of 

the range for the lower MOOP limit in 

paragraph (f)(4)(i)(C) as proposed (in 

paragraph (f)(4)(ii)(C)) as we believe the 

proposed regulation text is sufficiently 

clear. 

Next, we are finalizing 

§ 422.100(f)(4)(ii) with a more complete 

list of the regulations which use the 

terms ‘‘mandatory MOOP limit,’’ 

‘‘intermediate MOOP limit,’’ and ‘‘lower 

MOOP limit.’’ These terms encompass a 

MOOP amount that varies from the 

specific highest allowable dollar figure 

announced by CMS for each MOOP type 

when the plan’s MOOP amount is 

within the ranges specified in 

§ 422.100(f)(4)(i)(A) through (C). We 

proposed to refer to paragraphs (f)(6) 

and (j) of § 422.100, but are finalizing 

references to paragraphs (f) and (j) of 

§ 422.100, § 422.101(d), and 

§ 422.113(b)(2)(v). This change better 

reflects the cost sharing requirements 

finalized in section II.B. of this FC. 

Referring to § 422.101(d) is consistent 

with how the types of in-network 

MOOP limits referenced in 

§ 422.100(f)(4)(i)(A), (B), and (C) will be 

used, beginning for contract year 2023, 

to calculate the catastrophic and total 

catastrophic (combined MOOP) limits 

that apply to regional plans under 

§ 422.101(d)(2) and (3). 

To better reflect how finalized 

§ 422.100(f)(4) applies to catastrophic 

and total catastrophic (combined 

MOOP) limits, increase clarity in the 

regulations, and make necessary 

corrections from the February 2020 

proposed rule to codify the range CMS 

has applied in calculating and 

evaluating compliance with these 

MOOP limits, we are also finalizing 

changes in § 422.101(d)(2) and (3). We 

are consolidating proposed 

§ 422.101(d)(2) to clearly require MA 

regional plans to: (1) Establish a 

catastrophic enrollee MOOP for basic 

benefits that are furnished by innetwork providers that is consistent 

with § 422.100(f)(4); and (2) have the 

same MOOP type (lower, intermediate, 

or mandatory) for the catastrophic (innetwork MOOP) limit and total 

catastrophic (combined in-network and 

out-of-network expenditures) limit 

under § 422.101(d)(3). 

In addition, we are adding new 

paragraphs (d)(3)(ii)(A), (B), and (C) in 

§ 422.101. New paragraphs (d)(3)(ii)(A), 

(B), and (C) specify the ranges to 

determine if a plan’s total catastrophic 

(combined MOOP) amount is 

considered a mandatory, intermediate, 

or lower MOOP type for purposes of 

§§ 422.100 and 422.101. These 

correspond to the ranges in 

§ 422.100(f)(4)(i)(A) through (C) but are 

specific to the total catastrophic 

(combined MOOP) limits. Including 

these ranges for total catastrophic 

(combined MOOP) limits improves the 

regulation overall by providing more 

specificity in our codification of 

longstanding policy. As finalized in new 

§ 422.101(d)(3)(ii)(A), (B), and (C), the 

ranges that define the type of total 

catastrophic (combined MOOP) limit 

(mandatory, intermediate, and lower) 

are as follows: 

• Mandatory MOOP limit: One dollar 

above the in-network intermediate 

MOOP limit and up to and including 

the total catastrophic mandatory MOOP 

limit. 

• Intermediate MOOP limit: One 

dollar above the in-network lower 

MOOP limit and up to and including 

the total catastrophic intermediate 

MOOP limit. 

• Lower MOOP limit: Between $0.00 

and up to and including the total 

catastrophic lower MOOP limit. 

This addition adds clarity to the 

regulation text and the ranges now 

codified in § 422.101(d)(3)(ii)(A) and (B) 

are consistent with our current practice 

for setting the lower and upper ranges 

of the total catastrophic MOOP limits. 

Finalizing regulation text with these 

ranges explicitly described reflects a 

necessary correction to the proposed 

rule. Specifically, the approach in 

§ 422.101(d)(3)(iii)(A) through (C) of 

having total catastrophic (combined 

MOOP) limits set one dollar above the 

in-network lower and intermediate 

MOOP limit amounts (for the total 

catastrophic (combined) intermediate 

and mandatory MOOP limits, 

respectively) is consistent with 

longstanding practice and reflects our 

current policy for how MA plans must 

have the same type of in-network and 

total catastrophic (combined MOOP) 

amount (mandatory, intermediate, or 

lower). In the illustrative MOOP limits 

from Table 5 (Illustrative Example of 

Combined MOOP Limits for LPPO And 

Catastrophic (MOOP) Limits for RPPO 

Plans Based on Most Recent Medicare 

FFS Data Projections) in the February 

2020 proposed rule, the lower range of 

the illustrative combined intermediate 

and mandatory MOOP types did not 

correctly reflect our intention to 

continue our current policy. For 

example, based on the illustrative innetwork and combined MOOP limits for 

contract year 2022 provided in Tables 4 

and 5 in section VI.A. of the February 

2020 proposed rule, an MA plan that 

established an in-network intermediate 

MOOP of $3,451 would have to 

establish a combined intermediate 

MOOP between $5,151 and $8,400, even 

if a plan wanted to establish a combined 

MOOP amount of $4,000. Requiring an 

MA plan with an in-network MOOP 

amount to establish a combined MOOP 

amount that is one dollar above the 

combined lower MOOP limit (as shown 

in Table 5 from the February 2020 

proposed rule) unnecessarily raises the 

combined MOOP amount rather than 

tying the lower range of the amount to 

the type of in-network MOOP amount 

chosen. As a result, the contract year 

2023 in-network and total catastrophic 

(combined MOOP) limits in Table 5 

reflect this finalized policy (as well as 

other changes more completely 

discussed in this section to apply the 

proposed rounding rules in 

§ 422.100(f)(4)(iii), clarify how the 

application of the 10 percent cap on 

increases to the MOOP limits applies, 

and changes to the proposed ESRD cost 

transition discussed in section II.A.4.c. 

of this FC.). No changes in the approach 

to calculating the lower range of the 

combined lower MOOP limit are needed 

as the MOOP limits were shown to 

correctly reflect current practice by 

beginning at zero dollars in Table 5 from 

the February 2020 proposed rule. In 

summary, CMS will continue our 

longstanding approach by codifying the 

ranges finalized in §§ 422.100(f)(4)(i) 

and 422.101(d)(3)(ii) to determine if an 

MA organization is compliant with the 

finalized requirement in 

§ 422.101(d)(2)(ii) (proposed in 

paragraph (d)(2)(i)) that the MA plan has 

the same type of in-network and total 

catastrophic (combined MOOP) limit 

(mandatory, intermediate, or lower). 

We are finalizing at § 422.100(f)(4)(iii) 

the rounding rules CMS uses for the 

MOOP limits generally as proposed but 


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10http://www.actuarialstandardsboard.org/ 

profcounts/asop-no-1-and-professional-judgment/. 

we are also finalizing new text to clarify 

and correct how the rounding rules at 

§ 422.100(f)(4)(iii) are applied in 

calculating the in-network intermediate 

MOOP limit and all types of the 

catastrophic MOOP limits. In order to 

avoid applying the rounding rules in 

paragraph (f)(4)(iii) twice to calculate 

the in-network intermediate MOOP 

limit and to ensure that the resulting 

intermediate MOOP limit most closely 

reflects a numeric midpoint between the 

final mandatory and lower MOOP 

limits, we are finalizing a modification 

to paragraphs (f)(4)(iv)(B) and (v)(B). 

First, CMS will identify the unrounded 

mandatory and lower MOOP limits and 

apply the 10 percent cap on increases to 

the mandatory and lower MOOP limits 

from the prior year (as discussed in 

section II.A.4.c. in this FC). Second, 

CMS will identify the numeric midpoint 

of those two figures. Third, CMS will 

apply the rounding rules in paragraph 

(f)(4)(iii) to that numeric midpoint. The 

resulting figure is the intermediate 

MOOP limit. This process of calculating 

the intermediate MOOP limit is 

illustrated in Table 3. Specifically, 

Table 3 shows the calculations to set the 

contract year 2023 in-network 

intermediate MOOP limit following the 

methodology finalized in this FC. By 

basing the intermediate MOOP limit on 

the non-rounded, capped amounts used 

to calculate the final mandatory and 

lower MOOP limits, we are still 

calculating the intermediate MOOP 

limit as the numeric midpoint between 

the two MOOP limits as proposed. We 

are not finalizing any reference to the 

rounding rules in § 422.101(d)(2) 

because this modification to the 

provisions in § 422.100(f)(4) will apply 

to the catastrophic MOOP limits for innetwork basic benefits for regional MA 

plans calculated under § 422.101(d)(2) 

because of how § 422.101(d)(2) crossreferences § 422.100(f)(4). In addition, 

we are finalizing § 422.101(d)(3)(ii) with 

clarifying language about when the 

rounding rules are applied in order to 

avoid applying the rounding rules twice 

in calculating the total catastrophic 

MOOP limits for regional MA plans for 

contract year 2023 and subsequent 

years. We are also finalizing clarifying 

language about applying the 10 percent 

cap on increases to the mandatory and 

lower MOOP limits from the prior year 

when calculating the total catastrophic 

MOOP limits. Specifically, for contract 

year 2023 and subsequent years, we will 

calculate the total catastrophic 

(combined MOOP) limits for regional 

MA plans by multiplying the respective 

non-rounded in-network MOOP limits 

(after application of the 10 percent cap 

on increases to the mandatory and lower 

MOOP limits from the prior year in 

§ 422.100(f)(4)(iv) and (v)) by 1.5 and 

then applying the rounding rules to that 

figure. The rounded number will be the 

final upper range amount for the 

catastrophic limit for MA regional plans 

for combined in-network and out-ofnetwork expenditures for basic benefits. 

We believe these modifications to 

§ 422.100(f)(4)(iv)(B) and (v)(B), and to 

§ 422.101(d)(3)(ii) will result in more 

precise in-network intermediate MOOP 

limits and total catastrophic (combined 

MOOP) limits for future years. CMS 

completed the calculations of the innetwork intermediate and total 

catastrophic (combined MOOP) limits 

for contract year 2023 following this 

methodology as shown in Tables 3 and 

4. The final contract year 2023 innetwork intermediate MOOP limits and 

total catastrophic (combined MOOP) 

limits in Table 5 reflect these updates 

(as well as the other changes for 

calculating MOOP limits finalized in 

this FC). MA plans must comply with 

the resulting final MOOP limits 

included in Table 5 for contract year 

2023. 

We are also finalizing additional and 

revised text in § 422.101(d)(2) and (d)(3) 

to clarify the scope of the regional MA 

plan MOOP amounts and the specific 

services to which the different MOOP 

limits apply: The catastrophic limit 

calculated under paragraph (d)(2) 

applies to in-network basic benefits and 

the total catastrophic limit calculated 

under paragraph (d)(3) applies to innetwork and out-of-network basic 

benefits. We are finalizing a new 

paragraph (d)(3)(iii) to clearly require an 

MA organization to establish the total 

catastrophic MOOP amount (mandatory, 

intermediate, or lower) within the dollar 

range specified in paragraphs 

(d)(3)(ii)(A) through (C) and the type of 

MOOP limit will be used for purposes 

of §§ 422.100(f)(6), (j)(1), 422.101(d), 

and 422.113(b)(2)(v). 

In large part the proposal was to 

describe and codify the methodology 

used for MOOP limits under CMS’s 

policies first developed in a 2011 

rulemaking for adopting MOOP limits 

beginning in 2012. As described in the 

February 2020 proposed rule, the OACT 

performs the data projections used for 

setting MOOP limits. Taking the most 

recent Medicare FFS data and 

developing projections for the contract 

year for which we will be calculating 

the MOOP limits necessarily involves 

informed judgment and the making of 

actuarial assumptions. CMS and the 

OACT have been guided by generally 

accepted actuarial principles and 

practices in developing the projections 

used for calculating the MOOP limits. 

The proposal implicitly acknowledged 

this in its description of how the OACT 

analyzes the relevant data to develop 

the projections in the preamble of the 

February 2020 proposed rule. 

Specifically, the February 2020 

proposed rule discussed how the OACT 

conducted necessary analyses and 

projections in the past and made clear 

that the OACT would be involved in 

applying the methodologies to calculate 

the MOOP limits we were proposing. 

CMS will continue to use generally 

accepted actuarial principles and 

practices in finalizing the projections of 

beneficiary out-of-pocket costs that form 

the basis of the methodology to 

calculate MOOP limits. As a result, we 

are also finalizing new § 422.100(f)(7) to 

ensure that this FC provides more detail 

regarding the actuarial nature of how 

Medicare costs are projected which we 

believe is better stated in the regulation 

text. These principles permit discretion 

and the exercise of actuarial judgment; 

as a result, different actuaries and 

analysts may come to different, equally 

appropriate, projections. Actuaries often 

consider different methodologies and 

assumptions to project the effect of 

uncertain events.10 Generally, data from 

full calendar years would be used (and 

may be full data or samples based on 

full data), but specific trends and/or 

utilization patterns from more recent 

periods may be considered even if the 

Medicare FFS program and/or more 

recent utilization information from MA 

encounter data are from incomplete 

years. The projections of the percentiles 

that determine MOOP limits may be 

affected in limited situations by changes 

in legislation (such as, changes in 

Medicare benefits), payment policy 

changes, significant region-specific 

events (such as, natural disasters), or 

other emergency situations. As the 

OACT determines their projections, 

trend factors are applied (consistent 

with the most recent Medicare Trustees 

Report). For example, the OACT will 

apply trend factors that reflect the 

expected volatility and impact of 

COVID–19 on Medicare FFS utilization 

data from prior years in order to 

determine the Medicare FFS data 

projections for 2023 and subsequent 

years that CMS will use in calculating 

MOOP limits for those years. This 

approach is consistent with accepted 

actuarial standards of practice in that 

actuaries may use their professional 

judgment when selecting methods and 

assumptions, conducting an analysis, 

and reaching a conclusion. We reiterate 


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11Tim Courtney and Rachel Stewart, Wakely 

Consulting Group. ‘‘2021 Medicare Advantage 

Advance Notice,’’ March 4, 2020 https://

www.ahip.org/2021-medicare-advantage-advancenotice/. 

that this is an example and that CMS 

and the OACT may exercise actuarial 

judgment in other matters as 

appropriate based on the regulatory 

standard being finalized at paragraph 

(f)(7)(i). CMS may explain the 

significant, professional actuarial 

judgments the OACT considered and 

solicit comment from stakeholders 

through the subregulatory process 

finalized in paragraph (f)(7)(iii) prior to 

final issuance of the MOOP limits and 

cost sharing standards for a future 

contract year. CMS may also describe 

how the OACT reached the projections 

used to calculate MOOP limits, if 

applicable and appropriate. For contract 

year 2023, the Medicare FFS data 

projections of the 95th and 85th 

percentiles included in row D of Table 

2 reflect the OACT’s actuarial 

judgements of expected costs in contract 

year 2023, including considerations of 

the impact from COVID–19. In 

summary, we are finalizing paragraph 

(f)(7)(i) to ensure transparency about the 

standards applied in developing the 

projections used in the methodologies 

for calculating the MOOP limits in 

§§ 422.100(f)(4) and (f)(5), and 

422.101(d)(2) and (d)(3) will be applied 

using generally accepted actuarial 

principles and practices. 

As discussed in more detail in section 

II.B of this FC, new § 422.100(f)(7) will 

also apply to how cost sharing standards 

in paragraph (f)(6) and (j) are calculated 

and evaluated using the methodologies 

adopted in this FC. Accordingly, we 

also discuss this new regulatory 

paragraph as it relates to cost sharing 

standards in section II.B. of this FC. 

Next, we address comments received on 

the ESRD cost transition schedule, 

explain how CMS’s calculations of 

MOOP limits are impacted by ESRD 

costs, and more specifically address 

how the MOOP limits will be set for 

2023 and future years in section II.A.4.c. 

of this FC. 

c. Multiyear Transition of ESRD Costs 

Into the Methodology for MOOP Limits 

and Post-Transition Changes in the 

MOOP Limits (§ 422.100(f)(4)(iv) 

Through (vi)) 

CMS proposed to conduct a multiyear 

transition of ESRD costs into the 

methodology for how we calculate 

MOOP limits. Section 1851(a)(3) of the 

Act, as amended by section 17006 of the 

21st Century Cures Act, amended the 

Medicare statute to permit Medicare 

beneficiaries with diagnoses of ESRD to 

enroll in MA plans beyond the previous 

enrollment limitations, beginning in 

contract year 2021. Before these 

amendments were effective for contract 

year 2021, individuals diagnosed with 

ESRD could not enroll in a MA plan, 

subject to limited exceptions. In the 

proposed rule, we explained that the 

data CMS uses to calculate the MOOP 

limits should also incorporate the outof-pocket expenditures of beneficiaries 

with diagnoses of ESRD, which we are 

referring to in this FC as ‘‘ESRD costs,’’ 

to reflect this statutory change. We also 

proposed safeguards to protect against 

excessive changes in the MOOP limit 

during and after the ESRD cost 

transition. Since the February 2020 

proposed rule, OACT studied the 

impact of expanded ESRD enrollment 

eligibility for the MA program on MA 

benefits using 2021 Medicare data and 

has estimated the impact to be $¥0.45 

PMPM which is the weighted average 

for all MA plans. 

Comment: A commenter noted that 

the February 2020 proposed rule did not 

include Table 11, to which CMS 

referred (85 FR 9076) to illustrate how 

the transition of ESRD costs into the 

MOOP limit calculations would work. 

Response: The references to Table 11 

in the February 2020 proposed rule 

preamble (85 FR 9076) were incorrect. 

We should have referenced Table 4, 

titled ‘‘Table 4—Illustrative Example of 

In-Network MOOP Limits Based on 

Most Recent Medicare FFS Data 

Projections.’’ As indicated in the context 

of the February 2020 proposed rule and 

the table title, Table 4 illustrated the 

transition of the ESRD cost differential 

into the MOOP limit calculations using 

projections of Medicare FFS cost based 

on 2015 to 2019 Medicare FFS data (85 

FR 9077). 

Comment: Many commenters were 

generally concerned about the potential 

effects from enrollee subsidization of 

ESRD costs and believed passing the 

financial burden of ESRD care on to 

enrollees is not an appropriate solution. 

The commenters noted non-ESRD 

enrollee subsidization of ESRD costs 

may produce negative downstream 

effects on MA enrollment, plan options, 

premiums, supplemental benefits 

(including SSBCI), care coordination 

services, and access to lower MOOP and 

cost sharing limits. A commenter that 

opposed the transition of ESRD costs 

into MOOP limits acknowledged that 

some increase may be justified but 

stated that the incorporation of ESRD 

costs simply raises costs for all 

beneficiaries and was similarly 

concerned about non-ESRD enrollees 

subsidizing costs associated with 

enrollees with diagnoses of ESRD. 

A commenter, in referencing a Wakely 

actuarial consulting firm study,11

suggested MA organizations may raise 

enrollee premiums by as much as $18 

per member per month, or reduce 

benefits by a similar magnitude, or limit 

plan options, to cover the increase in 

plan expenses due to covering enrollees 

with diagnoses of ESRD. Another 

commenter mentioned that MA 

organizations may redirect MA rebate 

dollars, normally used for benefit 

enhancements such as reduced cost 

sharing and mandatory supplemental 

benefits, to instead cover the additional 

ESRD costs. A commenter noted that 

while some cost subsidization across all 

MA enrollees is inherent to the design 

of the MA program, the commenter did 

not believe that increasing the cost 

burden for all MA enrollees is a 

sustainable solution for higher costs 

caused by an increased number of ESRD 

beneficiaries in the MA program. 

Another commenter urged CMS to give 

equal consideration to containing outof-pocket costs for all Medicare 

beneficiaries. 

Response: We believe conducting a 

multiyear transition of ESRD costs into 

our methodology for setting MOOP 

limits is an important and necessary 

step to ensure plan designs are not 

discriminatory and protect beneficiaries 

from significant changes in out-ofpocket costs regardless of the MA plan 

they choose. As the MOOP limits will 

apply to enrollees with and without 

diagnoses of ESRD, the data CMS uses 

to calculate the MOOP limits should 

include out-of-pocket expenses from 

beneficiaries with and without 

diagnoses of ESRD similar to how costs 

for other high cost health conditions are 

included in the Medicare FFS data used 

to calculate MOOP limits. 

We appreciate that some MA plans 

anticipate increased costs associated 

with covering the cost of care for 

individuals with diagnoses of ESRD. An 

analysis conducted by the OACT 

demonstrates that the ESRD open 

enrollment opportunities beginning in 

2021 are expected to have a limited 

impact on both the financial outcomes 

of MA organizations and the 

corresponding benefits and premiums of 

the MA program. The primary reasons 

for the relatively small effect are that the 

increase in projected MA ESRD 

enrollment will represent a small 

fraction of membership in MA plans 

and that any financial effects will be 

diluted across existing plan 

membership. For the base data for this 

analysis, the OACT used the 2019 ESRD 

experience submitted by MA 


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12Powers, et al. ‘‘The Beneficial Effects Of 

Medicare Advantage Special Needs Plans For 

Patients With End-Stage Renal Disease’’ September 

2020 https://www.healthaffairs.org/doi/full/ 

10.1377/hlthaff.2019.01793?journalCode=hlthaff. 

organizations as part of their 2021 bids. 

Increases in MA enrollment of 

beneficiaries with ESRD due to the 

expanded ESRD enrollment eligibility 

were estimated based on prior baselines 

that did not include this expansion. The 

expectations are that the projected 

movement of beneficiaries with ESRD 

into the MA program will result in 

slightly decreased MA margins. The 

Medical Loss Ratio (MLR) for ESRD 

enrollees is projected to be higher than 

the MLR for non-ESRD enrollees. The 

MLR is expressed as a percentage, 

generally representing the percentage of 

revenue used for patient care, rather 

than for such other items as 

administrative expenses or profit. In 

general terms, the MLR is inversely 

correlated with margins; higher MLRs 

are normally associated with lower 

margins. The impact of the MA margin 

change on MA benefits was estimated 

based on the assumption that MA 

organizations will recoup the losses 

(gains) stemming from increased ESRD 

enrollment through a reduction 

(increase) in the margin represented in 

the MA bid. Using the revised bid 

margin assumption, we recalculated the 

key bid values, including the plan bid, 

MA rebate, and MA basic premium, if 

applicable. Combining these 

assumptions, the enrollment-weighted 

average estimated change in net MA 

benefits resulting from the ESRD 

enrollment expansion is ¥$0.45 PMPM 

for contract year 2021. 

As provided in section 1853(a)(1)(H) 

of the Act, CMS establishes separate 

rates of payment to MA organizations 

for ESRD beneficiaries enrolled in MA 

plans. See also §§ 422.254 and 422.304 

through 422.308. The rates used for 

enrollees in dialysis or transplant status 

are based on statewide average Medicare 

FFS costs for ESRD beneficiaries in 

dialysis status. For enrollees with 

functioning graft status, the MA county 

benchmark rates are the payment rates. 

The rates for those in dialysis, 

transplant, and functioning graft status 

are also adjusted using a risk adjustment 

methodology that is specific to the 

health care costs for beneficiaries with 

ESRD in dialysis, transplant or 

functioning graft status. The proposal 

being finalized here was about how the 

MOOP limits should be calculated, 

including the data used and the 

percentiles of Medicare FFS data 

projections that should be used in those 

calculations. 

We proposed to transition the out-ofpocket costs for beneficiaries who have 

diagnoses of ESRD into the methodology 

CMS uses to calculate MOOP limits over 

multiple years to avoid sudden and 

significant changes, which would be 

disruptive to enrollees. A sudden and 

significant shift in the MOOP limits— 

which would happen if the MOOP 

limits were increased by 100 percent of 

the ESRD cost difference in one year— 

is not consistent with protecting 

enrollees from disruptive year over year 

benefit or cost sharing changes. In this 

manner, we believe our approach gives 

equitable consideration to containing 

out-of-pocket costs for all current and 

potential MA enrollees. 

CMS acknowledges and understands 

that some plans may adopt a mandatory 

MOOP type. However, we expect MA 

organizations will continue to offer 

favorable benefit designs that meet 

beneficiary needs, are competitive, and 

are attractive to beneficiaries. In 

addition, MA organizations have 

multiple strategies to manage care and 

costs through provider contracting, care 

coordination, case management, plan 

benefit designs, and benefit flexibilities 

including SSBCI and MA uniformity 

flexibility. As such, CMS believes MA 

organizations have the opportunity to 

design affordable benefit packages that 

are tailored to beneficiary needs. CMS 

does not expect the potential negative 

downstream effects on MA enrollment, 

plan options, premiums, supplemental 

benefits (including SSBCI), care 

coordination services, and access to 

lower MOOP limits, referenced by the 

commenters, to come to fruition solely 

due to the provisions in this FC. 

Comment: A few commenters were 

concerned that the ESRD cost transition 

and the resulting MOOP limits would 

promote adverse selection of certain MA 

plans by enrollees with diagnoses of 

ESRD. These commenters noted that the 

nature of the needed medical care to 

manage ESRD is ongoing, complex, and 

will consistently produce annual health 

care costs that significantly exceed the 

projected lower MOOP limit. 

Commenters believe these factors will 

result in beneficiaries with diagnoses of 

ESRD being disproportionately attracted 

to and enrolling in MA plans with lower 

MOOP limits. A commenter noted that 

this would place a heavier cost burden 

on MA plans that endeavor to keep costs 

low for beneficiaries than for plans who 

maintain higher MOOP limits. 

Response: We understand the concern 

about potential adverse selection that 

may result when MA plans establish a 

lower MOOP type for beneficiaries that 

generally have higher health care costs, 

including beneficiaries with diagnoses 

of ESRD. While some MA organizations 

have experience in managing the health 

care services for beneficiaries with 

diagnoses of ESRD, under the prior 

enrollment policy, the proposals on 

MOOP limits and cost sharing 

standards, which we are finalizing with 

some modifications, provide incentives 

in the form of cost sharing flexibilities 

to MA organizations that adopt MOOP 

amounts below the mandatory level. 

Further, MA plans can utilize effective 

risk mitigation strategies, contracting 

arrangements, and care management 

policies in conjunction with the 

addition of the cost sharing flexibilities. 

For example, the People-to-People 

Health Foundation reported MA SNP 

enrollees had lower mortality and lower 

rates of utilization across the care 

continuum in comparison to Medicare 

FFS beneficiaries and stated that SNPs 

may be an effective alternative care 

financing and delivery model for 

patients with diagnoses of ESRD.12

Unlike past years, MA plans adopting a 

mandatory MOOP type in the future 

will have limited cost sharing flexibility 

for most service category standards 

compared to other MOOP limits (for 

example, the cost sharing limit will be 

reduced from 50 percent coinsurance in 

2022 to 30 percent by contract year 2026 

for most professional standards). CMS 

establishes separate rates of payment to 

MA organizations for ESRD 

beneficiaries enrolled in MA plans; the 

rates used for enrollees in dialysis or 

transplant status are based on statewide 

average FFS Medicare costs for ESRD 

beneficiaries in dialysis status and are 

subject to risk adjustment. Therefore, as 

the MA ESRD rates are based on FFS 

costs, higher costs of covering medically 

necessary benefits for beneficiaries with 

ESRD are factored into setting the 

payments to MA plans for enrollees 

with ESRD. As a result, we do not 

believe that the concern about adverse 

selection is as significant as it might 

otherwise be. 

Further, we did not propose or 

discuss increasing MOOP limits or plan 

premiums for only beneficiaries with 

diagnoses of ESRD. Consistent with 

sections 1852(d) and 1854(c) of the Act, 

MA regulations at §§ 422.100(d), 

422.254(b), and 422.262(c) require 

benefits, cost sharing, and premiums for 

enrollees to be uniform. Our 

interpretation of uniformity may permit 

an MA plan to reduce, not increase, cost 

sharing for similarly situated enrollees 

in order to address specific health needs 

of the enrollees (such as, lower cost 

sharing for enrollees with diabetes to 

see an endocrinologist). Section 

422.100(d), which was finalized in 

section V.C. of the January 2021 final 


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13Health Management Associates. ‘‘End-Stage 

Renal Disease and Medicare Advantage.’’ February 

12, 2019. The most recent report is available online 

at: https://www.healthmanagement.com/wpcontent/uploads/Health-Management-AssociatesESRD-and-Medicare-Advantage-White-Paper.pdf. 

14MedPAC. June 2019. Section 2: Medicare 

Beneficiary Demographics. June 2019 Data Book: 

Health Care Spending and the Medicare Program. 

The most recent version of MedPAC’s annual data 

book may be retrieved from: https://

www.medpac.gov/document-type/data-book. 

15 KFF, ‘‘Medicare Beneficiaries With End-StageRenal Disease (ESRD),’’ 2019 https://www.kff.org/ 

medicare/state-indicator/enrollees-with-esrd/

?currentTimeframe=0&

sortModel=%7B%22colId%22

:%22Location%22,%22sort%22:%22asc%22%7D. 

16Health Management Associates. ‘‘End-Stage 

Renal Disease and Medicare Advantage.’’ February 

12, 2019. The most recent report is available online 

at: https://www.healthmanagement.com/wpcontent/uploads/Health-Management-AssociatesESRD-and-Medicare-Advantage-White-Paper.pdf. 

17 Kazan et al, Avalere Health, ‘‘Medicare 

Advantage Plans May Be Paid Below Actual ESRD 

Patients’ Costs in Large Metropolitan Areas in 

2021’’ December 2019 https://avalere.com/insights/ 

medicare-advantage-plans-may-be-paid-belowactual-esrd-patients-costs-in-large-metropolitanareas-in-2021. 

rule to codify our interpretation of 

uniformity, does not authorize lower 

cost sharing or increased benefits for 

healthier enrollees. The requirement for 

uniform benefits is also subject to the 

waiver of uniformity that may be 

provided for an MA plan to target 

specific Special Supplemental Benefits 

for the Chronically Ill (SSBCI) under 

§ 422.102(f) and how optional 

supplemental benefits are only provided 

for enrollees who elect to pay the extra 

premium for that coverage under 

§ 422.101(c)(2). The ability to offer 

supplemental benefits that have a 

connection with a specific health 

condition is permitted only for 

reductions in cost sharing and 

additional benefits, not for decreasing 

benefits, and requires the supplemental 

benefit to be available to all similarly 

situated enrollees. We did not propose 

to permit an MA plan to apply MOOP 

amounts (or other cost sharing 

standards) in a non-uniform manner and 

are not finalizing any authority for that. 

CMS’s proposal discussed calculating 

MOOP limits that are applied uniformly 

to all MA plan enrollees to cap the 

MOOP costs for enrollees, protect 

beneficiaries, and prevent 

discrimination against enrollees with 

significant health care needs. Our 

proposal necessarily encompassed 

projected future increases to the MOOP 

limits but those increases are also to be 

uniformly applied. In addition, plan 

premiums are applied uniformly across 

plan enrollees (except for EGWPs that 

use a waiver of the requirement for 

uniform premiums) and cannot be 

targeted to specific beneficiaries or 

those with certain health conditions. 

Because of these uniformity 

considerations, we do not believe that 

the methodology for calculating the 

MOOP limits or the incorporation of the 

ESRD cost differential into the data that 

is used to calculate the MOOP limits 

will result in adverse selection or 

discrimination against beneficiaries 

with diagnoses of ESRD. 

Comment: A commenter believed the 

proposal to transition the out-of-pocket 

costs for beneficiaries with diagnoses of 

ESRD into the data used to set MOOP 

limits would result in an increased 

MOOP limit only for enrollees with 

diagnoses of ESRD and stated that an 

$850 increase in the mandatory MOOP 

limit is insufficient for MA 

organizations to cover the ESRD-related 

costs for this population. 

Response: We reiterate that as 

proposed and finalized, the MOOP 

limits may not be applied so that 

enrollees with diagnoses of ESRD have 

a higher MOOP amount than enrollees 

without these health conditions. A more 

complete discussion of the uniformity 

aspects of CMS’s MOOP limits proposal 

is available in section II.A.4.a. of this FC 

and in a previous response to comment 

in this section. Although the commenter 

stated that initial increases to MOOP 

limits proposed for contract year 2022 

(in essence, the first year we proposed 

to apply the changes) were insufficient 

to cover the increased costs that are 

projected for enrollees with diagnoses of 

ESRD, the MOOP limits are projected to 

further increase in future years based on 

our proposal to incorporate more of the 

ESRD cost differential. 

As discussed in greater detail 

subsequently in this section, CMS will 

limit the potential increase in MOOP 

limits to a cap of 10 percent compared 

to the MOOP limits set for the prior year 

(beginning with contract year 2023). As 

illustrated in Tables 2 and 3 and 

reflected in the final MOOP limits for 

contract year 2023, the in-network 

contract year 2023 mandatory MOOP 

limit has been capped at a 10 percent 

increase based on the contract year 2022 

mandatory MOOP limit. This means the 

mandatory MOOP limit for contract year 

2023 does not fully reflect the 95th 

percentile of Medicare FFS data 

projections as doing so would result in 

an increase greater than 10 percent 

compared to the contract year 2022 

mandatory MOOP limit. Applying this 

cap on the amount of potential increase 

each year to the MOOP limits is an 

important beneficiary protection and 

consistent with how we have previously 

balanced the goal of limiting enrollee 

costs (to avoid plan designs that 

discourage enrollment by sicker 

beneficiaries) and ensuring continued 

access to affordable and sustainable 

benefit packages when setting MOOP 

limits. 

Comment: A few commenters who 

were opposed to the ESRD cost 

transition generally encouraged CMS to 

explore alternative solutions to account 

for the approximately $6,300 difference 

between the existing mandatory MOOP 

limit ($6,700) and the average annual 

out-of-pocket costs for beneficiaries 

with ESRD in Medicare FFS ($13,042 13

based on data from 2015–2017) rather 

than raising the MOOP limit (as 

projected from incorporating the ESRD 

cost differential into the out-of-pocket 

costs used to establish the MOOP and 

cost sharing limits). Some of these 

commenters referenced data analyses 

completed by MedPAC14 and the Kaiser 

Family Foundation (KFF) 15 that found 

that the average cost of covering 

Medicare beneficiaries with ESRD is 

significantly more than the healthcare 

costs of an average MA beneficiary. 

Another commenter also referred to the 

research finding that applying the 

mandatory MOOP limit to ESRD 

beneficiary spending results in 

increased MA costs by an estimated 8 to 

9 percent on average when compared to 

Medicare FFS spending.16 A commenter 

described this data from the perspective 

that every ESRD enrollee effectively 

represents an outlier compared to the 

current average costs of care for other 

beneficiaries. Another commenter was 

concerned about the possibility of MA 

plans discriminating against and 

discouraging beneficiaries with 

diagnoses of ESRD from enrolling in the 

MA program. 

In a related note, a few commenters 

encouraged CMS to consider how 

coverage costs for ESRD patients can be 

significantly above or below the overall 

state average in certain locales, such as 

metropolitan areas in California, 

Florida, Ohio, and Texas. A commenter 

referenced the Avalere Health analysis 

of 2018 Medicare FFS claims data that 

found 10 of the top 15 metropolitan 

statistical areas with the most ESRD 

patients had costs that exceeded the MA 

payment rate.17 Given the research, a 

few commenters suggested that most, if 

not all, enrollees with diagnoses of 

ESRD will surpass the highest 

allowable, mandatory MOOP limit 

despite projected increases from the 

proposed ESRD cost transition. 

Response: We appreciate the 

commenters’ feedback and requests to 

consider alternatives to raising the 

MOOP limits to protect beneficiaries 

from increases in their out-of-pocket 


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18The Calendar Year 2021 and 2022 Rate 

Announcements may be accessed at https://

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

MedicareAdvtgSpecRateStats/Announcements-andDocuments. 

costs. Under the current regulation, MA 

MOOP limits have been based on stable 

percentiles of Medicare FFS spending. 

This approach supports our goal of 

ensuring that all eligible beneficiaries 

have access to affordable and 

sustainable benefit packages. Our 

approach to incorporate costs of 

beneficiaries with diagnoses of ESRD in 

setting MOOP limits is consistent with 

the approach CMS has historically used 

of spreading the burden of medical costs 

across all potential MA enrollees 

uniformly through the continued use of 

the 95th and 85th percentiles of out-ofpocket spending for the population that 

is eligible to enroll in an MA plan. 

Historically, CMS has tried to balance 

between limiting beneficiaries’ 

maximum out-of-pocket costs and 

potential changes in premium, benefits, 

and cost sharing, with the goal of 

ensuring beneficiary access to affordable 

and sustainable benefit packages. This 

practice avoids discriminating against 

beneficiaries with diagnoses of ESRD— 

or any group of beneficiaries with a 

particular high cost condition or health 

status—that would result if there were 

higher premiums, cost sharing, or 

MOOP amounts applicable only to those 

individuals with a certain chronic 

condition. Excluding the out-of-pocket 

costs for beneficiaries with diagnoses of 

ESRD from the data used to calculate 

the MOOP limits might serve to keep 

the out-of-pocket expenses borne by MA 

enrollees lower, but would not be 

consistent with ensuring access to 

affordable and sustainable benefit 

packages for all eligible beneficiaries 

because it would result in a significant 

increase in the costs that exceed the 

MOOP limit and therefore are borne by 

the MA organization. Increasing the 

coverage costs for MA organizations 

could lead to other increases in 

premiums or decreases in benefits. 

Further, calculating the MOOP limits at 

a level that is significantly less than the 

85th and 95th percentiles of beneficiary 

out-of-pocket spending is not as 

consistent with the underlying purpose 

for adopting the MOOP: Ensuring that 

beneficiaries that are most likely to be 

discriminated against—those 

beneficiaries who have much higher 

health care needs—are not discouraged 

from enrolling in an MA plan. 

We acknowledge that as beneficiaries 

with diagnoses of ESRD enroll in greater 

numbers into the MA program, MA 

organizations will more often than 

before have to cover the costs associated 

with that chronic condition when these 

enrollees meet the plan’s MOOP amount 

and incur more costs past the MOOP 

than enrollees without diagnoses of 

ESRD are projected to do, on average. 

CMS uses historical FFS reimbursement 

and enrollment data for beneficiaries 

with diagnoses of ESRD to develop the 

rates used to pay MA organizations for 

these enrollees, which are generally 

higher than the rates paid to MA 

organizations for enrollees without 

diagnoses of ESRD.18 CMS believes 

without incorporating ESRD costs into 

the MOOP limits, MA plans may have 

a greater likelihood of increasing 

premiums for all enrollees or reducing 

benefits to address the expected 

increased costs associated with 

additional enrollment of beneficiaries 

with diagnoses of ESRD. Guarding 

against those outcomes is consistent 

with the standard CMS uses to calculate 

the MOOP limit under current 

§§ 422.100(f) and 422.101(d) and part of 

our rationale for incorporating the ESRD 

cost differential. We believe that it is 

important for the MOOP limits to be 

calculated using data regarding the outof-pocket expenses of beneficiaries with 

and without diagnoses of ESRD because 

the MOOP limits will apply to enrollees 

with and without diagnoses of ESRD. 

MA organizations serve different 

geographic areas and ESRD enrollment 

and spending may vary across 

metropolitan areas and states. It would 

be overly complex to set MOOP limits 

by geographic area. For example, some 

complicating factors include: Medical 

economics in different geographic areas; 

how to reasonably define geographic 

areas; varying negotiating leverage of 

MA organizations and resources; and 

potential resulting complexities for 

beneficiaries in evaluating plan options. 

Also, it would be difficult to incorporate 

the remainder of the ESRD cost 

differential at a rate that was consistent 

with the enrollment rate of beneficiaries 

with diagnoses of ESRD in specific 

geographic areas. Finally, setting 

geographically specific MOOP limits 

was not proposed. 

Comment: Some commenters 

requested CMS modify the ESRD cost 

transition schedule to match projected 

enrollment changes or actual enrollment 

of beneficiaries with diagnoses of ESRD. 

For example, a commenter requested 

CMS delay finalizing the complete 

ESRD cost transition schedule until the 

actual year-1 penetration rate of 

beneficiaries with diagnoses of ESRD in 

the MA program can be assessed. In 

addition, this commenter requested (if 

the actual penetration rates were not 

used) that CMS match the ESRD cost 

transition rate to OACT’s projected rate 

of transition of beneficiaries with 

diagnoses of ESRD into the MA 

program. 

Response: CMS endeavors to calculate 

and issue these MOOP limit and cost 

sharing standards sufficiently in 

advance of the bid deadlines (typically 

by the first Monday in April, as 

discussed in section II.A.4.b. of this FC, 

when capitation rates and payment 

policies are announced for the 

upcoming year) to provide MA 

organizations with sufficient time to 

develop their bids. In addition, we did 

not propose to set the schedule for 

transitioning ESRD costs into MOOP 

limits based upon OACT’s projection of 

ESRD enrollment because actual ESRD 

enrollment per plan may vary and 

OACT’s analysis reflects expectations 

for the MA program as a whole. Using 

the penetration and enrollment rates 

from the prior year to transition the 

ESRD cost differential would not truly 

address the issue raised by the 

commenter (that is, the amount of the 

ESRD cost differential used in 

calculating the MOOP limit for a year is 

not the same as the MA enrollment rate 

of beneficiaries with diagnoses of ESRD 

for that year). The time lag between: (1) 

The enrollment information we have 

available at the time we calculate the 

MOOP limits; and (2) the contract year 

for which the MOOP limits are applied 

would mean that there would always be 

a disconnect between the enrollment 

numbers and the MOOP limit. In 

addition, as previously summarized in 

this section, it would be overly complex 

to set MOOP limits by geographic area 

and incorporate the remainder of the 

ESRD cost differential at a rate that was 

consistent with the enrollment rate of 

beneficiaries with diagnoses of ESRD in 

specific geographic areas. 

While we appreciate the commenter’s 

suggestion to align the ESRD cost 

transition schedule with the OACT’s 

projected rate of ESRD enrollment, we 

believe this would add another layer of 

complexity and further delay the 

transition process. As discussed in the 

February 2020 proposed rule, the OACT 

expected ESRD enrollment in MA plans 

to increase by 83,000 beneficiaries as a 

result of the 21st Century Cures Act 

provision. The OACT assumed the 

increase would be phased in over 6 

years, with half of those beneficiaries 

(41,500) enrolling during 2021; the 

remaining 41,500 additional 

beneficiaries were expected to enroll in 

MA plans during the years 2022 to 2026 

under the assumption that the number 

of additional enrollees who have 

diagnoses of ESRD will continue to 

increase during that time frame though 


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19See the HPMS memorandum titled ‘‘Final 

Contract Year 2021 Part C Benefits Review and 

Evaluation,’’ issued April 8, 2020 for information 

on MOOP limits for contract year 2021. 

20See the HPMS memorandum titled ‘‘Final 

Contract Year 2022 Part C Benefits Review and 

Evaluation,’’ issued May 20, 2021 for information 

on MOOP limits for contract year 2022. 

at a decreasing rate in later years. Based 

on actual 2021 enrollment data, the 

OACT continues to project that 83,000 

beneficiaries with diagnoses of ESRD 

will enroll in the MA program over 6 

years. If CMS were to match the 

transition of incorporating ESRD costs 

to that of OACT’s enrollment 

projections, we would be forced to delay 

the full transition of ESRD costs until 

2026. After publication of the February 

2020 proposed rule, CMS announced 

that it would take the Medicare FFS 

costs of beneficiaries with diagnoses 

ESRD into account in developing MOOP 

and cost sharing limits for 2021.19 The 

contract year 2021 MOOP limits (which 

encompassed 40 percent of the ESRD 

cost differential) were maintained for 

contract year 2022 while enrollment of 

beneficiaries with diagnoses of ESRD is 

projected to increase.20 As a result, CMS 

believes any further delays to the ESRD 

cost transition would not be beneficial 

as only 40 percent of the ESRD cost 

differential has been incorporated up to 

contract year 2022, the year the OACT 

projected total enrollment of 

beneficiaries with diagnoses of ESRD 

into the MA program to exceed 50 

percent. In addition, when developing 

our proposed ESRD cost transition 

schedule, we considered how OACT’s 

aggregate projections may not reflect the 

experiences in all geographic locations, 

which could have different rates of 

transition and changes in expenditures 

for providing care to beneficiaries with 

diagnoses of ESRD. 

Comment: As summarized in this 

section, CMS received many comments 

relevant to the solicitation in the 

February 2020 proposed rule on 

whether the ESRD cost transition 

schedule proposed at § 422.100(f)(4)(vii) 

aligns with the goals of providing 

predictable and transparent MOOP 

limits and cost sharing standards, 

minimizing significant new costs for 

MA plans or enrollees, and providing 

flexibility if the ESRD cost differential 

transition needs to be adjusted. Most 

commenters supported a multi-year 

transition of ESRD costs into the MOOP 

limits, but recommended changes to 

accelerate or simplify the transition. 

Some commenters who were supportive 

of the proposed transition schedule, or 

who did not solely tie their concerns to 

the proposed schedule of transitioning 

ESRD costs into the methodology for 

setting MOOP limits at paragraph 

(f)(4)(vii), shared concerns addressed in 

previous comment summaries in this 

section (namely, negative effects from 

costs associated with enrollees with 

diagnoses of ESRD being subsidized by 

other enrollees without these diagnoses; 

adverse selection of MA plans by 

enrollees with diagnoses of ESRD; and 

the possibility of MA plans 

discriminating against and discouraging 

beneficiaries with diagnoses of ESRD 

from enrolling in the MA program). A 

commenter who supported the 

transition noted that the projected 

MOOP limit increases over time would 

allow flexibility for MA organizations to 

adjust to the costs of covering enrollees 

with diagnoses of ESRD and that the 

gradual implementation of higher 

MOOP limits will minimize impacts 

(such as, additional cost sharing or 

increased premiums) on enrollees. 

Another commenter supported the 

ESRD cost transition schedule as 

proposed. 

Several commenters recommended 

accelerating or simplifying the ESRD 

cost transition because: (1) A lengthy, 

complex or confusing transition would 

be difficult for MA organizations to plan 

and execute; (2) a longer transition 

would not support MA plans managing 

the higher ESRD costs quickly enough; 

and (3) delaying the transition may 

require premium increases to fully cover 

or subsidize ESRD member costs. A 

commenter requested CMS complete the 

transition over 3 years, instead of 4 

years, by incorporating 25 percent of the 

ESRD cost differential each year as 

follows: 50 percent in 2021, 75 percent 

in 2022, and 100 percent of all ESRD 

costs incorporated in 2023. In addition, 

a few commenters were concerned that 

the OACT’s projections of beneficiaries 

with diagnoses of ESRD that will enroll 

in an MA plan during the next several 

years is understated. A commenter 

explained that even if only a small 

number of beneficiaries with diagnoses 

of ESRD migrate from Medicare FFS to 

the MA program, MA organizations will 

face significantly increased medical care 

costs. This commenter also stated that 

CMS’s phase-in proposal for the ESRD 

cost differential was understating the 

speed at which beneficiaries with ESRD 

will transition to MA plans. A 

commenter that wanted to accelerate the 

transition was also concerned that as 

beneficiaries with diagnoses of ESRD 

migrate to MA and fewer remain in 

Medicare FFS, CMS’s methodology of 

calculating MOOP limits using both 

non-ESRD and ESRD costs would result 

in MOOP limits being set too low and 

would fail to achieve an actuarially 

equivalent level of cost sharing. 

Specifically, this commenter noted that 

the substantial financial benefits of the 

MOOP limit for ESRD members would 

result in the ultimate blending (of outof-pocket costs for all beneficiaries) 

being insufficient if the penetration rate 

of ESRD members in MA plans ends up 

exceeding that of non-ESRD members. 

Response: In response to the 

comments we received (summarized in 

this section) and given the timing of this 

FC, we are finalizing some changes to 

the schedule for incorporating the ESRD 

cost differential into the Medicare FFS 

cost data used in the methodology for 

calculating the MOOP limits each year 

(and also used in the methodology for 

calculating inpatient hospital acute and 

psychiatric cost sharing limits, as 

discussed in section II.B. of this FC). 

The transition schedule was proposed 

as follows: 60 percent in 2022; 80 

percent in 2023 or next year; and 100 

percent in 2024 or the final year of 

transition. This was proposed in the 

context of the 2021 MOOP limits being 

based on Medicare FFS data projections 

that incorporated 40 percent of the 

ESRD cost differential. In addition, we 

proposed guardrails to pause the 

incorporation of the ESRD cost 

differential and cap the annual 

maximum change in MOOP limits to a 

10 percent increase or decrease in the 

limits from the prior year, if the dollar 

figure at the 85th or 95th percentile of 

projected Medicare FFS costs increased 

or decreased by a difference of more 

than two percentiles above or below the 

85th and 95th percentile from the prior 

year. The combination of the transition 

and guardrails was designed to strike a 

balance of providing plan benefit design 

stability while also protecting 

beneficiaries from rapid premium or 

cost sharing changes. We respond to 

general concerns regarding potential 

beneficiary discrimination tied to the 

MOOP limit methodology in section 

II.A.4. of this FC and to concerns related 

to enrollee subsidization of ESRD costs 

and potential adverse selection in 

previous responses in this section. 

We appreciate the recommendations 

about the timing to incorporate ESRD 

costs into the data used to calculate 

MOOP limits (and inpatient hospital 

acute and psychiatric cost sharing 

limits). In this FC, we are finalizing the 

use of a transition schedule combined 

with guardrails on overall increases 

with some modifications compared to 

the proposal. We are finalizing the 

definition and use of the ESRD cost 

differential as a specific way to measure 

ESRD costs and factor them into the 

data (and the methodology CMS uses to 

calculate annual MOOP limits) with 


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moderate modifications based on 

commenter feedback. We are finalizing 

a modification to the ESRD cost 

differential definition at 

§ 422.100(f)(4)(vi) (proposed in 

paragraph (f)(4)(vii)) to clarify that this 

value is the difference between, first, for 

the mandatory MOOP limit, $7,175 and 

for the lower MOOP limit, $3,360 and 

second, for the mandatory MOOP limit, 

the 95th percentile and, for the lower 

MOOP limit, the 85th percentile of the 

Medicare FFS data projections for each 

year between 2023 and 2024. The 

proposed definition mistakenly referred 

only to using costs incurred by 

beneficiaries with ESRD and did not 

fully clarify the specific comparisons 

being made for the mandatory and lower 

MOOP types. We note using the 

‘‘Medicare FFS data projections’’ term 

as defined in paragraph (f)(4)(i) ensures 

that the ESRD cost differential compares 

the 95th and 85th percentiles of the 

projected out-of-pocket costs for 

Medicare FFS beneficiaries with and 

without diagnoses of ESRD for the 

upcoming year to the $7,175 and $3,360 

dollar amounts in order to calculate the 

ESRD cost differential for that year (as 

discussed in the February 2020 

proposed rule). We believe that 

clarification on these points improves 

the regulation text. We also added 

language to paragraph (f)(4)(vi) to clarify 

that the ESRD cost differential is used 

in the ESRD cost transition finalized 

throughout paragraph (f)(4). Because the 

Medicare FFS data projections will be 

updated each year with more recent 

data, references to different projections 

in this FC include the contract year that 

the projections are for and the years of 

data that those projections are based on. 

For example, contract year 2023 

Medicare FFS data projections (based on 

Medicare FFS data from 2017 to 2021) 

reflect the amounts CMS used to 

calculate the MOOP and cost sharing 

limits for contract year 2023. 

As discussed in section V.H.1. of this 

FC, CMS considered several alternatives 

to implementing the proposed ESRD 

cost transition schedule into the 

methodology CMS uses to calculate 

MOOP limits based on public 

comments, the timing of this FC, 

potential for enrollee disruption, and 

impacts of further delays in integrating 

ESRD costs. After consideration of those 

alternatives, we believe finalizing a 

modified transition schedule would be 

beneficial and address the concerns and 

interests raised by the comments. The 

delay in finalizing this provision 

resulted in no increased ESRD cost 

adjustment for contract year 2022 

MOOP limits (rather, the ESRD cost 

differential remained the same as 2021) 

while ESRD enrollment in MA is 

projected to increase in 2022. 

Specifically, CMS maintained the 

contract year 2021 MOOP limits for 

contract year 2022. Therefore, we are 

not finalizing a provision to address the 

incorporation of the ESRD cost 

differential for contract year 2022 

(proposed at paragraph (f)(4)(vii)(A)) 

and are organizing the regulation text as 

necessary. 

As a result, we are finalizing at 

§ 422.100(f)(4)(vi)(A) and (B) that the 

ESRD cost differential will be factored 

into the Medicare FFS data projections 

used to calculate the MOOP limits as 

follows: For 2023, 70 percent and for 

2024, 100 percent. 

In finalizing use of 70 percent of the 

ESRD cost differential for 2023, we aim 

to strike a balance among curbing 

potential disruptive changes in MOOP 

limits from contract year 2022 to 

contract year 2023, avoiding the 

concerns with a lengthy transition 

identified by commenters, and ensuring 

MA organizations can continue offering 

all plan enrollees, regardless of their 

ESRD status, quality care and service 

while keeping premiums and cost 

sharing at non-discriminatory levels. As 

finalized, § 422.100(f)(4)(iv) through (vi) 

reflects the updated timing for the 

finalized transition and includes some 

minor clarifications and edits to use 

consistent terminology. We expect these 

changes will help ensure that MA plans 

are able to both expand their 

membership to beneficiaries with 

diagnoses of ESRD and continue 

offering all enrollees, regardless of their 

ESRD status, high-quality health care 

and service while keeping premiums 

and out-of-pocket costs at reasonable 

levels for all enrollees. 

The modified schedule we are 

finalizing to transition ESRD costs was 

used to update the MOOP limits from 

the illustrative figures provided in 

Tables 4 and 5 (Table 4, ‘‘Illustrative 

Example of In-Network MOOP Limits 

Based on Most Recent Medicare FFS 

Data Projections’’ and Table 5, 

‘‘Illustrative Example of Combined 

MOOP Limits for LPPO and 

Catastrophic (MOOP) Limits for RPPO 

Plans Based on Most Recent Medicare 

FFS Data Projections’’) in the February 

2020 proposed rule. In this FC, Table 5 

contains the final MOOP limits for 

contract year 2023 and Table 9 contains 

illustrative MOOP limits for contract 

year 2024 for comparison purposes to 

Tables 4 and 5 from the February 2020 

proposed rule. The calculations to reach 

the MOOP limits in Tables 5 and 9 are 

provided in Tables 2–4 and Tables 6–8. 

In addition, Tables 4, 5, 8, and 9 include 

a correction in the calculation of the 

lower ranges to the total catastrophic 

(combined MOOP) limits per 

§ 422.100(d)(3)(iii), as discussed in 

section II.A.4.b. of this FC. CMS took 

public comments on the MOOP limit 

proposal from the February 2020 

proposed rule into consideration 

regarding the use of a subregulatory 

notice and comment process before 

finalizing the MOOP and cost sharing 

limits each year and as discussed in 

sections II.A.4.b. and II.B.5. of this FC, 

we are adopting that process for the 

future. However, as this FC is not being 

published early enough to provide time 

for CMS to solicit comment and release 

subregulatory guidance before the 

contract year 2023 bid deadline, the 

MOOP limits contained in Table 5 are 

final. These limits were calculated 

applying the rules finalized in this FC. 

CMS intends to update the illustrative 

contract year 2024 MOOP limits using 

contract year 2024 Medicare FFS data 

projections (based on Medicare FFS data 

from 2018 to 2022) when available and 

have a separate public comment period 

(based on § 422.100(f)(7)(iii)) before 

releasing the final contract year 2024 

MOOP limits. 

Using the 95th percentile of contract 

year 2023 Medicare FFS data 

projections (based on Medicare FFS data 

from 2017–2021), the projected percent 

increase to the mandatory MOOP limit 

for contract year 2023 would be greater 

than 10 percent in comparison to the 

mandatory MOOP limit set for contract 

year 2022. Table 2 compares the 

unrounded contract year 2023 innetwork mandatory MOOP limit before 

application of the 10 percent cap 

($8,530.20) to the mandatory MOOP 

limit set for contract year 2022 

($7,550.00); this increase equates to 

approximately 13 percent (after 

accounting for the rounding rules which 

would raise the MOOP limit amount to 

$8,550.00). As a result, Tables 2 through 

5 illustrate application of the 10 percent 

guardrail for the mandatory MOOP limit 

in contract year 2023 to limit the 

increase to 9.9 percent after application 

of the rounding rules. Conversely, the 

percent increase of 5.8 percent to the 

lower MOOP limit for contract year 

2023 is less than 10 percent in 

comparison to the voluntary MOOP 

limit set for contract year 2022. 

Similarly, comparing the highest 

allowable in-network mandatory and 

lower MOOP limits for contract year 

2023 to the corresponding illustrative 

in-network MOOP limits for contract 

year 2024 is less than 10 percent. For 

example, the final contract year 2023 innetwork mandatory MOOP limit 


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22316 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

($8,300.00) compared to the illustrative 

unrounded contract year 2024 innetwork mandatory MOOP limit 

($9,111.00) reflects an approximate 9.8 

percent increase (and an approximate 

3.3 percent increase for the illustrative 

lower MOOP limits). As a result, Tables 

2 through 9 illustrate application of the 

10 percent guardrails finalized in 

paragraphs (f)(4)(iv)(A) and (C) and 

(f)(4)(v)(A) when the increase threshold 

is met. These guardrails are also 

discussed more completely in a 

subsequent response to comment in this 

section. 

Under § 422.100(f)(4)(vi), the ESRD 

cost differential for contract year 2023 is 

the difference between, first, for the 

mandatory MOOP limit, $7,175 and for 

the lower MOOP limit, $3,360 and 

second, for the mandatory MOOP limit, 

the 95th percentile ($9,111.00) and for 

the lower MOOP limit, the 85th 

percentile ($3,772.00) of the contract 

year 2023 Medicare FFS data 

projections (based on Medicare FFS data 

from 2017 to 2021). As shown in Tables 

2 through 5, modifying the ESRD cost 

transition from the proposed 80 percent 

to 70 percent of the ESRD cost 

differential in contract year 2023 and 

completing the calculations using 

projections of Medicare FFS data from 

2017–2021 (compared to the 2015–2019 

Medicare FFS data available at the time 

of the February 2020 proposed rule), 

produced a moderate increase from the 

illustrative amounts contained in the 

February 2020 proposed rule. For 

example, the highest allowable (and 

illustrative) in-network mandatory 

MOOP limit was listed as $7,950 for 

contract year 2023 in the February 2020 

proposed rule. In comparison, as shown 

in Table 5, the final contract year 2023 

highest allowable in-network mandatory 

MOOP limit is $8,300 (an increase of 

$350). 

BILLING CODE 4120–01–P 


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TABLE 2: CMS CALCULATIONS OF FINAL CONTRACT YEAR 2023 IN-NETWORK 

MANDATORY AND LOWER MOOP LIMITS USING PROJECTIONS OF 2017 - 2021 

MEDICARE FFS DATA 

Mandatory Lower 

Row MOOP MOOP 

Reference Description Limit Limit 

A Contract year 2022 MOOP limit $7,550.00 $3,450.00 

B Maximum contract year 2023 MOOP limit per§ 422.100(t)(4)(iv) (110% of $8,305.00 $3,795.00 

row A) 

C Medicare FFS percentile in & 422.100(f)(4) 95th 85th 

D Umounded contract year 2023 Medicare FFS data projections for the applicable $9,111.00 $3,772.00 

percentile in row C 1 

E Baseline MOOP amount in§ 422.100(f)(4)(iv) $7,175.00 $3,360.00 

F Contract year 2023 ESRD Cost Differential per§ 422.100(t)(4)(vi) (difference $1,936.00 $412.00 

between row D and row E) 

G 70% of the contract year 2023 ESRD Cost Differential per $1,355.20 $288.40 

§ 422.100(f)(4)(vi)(A) (row F multiplied by 0.7) 

H Umounded contract year 2023 MOOP limit prior to applying 10% cap on $8,530.20 $3,648.40 

increases per & 422.100(f)(4)(iv) and (vi)(A) (row E plus row G) 

I Umounded contract year 2023 MOOP limit with 10% cap on increases applied $8,305.00 $3,648.40 

(the lesser value comparing row B and row H) 

J Rounded contract year 2023 MOOP limit per§ 422.100(t)(4)(iii) and (iv) (row I $8,300.00 $3,650.00 

rounded) 

K Lowest dollar range of the contract year 2023 MOOP limit per $6,001.002 $0.003 

& 422.100(f)(4)(i) 

L Final contract year 2023 MOOP limit dollar ranges per§ 422.100(t)(4)(i) $6,001.00 to $0.00 to 

throm1:h (iv) and (vi) $8,300.00 $3,650.00 1The OACT employed generally accepted actuarial principles and practices in calculating these projected amounts (as finalized in 

§ 422.100(f)(7)). 

2The in-network mandatory MOOP limit dollar range begins at the value of the in-network intermediate MOOP limit from row D 

in Table 3 plus $1.00 per§ 422.100(f)(4)(i)(A). 

3The in-network lower MOOP limit dollar range begins at $0.00 per§ 422.100(f)(4)(i)(C). 
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TABLE 3: CMS CALCULATIONS OF FINAL CONTRACT YEAR 2023 IN-NETWORK 

INTERMEDIATE MOOP LIMIT PROJECTIONS OF 2017 - 2021 MEDICARE FFS 

DATA 

Intermediate 

Row MOOP 

Reference Description Limit 

A Unrounded contract year 2023 mandatory MOOP limit with 10% cap on increases applied $8,305.00 

(row I, mandatory MOOP limit column in Table 2) 

B Unrounded contract year 2023 lower MOOP limit with 10% cap on increases applied (row I, $3,648.40 

lower MOOP limit column in Table 2) 

C Unrounded contract year 2023 intermediate MOOP limit per§ 422.100(f)(4)(iv) (numeric $5,976.70 

midpoint between row A and row B) 

D Rounded contract year 2023 intermediate MOOP limit (row C rounded per § $6,000.00 

422.100(f)(4)(iii)) 

E Lowest dollar range of the contract year 2023 MOOP limit per§ 422.l00(fV4)(i)(B) $3,651.00* 

F Final contract year 2023 intermediate MOOP limit dollar range per§ 422.100(f)(4)(i) $3,651.00 to 

through (iv) and (vi) 

*The in-network intermediate MOOP limit dollar range begins at the value of the in-network lower MOOP limit from row Jin 

Table 2 plus $1.00 per§ 422.100(t)(4)(i)(B). 

TABLE 4: CMS CALCULATIONS OF FINAL CONTRACT YEAR 2023 COMBINED 

MOOP LIMITS FOR LPPO AND TOTAL CATASTROPHIC MOOP LIMITS FOR 

RPPO PLANS USING PROJECTIONS OF 2017 - 2021 MEDICARE FFS DATA 

Mandatory Intermediate 

Row MOOP MOOP 

Reference Description Limit Limit 

A Corresponding unrounded in-network MOOP type with 10% $8,305.00 $5,976.70 

cap on increases applied (values from row I in Table 2 and 

row C in Table 3) 

B Unrounded contract year 2023 combined and total $12,457.50 $8,965.05 

catastrophic MOOP limit per§ 422.101(d)(3)(ii) (row A 

multiplied by 1.5) 

C Rounded contract year 2023 combined and total catastrophic $12,450.00 $8,950.00 

MOOP limit (row B rounded per§ 422.100(t)(4)(iii)) 

D Lowest dollar range of the contract year 2023 MOOP limit $6,001.001 $3,651.002 

per§ 422.101(d)(3)(ii) 

E Final contract year 2023 combined and total catastrophic $6,001.00 to $3,651.00 to 

MOOP limit dollar ranges per§ 422.101(d)(3)(ii) $12,450.00 $8,950.00 

1The combined and total catastrophic mandatory MOOP limit dollar range begins at the value of the in-network intermediate 

MOOP limit from row Din Table 3 plus $1.00 per§ 422.101(d)(3)(ii)(A). 

$6,000.00 

Lower 

MOOP 

Limit 

$3,648.40 

$5,472.60 

$5,450.00 

$0.003 

$0.00 to 

$5,450.00 

2The combined and total catastrophic intermediate MOOP limit dollar range begins at the value of the in-network lower MOOP 

limit from row Jin Table 2 plus $1.00 per§ 422.101(d)(3)(ii)(B). 

3The combined and total catastrophic lower MOOP limit dollar range begins at $0.00 per§ 422.101(d)(3)(ii)(C). 
22318 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

BILLING CODE 4120–01–C 

In summary, we are finalizing 

§ 422.100(f)(4)(vi) (proposed in 

paragraph (f)(4)(vii)) with changes in the 

transition schedule to calculate annual 

in-network MOOP limits and 

modifications to paragraph (f)(4) 

addressed in this section and section 

II.A.4. of this FC. 

CMS will monitor the penetration rate 

of beneficiaries with diagnoses of ESRD 

in MA plans and if the penetration rate 

ends up being significantly different 

from Medicare FFS, we will consider 

future rulemaking to alter the 

methodology CMS uses to set MOOP 

limits if there are significant unforeseen 

impacts or negative consequences that 

need to be addressed. We also would 

consider whether additional changes 

would outweigh the interests of 

maintaining a settled methodology for 

the MOOP limits and sufficiently 

protect enrollees from substantial 

changes in cost sharing and benefits 

from one year to the next. Finally, we 

note that MA organizations can still 

design a PBP with cost sharing that is 

actuarially equivalent to cost sharing in 

Medicare FFS while complying with the 

MOOP and cost sharing limits in this 

FC. 

Comment: A few commenters made 

specific requests on how CMS should 

simplify or otherwise modify the 

proposed transition of ESRD costs into 

MOOP limits. A commenter requested 

CMS enforce the schedule to transition 

ESRD costs into MOOP limits regardless 

of any year-over-year changes to the 

95th and 85th percentiles for the 

following reasons: (1) ESRD migration is 

happening separately from any changes 

to non-ESRD costs in setting the MOOP 

limits; and (2) potential delays in the 

ESRD phase-in schedule could require 

additional member premium increases 

for non-ESRD members in order to 

subsidize ESRD member costs. Another 

commenter noted that simplifying the 

methodology for incorporating the ESRD 

cost differential would increase 

transparency and predictability. 

Response: Regarding the request to 

enforce the ESRD cost transition 

schedule year-over-year regardless of 

any other considerations, we believe the 

commenter was specifically referring to 

the guardrails at proposed 

§ 422.100(f)(4)(v)(A) and (C) that we 

proposed to prevent sudden, significant 

changes to MOOP limits for contract 

year 2023 and 2024 (or until the end of 

the ESRD cost transition) if the 

projections of the 85th or 95th 

percentile were to shift more than two 

percentiles within 1 year. We proposed 

that if the dollar value at the 85th or 

95th percentile shifted more than two 

percentiles during the ESRD cost 

transition, the MOOP limits would only 

increase or decrease by 10 percent. The 

97th and 93rd percentiles of the contract 

year 2021 Medicare FFS data 

projections (based on Medicare FFS data 

from 2015–2019) were $11,485 and 

$6,391 respectively, in comparison to 

the 95th percentile of $8,174. The 97th 

percentile was approximately 40 

percent higher than the 95th percentile 

and the 93rd percentile was 

approximately 22 percent lower than 

that the 95th percentile for contract year 

2021. In addition, the 87th and 83rd 

percentiles of the contract year 2021 

Medicare FFS data projections (based on 

Medicare FFS data from 2015–2019) 

were $3,993 and $3,162 respectively, in 

comparison to the 85th percentile of 

$3,537. The 87th percentile was 

approximately 13 percent higher than 

the 85th percentile and the 83rd 

percentile was approximately 11 

percent lower than that the 85th 

percentile for contract year 2021. Our 

proposed guardrails were intended to 

protect MA enrollees from being 

potentially subject to a MOOP amount 

that is substantially different compared 

to the prior contract year. However, 

based on historical trends, we do not 

expect a shift in one year that is outside 

of the range created by these percentiles. 

We believe that the guardrails can be 

simplified while protecting enrollees as 

intended. 

We are modifying the proposed 

guardrails to use only a 10 percent cap 

on increases to MOOP limits from the 

prior year and will apply this guardrail 

for contract year 2023 and subsequent 

years at § 422.100(f)(4)(iv) and (v). In 

essence, we are not finalizing the 

condition that the projections of the 

85th or 95th percentile must shift more 

than two percentiles within one year in 

order to apply a 10 percent change cap 

to the mandatory and lower MOOP 

limits. We are also not finalizing the 

proposal to toll or delay the 

incorporation of the ESRD cost 

differential as part of the limits on 

changes to MOOP limits from year to 

year. We are finalizing the 10 percent 

guardrail in paragraphs (f)(4)(iv) and (v) 

and will apply it during and after the 

ESRD cost transition. To simplify the 

regulation text for how CMS calculates 

the MOOP limits for contract year 2024 

and subsequent years, we are also 

consolidating into one paragraph 

((f)(4)(v)(A)) rather than two (proposed 

paragraphs (f)(4)(v)(A) and (C)) the 

methodology that will apply 

consistently to both the mandatory and 

lower MOOP types (with the only 

difference being the percentile that 

determines the type of limit). This 

makes the regulation simpler while 

providing stability and a measure of 

predictability for enrollees and MA 

organizations about the degree of change 

that may occur in MOOP limits from 

year to year. As finalized, paragraphs 

(f)(4)(iv) and (f)(4)(v) provide that the 

mandatory and lower MOOP limits may 

only increase by 10 percent; the 

intermediate MOOP limit will be 

calculated as the numeric midpoint 

between the mandatory and lower 

MOOP limits after application of the 10 

percent cap on increases, subject to the 

clarified rounding rules. By finalizing 


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TABLE 5: FINAL CONTRACT YEAR 2023 MOOP LIMITS BY PLAN TYPE 

Plan Type Lower MOOP Limit Intermediate MOOP Limit Mandatory MOOP Limit 

HMO $0 - $3,650 $3,651 to $6,000 $6,001 - $8,300 

HMOPOS $0 - $3,650 In-network $3,651 to $6,000 $6,001 - $8,300 In-network 

LocalPPO $0 - $3,650 In-network and $3,651 to $6,000 In-network and $6,001 - $8,300 In-network and 

$0 - $5,450 Combined $3,651 - $8,950 Combined $6,001 - $12,450 Combined 

Regional PPO $0 - $3,650 In-network and $3,651 to $6,000 In-network and $6,001 - $8,300 In-network and 

$0 - $5,450 Combined $3,651 - $8,950 Combined $6,001 - $12,450 Combined 

PFFS (full network) $0 - $3,650 $3,651 to $6,000 $6,001 - $8,300 

PFFS (partial network) $0 - $3,650 $3,651 to $6,000 $6,001 - $8,300 

PFFS (non-network) $0 - $3,650 $3,651 to $6,000 $6,001 - $8,300 
Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22319 

only the 10 percent cap on increases, we 

are making the guardrails more 

definitive and more likely to limit 

dramatic shifts in annual Medicare FFS 

data projections that do not quite reach 

a change that is more than two 

percentiles from the 95th and 85th 

percentiles. We believe this is 

appropriate as the 95th percentile of 

contract year 2023 Medicare FFS data 

projections with full incorporation of 

the ESRD cost differential (based on 

Medicare FFS data from 2017–2021) is 

$9,111 and does not reflect a change 

that is more than two percentiles 

different than the projected amounts for 

the prior contract year. Specifically, 

based on Medicare FFS data from 2016– 

2020, the projected contract year 2022 

95th percentile was $8,468, the 97th 

percentile was $11,837, and the 93rd 

percentile was $6,631. Using the 

proposed two percentile requirement, 

these projections would not trigger CMS 

to apply the 10 percent cap to calculate 

the contract year 2023 mandatory 

MOOP limit because $9,111 does not 

exceed $11,837. Using the $9,111 

amount without applying the cap on 

increases would produce a contract year 

2023 mandatory MOOP limit of $8,550, 

which is approximately 13 percent 

higher than the contract year 2022 

mandatory MOOP limit ($7,550) after 

applying the rounding rules and 

incorporating 70 percent of the ESRD 

cost differential. In addition, this would 

increase the intermediate MOOP limit 

as it is calculated using the numeric 

midpoint between the mandatory and 

lower MOOP limits and the total 

catastrophic (combined) MOOP limits as 

they are calculated at 1.5 times the innetwork amounts. It is likely that 

significant increases in costs occurring 

within two percentiles of the prior 

year’s Medicare FFS data projections 

would circumvent the purpose of our 

proposed guardrail to provide stability 

and predictability of MOOP limits from 

one year to the next. In such a situation, 

MA enrollees would not be protected 

from potentially significant increases in 

MOOP amounts for that contract year. In 

order to better protect MA enrollees 

from significant increases in costs for 

contract year 2023 and future years, we 

are finalizing the 10 percent cap on 

increases without the two percentile 

requirement; application of the 10 

percent cap is shown in Tables 2 

through 9. In summary, this removal of 

the two percentile requirement results 

in a contract year 2023 mandatory 

MOOP limit that is $8,300 rather than 

$8,550 and an intermediate MOOP limit 

that is $6,000 rather than $6,100. In 

addition, the increases to the total 

catastrophic (combined) MOOP 

mandatory and intermediate MOOP 

types for contract year 2023 were 

tempered through application of the 

final 10 percent cap requirement, with 

the mandatory limit set at $12,450 

rather than $12,800 and the 

intermediate MOOP limit set at $8,950 

rather than $9,150. With regard to the 

lower MOOP limit, the contract year 

2023 limit compared to the prior 

contract year reflects an increase less 

than 10 percent. In addition, the 

contract year 2023 85th percentile 

($3,772) did not exceed the prior year’s 

87th percentile ($4,153), so there is no 

effect in removing the two-percentile 

requirement for the lower in-network 

and total catastrophic (combined) 

MOOP type for contract year 2023. As 

shown in Tables 6 through 9, we 

currently project that the contract year 

2024 mandatory MOOP limit will 

incorporate any remaining difference, to 

the lower of $9,130 (a 10 percent 

increase) or the value at the 95th 

percentile as projected using the 

annually updated Medicare FFS data 

projections. 

Regarding the comments about 

potential increases in MA premiums 

associated with our proposals to limit 

increases in the MOOP limits from year 

to year and to phase-in the ESRD cost 

differential over a period of time, only 

40 percent of the ESRD cost differential 

was incorporated into the MOOP limits 

set for contract year 2021 (and 

maintained for contract year 2022) 

which is a one year delay in 

incorporating additional ESRD costs (in 

comparison to the schedule proposed). 

Despite this delay and the limited 

increase in MOOP limits for these 

contract years during which enrollment 

of beneficiaries with diagnoses of ESRD 

continued to increase into the MA 

program, the weighted average monthly 

plan premium is continuing to decrease 

from prior years and the percent of 

plans offering supplemental benefits or 

other benefit flexibilities (such as, 

SSBCI) continues to increase (based on 

plan bid information for contract year 

2022). This suggests that increases in 

plan premiums or supplemental benefit 

changes are not occurring on an 

aggregate level in response to a 1 year 

delay of incorporating additional ESRD 

costs into the methodology CMS uses to 

calculate MOOP limits. We expect this 

may be a result of market forces and 

competition. Therefore, we believe that 

finalizing a 10 percent cap on increases 

to the MOOP limits from the prior year 

and its application for the mandatory 

and intermediate MOOP limits (innetwork and combined) using contract 

year 2023 Medicare FFS data 

projections (based on Medicare FFS data 

from 2017–2021) will not immediately 

result in MA plans increasing premiums 

or reducing benefits. We are finalizing 

guardrails at § 422.100(f)(4)(iv) and (v) 

that use this 10 percent cap on increases 

in the mandatory and lower MOOP 

limits; this cap will necessarily limit 

increases in the intermediate MOOP 

limit and the total catastrophic 

(combined) MOOP limits as well based 

on the methodology to calculate those 

limits. 

Therefore, subject to the rounding 

rules in § 422.100(f)(4)(iii) and the ESRD 

cost transition schedule in 

§ 422.100(f)(4)(vi), the MOOP limits for 

2023 and subsequent years will be 

calculated as follows: 

For contract year 2023 (applying both 

§ 422.100(f)(4)(iv) and (vi)(A)): 

• The mandatory MOOP limit is 

calculated as $7,175 (the 95th percentile 

of projected contract year 2021 

Medicare FFS beneficiary out-of-pocket 

spending for beneficiaries without 

diagnoses of ESRD) plus 70 percent of 

the ESRD cost differential unless: the 

resulting MOOP limit (after application 

of the rounding rules in paragraph 

(f)(4)(iii) of this section) reflects an 

increase greater than 10 percent 

compared to the mandatory MOOP limit 

from the prior year, in which case CMS 

caps the increase to the mandatory 

MOOP limit by 10 percent of the prior 

year’s MOOP limit. 

• The intermediate MOOP limit is 

calculated as the numeric midpoint 

between the mandatory and lower 

MOOP limits (calculated before 

application of the rounding rules in 

§ 422.100(f)(4)(iii) and after application 

of the 10 percent cap on increases to the 

mandatory and lower MOOP limits from 

the prior year in paragraphs (f)(4)(iv)(A) 

and (C)). 

• The lower MOOP limit is calculated 

as $3,360 (the 85th percentile of 

projected contract year 2021 Medicare 

FFS beneficiary out-of-pocket spending 

for beneficiaries without diagnoses of 

ESRD) plus 70 percent of the ESRD cost 

differential unless: The resulting MOOP 

limit (after application of the rounding 

rules in paragraph (f)(4)(iii) of this 

section) reflects an increase greater than 

10 percent compared to the voluntary 

MOOP limit from the prior year, in 

which case CMS caps the increase to the 

lower MOOP limit by 10 percent of the 

prior year’s MOOP limit. 

The MOOP limits for contract year 

2024 and subsequent years will be 

calculated, subject to the rounding rules 

in paragraph (f)(4)(iii), as follows: 

• The mandatory and lower MOOP 

limits are calculated as the 95th and 


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22320 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

85th percentiles of the Medicare FFS 

data projections if the resulting MOOP 

limits reflect a decrease or an increase 

equal to or less than 10 percent 

compared to each of the prior year’s 

corresponding MOOP limits. If the 

MOOP limits are not calculated as the 

95th and 85th percentiles of the 

Medicare FFS data projections, CMS 

increases the prior year’s mandatory and 

lower MOOP limits by 10 percent 

annually until the MOOP limits are 

calculated at the applicable percentile 

(95th percentile for the mandatory 

MOOP limit and 85th percentile for the 

lower MOOP limit) of Medicare FFS 

data projections. This policy is finalized 

in paragraph (f)(4)(v)(A). 

• The intermediate MOOP type is 

either maintained at the prior year’s 

limit or if either the mandatory or lower 

MOOP limit changes from the prior 

year, updated to the new numeric 

midpoint between the mandatory and 

lower MOOP limits (calculated before 

application of the rounding rules in 

paragraph (f)(4)(iii) and after application 

of the 10 percent cap on increases to the 

mandatory and lower MOOP limits from 

the prior year in paragraph (f)(4)(v)(A)). 

This policy is finalized in paragraph 

(f)(4)(v)(B). 

As a result, CMS will distribute 

significant (that is, more than 10 

percent) increases to the mandatory and 

lower MOOP types over multiple years 

in order to avoid potential disruption to 

beneficiaries and plan designs for 

contract year 2023 and subsequent 

years. This is generally consistent with 

our approach in the February 2020 

proposed rule of limiting changes in the 

MOOP limit but, we believe, is a more 

direct and simpler approach. Based on 

the contract year 2021 Medicare FFS 

data projections (based on Medicare FFS 

data from 2015–2019) available at the 

time of the February 2020 proposed 

rule, a comparison of 95th percentile 

data reflected an approximate 14 

percent difference ($8,174 with and 

without ESRD costs compared to $7,175 

with only non-ESRD costs, 

respectively). As discussed in the 

February 2020 proposed rule, 

distributing a difference in projected 

costs of this magnitude over multiple 

years is necessary in order to avoid 

disruption to beneficiaries. By applying 

the 10 percent cap, we will ensure 

changes of a similar magnitude are 

limited. For example, if the value at the 

95th percentile of Medicare FFS data is 

$10,049 (meaning a MOOP limit of 

$10,050 after application of the 

rounding rules in paragraph (f)(4)(iii)), 

and the next year the value at the 95th 

percentile is projected to be $11,219 (a 

rounded MOOP value of $11,200), there 

would have been a potential increase of 

$1,150 or approximately 11 percent. 

Under the rules finalized here, the 

MOOP limit would be increased by only 

10 percent, resulting in a mandatory 

MOOP limit of $11,050 in the second 

year. In the third year, the mandatory 

MOOP limit would incorporate any 

remaining difference, to the lower of 

$12,150 (a 10 percent increase) or the 

value at the 95th percentile as projected 

using the annually updated Medicare 

FFS data projections. If the 95th 

percentile for the third year is projected 

to be $11,603 (an increase of 

approximately 5 percent over the prior 

year), the MOOP limit for that third year 

would be $11,600 after application of 

the rounding rules. By applying the 10 

percent cap, we will ensure increases of 

a similar magnitude are limited. 

However, the projections for 2024 and 

subsequent years would be made using 

annually updated Medicare FFS data 

projections that are based on data for 

beneficiaries with and without 

diagnoses of ESRD. 

This 10 percent cap on increases to 

the MOOP limits provision in 

§ 422.100(f)(4)(iv) and (v) will make sure 

that, if the projected 95th or 85th 

percentile substantially increases from 

one year to the next for contract year 

2023 and subsequent years, enrollees 

are not subject to potentially significant 

increases in MOOP amounts for that 

contract year. In addition, by 

consistently applying the 10 percent 

guardrail and ESRD cost transition to 

both the mandatory and lower MOOP 

limits (which, in turn, determine the 

intermediate MOOP limit and the total 

catastrophic MOOP limits), there will be 

a level of stability and predictability for 

MA organizations and better protection 

for MA enrollees. Codifying this rule 

provides transparency in how CMS will 

address significant changes in Medicare 

FFS data projections for contract year 

2023 and subsequent years. In addition 

to these substantive changes, this FC 

includes clarifying edits. By generally 

maintaining the proposed limit of a 10 

percent increase in comparison to the 

prior year’s MOOP limit amount, we are 

essentially continuing the ESRD cost 

transition, but in a limited fashion in 

order to protect enrollees from 

potentially significant changes in out-ofpocket costs. As a result, we do not 

believe these guardrails will directly 

result in increases in premiums or 

decreases to supplemental benefits. 

However, we will consider future 

rulemaking if there are significant 

unforeseen changes. 

CMS proposed a similar but separate 

methodology to maintain or update 

MOOP limits for contract year 2025 or 

after completion of the ESRD cost 

transition at proposed 

§ 422.100(f)(4)(vi). Since we are 

applying the simplified guardrails in 

paragraph (f)(4)(v) to contract year 2024 

and subsequent years, we are not 

finalizing paragraph (f)(4)(vi) as 

proposed. Our proposal included 

similar guardrails for during the ESRD 

cost transition and after the completion 

of the ESRD cost transition to protect 

against potentially disruptive changes to 

the MOOP limits during and after the 

ESRD cost transition; this FC is 

generally consistent with that. In 

addition, we are not finalizing the 

requirement that there must be a 

consistent trend of changes over 3 years 

of the 85th and 95th percentiles to 

update the mandatory and lower MOOP 

limits after the ESRD cost transition is 

completed (proposed in paragraphs 

(f)(4)(vi)(A)(2) and (f)(4)(vi)(C)(2)). In the 

February 2020 proposed rule, we noted 

that the OACT uses the most recent 

complete Medicare FFS data to project 

costs for the applicable year. 

Specifically, the OACT applies actuarial 

judgement to create trend factors (that 

are consistent with the Medicare 

Trustees Report) to project expected 

costs (or savings) for the applicable 

future year, taking into consideration 

current laws, regulations, and several 

years of Medicare data in order to 

determine the cost projections CMS 

proposed to use to calculate MOOP 

limits. As a result, the requirement to 

meet a 3-year trend as proposed is 

duplicative of the trend factors to an 

extent and may unnecessarily delay 

updates to the MOOP limits. In 

proposing use of a 3-year trend, we 

intended to base changes in the MOOP 

limits on a material change. To achieve 

the goal of updating the MOOP limits 

when there are material changes to the 

Medicare FFS data projections, as 

intended by the February 2020 proposed 

rule, CMS will instead annually update 

the MOOP limits to reflect the 

applicable percentile of Medicare FFS 

data projections. Small fluctuations in 

the MOOP limits are likely to be 

eliminated by application of the 

rounding rule, so changes in the MOOP 

limit from year to year will be within 

these ranges: 

• Decreases of $50 or more, in $50 

increments; or 

• Increases of at least $50 and in 

increments of $50 but less than a 10 

percent increase. 

In summary, § 422.100(f)(4)(iv) and (v) 

reflect final CMS policies in this FC for 

2023 and for subsequent years. We 

expect that applying the standardized 

update, as detailed in paragraphs 

(f)(4)(iv) and (v), will result in MOOP 


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Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22321 

limits that better guard against 

potentially disruptive annual changes. 

Therefore, we are finalizing this more 

streamlined approach, which includes 

aspects of our proposal, to calculate the 

mandatory and lower MOOP limits for 

contract year 2023 and subsequent 

years. 

CMS will annually update the 

mandatory and lower MOOP limits for 

the upcoming contract year (subject to 

the rounding rules at paragraph 

§ 422.100(f)(4)(iii)) to reflect the 

Medicare FFS data projections of the 

85th and 95th percentiles unless either 

of the resulting MOOP limits reflect an 

increase greater than 10 percent 

compared to the same type of MOOP 

limit from the prior year. If there is a 10 

percent or more increase in the dollar 

value at the applicable percentile, we 

would cap the increase of the applicable 

MOOP limit(s) at 10 percent of the prior 

year’s MOOP limit annually, until the 

MOOP limit(s) reflects the applicable 

percentile(s). In addition, under 

finalized paragraph (f)(4)(iv)(B) and 

(f)(4)(vi)(B), for 2023 and for subsequent 

years, the intermediate MOOP limit will 

either be maintained at the prior year’s 

limit, or, if the mandatory or lower 

MOOP limit changes from the prior 

year, we will update the intermediate 

MOOP limit to the new numeric 

midpoint between the mandatory and 

lower MOOP limits (calculated before 

application of the rounding rules in 

paragraph (f)(4)(iii) and after application 

of the 10 percent cap on increases to the 

mandatory and lower MOOP limits from 

the prior year in paragraphs (f)(4)(iv) 

and (v)). Application of this 

methodology for calculating and setting 

contract year 2023 MOOP limits is 

reflected in Tables 2 through 5, as 

described previously in this section. 

We included Tables 6 through 9 to 

illustrate how contract year 2024 MOOP 

limits would be set using the 

methodology described in 

§ 422.100(f)(4)(v) and applying the 

ESRD cost transition and the 10 percent 

cap on increases to the MOOP limits. 

Specifically, Tables 6 through 9 

illustrate how CMS would calculate 

contract year 2024 MOOP limits using 

contract year 2023 Medicare FFS data 

projections (based on Medicare FFS data 

from 2017–2021) because contract year 

2024 projections were not available at 

the time of this FC. For example, the 

illustrative contract year 2024 innetwork mandatory and lower MOOP 

limits in Table 6 reflect 100 percent of 

the ESRD cost differential based on 

finalized § 422.100(f)(4)(vi)(B). 

However, other potential outcomes are 

possible and we expect the final 

contract year 2024 MOOP limits will be 

different than the illustrative amounts 

in Table 9 after updating the 

calculations to use contract year 2024 

Medicare FFS data projections (based on 

Medicare FFS data from 2018–2022). 

BILLING CODE 4120–01–P 


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TABLE 6: CMS CALCULATIONS OF ILLUSTRATIVE CONTRACT YEAR 2024 INNETWORK MANDATORY AND LOWER MOOP LIMITS USING CONTRACT YEAR 

2023 MEDICARE FFS DATA PROJECTIONS (BASED ON 2017 - 2021 MEDICARE 

FFSDATA) 

Mandatory Lower 

Row MOOP MOOP 

Reference Description Limit Limit 

A Contract year 2023 MOOP limit (values from row J in Table 2) $8,300.00 $3,650.00 

B Maximum contract year 2024 MOOP limit per§ 422.100(f)(4)(v) (110% of $9,130.00 $4,015.00 

row A) 

C Medicare FFS percentile in~ 422.100(0(4) 95th g5th 

D Umounded contract year 2024 MOOP limit prior to applying 10% cap on $9,111.00 $3,772.00 

increases per§ 422.100(t)(4)(v) and (vi)(B)1 

E Umounded contract year 2024 MOOP limit with 10% cap on increases applied $9,111.00 $3,772.00 

(the lesser value comparing row Band row D) 

F Rounded contract year 2024 MOOP limit per§ 422.100(f)(4)(iii) and (v) (row $9,100.00 $3,750.00 

E rounded) 

G Lowest dollar range of the contract year 2024 MOOP limit per § $6,451.002 $0.003 

422.1 OO(f)( 4)(i) 

H Illustrative contract year 2024 MOOP limit dollar ranges per§ 422.100(f)(4)(i) $6,451.00 to $0.00 to 

thromm (iii) and (v) throue:h (vi) $9,100.00 $3,750.00 

1These amounts are for illustrative purposes only and are the values for contract year 2023 from row Din Table 2 (the unrounded 

Medicare FFS data projections for the applicable percentile in row C). The projected percentile amounts CMS will use to 

calculate the final contract year 2024 MOOP limits will be based on Medicare FFS data from 2018 - 2022 and reflect 100 percent 

of the ESRD Cost Differential per§ 422.100(f)(4)(vi)(B). 

2The in-network mandatory MOOP limit dollar range begins at the value of the in-network intermediate MOOP limit from row D 

in Table 7 plus $1.00 per§ 422.100(f)(4)(i)(A). 

3The in-network lower MOOP limit dollar range begins at $0.00 per§ 422.100(f)(4)(i)(C). 
22322 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 


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TABLE 7: CMS CALCULATIONS OF ILLUSTRATIVE CONTRACT YEAR 2024 INNETWORK INTERMEDIATE MOOP LIMIT USING CONTRACT YEAR 2023 

MEDICARE FFS DATA PROJECTIONS (BASED ON 2017 - 2021 MEDICARE FFS 

DATA} 

Intermediate 

Row MOOP 

Reference Description Limit 

A Umounded contract year 2024 mandatory MOOP limit with 10% cap on increases applied $9,111.00 

(row E, mandatory MOOP limit column in Table 6) 

B Umounded contract year 2024 lower MOOP limit with 10% cap on increases applied (row $3,772.00 

E, lower MOOP limit column in Table 6) 

C Umounded contract year 2024 intermediate MOOP limit per§ 422.100(f)(4)(v) (numeric $6,441.50 

midpoint between row A and row B) 

D Rounded contract year 2023 intermediate MOOP limit (row C rounded per $6,450.00 

& 422.IO0(f)(4)(iii)) 

E Lowest dollar range of the contract year 2024 MOOP limit per & 422.I00(f)(4)(i)(B) $3,751.00* 

F Illustrative contract year 2024 intermediate MOOP limit dollar range per§ 422.100(f)(4)(i) $3,751.00 to 

throm!h (iii) and (v) throue:h (vi) $6,450.00 

*The in-network intermediate MOOP limit dollar range begins at the value of the in-network lower MOOP limit from row Fin 

Table 6 plus $1.00 per§ 422.100(f)(4)(i)(B). 

TABLE 8: CMS CALCULATIONS OF ILLUSTRATIVE CONTRACT YEAR 2024 

COMBINED MOOP LIMITS FOR LPPO AND TOTAL CATASTROPHIC MOOP 

LIMITS FOR RPPO PLANS USING CONTRACT YEAR 2023 MEDICARE FFS DATA 

PROJECTIONS (BASED ON 2017 - 2021 MEDICARE FFS DATA} 

Mandatory Intermediate 

Row MOOP MOOP 

Reference Description Limit Limit 

A Corresponding umounded in-network MOOP type with $9,111.00 $6,441.50 

10% cap on increases applied (values from row E in Table 

6 and row C in Table 7) 

B Umounded contract year 2024 combined and total $13,666.50 $9,662.25 

catastrophic MOOP limit per§ 422.101(d)(3)(ii) (row A 

multiplied bv 1.5) 

C Rounded contract year 2024 combined and total $13,650.00 $9,650.00 

catastrophic MOOP limit (row B rounded per 

~ 422.100(f)(4)(iii)) 

D Lowest dollar range of the contract year 2024 MOOP limit $6,451.001 $3,751.002 

per§ 422.101(d)(3)(ii) 

E Illustrative contract year 2024 combined and total $6,451.00 to $3,751.00 to 

catastrophic MOOP limit dollar ranges per $13,650.00 $9,650.00 

~ 422.101(d)(3)(ii) 

1The combined and total catastrophic mandatory MOOP limit dollar range begins at the value of the in-network intermediate 

MOOP limit from row Din Table 7 plus $1.00 per§ 422.101(d)(3)(ii)(A). 

Lower 

MOOP 

Limit 

$3,772.00 

$5,658.00 

$5,650.00 

$0.003 

$0.00 to 

$5,650.00 

2The combined and total catastrophic intermediate MOOP limit dollar range begins at the value of the in-network lower MOOP 

limit from row Fin Table 6 plus $1.00 per§ 422.101(d)(3)(ii)(B). 

3The combined and total catastrophic lower MOOP limit dollar range begins at $0.00 per§ 422.101(d)(3)(ii)(C). 
Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22323 

BILLING CODE 4120–01–C 

Some other potential outcomes of 

how CMS may annually update MOOP 

limits for 2024 and for subsequent years, 

subject to the rounding rules in 

paragraph (f)(4)(iii) and the ESRD cost 

transition in paragraph (f)(4)(vi), may 

include: 

• Maintaining the contract year 2024 

MOOP limits for contract year 2025 if 

the 95th and 85th percentiles of contract 

year 2025 Medicare FFS data 

projections result in values equivalent 

to the MOOP limits in effect for the 

prior contract year after applying the 

rounding rules at § 422.100(f)(4)(iii). 

• Calculating updated MOOP limits 

for contract year 2026 (after the contract 

year 2024 MOOP limits were 

maintained for contract year 2025) if the 

95th and 85th percentiles of contract 

year 2026 Medicare FFS data 

projections result in increases of 3 

percent and 5 percent, respectively, 

from the MOOP limits in effect for the 

prior contract year. 

• Increasing the prior year’s 

mandatory MOOP limit by 10 percent 

and increasing the prior year’s lower 

MOOP limit by 8 percent (and 

calculating the intermediate MOOP 

limit per the regulation text) for contract 

year 2025 if the 95th and 85th 

percentiles of contract year 2025 

Medicare FFS data projections result in 

increases of 16 and 8 percent, 

respectively, from the MOOP limits in 

effect for the prior contract year. 

We reiterate that, as finalized in 

§ 422.100(f)(7)(i), CMS will use 

generally accepted actuarial principles 

and practices in projecting the 

beneficiary out of pocket costs using 

updated Medicare FFS data each year to 

calculate MOOP limits in accordance 

with paragraph (f)(4) and (5) and 

§ 422.101(d)(2) and (d)(3). In addition, 

we may explain the calculations CMS 

made to apply the regulations through 

the subregulatory process finalized in 

paragraph (f)(7)(iii). Tables 2 through 4 

illustrate how the methodology for 

setting the MOOP limits for has been 

applied for contract year 2023 MOOP 

limits. Because this FC is adopting the 

specific MOOP limits for contract year 

2023, as shown in Table 5, the 

requirement for a subregulatory notice 

and comment process will begin with 

the calculation of the 2024 MOOP limits 

under the rules finalized in 

§§ 422.100(f)(4) and (f)(5) and 

422.101(d)(2) and (d)(3). 

Comment: A few commenters were 

concerned that MA provider network 

instability or weak dialysis networks in 

combination with higher MOOP limits 

would discourage beneficiaries with 

diagnoses of ESRD from enrolling in MA 

plans. Concerns about the number of 

dialysis providers in an MA plan 

network appear tied to the MA and cost 

plan network adequacy proposal from 

the February 2020 proposed rule that 

was finalized in the June 2020 final rule. 

Similarly, another commenter was 

concerned about the combination of 

ESRD payment rates, MOOP limits, and 

network adequacy standards creating 

disincentives for beneficiaries with 

diagnoses of ESRD from enrolling in MA 

plans. In addition, a commenter 

requested that CMS ensure beneficiaries 

with diagnoses of ESRD are properly 

informed about the adequacy of MA 

plan networks (in addition to out-ofpocket costs as discussed in section 

II.A.4. of this FC) to assist them in 

making health care coverage choices. 

Response: We do not believe that 

CMS’s network adequacy requirements 

and ESRD payment rates by themselves 

or in combination with the MOOP limit 

provision will discourage beneficiaries 

with diagnoses of ESRD from enrolling 

in MA plans. We direct commenters to 

the Calendar Year 2021 and 2022 Rate 

Announcements at https://

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

MedicareAdvtgSpecRateStats/ 

Announcements-and-Documents for 

finalized policies on ESRD payment for 

contract year 2021 and 2022. As 

mentioned in the Calendar Year 2021 

Rate Announcement, we will continue 

to analyze and consider whether, 

consistent with the statutory provisions 

for setting ESRD rates in section 

1853(a)(1)(H) of the Act, any 

refinements to the methodology may be 

warranted in future years. We also 

direct commenters to the June 2020 final 

rule (85 FR 33796) for how CMS 

finalized policies related to network 

adequacy (section V.A. of the June 2020 

final rule) and note that MA plans and 

cost plans are required to provide 

medically necessary services for all 

enrollees and that the regulations 

regarding network adequacy standards 

do not limit application of this 

requirement. In addition, MA 

organizations must maintain a network 

of contracted providers that is sufficient 

to provide adequate access to covered 

services to meet the needs of the 

population served and is consistent 

with the prevailing community pattern 

of health care delivery in the areas 

where the network is being offered per 

§ 422.112. Importantly, the regulations 

at § 422.112(a) provide a critical 

beneficiary protection (including when 

a provider or facility specialty type is 

not subject to the network evaluation 

standards in § 422.116) that access to 

providers at in-network cost sharing 

must be provided by the MA 

organization if the MA plan’s network 

providers are unavailable or inadequate 

to furnish medically necessary benefits 

for an enrollee. This critical beneficiary 

protection ensures that MA enrollees 

have similar reasonable access to 

providers and facilities for covered 

benefits as beneficiaries in Medicare 

FFS. Therefore, we believe that MA 

plans will continue to provide adequate 

access to dialysis providers and the 

network adequacy requirements will not 

discourage beneficiaries with diagnoses 

of ESRD from enrolling in MA plans. 

The ESRD payment rates, CMS’s 


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TABLE 9: ILLUSTRATIVE CONTRACT YEAR 2024 MOOP LIMITS BY PLAN TYPE 

Plan Type Lower MOOP Limit Intermediate MOOP Limit Mandatory MOOP Limit 

HMO $0 - $3,750 $3,751 to $6,450 $6,451 - $9,100 

HMOPOS $0 - $3,750 In-network $3,751 to $6,450 $6,451 - $9,100 In-network 

LocalPPO $0 - $3,750 In-network and $3,751 to $6,450 In-network and $6,451 - $9,100 In-network and 

$0 - $5,650 Combined $3,751 - $9,650 Combined $6,451 - $13,650 Combined 

Regional PPO $0 - $3,750 In-network and $3,751 to $6,450 In-network and $6,451 - $9,100 In-network and 

$0 - $5,650 Combined $3,751 - $9,650 Combined $6,451 - $13,650 Combined 

PFFS (full network) $0 - $3,750 $3,751 to $6,450 $6,451 - $9,100 

PFFS (partial network) $0 - $3,750 $3,751 to $6,450 $6,451 - $9,100 

PFFS (non-network) $0 - $3,750 $3,751 to $6,450 $6,451 - $9,100 
22324 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

21Adam Barnhart, Julia M. Friedman, and Peter 

T. Kissinger, Milliman, ‘‘Star Rating Changes: How 

Medicare Advantage Plans React,’’ October 2020 

https://us.milliman.com/en/insight/Star-ratingchanges-How-Medicare-Advantage-plans-react. 

22Advance Notice and Rate Announcement 

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

Medicare/Health-Plans/MedicareAdvtgSpecRate 

Stats/Announcements-and-Documents. 

23These HPMS memoranda may be accessed 

through the HHS guidance repository at: HHS 

Guidance Submissions | Guidance Portal and 

individuals and organizations may request 

placement on the HPMS listserv at https://

hpms.cms.gov/app/ng/home/. 

network adequacy requirements, and 

the MOOP limit do not provide an 

incentive for MA organizations to 

discriminate against beneficiaries with 

chronic conditions, including diagnoses 

of ESRD. 

If beneficiaries believe that an MA 

organization is not providing adequate 

access to services, complaints may be 

submitted online or by calling 1–800– 

MEDICARE. CMS monitors and 

investigates complaints related to plan 

coverage and CMS caseworkers assist in 

the resolution of issues with the MA 

organizations. CMS may take 

compliance or enforcement actions 

against an MA organization for failing to 

meet any contract or regulatory 

requirements, such as providing 

adequate access to medically necessary 

services, as warranted. In addition, 

enrollees who have complaints about 

their plan have the right to file a 

grievance under § 422.564 and, if they 

believe that benefits have been 

improperly denied, file an appeal under 

the appeal rules in §§ 422.562 through 

422.619. 

In addition, we believe provider 

networks and the plan’s established 

MOOP amount are not the only factors 

beneficiaries consider when choosing a 

health plan. Enrollees may continue to 

consider a number of factors in relation 

to their unique healthcare needs and 

financial situation, such as perception 

of brand, premium, plan type, benefits, 

cost sharing, quality ratings, provider 

network, and the MOOP amount when 

choosing a health care plan 21. This 

information will continue to be 

available to beneficiaries as they review 

their MA plan options for the upcoming 

contract year. Beneficiaries can use 

Medicare Plan Finder (MPF), provider 

network information, and other 

communications materials in 

determining which plan options 

available to them (such as the MA 

program, Medicare FFS, and Medigap) 

best meet their healthcare needs and 

financial situation. 

d. Out-of-Scope Comments 

Comment: Many commenters also 

provided a wide range of feedback that 

was outside of the scope of the changes 

proposed to §§ 422.100(f) and 

422.101(d) for the MOOP limits, 

including requests for CMS to change 

ESRD payments for MA plans in 

addition to, or in place of, transitioning 

ESRD costs into MOOP limits; 

commenters stated these payment 

changes would mitigate the costs for 

MA plans and keep MA program costs 

low for beneficiaries. These commenters 

were concerned that payment changes 

were needed in order to ensure MA 

plans and ultimately providers have the 

resources needed to treat this 

population of chronically ill patients, 

support MA plans in covering the 

higher medical costs for beneficiaries 

with diagnoses of ESRD, and prevent 

detrimental changes to the number and 

scope of plans offered, premiums, cost 

sharing, and supplemental benefits. A 

commenter was concerned the ESRD 

payment amounts might limit MA plan 

options. Similarly, some commenters 

suggested that we adjust MA payment 

rates for ESRD beneficiaries receiving 

dialysis to reflect the impact of MOOP 

limits. 

In addition, a few commenters were 

concerned that the estimate of kidney 

acquisition costs, which are carved out 

of MA payment rates, was inflated and 

tied that to the proposed MOOP limits. 

A commenter was specifically 

concerned that an inflated estimate of 

kidney acquisition costs, combined with 

the proposed MOOP limits, could lead 

to reductions in benefits and result in 

adverse selection for plans that may 

attract higher numbers of enrollees with 

diagnoses of ESRD (such as through 

lower MOOP limits and cost sharing 

structures). Other out-of-scope 

comments included suggestions to 

modify the MOOP limit to include the 

Part D prescription drug program and to 

change the total beneficiary cost (TBC) 

evaluation that CMS uses (under 

§ 422.256(a)) each year to identify MA 

bids that include potentially significant 

increases in enrollee costs or decreases 

in enrollee benefits. 

Response: While we appreciate the 

comments, ensuring payments to MA 

plans capture the cost of enrollees with 

diagnoses of ESRD and the development 

of MA capitation rates (which must 

exclude kidney acquisition costs 

pursuant to section 1853(k) and (n) of 

the Act) is not within the scope of the 

proposal to adopt a methodology for 

calculating MOOP limits. Further, we 

do not find the specific suggestions to 

modify MA payments (including 

adjusting payment rates for beneficiaries 

receiving dialysis to reflect the impact 

of MOOP limits as well as rate 

adjustments to be made instead of 

factoring in the ESRD cost differential) 

to be consistent with our interpretation 

of section 1853 of the Act as a whole, 

which is that CMS should more closely 

align MA payment rates with FFS costs. 

We also do not find the suggestions 

consistent with the statutory provisions 

for ESRD payment policies. In 

accordance with section 1853(b) of the 

Act, CMS addresses the methodology for 

developing the MA (including ESRD) 

capitation rates and payment policies in 

the Advance Notice and Rate 

Announcement for each contract year.22

Comments were submitted and 

addressed in the CY 2021 and CY 2022 

Rate Announcements. Similar to 

comments regarding the accuracy in 

calculating the kidney acquisition cost, 

the methodology used by CMS and the 

amount of payment to MA plans are 

addressed by CMS in the annual Rate 

Announcement. We direct readers to the 

annual Advance Notice and Rate 

Announcement documents for a more 

detailed discussion of these issues. We 

also direct commenters to the June 2020 

final rule (85 FR 33796) for how CMS 

finalized policies related to kidney 

acquisition costs (sections III.B. and 

III.C. of the June 2020 final rule) and 

ESRD enrollment (section III.A. of the 

June 2020 final rule). To the extent that 

consideration of how enrollees with 

diagnoses of ESRD will incur more 

costs, including out-of-pocket expenses, 

is related to calculating the MOOP 

limits, we have addressed those issues 

in section II.A.4.c. of this FC in response 

to other comments. 

Finally, the MOOP limit is one of a 

number of factors that CMS takes under 

consideration in setting the TBC 

standard on an annual basis. For 

example, we also consider benefit and 

payment policies and technical out-ofpocket cost (OOPC) model changes. The 

TBC evaluation process is distinct and 

separate from calculating MOOP and 

cost sharing limits. We direct 

commenters to the HPMS memorandum 

titled ‘‘Final Contract Year 2021 Part C 

Benefits Review and Evaluation,’’ issued 

April 8, 2020, for TBC requirements 

finalized for contract year 2021 and the 

HPMS memorandum titled ‘‘Final 

Contract Year 2022 Part C Benefits 

Review and Evaluation,’’ issued May 20, 

2021, for TBC requirements finalized for 

contract year 2022.23 CMS released an 

HPMS memorandum titled ‘‘Preliminary 

Contract Year 2023 Part C Benefits 

Review and Evaluation’’ on March 3, 

2022 (with a comment period) that 

includes potential changes to the TBC 

threshold for contract year 2023. CMS 

will also consider soliciting comment 


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Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22325 

on how CMS sets the TBC threshold for 

contract year 2024 and future years, if 

necessary. 

5. Final Decision 

CMS received feedback from 27 

commenters pertaining to the MOOP 

limit proposal, with the majority 

reflecting support for, or requests for 

modifications to, the proposed 

amendments at §§ 422.100(f)(4) and (5) 

and 422.101(d)(2) and (3) to: (1) 

Calculate three in-network and out-ofnetwork MOOP limits for local and 

regional MA plans; (2) transition the 

ESRD cost differential (that is, data 

regarding the out-of-pocket costs of 

beneficiaries who have diagnoses of 

ESRD) into the Medicare FFS data used 

to calculate MOOP limits; and (3) 

calculate MOOP limits during and after 

completion of the transition schedule. 

We thank commenters for their feedback 

and helping to inform our final policy 

concerning MOOP limits. CMS intends 

to track several measures of plan benefit 

design to monitor the potential impact 

of the polices adopted in this FC, such 

as: (1) Percent of plans offering lower 

MOOP limits; (2) percent of plans that 

use copayments rather than coinsurance 

in their plan designs; (3) percent of 

plans that establish the highest 

allowable cost sharing for each service 

category (and/or the average or median 

cost sharing for each service category as 

a direct year over year comparison); (4) 

percent of plans with zero premium; 

and (5) the average number of plan 

options. CMS may consider additional 

changes to the methodology for 

calculating MOOP limits in future 

rulemaking if this FC results in 

unforeseen negative consequences, does 

not encourage favorable benefit designs 

for enrollees, or does not increase access 

to plan offerings with lower or 

intermediate MOOP amounts and cost 

sharing that is lower or comparable 

when compared to existing benefit 

packages. 

After careful consideration of all the 

comments we received, and for the 

reasons set forth in the February 2020 

proposed rule and in our responses to 

the related comments discussed 

previously, we are finalizing 

amendments §§ 422.100(f)(4) and (5) 

and 422.101(d)(2) and (3) as proposed, 

with some modification. These new 

MOOP provisions are applicable for 

coverage beginning January 1, 2023 and 

later. We will therefore use these rules 

and the final contract year 2023 MOOP 

limits in Table 5 to evaluate MA bids 

submissions due the first Monday in 

June (June 6, 2022) for the 2023 contract 

year. We will also use these rules to 

evaluate MA bid submissions for 

subsequent contract years going 

forward. In summary, the proposed 

changes are finalized substantially as 

proposed but with the following 

modifications from the proposal: 

• Adding descriptive headings to 

§ 422.100(f)(1)–(9) to orient the reader to 

the content in each paragraph. 

• Applying the methodology in the 

amendments to §§ 422.100(f)(4) and (5) 

and 422.101(d)(2) and (3) beginning on 

or after January 1, 2023 instead of 

January 1, 2022. 

• Revisions in §§ 422.100(f)(4) and (5) 

and 422.101(d)(2) and (3) to use 

consistent language in regulation text 

when referring to: (1) Plan MOOP 

amounts established by MA 

organizations and MOOP limits 

calculated by CMS; (2) in-network, 

combined, catastrophic, and total 

catastrophic MOOP limits, amounts, or 

types; and (3) the Medicare FFS data 

projections CMS uses in calculating 

MOOP and cost sharing limits. 

• Revising introductory language in 

§ 422.100(f)(4) for clarity and to: (1) 

Retain how MA local plans, as defined 

in § 422.2, must have an enrollee innetwork maximum out-of-pocket 

amount for basic benefits before January 

1, 2023 that is no greater than the 

annual limit calculated by CMS using 

Medicare FFS data projections; and (2) 

codify current policy that the innetwork MOOP limits apply to PFFS 

plans for all covered basic benefits. 

• Revising § 422.100(f)(4)(i) to 

address: (1) That CMS will calculate 

three MOOP limits; (2) the addition of 

a definition for the term ‘‘Medicare FFS 

data projections’’; and (3) how the 

MOOP limits are based on the Medicare 

FFS data projections. 

• Adding § 422.100(f)(4)(i)(A)–(C) to 

specify: (1) The dollar ranges of the 

three in-network MOOP types; (2) the 

range of the mandatory MOOP limit 

begins one dollar above the intermediate 

MOOP limit; and (3) the range of the 

intermediate MOOP limit begins one 

dollar above the lower MOOP limit. 

• Revisions in § 422.100(f)(4)(ii) to: 

(1) Clarify that the ranges specified in 

paragraphs (f)(4)(i)(A) through (C) are 

dollar ranges for each MOOP type; and 

(2) add references to §§ 422.101(d) and 

422.113 because the MOOP types are 

referenced in those sections. 

• Removing § 422.100(f)(4)(ii)(A)–(C), 

as this information is finalized with 

clarifications in paragraphs (f)(4)(i)(A)– 

(C). 

• Revisions in § 422.100(f)(4)(iv) to: 

(1) Address how CMS will calculate 

MOOP limits for 2023, including 

incorporation of 70 percent of the ESRD 

cost differential in the data used for 

calculating the MOOP limits; and (2) 

apply a 10 percent cap on increases to 

the MOOP limits from the prior year. 

• Revisions in § 422.100(f)(4)(iv)(B) to 

provide that the numeric midpoint is 

calculated from the mandatory and 

lower MOOP limits before rounding and 

after application of the 10 percent cap 

on increases to the mandatory and lower 

MOOP limits from the prior year. 

• Revisions in § 422.100(f)(4)(v) to: (1) 

Update the applicable dates (to 2024 

and subsequent years); and (2) update 

the reference to the ESRD cost transition 

to paragraph (f)(4)(vi)(B). 

• Revisions in § 422.100(f)(4)(v)(A) to: 

(1) Apply that paragraph to calculate 

both the mandatory and lower MOOP 

limits to make the regulation text 

concise and ensure consistency in the 

methodology; (2) replace the twopercentile guardrail with a 10 percent 

cap on increases to the MOOP limits 

from the prior year; and (3) to include 

clarifying edits because the proposal to 

delay the ESRD cost differential 

transition is not being finalized. 

• Revisions in § 422.100(f)(4)(v)(B) to: 

(1) Clarify that the numeric midpoint is 

calculated between the mandatory and 

lower MOOP limits if either limit 

changes from the prior year; (2) avoid 

double rounding in the calculations of 

the intermediate MOOP limit; and (3) 

calculate the numeric midpoint after 

application of the 10 percent cap on 

increases to the mandatory and lower 

MOOP limits from the prior year. 

• Removing § 422.100(f)(4)(v)(C) as 

the methodology CMS will use to 

calculate the lower MOOP limit for 

contract year 2024 and subsequent years 

is addressed in paragraph (f)(4)(v)(A). 

• Removing proposed 

§ 422.100(f)(4)(vi) as the methodology 

for how CMS calculates MOOP limits 

for 2025 and subsequent years is now 

addressed in paragraph (f)(4)(v). 

• Finalizing the proposed ESRD cost 

differential transition (proposed at 

§ 422.100(f)(4)(vii)) in paragraph 

(f)(4)(vi) with revisions to: (1) Clarify 

that the definition of ‘‘ESRD cost 

differential’’ is used for purposes of the 

ESRD cost transition methodology to 

calculate annual MOOP limits; (2) 

correct and update the definition of the 

ESRD cost differential by using the new 

defined term of Medicare FFS data 

projections and identifying the specific 

Medicare FFS percentiles that CMS will 

use for each MOOP type; (3) decrease 

the percentage of ESRD cost differential 

to incorporate for 2023 (70 percent 

instead of 80 percent); and (4) finalize 

the substance of proposed paragraph 

(f)(4)(vii)(C) in paragraph (f)(4)(vi)(B) 

and apply it to 2024 and subsequent 

years. 


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22326 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

• Revisions in § 422.100(f)(5) to 

clarify that the MOOP limits specified 

in paragraph (f)(4) apply to in-network 

providers. 

• Revisions in § 422.100(f)(5)(i) to: (1) 

Clarify that the combined MOOP is 

applied to MA enrollees (rather than 

beneficiaries); and (2) refer to 

§ 422.101(d)(3) to encompass the 

addition of dollar ranges for the total 

catastrophic (MOOP) limits. 

• Revisions in § 422.100(f)(5)(iii) to 

clarify that the MA organization’s 

responsibility to track out-of-pocket 

spending applies to the combined 

MOOP amount. 

• Finalizing new § 422.100(f)(7)(i) to: 

(1) Clarify that CMS will use generally 

accepted actuarial principles and 

practices in making the projections and 

calculations used in the methodologies 

described in §§ 422.100(f)(4), (f)(5), 

(f)(6), (f)(7)(ii), (f)(8), and (j) and 

422.101(d)(2) and (d)(3) to calculate the 

MOOP limits; and (2) provide examples 

of the types of approaches and data 

CMS may consider. This provision and 

paragraphs (f)(7)(i)(B)–(C) are also 

applicable to the cost sharing standards 

addressed in paragraph (f)(6) and (j) and 

a more complete discussion of these 

applications is available in section II.B. 

of this FC. 

• Finalizing new § 422.100(f)(7)(iii) 

to: (1) Codify a specific rule, beginning 

with contract year 2024, requiring CMS 

to issue subregulatory guidance prior to 

bid submission that specifies the MOOP 

limits and cost sharing standards CMS 

sets for the upcoming year to allow 

sufficient time for MA organizations to 

prepare and submit plan bids; and (2) 

provide a public comment period on the 

projected MOOP limits and cost sharing 

standards for the upcoming contract 

year, unless a public comment period is 

impracticable, unnecessary, or contrary 

to the public interest. 

• Revisions in § 422.101(d)(2) to 

specify the requirements related to 

establishing a catastrophic MOOP 

amount for MA regional plans. 

• Revisions in § 422.101(d)(2)(i) to 

require MA regional plans to establish a 

catastrophic enrollee MOOP amount for 

basic benefits that are furnished by innetwork providers that is consistent 

with § 422.100(f)(4). 

• Revisions in § 422.101(d)(2)(ii) to: 

(1) Remove repetitive references to the 

requirement that MA organizations are 

required to track out-of-pocket spending 

and alert enrollees and contracted 

providers when the MOOP amount is 

reached; and (2) clarify that MA regional 

plans must have the same MOOP type 

for the catastrophic MOOP (in-network) 

limit and total catastrophic (combined 

in-network and out-of-network 

expenditures) limit. 

• Revisions in the introductory 

language of § 422.101(d)(3) to clarify 

that the total catastrophic MOOP 

amount encompasses the combined innetwork and out-of-network 

expenditures and that this MOOP 

amount is applied to MA enrollees. 

• Revisions in § 422.101(d)(3)(i) to: 

(1) Avoid repetitive text in the 

regulation; and (2) clarify the reference 

to paragraph (d)(2) applies to the 

catastrophic limit. 

• Revisions in § 422.101(d)(3)(ii) to: 

(1) Avoid double rounding in the 

calculations of the total catastrophic 

MOOP limits; (2) calculate the total 

catastrophic MOOP limits using the 

mandatory and lower MOOP limits after 

application of the 10 percent cap on 

increases from the prior year; and (3) 

add new paragraphs (d)(3)(ii)(A), (B), 

and (C) to provide the dollar ranges for 

each type of total catastrophic MOOP 

limit (mandatory, intermediate, and 

lower) for purposes of paragraph (d) and 

§ 422.100(f) and (j). 

• Removing proposed 

§ 422.101(d)(3)(iii) and revising to: (1) 

Remove repetitive references to the 

requirement that MA organizations are 

required to track out-of-pocket spending 

and alert enrollees and contracted 

providers when the MOOP is reached; 

and (2) reference the total catastrophic 

MOOP dollar ranges specified in 

paragraph (d)(3)(ii) for purposes of 

paragraph (d) and §§ 422.100(f)(6), (j)(1), 

and 422.113(b)(2)(v) as those sections 

apply certain flexibilities depending on 

the MOOP type established. 

• Adding various minor technical and 

grammatical changes from the proposed 

regulation text at §§ 422.100(f)(4) and (5) 

and 422.101(d)(2) and (3) to ensure 

clarity and avoid repetitive text in the 

regulations. 

Finally, in addition to the authority 

outlined in the February 2020 proposed 

rule for these MOOP limits, section 

1854(a)(5) and (6) of the Act provide 

that CMS is not obligated to accept 

every bid submitted and may negotiate 

with MA organizations regarding the 

bid, including benefits. Under section 

1854(a)(5)(C)(ii) of the Act, CMS is 

authorized to deny a plan bid if the bid 

proposes too significant an increase in 

enrollee costs or decrease in benefits 

from one plan year to the next. While 

the rules adopted here do not limit our 

negotiation authority (§ 422.256), they 

provide minimum standards for an 

acceptable benefit design for CMS to 

apply in reviewing and evaluating bids 

in addition to establishing important 

protections to ensure that enrollees with 

high health care costs are not 

discouraged from enrolling in MA 

plans. 

B. Service Category Cost Sharing Limits 

for Medicare Parts A and B Services and 

per Member per Month Actuarial 

Equivalence Cost Sharing (§§ 422.100 

and 422.113) 

Section 1852 of the Act imposes a 

number of requirements that apply to 

the cost sharing and benefit design of 

MA plans. First, section 1852(a)(1)(B)(i) 

of the Act provides that the MA 

organization must cover, subject to 

limited exclusions, the benefits under 

Parts A and B (that is, basic benefits as 

defined in § 422.100(c)) with cost 

sharing that does not exceed or is at 

least actuarially equivalent to cost 

sharing in original Medicare; this is 

repeated in a bid requirement under 

section 1854(e)(4) of the Act. We have 

addressed and implemented that 

requirement in several regulations, 

including §§ 422.101(e)(2), 

422.102(a)(4), and 422.254(b)(4). 

Second, section 1852(a)(1)(B)(iii) and 

(iv) of the Act also imposes particular 

constraints on the cost sharing for 

specific benefits, which have been 

implemented in § 422.100(j) for MA 

plans and extended to cost plans under 

§ 417.454(e); the statute authorizes CMS 

to add to the list of items and services 

for which MA cost sharing may not 

exceed the cost sharing levels in original 

Medicare. Relatedly, we have codified a 

requirement in § 422.100(k) that MA 

plans must cover original Medicarecovered preventive services (as defined 

in § 410.152(l)) without cost sharing 

when the services are provided innetwork; the same restriction is applied 

to cost plans under § 417.454(d). Third, 

section 1852(b)(1) of the Act prohibits 

discrimination by MA organizations on 

the basis of health status-related factors 

and directs that CMS may not approve 

an MA plan if CMS determines that the 

design of the plan and its benefits are 

likely to substantially discourage 

enrollment by certain MA eligible 

individuals. The requirements under 

§§ 422.100(f)(4) and (5) that impose 

Maximum Out-of-Pocket (MOOP) limits 

on MA local plans are based on this 

anti-discrimination provision and 

designed to prohibit discrimination 

against or discouragement of enrollment 

by beneficiaries with high health care 

needs. In addition, the MOOP 

requirements under §§ 422.101(d)(2) 

and (3) implement the statutory 

catastrophic limits imposed on regional 

MA plans under section 1858(b) of the 

Act. Section 422.100(f)(6) provides that 

cost sharing must not be discriminatory. 

Calculating limits on cost sharing for 

covered services is an important way to 


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Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22327 

24See the HPMS memorandum titled ‘‘Final 

Contract Year 2021 Part C Benefits Review and 

Evaluation,’’ issued April 8, 2020, for information 

on MOOP and cost sharing limits for contract year 

2021 and the HPMS memorandum titled ‘‘Final 

Contract Year 2022 Part C Benefits Review and 

Evaluation,’’ issued May 20, 2021, for information 

on MOOP and cost sharing limits for contract year 

2022. 

25Chapter 4 of the MMMCM can be accessed at 

https://www.cms.gov/Regulations-and-Guidance/ 

Guidance/Manuals/Downloads/mc86c04.pdf. 

26After publication of the February 2020 

proposed rule, CMS announced that it would take 

the Medicare FFS costs of beneficiaries with 

diagnoses of ESRD into account in developing 

MOOP limits and cost sharing limits for 2021 and 

2022. See the HPMS memorandum titled ‘‘Final 

Contract Year 2021 Part C Benefits Review and 

Evaluation,’’ issued April 8, 2020, for information 

on MOOP and cost sharing limits for contract year 

2021 and HPMS memorandum titled ‘‘Final 

Contract Year 2022 Part C Benefits Review and 

Evaluation,’’ issued May 20, 2021, for information 

on MOOP and cost sharing limits for contract year 

2022. 

27The Fiscal Year President’s Budgets may be 

accessed at https://www.govinfo.gov/app/ 

collection/BUDGET/ and the annual Advance 

Notice and Rate Announcements may be accessed 

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

MedicareAdvtgSpecRateStats/Announcements-andDocuments. In addition, see page 14 from the 2020 

Rate Notice and Final Call Letter, retrieved from 

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

MedicareAdvtgSpecRateStats/Downloads/ 

Announcement2020.pdf. 

ensure that the cost sharing aspect of an 

MA plan design does not discriminate 

against or discourage enrollment of 

beneficiaries who have high health care 

needs. CMS issued annual limits on cost 

sharing for covered services and 

guidance addressing discriminatory cost 

sharing, as applied to specific benefits 

and to categories of benefits, in the 

annual Call Letters issued prior to 

2020 24 and in bidding instructions. In 

addition, Chapter 4 25 of the Medicare 

Managed Care Manual (MMCM) has 

contained long-standing polices 

regarding discriminatory cost sharing 

based on the requirements under 

§ 422.100(f). 

Currently, CMS annually analyzes 

Medicare program data to interpret and 

apply the various cost sharing limits 

from these authorities and to publish 

guidance on MA cost sharing limits. The 

relevant Medicare data included in this 

analysis are the most recent Medicare 

fee-for-service (FFS) data, including cost 

and utilization data, and MA patient 

utilization information from MA 

encounter data. CMS sets cost sharing 

limits based on analyses of and 

projections from this data and then 

reviews cost sharing established by MA 

organizations to determine compliance 

with the cost sharing limits and 

requirements established in the statute 

and regulations, as interpreted and 

implemented in sub-regulatory 

guidance, including Chapter 4 from the 

MMCM. The cost sharing limits set by 

CMS reflect a combination of outpatient 

and professional visits and inpatient 

utilization scenarios based on the 

lengths of stays typically used by 

average to sicker Medicare patients. 

CMS uses multiple inpatient utilization 

scenarios to guard against MA 

organizations setting inpatient cost 

sharing amounts in a manner that is 

potentially discriminatory. CMS also 

sets review parameters for frequently 

used Medicare professional services, 

such as primary and specialty care 

services. 

CMS proposed to codify our current 

and longstanding practice and 

methodology for interpreting and 

applying the limits on MA cost sharing, 

with some modifications. In addition, 

CMS proposed to add categories of 

services to the regulation requiring MA 

cost sharing be no greater than that in 

original Medicare. Our proposal as a 

whole, in combination with the MOOP 

proposal in section VI.A. of the 

February 2020 proposed rule, aimed to 

provide MA organizations incentives to 

offer plans with favorable benefit 

designs for beneficiaries. As noted in 

the February 2020 proposed rule, 

organizations must also comply with 

applicable Federal civil rights laws that 

prohibit discrimination on the basis of 

race, color, national origin, sex (sexual 

orientation and gender identity), age, 

disability, including section 1557 of the 

Affordable Care Act, title VI of the Civil 

Rights Act of 1964, section 504 of the 

Rehabilitation Act of 1973, and the Age 

Discrimination Act of 1975. None of the 

proposals in the February 2020 

proposed rule limited application of 

such anti-discrimination requirements. 

In the February 2020 proposed rule, 

CMS explained that in developing and 

applying the reviews of MA cost sharing 

for 2020 and prior years,26 we exclude 

the costs for individuals with diagnoses 

of ESRD from the Medicare FFS data 

used. We explained the exclusion of 

costs for these individuals is because of 

the pre-2021 restrictions on when and 

how Medicare beneficiaries with 

diagnoses of ESRD could enroll in an 

MA plan under section 1851(a) of the 

Act. In the February 2020 proposed rule, 

we stated that in contract year 2018, 0.6 

percent of the MA enrollee population, 

or approximately 121,000 beneficiaries, 

have diagnoses of ESRD. This statistic 

was based on the statutory definition of 

ESRD and CMS data. Using more recent 

enrollment data, the number of 

beneficiaries enrolled in MA in contract 

year 2018 with diagnoses of ESRD is 

lower than previously stated, 

approximately 120,100 (which does not 

impact the 0.6 percent of the MA 

enrollee population figure).27 As 

discussed in more detail in section III.A. 

of the June 2020 final rule (85 FR 

33796), section 17006 of the 21st 

Century Cures Act amended the 

Medicare statute to allow Medicare 

beneficiaries with diagnoses of ESRD to 

enroll in MA plans beginning in 

contract year 2021. CMS expected this 

change would result in Medicare 

beneficiaries with diagnoses of ESRD 

beginning to transition to, or choosing, 

MA plans in greater numbers than they 

did before contract year 2021. As 

discussed in the February 2020 

proposed rule, the OACT expected 

ESRD enrollment in MA plans to 

increase by 83,000 as a result of the 21st 

Century Cures Act provision. The OACT 

assumed the increase would be phased 

in over 6 years, with half of those 

beneficiaries (41,500) enrolling during 

2021. Given the potential increase in 

enrollment of beneficiaries with 

diagnoses of ESRD in MA plans, the 

OACT has conducted another analysis 

to determine the impact of including all 

costs incurred by beneficiaries with 

diagnoses of ESRD into the Medicare 

FFS data CMS uses to project future outof-pocket expenditures to calculate cost 

sharing standards and limits. Based on 

the most recent analyses and 

projections, adding in ESRD costs (that 

is, projected out-of-pocket costs for 

beneficiaries with diagnoses of ESRD) 

affects MA cost sharing limits for 

inpatient hospital acute length of stay 

scenarios, with the longer length of stay 

scenarios being the most affected. As 

discussed in section VI.A. of the 

February 2020 proposed rule, CMS 

proposed a schedule for incorporating 

use of the most recent, complete 

Medicare FFS data for beneficiaries with 

diagnoses of ESRD into the data used to 

set MOOP limits. (Section II.A. of this 

FC addresses that proposal.) CMS made 

a similar proposal to codify, with some 

updates and changes, the current 

process for calculating nondiscriminatory cost sharing limits and to 

incorporate out-of-pocket expenditures 

for beneficiaries with diagnoses of 

ESRD. CMS also proposed to codify the 

methodology used to set the standards 

for MA cost sharing for professional 

services and for inpatient hospital acute 

and psychiatric services at 

§ 422.100(f)(6) and to require MA plans 

to have cost sharing that does not 

exceed the standards set each year using 

the methodology in paragraph (f)(6). As 

explained in the February 2020 

proposed rule (and reflected in the 

proposed regulation text), the limits in 

proposed § 422.100(f)(6) would be in 


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22328 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

28See page 180 in the 2020 Rate Notice and Final 

Call Letter, retrieved from https://www.cms.gov/ 

Medicare/Health-Plans/MedicareAdvtgSpecRate 

Stats/Downloads/Announcement2020.pdf. 

addition to other limits on cost sharing 

that apply to MA plans. CMS also 

proposed, at § 422.100(j), that MA plans 

must not impose cost sharing that 

exceeds original Medicare for certain 

specific benefits and for certain 

categories of benefits on a per member 

per month actuarially equivalent basis. 

The proposal also included specific cost 

sharing requirements for emergency/ 

post-stabilization services and urgently 

needed services, proposed in 

§ 422.113(b)(2)(v) and (vi). 

We explained in the February 2020 

proposed rule how CMS is committed to 

encouraging plan offerings with 

favorable MOOP and cost sharing limits. 

Based on that, CMS proposed to modify 

the regulations at §§ 422.100(f)(6) and 

422.113(b)(2)(v) and (vi) to establish a 

range of cost sharing limits for basic 

benefits furnished on an in-network 

basis based on the MOOP limit 

established by the MA plan. We 

explained that providing MA 

organizations with greater flexibility to 

set cost sharing based on different 

MOOP limits should incentivize MA 

organizations to create favorable benefit 

designs for MA enrollees. 

In addition, CMS proposed amending 

§§ 422.100(f)(6) and (j) and 422.113(b)(2) 

to implement safeguards to ensure MA 

enrollees are not subject to 

discriminatory benefits or 

discriminatory costs for basic benefits. 

These proposed safeguards included 

codifying a long-standing interpretation 

of the current anti-discrimination 

provision of section 1852(b)(1) that 

payment of less than 50 percent of the 

total MA plan financial liability 

discriminates against enrollees who 

need those services. Specifically, CMS 

proposed to codify in 

§ 422.100(f)(6)(i)(A) that MA plans may 

not pay less than 50 percent of the total 

MA plan financial liability, regardless of 

the MOOP limit established, for basic 

benefits that are provided in-network 

and out-of-network that are not 

explicitly addressed in the cost sharing 

standards at paragraph (f)(6). We noted 

in the February 2020 proposed rule that, 

under current policy and guidance,28

copayments are expected to reflect 

specific benefits identified within the 

plan benefit package (PBP) service 

category or a reasonable group of 

benefits or services. Organizations may 

design their plan benefits as they see fit 

so long as they satisfy Medicare 

coverage requirements, including 

applicable MA regulations. MA 

organizations typically offer benefits 

with lower cost sharing amounts than 

the annual limits published by CMS; we 

believe this is due to multiple factors, 

including the principles and incentives 

inherent in managed care, effective 

negotiations between organizations and 

providers, and market competition. 

1. General Non-Discriminatory Cost 

Sharing Limits (§ 422.100(f)(6)) 

CMS proposed to codify in 

§ 422.100(f)(6) a set of general rules for 

cost sharing for basic benefits. The term 

‘‘basic benefits,’’ as defined in 

§ 422.100(c), means items and services 

(other than hospice care and, beginning 

2021, coverage for organ acquisitions for 

kidney transplants) for which benefits 

are available under Parts A and B of 

Medicare and including additional 

telehealth benefits offered consistent 

with the requirements at § 422.135. We 

proposed that the rules in paragraph 

(f)(6) must be followed by MA plans in 

addition to other regulatory and 

statutory requirements for cost sharing. 

MA organizations have the option to 

charge either coinsurance or a 

copayment for most service categories, 

which we aimed to make clear in the 

proposed regulation text. Under our 

proposal, the MA plan would be 

prohibited from exceeding the 

coinsurance or copayment limit for 

service category standards set by CMS 

using the various rules in paragraph 

(f)(6) and (j). In addition, after 

publication of the February 2020 

proposed rule, the Families First 

Coronavirus Response Act (Pub. L. 116– 

127) amended section 1852 of the Act to 

prohibit MA plans from charging 

enrollees higher cost sharing than is 

charged under original Medicare for 

COVID–19 testing and testing-related 

services identified in section 1833(cc)(1) 

for which payment would be payable 

under a specified outpatient payment 

provision described in section 

1833(cc)(2) during the period from 

March 18, 2020, through to the end of 

the emergency period described in 

section 1135(g)(1)(B) (namely, the 

COVID–19 public health emergency). 

The Coronavirus Aid, Relief, and 

Economic Security Act (Pub. L. 116– 

136) amended section 1852(a)(1)(B) to 

require MA plans have cost sharing that 

does not exceed cost sharing in Original 

Medicare for a COVID–19 vaccine and 

its administration described in section 

1861(s)(10)(A) of the Act. 

CMS proposed to codify our longstanding interpretation and 

implementation of the antidiscrimination provisions (including 

section 1852(b)(1) of the Act) that 

payment of less than 50 percent of the 

total MA plan financial liability 

discriminates against enrollees who 

have significant health care needs and 

discourages enrollment in the plan by 

such beneficiaries. We stated how we 

recognize that it is difficult to set a cost 

sharing limit for every possible benefit 

and that this catch-all rule, which has 

been long-standing policy used in our 

review of bids, is an important 

beneficiary protection. We proposed 

that this rule would apply regardless of 

the MOOP limit established and 

regardless of whether the basic benefit 

is furnished in-network or out-ofnetwork, to protect beneficiaries 

regardless of the MA plan they choose. 

As used in the proposed regulation text, 

the term ‘‘total MA plan financial 

liability’’ meant the total payment paid 

and includes both the enrollee cost 

sharing and the amount paid by the MA 

organization. Specifically, CMS 

proposed to codify at § 422.100(f)(6)(i) 

that MA plans may not pay less than 50 

percent of the total MA plan financial 

liability, regardless of the MOOP limit 

established, for in-network benefits and 

out-of-network benefits for which a cost 

sharing limit is not otherwise specified 

in proposed paragraph (f)(6), inclusive 

of basic benefits. In order to clarify this 

policy, we also proposed in paragraphs 

(f)(6)(i)(B) and (C) how this rule would 

apply when coinsurance or copayment 

structures are used: (1) If the MA plan 

uses copayments, the copayment for an 

out-of-network benefit cannot exceed 50 

percent of the average Medicare FFS 

allowable amount for that service area 

and the copayment for in-network 

benefits cannot exceed 50 percent of the 

average contracted rate of that benefit 

(that is, the PBP service category level 

or for a reasonable group of benefits or 

services covered under the plan); and 

(2) if the MA plan uses coinsurance, 

then the coinsurance cannot exceed 50 

percent. 

CMS also proposed general rules to 

govern how CMS would set copayment 

limits. This included proposed 

§ 422.100(f)(6)(ii)(A) which provided 

that CMS rounds amounts to the nearest 

whole $5 increment for professional 

services copayments and nearest whole 

$1 for inpatient acute and psychiatric 

and skilled nursing facility copayments. 

Our proposal at paragraph (f)(6)(ii)(B) 

provided that for all cases in which the 

copayment limit is projected to be 

exactly between two increments, CMS 

rounds to the lower dollar amount. This 

rounding rule would codify, for the 

most part, current policy, but with slight 

modification to protect beneficiaries 

from higher increases in costs by 

rounding down whenever possible. 


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29Chapter 4, Section 50.1 of the MMMCM can be 

accessed at https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/Downloads/ 

mc86c04.pdf. 

In proposed § 422.100(f)(6)(iii), CMS 

proposed to codify rules to give MA 

plans flexibility in setting cost sharing 

for professional services, including 

primary care services, physician 

specialist services, partial 

hospitalization, and rehabilitation 

services. The proposed flexibility is, in 

many respects, the same as the 

flexibility we currently provide for MA 

plans that use the lower, voluntary 

MOOP limit, but with modifications to 

account for our proposal in section 

VI.A. of the February 2020 proposed 

rule which proposed the setting of three 

MOOP limits each year. This included 

new paragraph (f)(6)(iii)(A) to provide 

that an MA plan may not establish cost 

sharing amounts that exceed the limits 

under paragraph (f)(6)(iii) for basic 

benefits that are professional services 

furnished in-network (that is, by 

contracted providers). In addition, CMS 

proposed new paragraph (f)(6)(iii)(B) to 

specify the data that CMS would use in 

applying the methodology in paragraph 

(f)(6)(iii) to set the cost sharing limits for 

professional services. As proposed, the 

specific data would be projections of 

out-of-pocket costs representing 

beneficiaries with and without 

diagnoses of ESRD based on the most 

recent, complete Medicare FFS data. 

Finally, CMS proposed new paragraph 

(f)(6)(iii)(C) to outline the method for 

setting the cost sharing limits for 

professional services each year and to 

clarify that the resulting limits 

(specified as dollar amounts) are subject 

to the rounding rules in paragraph 

(f)(6)(ii). CMS explained the cost sharing 

limits would vary based on the type of 

MOOP limit used by the MA plan as 

follows: 

• Mandatory MOOP limit: 30 percent 

coinsurance or actuarially equivalent 

copayment values. The MA plan must 

not pay less than 70 percent of the total 

MA plan financial liability. 

• Intermediate MOOP limit: 40 

percent coinsurance or actuarially 

equivalent copayment values. The MA 

plan must not pay less than 60 percent 

of the total MA plan financial liability. 

• Lower MOOP limit: 50 percent 

coinsurance or actuarially equivalent 

copayment values. The MA plan must 

not pay less than 50 percent of the total 

MA plan financial liability. 

Under the proposal, an MA plan must 

pay no less than a specific percentage of 

the total financial liability for 

professional services to align with the 

range of flexibility each MOOP limit 

provides. We explained that our 

proposal was intended to ensure that 

there is a clear increase in an MA 

organization’s financial responsibility 

for professional services if the MA plan 

uses a mandatory MOOP limit, rather 

than a lower or intermediate MOOP 

limit. We arrived at the specified 

percentages by assigning the highest 

coinsurance amount that was not 

discriminatory (50 percent) to the 

lowest MOOP limit, and assigning 30 

percent coinsurance (which is most 

closely related to copayment limits from 

prior contract years) to the mandatory 

MOOP limit, to balance the incentives 

for each type of MOOP limit. We 

proposed the midpoint (40 percent) for 

the intermediate MOOP limit. We 

explained that these coinsurance 

percentages would result in reasonable 

differences between expected 

copayment limits for each of the MOOP 

limits. Overall, our proposal aimed to 

prevent discrimination against the 

enrollees with high health needs for the 

covered services by setting these cost 

sharing limits to cap the amount of 

financial responsibility for professional 

services the MA organization can 

transfer to enrollees. To set the 

actuarially equivalent values for the 

copayment limits based on the 

regulation text each year, we stated that 

CMS would calculate copayment limits 

that are approximately equal to the 

identified coinsurance percentage limit 

based on the OACT’s projections of the 

most recent, complete Medicare FFS 

data that includes 100 percent of the 

out-of-pocket costs representing all 

beneficiaries with and without 

diagnoses of ESRD. 

CMS proposed to base the 

approximate actuarially equivalent 

copayment limits for primary care, 

physician specialties, mental health 

specialty services, and physical and 

speech therapy on the most recent, 

complete Medicare FFS average cost 

data (including 100 percent of the outof-pocket costs incurred by beneficiaries 

with diagnoses of ESRD), weighted by 

utilization for the applicable provider 

specialty types for each service category. 

We stated that using an average that is 

weighted by specialty type utilization is 

consistent with developing an 

actuarially equivalent copayment for the 

coinsurance percentage specified in 

proposed § 422.100(f)(6)(iii). We 

solicited comment on whether our 

regulation text should be further revised 

on this point. In the preamble of the 

February 2020 proposed rule, we listed 

the applicable provider specialty types 

we would use in this analysis: 

• Primary Care: Family Practice; 

General Practice; Internal Medicine 

• Physician Specialties: Cardiology; 

Geriatrics; Gastroenterology; 

Nephrology; Otolaryngology (ENT) 

• Mental Health Specialty Services: 

Clinical Psychologist; Licensed 

Clinical Social Worker; Psychiatry 

• Physical and Speech Therapy: 

Physical Medicine and Rehabilitation; 

Speech-language Pathologists 

In addition to these categories, we 

proposed to base the approximate 

actuarially equivalent copayment limits 

for psychiatric services, occupational 

therapy, and chiropractic care on the 

most recent, complete Medicare FFS 

cost data from a single, most applicable 

provider specialty: respectively, 

Psychiatry, Occupational Therapist, and 

Chiropractor. We solicited comment on 

whether other provider specialty types 

should inform our proposed actuarially 

equivalent copayment limits for the 

various professional services. Table 5 

(Illustrative Contract Year 2022 InNetwork Service Category Cost Sharing 

Limits) from the February 2020 

proposed rule (85 FR 9086–9087) 

provided an illustration of potential cost 

sharing limits for contract year 2022 

based on projections of the Medicare 

FFS cost data from 2015–2019 for 

professional services, emergency/poststabilization services, and urgently 

needed services. 

We also solicited comment on 

whether to require additional regulation 

text to address combining or bundling of 

cost sharing. CMS has previously issued 

guidance in Chapter 4, section 50.1, 

‘‘Guidance on Acceptable Costsharing,’’ 29 of the MMCM that cost 

sharing should appear to MA enrollees 

consistent with MA disclosure 

requirements at § 422.111(b)(2). Section 

422.111(b)(2) requires MA plans to 

clearly and accurately disclose benefits 

and cost sharing. We explained in the 

February 2020 proposed rule that MA 

plans must identify (and charge) the 

enrollee’s entire cost sharing 

responsibility as a single copay (if using 

copayment rather than coinsurance) 

even if the MA plan has differential cost 

sharing that varies by facility setting or 

contracted arrangements that involve 

separate payments to facilities (or 

settings) and other providers. As 

discussed in the February 2020 

proposed rule, we are aware that a 

facility or another health care delivery 

setting may charge an amount separate 

from that charged by the health care 

provider who actually furnishes covered 

services. In the February 2020 proposed 

rule, we clarified that those separate 

fees should be combined (bundled) into 

the cost sharing amount for that 


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22330 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

particular place of service and be clearly 

reflected as a total copayment in 

beneficiary communication and 

marketing materials. We noted that we 

believe this current guidance is an 

appropriate interpretation of § 422.111, 

but solicited comment on codifying it. 

2. Cost Sharing Limits for Inpatient 

Hospital Acute and Psychiatric Services 

(§ 422.100(f)(6)(iv)) 

As discussed in the February 2020 

proposed rule, since contract year 2011, 

CMS has set cost sharing limits for 

certain inpatient length of stay scenarios 

based on a percentage of estimated 

Medicare FFS cost sharing projected to 

the applicable contract year. We 

explained the current process and 

proposed to codify continued use of it 

with some modifications. 

We stated in the February 2020 

proposed rule that the OACT conducts 

an annual analysis of the most recent, 

complete Medicare FFS data, and uses 

that data to project costs for the Part A 

deductible and Part B costs based on the 

length of stay scenarios and the setting 

of the inpatient stay (acute or 

psychiatric), to help determine the 

inpatient hospital acute and psychiatric 

cost sharing limit amounts. CMS 

compares the cost sharing for an MA 

enrollee, under the plan design for each 

bid, to the projected Medicare FFS cost 

sharing in each scenario; for MA plans 

with the mandatory MOOP limit, the 

cost sharing limit is 100 percent of the 

Medicare FFS cost sharing for the 

applicable scenario and for MA plans 

using the lower, voluntary MOOP limit, 

it is 125 percent of the Medicare FFS 

cost sharing. If an MA plan’s cost 

sharing exceeds the applicable limit for 

any of the length of stay scenarios, CMS 

considers the MA plan’s cost sharing as 

discriminatory under current § 422.100 

and does not approve that plan benefit 

package. CMS proposed new 

§ 422.100(f)(6)(iv)(A) through (D) to 

codify this long-standing policy for the 

cost sharing established by an MA plan 

for inpatient acute and psychiatric 

services, with modifications to 

incorporate cost sharing expenditures 

for beneficiaries with diagnoses of ESRD 

in setting the limits and to set a limit for 

MA plans that use the intermediate 

MOOP limit. Proposed paragraph 

(f)(6)(iv)(A) required an MA plan to 

have cost sharing for inpatient hospital 

acute and psychiatric benefits that does 

not exceed the limits set in paragraph 

(f)(6)(iv). Our proposal aimed to provide 

transparency on how CMS will set the 

cost sharing thresholds with which MA 

organizations must comply for inpatient 

hospital acute and psychiatric benefits. 

We proposed that during our review of 

bids, we would evaluate the MA cost 

sharing included in plan bids to 

determine compliance with the cost 

sharing limits adopted in the regulation. 

We proposed to add a 3-day length of 

stay scenario for acute stays and an 8- 

day length of stay scenario for 

psychiatric care to those used under our 

current policy; these proposed scenarios 

were based on Medicare FFS data and 

informed by patient utilization 

information from MA encounter data. 

As a result, proposed 

§ 422.100(f)(6)(iv)(B) specified the seven 

inpatient stay scenarios (current and 

new) for which cost sharing would 

apply under original Medicare and that 

would be used to set the MA cost 

sharing limits. The inpatient hospital 

acute stay scenarios are for 3 days, 6 

days, 10 days, and 60 days and the 

psychiatric inpatient hospital stay 

scenarios are for 8 days, 15 days, and 60 

days. Many of these same scenarios 

were described in the contract year 2020 

Call Letter and in previous years. 

Under our proposal, cost sharing 

limits for each of the seven inpatient 

hospital length of stay scenarios would 

incorporate the projected Medicare FFS 

inpatient Part A deductible and Part B 

professional costs. We explained that 

under our proposal, plans could vary 

cost sharing for different admitting 

health conditions, providers, or services 

provided, but overall benefit cost 

sharing must satisfy the limits 

established by CMS. Proposed 

§ 422.100(f)(6)(iv)(C) described the data 

CMS would use for calculating the 

Medicare FFS out-of-pocket costs for 

each scenario. Under the proposal, CMS 

would use projected out-of-pocket costs 

and utilization data based on the most 

recent Medicare FFS data that factors in 

out-of-pocket costs incurred by 

beneficiaries with diagnoses of ESRD on 

the transition schedule we proposed in 

paragraph (f)(4)(vii)(A) through (D) and 

could also use patient utilization 

information from MA encounter data. In 

addition, for purposes of setting these 

cost sharing limits, the February 2020 

proposed rule provided that the 

Medicare FFS data that factors in the 

ESRD cost differential would not 

include the exceptions for tolling the 

scheduled transition that were proposed 

for the MOOP limit calculations (in 

proposed paragraphs (f)(4)(v)(A) and 

(C)). 

As discussed in the February 2020 

proposed rule, the OACT conducted an 

analysis to help determine the impact of 

including all costs incurred by 

beneficiaries with diagnoses of ESRD 

into the most recent Medicare FFS data 

projections used to calculate cost 

sharing standards. This analysis found 

adding in related ESRD costs affects 

inpatient hospital acute cost sharing 

limits but that adding in those costs did 

not impact inpatient hospital 

psychiatric standards based on 

projections of Medicare FFS data 

available at the time of writing the 

February 2020 proposed rule. Based on 

this, we proposed to update the 

methodology to consider ESRD costs in 

setting all inpatient hospital acute and 

psychiatric standards. Specifically, CMS 

proposed to integrate approximately 60 

percent of the difference between 

Medicare FFS costs incurred by all 

beneficiaries (including those with 

diagnoses of ESRD) and the costs 

excluding beneficiaries with diagnoses 

of ESRD into the data used to set the 

inpatient hospital acute and psychiatric 

cost sharing limits for contract year 

2022. After contract year 2022, CMS 

proposed to incorporate an additional 

20 percent of costs incurred by 

beneficiaries with diagnoses of ESRD 

each year until contract year 2024, when 

CMS would integrate 100 percent of the 

costs incurred by beneficiaries with 

diagnoses of ESRD into the most recent, 

complete Medicare FFS data that is used 

to determine inpatient hospital acute 

and psychiatric cost sharing limits. This 

was the same schedule proposed to 

transition ESRD costs into MOOP limit 

calculations so we used a crossreference in the proposed regulation text 

to avoid repetitive regulation text. 

Finally, at § 422.100(f)(6)(iv)(D), CMS 

proposed specific cost sharing limits for 

inpatient acute and psychiatric stays 

that are tied to the type of MOOP limit 

used by the MA plan. The proposed 

limits were stated as percentages of the 

FFS costs for each length of stay 

scenario (based on original Medicare 

cost sharing for a new benefit period): 

• Mandatory MOOP limit: Cost 

sharing must not exceed 100 percent of 

estimated Medicare Fee-for-Service cost 

sharing, including the Part A deductible 

and related Part B costs. 

• Intermediate MOOP limit: Cost 

sharing must not exceed the numeric 

mid-point between the cost sharing 

limits for the mandatory and lower 

MOOP limits. 

• Lower MOOP limit: Cost sharing 

must not exceed 125 percent of 

estimated Medicare Fee-for-Service cost 

sharing, including the Part A deductible 

and related Part B costs. For inpatient 

acute 60-day length of stays, we 

proposed that MA plans that establish a 

lower MOOP limit would have the 

flexibility to set cost sharing above 125 

percent of estimated Medicare Fee-forService cost sharing as long as the total 

cost sharing for the inpatient benefit 

does not exceed the MOOP limit or cost 


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Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22331 

30Section 1852(a)(1)(B)(iv)(IV), as cited in the 

February 2020 proposed rule, was re-designated to 

section (a)(1)(B)(iv)(VII) pursuant to amendments to 

section 1852 of the Act made by the Families First 

Coronavirus Response Act (Pub. L. 116–127) and 

the CARES Act (Pub. L. 116–136) regarding 

coverage of COVID–19 testing, testing-related 

services, and vaccination. 

sharing for those benefits in original 

Medicare on a per member per month 

actuarially equivalent basis. 

We proposed to use the same 

percentage of estimated Medicare FFS 

cost sharing for the mandatory and 

lower MOOP limits (100 percent and 

125 percent respectively) as under 

current policy to determine inpatient 

hospital acute and psychiatric cost 

sharing limits. Using the rule proposed 

in § 422.100(f)(6)(ii)(A), all inpatient 

hospital acute and psychiatric cost 

sharing limits would be rounded to the 

nearest or lower whole $1 increment. As 

discussed in the February 2020 

proposed rule, our proposal for limits 

on the cost sharing for inpatient acute 

and psychiatric services aligned with 

our current practice (with some 

modifications, as discussed). We 

explained that would provide benefit 

design stability for MA plans. 

The February 2020 proposed rule 

stated that CMS would continue to 

publish acceptable inpatient hospital 

acute and psychiatric cost sharing limits 

and a description of how the regulation 

standard is applied (that is, the 

methodology used) through 

subregulatory means, such as a Health 

Plan Management System (HPMS) 

memoranda, issued prior to bid 

submission each year. We solicited 

comment on whether to include 

additional regulation text to establish 

when information would be published 

for plans. 

The February 2020 proposed rule 

included Table 4 (Illustrative Example 

of Cost Sharing Limits Based on Current 

Medicare FFS Data for Inpatient 

Hospital Acute 10-Day Length of Stay 

Scenario), to provide an illustrative 

example of the cost sharing limits for 

the 10-day length of stay scenario (an 

inpatient hospital acute stay); the 

illustration was developed using 2015– 

2019 data projected to contract years 

2022 through 2024 (85 FR 9082). We 

explained that the limits were 

illustrations and that the actual cost 

sharing limits set for future years could 

change, based on updated projections 

and Medicare FFS cost sharing 

requirements. We also explained in 

more detail how the proposed 

methodology was applied to illustrate a 

contract year 2022 cost sharing amount 

in Table 4. 

We also included Table 5 (Illustrative 

Contract Year 2022 In-Network Service 

Category Cost Sharing Limits) in the 

February 2020 proposed rule to 

illustrate the potential impact of our 

proposals for other in-network service 

categories (85 FR 9086 through 9087). 

The February 2020 proposed rule Table 

5 included projections of potential 

inpatient hospital acute and psychiatric 

cost sharing limits based on the 

methodology we proposed in 

§ 422.100(f)(6)(iv). As explained in the 

February 2020 proposed rule, we expect 

the cost sharing limits for inpatient 

services for future years would be 

different from the illustrations in the 

February 2020 proposed rule due to 

updated projections using Medicare FFS 

data. 

CMS requested comments and 

suggestions on its proposed cost sharing 

standards. We also requested comment 

on whether additional regulation text or 

restructuring of § 422.100(f)(6)(iv) was 

needed to achieve CMS’s goal of 

providing additional transparency on 

how CMS will: (1) Develop the seven 

length of stay scenarios for inpatient 

hospital acute and psychiatric services; 

(2) transition ESRD costs into inpatient 

hospital acute and psychiatric limit 

calculations; and (3) calculate inpatient 

hospital acute and psychiatric limits 

after the ESRD cost transition is 

complete. 

3. Basic Benefits for Skilled Nursing 

Facilities (SNFs), Outpatient, and 

Professional Services Subject to Cost 

Sharing Limits (§ 422.100(j)) 

CMS proposed to codify and adopt 

specific cost sharing limits for certain 

benefits (by service and by category of 

services) that are based on a comparison 

to the cost sharing applicable in the 

Medicare FFS program. We relied on 

both section 1852(a)(1)(B)(iv)(VII) 30 and 

section 1852(b) of the Act to propose 

codifying the current policy and adding 

new limits. Section 

1852(a)(1)(B)(iv)(VII) of the Act 

explicitly authorizes the Secretary to 

identify services that the Secretary 

determines appropriate (including 

services that the Secretary determines 

require a high level of predictability and 

transparency for beneficiaries) to be 

subject to a cost sharing limit that is tied 

to the cost sharing imposed for those 

services under original Medicare. In 

addition, we have relied on how higher 

cost sharing for these benefits 

discriminates against the enrollees who 

need these services in setting additional 

cost sharing limits in the past. We 

believe that charging higher cost sharing 

for specific services discriminates 

against and discourages enrollment by 

beneficiaries with a health status that 

requires those services. We further rely 

on sections 1856(b) and 1857(e) of the 

Act, which authorize CMS to set 

implementing standards for Part C and 

adopt additional requirements as 

necessary, appropriate and not 

inconsistent with Part C, to the extent 

necessary to set these additional cost 

sharing protections for enrollees. As 

discussed extensively in this FC, setting 

standards for cost sharing limits and 

codifying the methodology serves 

important program purposes and goals 

for the MA program. 

a. Range of Cost Sharing Limits for 

Certain Outpatient and Professional 

Services (§ 422.100(f)(6)(iii)) 

CMS proposed to modify the 

regulation at § 422.100(f)(6) to establish 

a range of cost sharing limits based 

upon the MOOP limit established by the 

MA plan for basic benefits (as defined 

in § 422.100(c)(1)) offered on an innetwork basis. The proposal was 

intended to provide MA organizations 

with benefit design flexibilities while 

balancing the incentives for each MOOP 

type. As discussed in the February 2020 

proposed rule, this proposal aligned 

with the long-standing policy of 

affording MA plans greater flexibility in 

establishing Parts A and B cost sharing 

when the MA plan adopts a lower, 

voluntary MOOP amount. 

CMS proposed to add 

§ 422.100(f)(6)(iii) to specify that for 

basic benefits that are for professional 

services furnished in-network, MA 

plans may have greater flexibility in 

setting cost sharing based on the MOOP 

limit they establish. This proposal 

addressed the type of data used to set 

cost sharing limits for those professional 

services and proposed paragraphs 

(f)(6)(iii)(C)(1), (2), and (3) specified the 

maximum cost sharing limit based on 

the MOOP limit established by the MA 

plan. In addition to those cost sharing 

limits, CMS proposed to amend 

§ 422.100(j) to impose cost sharing 

limits for specific benefits and specific 

categories of benefits that are based on 

the cost sharing used in original 

Medicare. Our proposal for paragraph (j) 

also considered the MOOP type used by 

an MA plan to grant additional cost 

sharing flexibility to MA plans with 

regard to specific services. As a whole, 

our proposal would apply multiple 

standards to the cost sharing for 

professional services and outpatient 

benefits. In the February 2020 proposed 

rule, Table 5 (Illustrative Contract Year 

2022 In-Network Service Category Cost 

Sharing Limits) illustrated the 

application of the proposed copayment 

limits to in-network cost sharing for 

basic benefits, using the most recent 


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22332 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

31Loewenstein G, Friedman JY, McGill B, Ahmad 

S, Linck S, Sinkula S, Beshears J, J.Choi J, Kolstad 

J, Laibson D, Madrian BC, List JA, Volpp KG. 

‘‘Consumers’ misunderstanding of health 

insurance’’. Journal of Health Economics 

2013;32(5):850–862. Retrieved from: https://

scholar.harvard.edu/laibson/publications/ 

consumers-misunderstanding-health-insurance. 

Medicare FFS data projections available 

at the time of the February 2020 

proposed rule (that is, 2015–2019 data) 

(85 FR 9086 through 9087). 

As discussed in the February 2020 

proposed rule, CMS will monitor 

copayment amounts and coinsurance 

percentages during our annual review of 

plan cost sharing. Copayments are for 

specific benefits identified within the 

PBP service category or a reasonable 

group of benefits or services covered by 

the plan. Some PBP service categories 

may identify specific benefits for which 

a unique copayment would apply (for 

example, PBP service category 7a 

includes ‘‘primary care services’’), while 

other categories may include a variety of 

services with different levels of costs 

which may reasonably have a range of 

copayments based on groups of similar 

services (for example, PBP service 

category 15 includes ‘‘Part B drugs— 

other’’ which covers a wide range of 

products and costs). We noted that MA 

plans may establish one cost sharing 

amount for multiple visits provided 

during an episode of care (for example, 

several sessions of cardiac 

rehabilitation) as long as the overall (or 

total) cost sharing amount satisfies CMS 

standards. Based on the amendments 

CMS proposed for §§ 422.100(f)(6), 

422.100(j), and 422.113(b)(2)(v) and (vi), 

we clarified that if finalized, bids for the 

upcoming year to which the proposed 

rules would apply must reflect enrollee 

cost sharing for in-network services no 

greater than the coinsurance levels set 

in or the copayments amounts 

calculated using those regulations. We 

confirmed that, under our proposal, MA 

organizations would still have the 

option to charge either coinsurance or a 

copayment for most service category 

benefits. We also noted that although 

MA plans have the flexibility to 

establish cost sharing amounts as 

copayments or coinsurance, MA plans 

should keep in mind, when designing 

their cost sharing, that enrollees 

generally find copayment amounts more 

predictable and less confusing than 

coinsurance.31

b. Emergency/Post-Stabilization 

Services and Urgently Needed Services 

(§ 422.113(b)(2)(v) and (vi)) 

Currently, § 422.113(b)(2)(v) requires 

MA plans to charge cost sharing for 

emergency department services that 

does not exceed the lesser of: (1) An 

amount CMS sets annually; or (2) the 

plan’s cost sharing for the services if 

they were obtained through the MA 

plan’s network. After explaining that 

applying a specific dollar limit for cost 

sharing for emergency and poststabilization services would be more 

appropriate than a methodology for 

changing the cost sharing limit for those 

services, we proposed to revise the 

existing rules for the cost sharing limits 

for emergency and post-stabilization 

services and to codify a new rule for 

cost sharing limits for urgently needed 

services. CMS proposed, at paragraph 

(b)(2)(v), that the MA organization is 

financially responsible for emergency 

and urgently needed services with a 

dollar limit on emergency/poststabilization services costs for enrollees 

that is the lower of— 

• The cost sharing established by the 

MA plan if the emergency/poststabilization services were provided 

through the MA organization; or 

• A maximum cost sharing limit 

permitted per visit that corresponds to 

the MA plan MOOP limit as follows: 

Æ $115 for MA plans with a 

mandatory MOOP limit. 

Æ $130 for MA plans with an 

intermediate MOOP limit. 

Æ $150 for MA plans with a lower 

MOOP limit. 

As discussed in the February 2020 

proposed rule, the proposed limits were 

based on analyses of Medicare FFS costs 

that showed shifts in payment trends 

that may affect emergency/poststabilization services costs more so than 

urgently needed services. The proposed 

dollar limits were based on the 

projected median total allowed amount 

for emergency services (including visit 

and related procedure costs) using the 

most recent Medicare FFS data available 

at the time, which included 100 percent 

of the out-of-pocket costs incurred by all 

beneficiaries, both with and without 

diagnoses of ESRD. We arrived at the 

proposed cost sharing limits for an MA 

plan with a mandatory MOOP limit and 

an MA plan with a lower MOOP limit 

by taking the dollar figures that are 15 

percent and 20 percent of that median 

cost, rounded to the nearest whole $5 

increment. The proposed maximum cost 

sharing limits for MA plans with an 

intermediate MOOP limit was based on 

the numeric midpoint of the related cost 

sharing limits for MA plans with 

mandatory and lower MOOP limits, 

rounded to the nearest whole $5 

increment. In addition, CMS proposed 

clarifying updates to the language at 

§ 422.113(b)(2)(v) to note that the cost 

sharing limits for emergency services 

include post-stabilization service costs. 

For urgently needed services, CMS 

proposed that the same cost sharing 

limits for professional services under 

§ 422.100 apply to urgently needed 

services, regardless whether those 

urgently needed services are furnished 

in-network or out-of-network. We did 

not propose any changes to § 422.113 

regarding the MA organization’s 

obligations to cover and pay for 

emergency/post-stabilization services 

and urgently needed services but only to 

codify specific cost sharing limits for 

those services. As noted in the February 

2020 proposed rule, CMS intends to 

monitor trends and consider updating 

cost sharing limits for both urgently 

needed services and emergency/poststabilization services in future 

rulemaking based on emerging trends. 

c. Services No Greater Than Original 

Medicare (§ 422.100(j)(1)) 

Section 1852(a)(1)(B) of the Act 

specifies that MA plans may not charge 

enrollees higher cost sharing than is 

charged under original Medicare for 

chemotherapy administration services 

(which we have implemented as 

including Part B—chemotherapy/ 

radiation drugs integral to the treatment 

regimen), skilled nursing care, and renal 

dialysis services. This provision is 

currently reflected in §§ 417.454(e) (for 

cost plans) and 422.100(j) (for MA 

plans). The statute provides authority 

for CMS to require cost sharing that 

does not exceed cost sharing in the FFS 

Medicare program for additional 

Medicare-covered services. As noted 

elsewhere, section 1852(b) of the Act 

also prohibits plan designs that have the 

effect of discriminating against or 

discouraging enrollment by 

beneficiaries based on their health 

needs; we rely on this authority and 

sections 1856(b) and 1857(e) of the Act, 

which authorize CMS to set 

implementing standards for Part C and 

adopt additional requirements as 

necessary, appropriate and not 

inconsistent with Part C, to the extent 

necessary to set these additional cost 

sharing protections for enrollees. CMS 

proposed to restructure paragraph (j) 

and codify additional cost sharing limits 

for other services. We clarified that 

under our proposal cost sharing 

standards for cost plans will remain the 

same. 

In our current interpretation and 

application of this requirement for 

skilled nursing care, MA plans that 

establish the higher, mandatory MOOP 

limit must establish $0 per-day cost 

sharing for the first 20 days of a SNF 

stay and the per-day cost sharing for 

days 21 through 100 must not be greater 

than the original Medicare SNF amount. 


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We proposed at § 422.100(j)(1)(iii) that, 

beginning in contract year 2022, the 

current rule for MA plans that use the 

higher, mandatory MOOP limit would 

remain the same and that limited cost 

sharing for the first 20 days of SNF 

would be permitted for MA plans that 

establish either the lower or 

intermediate MOOP limit. 

In addition, CMS proposed to add the 

following services to the requirement 

that cost sharing charged by an MA plan 

may not exceed cost sharing required 

under original Medicare: (1) Home 

health services (as defined in section 

1861(m) of the Act) for MA plans that 

establish a mandatory or intermediate 

MOOP limit; and (2) durable medical 

equipment (DME). For home health 

services, we also proposed that when 

the MA plan establishes the lower 

MOOP limit, the MA plan may have 

cost sharing up to 20 percent, or an 

actuarially equivalent copayment, of the 

total MA plan financial liability. Our 

proposal would prohibit the DME peritem or service cost sharing from being 

greater than original Medicare cost 

sharing for MA plans that establish a 

mandatory MOOP limit. For MA plans 

that establish a lower or intermediate 

MOOP limit, our proposal was that total 

cost sharing for all DME PBP service 

categories combined would be required 

to be equal or less than original 

Medicare cost sharing on a per member 

per month actuarially equivalent basis, 

but such MA plans would be permitted 

to establish cost sharing for specific 

service categories of DME that exceed 

the cost sharing under original Medicare 

as long as it complies with other CMS 

cost sharing requirements. In order to 

codify these changes at § 422.100(j), we 

proposed to reorganize that paragraph 

with new text at paragraph (j)(1) to 

provide that for the basic benefits 

specified, an MA plan may not establish 

in-network cost sharing that exceeds the 

cost sharing required under original 

Medicare. 

d. In-Network Service Category Cost 

Sharing Requirements 

We included Table 5 (Illustrative 

Contract Year 2022 In-Network Service 

Category Cost Sharing Limits) in the 

February 2020 proposed rule to provide 

examples of cost sharing limits for 

contract year 2022 based on projections 

of the most recent Medicare FFS data 

available at the time of the February 

2020 proposed rule (2015–2019 data) 

and using the proposed methodology to 

set the various cost sharing limits 

specified as proposed §§ 422.100(f)(6), 

422.100(j) and 422.113(b)(2)(v) and (vi). 

We noted these were only projections of 

potential cost sharing limits for contract 

year 2022 to illustrate the impact of the 

methodology. We stated that our 

proposed standards and cost sharing 

limits would continue to be inclusive of 

applicable service category deductibles, 

copayments and coinsurance, but do not 

include plan level deductibles. We 

proposed to update the cost sharing 

limits on an annual basis based on the 

final regulations. We noted our 

intention to apply the revised 

regulations each year to calculate the 

amounts that would be the copayment 

limits unless otherwise stated and that 

we would publish the annual limits 

with a description of how the regulation 

standard is applied (that is, the 

methodology used) prior to bid 

submission each year, such as through 

HPMS memoranda. We proposed to use 

projections of the most recent, complete 

Medicare FFS data that include 100 

percent of ESRD costs to set the 

amounts for copayment limits, that is 

the actuarially equivalent amount of the 

coinsurance limits proposed in 

paragraph (f)(6), versus a transition of 

ESRD costs over time; there were no 

significant differences in the resulting 

cost sharing amounts when including 

ESRD for any of the physician 

specialties based on projections of the 

most recent Medicare FFS from the 

OACT. 

In the February 2020 proposed rule, 

Table 5 (Illustrative Contract Year 2022 

In-Network Service Category Cost 

Sharing Limits) did not include 

approximate actuarially equivalent 

copayment limits for some services: 

cardiac rehabilitation, intensive cardiac 

rehabilitation, pulmonary rehabilitation, 

supervised exercise therapy (SET) for 

symptomatic peripheral artery disease 

(PAD), partial hospitalization, home 

health, therapeutic radiological services, 

DME, dialysis, Part B Drugs 

Chemotherapy/Radiation Drugs, and 

‘‘Part B Drugs—Other’’. As discussed in 

the February 2020 proposed rule, we 

found these categories are subject to a 

higher variation in cost or unique 

provider contracting arrangements, 

which would potentially make using 

Medicare FFS average or median cost 

data less suitable for developing a 

standardized actuarially equivalent 

copayment value at this time. 

Accordingly, in order to monitor and 

enforce compliance with these cost 

sharing requirements when the 

copayment is based on an analysis of 

the contracted rates the MA plan uses 

for in-network services, CMS noted that 

MA organizations may be required to 

provide information to CMS 

demonstrating how plan cost sharing 

complies with the regulation standards 

proposed in § 422.100(f)(6). We solicited 

comment whether an explicit regulatory 

provision should be added to require 

MA organizations to demonstrate 

compliance with these standards upon 

request by CMS; such demonstration 

would include providing CMS with 

information substantiating the 

contracted rates for basic benefits that 

are professional services for which CMS 

has not calculated an approximate 

actuarially equivalent copayment limit, 

and illustrating how the MA 

organization determined its cost sharing 

amounts. 

As discussed in the February 2020 

proposed rule, MA organizations with 

plan benefit designs that use a 

coinsurance or copayment amount for 

which we did not propose to publish a 

specific cost sharing threshold (for 

example, coinsurance for inpatient or 

copayment for durable medical 

equipment), must maintain 

documentation that clearly 

demonstrates how the coinsurance or 

copayment amount satisfies the 

regulatory requirements for each 

applicable plan. This is consistent with 

existing MA program monitoring and 

oversight for MA organizations to be 

able to demonstrate compliance with 

applicable program requirements. Cost 

sharing and other plan design elements 

remain subject to § 422.100(f)(2), which 

prohibits MA plans from designing 

benefits to discriminate against 

beneficiaries, promote discrimination, 

discourage enrollment or encourage 

disenrollment, steer subsets of Medicare 

beneficiaries to particular MA plans, or 

inhibit access to services. This 

documentation may be used by CMS 

during bid review as well as to address 

issues concerning beneficiary appeals, 

complaints, and/or to conduct general 

oversight activities. In addition, MA 

plans are required to attest when they 

submit their bid(s) that their benefits 

will be offered in accordance with all 

applicable Medicare program 

authorizing statutes and regulations. 

4. Per Member per Month Actuarial 

Equivalent (AE) Cost Sharing Limits for 

Basic Benefits (§ 422.100(j)(2)) 

As discussed in the February 2020 

proposed rule, under the statute and 

regulations, an MA plan’s total cost 

sharing for Parts A and B services 

(excluding hospice services and kidney 

acquisition costs and including 

additional telehealth benefits) must not 

exceed cost sharing for those services in 

Medicare FFS on an actuarially 

equivalent basis and must not be 

discriminatory. In order to ensure that 

cost sharing is consistent with both 

§§ 422.254(b)(4), 422.100(f)(2), and 


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current 422.100(f)(6), CMS has also 

historically evaluated cost sharing limits 

on a per member per month actuarially 

equivalent basis for the following 

service categories: Inpatient hospital, 

SNF, DME, and Part B drugs. 

Proposed § 422.100(j)(2) required that 

total cost sharing for all basic benefits 

covered by an MA plan, excluding outof-network benefits covered by a 

regional MA plan, not exceed cost 

sharing for those benefits in original 

Medicare on a per member per month 

actuarially equivalent basis. We 

explained that the provision 

implements section 1852(a)(1)(B) of the 

Act and the carve out of out-of-network 

benefits covered by a regional MA plan 

is to be consistent with section 

1852(a)(1)(B)(ii) of the Act. As noted 

elsewhere, section 1852(b) of the Act 

also prohibits plan designs that have the 

effect of discriminating against or 

discouraging enrollment by 

beneficiaries based on their health 

needs. We explained in the February 

2020 proposed rule that our proposals 

were based on this authority and 

sections 1856(b) and 1857(e) of the Act, 

which authorize CMS to set 

implementing standards for Part C and 

adopt additional requirements as 

appropriate and not inconsistent with 

Part C, to the extent necessary. CMS also 

proposed to codify, in § 422.100(j)(2)(i), 

our existing policy regarding the 

specific service categories for which an 

MA plan must not exceed the cost 

sharing in original Medicare on a per 

member per month actuarially 

equivalent basis. The services we 

proposed for this rule are consistent 

with long-standing policy and were: (1) 

Inpatient hospital acute and psychiatric 

services, defined as services provided 

during a covered stay in an inpatient 

facility during the period for which cost 

sharing would apply under original 

Medicare; (2) DME; (3) drugs and 

biologics covered under Part B of 

original Medicare (including both 

chemotherapy/radiation drugs and other 

drugs covered under Part B); and (4) 

skilled nursing care, defined as services 

provided during a covered stay in a SNF 

during the period for which cost sharing 

would apply under original Medicare. 

As discussed in the February 2020 

proposed rule, we believe our proposals 

would ensure that MA plans that have 

greater cost sharing flexibility in these 

categories are not designing benefits in 

a way that discriminates against 

enrollees with health status factors and 

conditions that require the services in 

§ 422.100(j)(2)(i). Further, we noted that 

limiting cost sharing in this way will 

ensure that enrollees with certain 

conditions, or who are high utilizers of 

these basic benefits, are not discouraged 

from enrolling in MA plans because of 

higher cost sharing on necessary 

services. We noted that setting 

copayment limits through quantitative 

formulas (such as those used for our 

inpatient hospital acute and psychiatric 

standards) may be less appropriate for 

some categories, like DME and Part B 

drugs, and that it may be better to 

evaluate cost sharing for these service 

categories on an aggregate service 

category basis to determine whether 

they are discriminatory. These 

categories include items or services that 

significantly vary in cost or may be 

subject to provider contracting 

arrangements that make it difficult for 

CMS to calculate a specific copayment 

amount for the category as a whole, as 

opposed to specific items and benefits. 

CMS also proposed, at 

§ 422.100(j)(2)(ii), to extend flexibility 

for MA plans when evaluating actuarial 

equivalent cost sharing limits for those 

service categories to the extent that the 

per member per month cost sharing 

limit is actuarially justifiable based on 

generally accepted actuarial principles 

and supporting documentation included 

in the bid, provided that the cost 

sharing for specific services otherwise 

satisfies published cost sharing 

standards. The proposed exception 

would apply in limited situations, such 

as when the MA plan uses capitated 

arrangements with provider groups, 

when the MA organization operates its 

own facilities, or other unique 

arrangements. This flexibility would be 

consistent with long-standing policy 

and practice. 

Overall, our proposal was aimed to 

describe how CMS would determine 

whether specific cost sharing is 

discriminatory and to set standards and 

thresholds above which CMS believes 

cost sharing is discriminatory as well as 

to implement specific statutory 

authority regarding cost sharing for 

basic benefits in an MA plan as 

compared to original Medicare. Similar 

to our current practice prior to bid 

submission, CMS shared our intent to 

communicate application of the 

regulation for future years, such as 

through HPMS memoranda, as 

appropriate. We solicited comment on 

our various cost sharing limit proposals. 

5. Comments Received and Responses 

for All Cost Sharing Provisions 

We received feedback from 17 

commenters on our proposal for 

codifying the methodology for setting 

certain cost sharing standards each year. 

The majority of comments were from 

health plans, provider associations, 

beneficiary and other advocacy 

organizations, and pharmaceutical 

companies. A summary of the 

comments (generally by issue) and our 

responses follows: 

Comment: Several commenters 

generally supported proposals to codify 

long-standing policies and increase 

transparency, including the 

methodology CMS uses to determine 

cost sharing limits described in section 

VI.B. of the February 2020 proposed 

rule. A commenter supported 

transitioning from subregulatory 

guidance to rulemaking and believed 

that the standardization, transparency, 

and predictability of formal rulemaking 

makes it a more appropriate vehicle for 

most provisions that make significant 

changes to the Medicare program. 

Another commenter appreciated the 

opportunity to provide feedback to 

guide implementation processes. 

Response: We thank commenters for 

their support and feedback. CMS’s goals 

for this proposal, in combination with 

section II.A. of this FC, include 

addressing potential stakeholder 

concerns about the impact of the MA 

eligibility changes for Medicare 

beneficiaries with diagnoses of ESRD on 

the methodology used for cost sharing 

limits and providing MA organizations 

with cost sharing flexibilities as an 

incentive to encourage favorable benefit 

designs for beneficiaries. Our aim is to 

provide transparency and predictability 

in how CMS calculates cost sharing 

thresholds for MA plans and evaluates 

MA organization compliance with cost 

sharing standards. We also intend this 

FC to encourage and facilitate stability 

in plan benefit design for beneficiaries. 

Proposing and codifying these 

flexibilities in regulation in advance of 

the years to which they will apply will 

encourage MA organizations to develop 

plan designs to take advantage of the 

flexibilities, as well as provide a 

measure of transparency and stability 

for the MA program. In addition, based 

on this rulemaking, MA organizations 

should have greater knowledge about 

how MA cost sharing limits are 

calculated and an ability to anticipate 

cost sharing limits in future years. 

Consistent with our long-standing 

policy, most of the cost sharing 

standards we proposed and are 

finalizing apply only to in-network Parts 

A and B services and exceptions to that 

(where limits will apply to out-ofnetwork benefits) are explicitly stated. 

In-network service category cost sharing 

standards are inclusive of applicable 

service category deductibles, 

copayments and coinsurance, but do not 

include plan-level deductibles (for 

example, deductibles that include 

several service categories). In addition, 


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as finalized, CMS will use Medicare FFS 

data projections (the definition is 

codified in § 422.100(f)(4)(i) as 

discussed in section II.A. of this FC) to 

calculate cost sharing limits for service 

categories subject to § 422.100(f)(6) and 

(j)(1); this is explicitly addressed in 

§ 422.100(f)(7)(ii) and discussed in more 

detail in section II.B.5.a. of this FC. This 

means that unless otherwise stated, 

CMS will use projections of beneficiary 

out-of-pocket costs for the applicable 

contract year, based on recent Medicare 

FFS data (including data for 

beneficiaries with and without 

diagnoses of ESRD) that are consistent 

with generally accepted actuarial 

principles and practices as outlined in 

paragraph (f)(7)(i) to calculate cost 

sharing limits. As a result, the Medicare 

FFS data projections used in calculating 

MA MOOP and cost sharing limits will 

encompass all original Medicare 

requirements, such as coverage 

restrictions and cost sharing limits. For 

emergency services (service category 

clarified as discussed in section II.B.5.e. 

of this FC.) and urgently needed 

services, the cost sharing limit applies 

whether the services are received inside 

or outside the MA organization’s 

contracted network of providers and 

facilities (§ 422.113(b)(2)(i)), which is 

consistent with current policy and the 

obligation on all MA plans to cover such 

services both in-network and out-ofnetwork without imposing any prior 

authorization limits. These 

considerations are generally aligned 

with our proposal to use the most recent 

Medicare FFS data projections to 

calculate MOOP and cost sharing limits 

and our longstanding practice of 

applying original Medicare rules to 

ensure MA plans are using cost sharing 

that is overall at least actuarially 

equivalent to Medicare FFS. In addition, 

this FC maintains the ability for D–SNPs 

to establish zero cost sharing for 

enrollees who are dually enrolled in 

both Medicare and Medicaid. For 

example, in a Zero-Dollar Cost Sharing 

D–SNP, Medicare inpatient hospital 

stays and doctor visits are available at 

no cost to the enrollee. A Medicare NonZero Dollar Cost Sharing D–SNP is a D– 

SNP under which the cost sharing for 

Medicare Part A and B services varies 

depending on the enrollee’s category of 

Medicaid eligibility. 

The changes to the proposals we are 

finalizing in this FC range from minor 

edits, reorganizations, corrections, and 

clarifications to substantive 

modifications based on the comments 

received, operational considerations, 

and additional implementation of 

antidiscriminatory requirements (such 

as, to support equitable access to plans 

for beneficiaries with high health 

needs). Due to operational 

considerations and to help ensure that 

MA organizations have sufficient 

implementation time, the provisions in 

this FC will not be applicable until 

January 1, 2023. This reflects a one-year 

delay from the proposed 

implementation schedule. When MA 

bids for contract year 2023 are 

submitted for review and approval by 

the statutory deadline (June 6, 2022, for 

contract year 2023), the regulations in 

this FC will be used to evaluate those 

bids for approval. This change means 

that the dates in the proposed regulation 

text in §§ 422.100(f)(6), 422.100(j), and 

422.113 have been updated from the 

February 2020 proposed rule (for 

example, changing a reference from 

January 1, 2022 to January 1, 2023) and 

we do not discuss those edits in much 

detail in our responses to comments and 

description of the final regulations. 

Changes to the implementation of the 

proposed policies that are more 

nuanced are explained (for example, 

section II.B.5.c. of this FC addresses the 

multi-year transition schedule of ESRD 

costs into inpatient hospital cost sharing 

limits). Further, we are adding 

descriptive headings to paragraphs (f)(6) 

introductory text and (f)(6)(i) through 

(iv) to identify the scope of the content 

in each paragraph. Additional changes 

to paragraphs (f)(6) introductory text 

and (f)(6)(i) through (iv) are discussed in 

sections II.B.5.a., b., and c. of this FC. 

Similarly, in our reorganization of 

proposed (j)(1) discussed in section 

II.B.5.e. of this FC, we are adding 

descriptive headings to paragraphs 

(j)(1)(i) and (ii). These headings are not 

substantive changes. 

As discussed in section II.A. of this 

FC, the MOOP limits and cost sharing 

standards for contract year 2024 and 

future years will be communicated 

annually through a subregulatory 

process, which we are finalizing at 

§ 422.100(f)(7)(iii). This FC adopts the 

MOOP limits and specific cost sharing 

limits for contract year 2023 by applying 

the rules being finalized. As finalized in 

§ 422.100(f)(7)(iii), beginning with 

contract year 2024, CMS will issue 

annual subregulatory guidance that 

specifies the MOOP limits and cost 

sharing standards that are set and 

calculated using the rules adopted in 

this FC; that guidance will be released 

prior to bid submission to allow 

sufficient time for MA organizations to 

prepare and submit plan bids. We 

expect this date will typically be by the 

first Monday in April. In addition, CMS 

will provide a public notice and 

comment period on the projected MOOP 

limits and cost sharing standards for the 

upcoming contract year unless a public 

comment period is impracticable, 

unnecessary, or contrary to the public 

interest. We believe these situations will 

be rare and intend to solicit comment 

annually, but believe that aligning the 

availability of prior notice and an 

opportunity to comment with 

rulemaking standards, which include 

authority to waive prior notice and a 

comment period when it is 

impracticable, unnecessary, or contrary 

to the public interest, is appropriate. For 

example, CMS may solicit and consider 

public comment on actuarial 

approaches before releasing the final 

MOOP limits and cost sharing 

standards. The exercise of actuarial 

judgment by the OACT may be a topic 

on which the public, or MA 

organizations, wish to comment when 

reviewing how CMS has applied the 

regulations adopted in this FC to 

calculate the benefit parameters for MA 

plans. As appropriate, we will consider 

such comments and may revise the 

decisions made in developing the 

projections and calculations of the 

MOOP and other cost sharing limits. To 

set the final contract year 2023 cost 

sharing limits following the 

methodology in this FC, CMS is using 

contract year 2023 Medicare FFS data 

projections (based on 2017–2021 

Medicare FFS data) which reflect the 

OACT’s actuarial judgements of 

expected costs in contract year 2023, 

including considerations of the impact 

from COVID–19. We did not codify the 

first Monday in April as a deadline to 

release the final MOOP limit and cost 

sharing standards or a specific 

minimum time frame for the comment 

period so CMS can remain flexible to 

potential future situations. The 

regulation provides for the release of 

subregulatory guidance that addresses 

MOOP limits and cost sharing standards 

in advance of the upcoming plan year 

with sufficient time for MA 

organizations to prepare bids. For 

contract year 2023, we are releasing the 

final MOOP and cost sharing limits in 

this FC, in Tables 5 and 28. In addition, 

the final cost sharing limits for contract 

year 2023 through 2026 and future years 

for emergency services are provided in 

Table 24. Descriptions of the 

calculations CMS completed to reach 

these final contract year 2023 MOOP 

and cost sharing limits following the 

regulations finalized in this FC are 

available in section II.A.4. and II.B.5. of 

this FC. 


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32As referenced in Chapter 4, section 50.1 and 

the CY 2017 Final Call Letter; both documents may 

be accessed in the HHS Guidance Repository at: 

https://www.hhs.gov/guidance/. 

February 2020 Proposed Rule Comment 

Solicitation for Bundled Copayments 

In the February 2020 Proposed Rule, 

CMS solicited comment on whether to 

codify the current guidance regarding 

bundled copayments. Our current 

guidance 32 requires MA organizations 

to disclose and charge a single, bundled 

copayment in order to ensure that 

enrollees are provided accurate 

information about their potential 

financial liability (prior to and following 

enrollment in a plan) and to avoid 

confusion. Specifically, in situations 

where a facility or setting charges a 

separate amount from the health care 

provider that actually furnishes covered 

services, such as an emergency 

department fee and a fee for the 

emergency room physician, our 

guidance has been that those fees be 

combined (bundled) into the cost 

sharing amount for that particular place 

of service and be clearly reflected as a 

total copayment in appropriate 

materials distributed to beneficiaries. 

This longstanding guidance reflects 

CMS’s interpretation of § 422.111 that 

enrollees be provided clear information 

about benefits and cost sharing that is 

not confusing. CMS received no 

comments regarding whether to codify 

this guidance. 

CMS strives to make sure that plan 

cost sharing is transparent to MA 

enrollees and Medicare beneficiaries 

who are considering enrolling in MA. 

To ensure the MA regulations are 

sufficiently clear on these points, we are 

finalizing additional regulation text, at 

§ 422.100(f)(9), to require that cost 

sharing (copayments and coinsurance) 

reflect the enrollee’s entire cost sharing 

responsibility, inclusive of professional, 

facility, or provider setting charges, by 

combining (or bundling) all applicable 

fees into the cost sharing amount for 

that particular service(s) and setting(s) 

and be clearly reflected as a single, total 

cost sharing amount in appropriate 

materials distributed to beneficiaries. 

MA enrollees must receive the plan’s 

Evidence of Coverage (EOC) document 

and other applicable plan materials that 

clearly disclose their total cost sharing 

responsibility for particular benefits. By 

requiring MA plans to clearly disclose 

and apply cost sharing this way, this FC 

will ensure that beneficiaries receive 

information about their financial 

responsibility for covered benefits 

through an MA plan and when 

comparing MA plans. We are finalizing 

this provision at § 422.100(f)(9) instead 

of in § 422.111 because it is about cost 

sharing and related to the cost sharing 

rules we are codifying in paragraph (f) 

even if the underlying purpose of the 

existing guidance and adequate 

information is provided to beneficiaries. 

Finally, this requirement about 

bundling cost sharing into one 

copayment amount applies to cost 

sharing for basic benefits. 

a. General Non-Discriminatory Cost 

Sharing Limits (§ 422.100(f)(6)) 

Comment: CMS received mixed 

comments on the proposal to codify the 

long-standing policy, used in CMS’s 

review of bids, that payment of less than 

50 percent of the total MA plan 

financial liability discriminates against 

enrollees who need those services at 

§ 422.100(f)(6)(i). A few commenters 

opposed CMS’s proposal to allow MA 

plans with lower MOOP limits to 

establish cost sharing up to a 50 percent 

coinsurance, based on beneficiary 

discrimination concerns, and suggested 

that lower cost sharing would better 

protect beneficiaries who need highercost services. These beneficiary 

concerns were shared by other 

commenters generally or in relation to 

other specific cost sharing proposals 

and are also addressed, more 

comprehensively, in section II.B.5.b. of 

this FC. 

A few commenters were generally 

supportive and requested clarifications 

or technical modifications. For example, 

a commenter requested CMS confirm 

that it did not intend to require MA 

plans to measure financial liability at 

the individual item or service level or 

use the average allowable amount when 

calculating the copayment applicable to 

a specific transaction; the commenter 

noted that measuring financial liability 

at the ‘‘individual item or service level’’ 

would make the use of copayments very 

difficult, and would not correspond 

with other parts of the February 2020 

proposed rule that indicated 

copayments are preferred over 

coinsurance. In addition, the commenter 

noted that MA plans may not have the 

average Medicare FFS allowed amount 

for each claim (which was referred to in 

the February 2020 proposed rule), but 

would have the plan’s allowable amount 

for each particular provider to calculate 

a cost sharing threshold. Similarly, 

another commenter requested CMS 

allow the average contracted rate to be 

calculated at the parent organization 

level for purposes of determining 

compliance with the 50 percent total 

MA plan financial liability limit. This 

commenter noted that this approach 

would allow MA organizations the 

ability to consider credibility when 

setting cost sharing limits to help create 

year over year cost sharing stability for 

beneficiaries. CMS believes the 

commenter was referencing claims 

credibility for pricing purposes in their 

comment. 

Response: We appreciate the support 

and questions from commenters seeking 

guidance on how to implement and 

demonstrate compliance with our 

proposal to codify the longstanding 

policy for out-of-network basic benefits 

and in-network basic benefits that are in 

service categories for which CMS has 

not otherwise established a cost sharing 

standard. The requirement that MA 

organizations must pay at least 50 

percent of the total MA plan financial 

liability for the benefit protects 

beneficiaries with high health needs and 

ensures an equitable plan design that 

balances overall costs between the MA 

plan and enrollees. In addition to 

addressing these concerns, we take this 

opportunity to explain the changes we 

are finalizing to § 422.100(f)(6), (f)(6)(i), 

and new paragraph (f)(7) that are related 

to the overall policies being adopted for 

calculating MA cost sharing limits. In 

brief, paragraph (f)(7) codifies how CMS 

will utilize generally accepted actuarial 

principles and practices, Medicare FFS 

payment data, Medicare FFS and MA 

utilization data, and other factors as part 

of calculating the copayment limits for 

the cost sharing standards in this FC. 

We explain how these clarifications, 

modifications and new paragraphs 

apply to service categories subject to 

paragraph (f)(6)(i), as well as cost 

sharing limits set under other 

paragraphs. The method by which an 

MA organization identifies estimated 

total MA plan financial liability for 

purposes of ensuring that its cost 

sharing does not exceed 50 percent of 

that amount is similar to the process an 

MA organization would use to ensure 

that MA cost sharing complies with the 

other limits we proposed and are 

finalizing in § 422.100(f)(6). We believe 

addressing these changes first in this 

response will provide context and 

clarity regarding how MA organizations 

may implement and demonstrate 

compliance with the rules finalized in 

§ 422.100(f)(6)(i), (f)(6)(iii), and (j)(1). 

The specific cost sharing standards 

finalized at § 422.100(f)(6)(iii) and (j)(1) 

are explained in more detail in section 

II.B.5.b and II.B.5.e. of this FC. 

MA organizations previously and 

currently have flexibility to establish 

cost sharing up to 50 percent 

coinsurance for many benefits, but 

generally do not establish cost sharing 

amounts at the maximum allowable cost 

sharing limit for most service categories. 

MA organizations typically offer 


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benefits with lower cost sharing 

amounts than the permitted maximum 

cost sharing limits for the vast majority 

of service categories (such as primary 

care physician). While we do not have 

definitive data, we believe this is due to 

multiple factors, including the 

principles and incentives inherent in 

managed care, effective negotiations 

between MA organizations and 

providers, and market competition. 

Further, the requirement that cost 

sharing for basic benefits overall must 

be actuarially equivalent to cost sharing 

in original Medicare, with the ability to 

reduce cost sharing as a supplemental 

benefit, discourages MA plans from 

using extremely high cost sharing. In 

addition, we expect beneficiary 

preferences will continue to act as an 

incentive for MA organizations to offer 

favorable benefit designs. Also, several 

professional service category cost 

sharing standards calculated in this FC 

for intermediate and mandatory MOOP 

types (as discussed in section II.B.5.b. of 

this FC) are lower than what would be 

allowable under CMS’s longstanding 

policy that cost sharing not exceed 50 

percent of the estimated total MA plan 

financial liability for the benefit. 

Considering these factors, CMS expects 

that codifying this longstanding policy 

will not result in significant increases in 

cost sharing amounts for enrollees 

compared to prior contract years as MA 

organizations have incentive to 

maintain a competitive position in the 

market. 

Our rule explicitly addresses both 

copayment and coinsurance structures. 

We proposed (at § 422.100(f)(6)(i)(A), 

(B), and (C)) that coinsurance cannot 

exceed 50 percent of the total MA plan 

financial liability and specific rules for 

setting copayments based on that 

percentage limit. We are finalizing 

similar, but not identical requirements, 

at paragraph (f)(6)(i) to consolidate and 

simplify the regulation. We did not 

intend by our proposal at paragraph 

(f)(6)(i) that copayments would be 

required to vary with each specific 

encounter (that is, that the copayment 

amount for a particular item or service 

would vary based on the payment rate 

to a specific provider for that service). 

To ensure clarity in the regulations on 

this point, we are finalizing the 

introductory language in paragraph 

(f)(6) with a revision to explicitly 

provide that cost sharing may be a 

coinsurance or copayment for a plan 

benefit package service category or for a 

reasonable group of benefits covered 

under the plan. This means that 

copayments are not required to vary by 

specific provider, item, or service, based 

on the provider’s payment amount but 

rather must be set at a dollar amount 

that applies to visits of the identified 

service category of benefits. This reflects 

CMS’s intent to codify the less 

burdensome, longstanding policies that 

are familiar to MA stakeholders. In 

tandem with this modification to 

paragraph (f)(6), we are not finalizing 

the proposed regulation text in 

paragraph (f)(6)(i)(C) about using the 

MA organization’s average contracted 

rate of that benefit (item or service) to 

calculate the copayment dollar amount 

for out-of-network benefits. Rather, we 

are finalizing rules in paragraph (f)(6)(i) 

to require that MA plans must not 

establish a cost sharing amount that 

exceeds 50 percent coinsurance or an 

actuarially equivalent copayment value 

for the service category or for a 

reasonable group of benefits in the PBP. 

This includes finalizing rules for the 

data used by the MA organization to 

determine an amount that is actuarially 

equivalent to 50 percent coinsurance, 

including authority to use the average 

Medicare FFS allowable amount (as 

proposed in paragraph (f)(6)(i)(C)). CMS 

will monitor copayment amounts and 

coinsurance percentages as part of our 

annual bid review process during which 

we examine plan cost sharing. In 

addition, MA organizations may use the 

estimated total MA plan financial 

liability for the service category or for a 

reasonable group of benefits in the PBP 

for that contract year to determine the 

actuarially equivalent value to 50 

percent coinsurance. With this 

approach, we intend to permit the MA 

organization to use aggregate payment 

data about the service category, or for 

the reasonable group of benefits, to 

which the cost sharing applies when 

determining the dollar figure that is 

actuarially equivalent to 50 percent 

coinsurance. That dollar figure would 

be the maximum permissible copayment 

amount for the service category or group 

of benefits. In addition, we are adopting 

a provision that an MA plan must not 

charge an enrollee a copayment for a 

basic benefit that is greater than the cost 

of the covered service(s). We believe 

that this important enrollee protection is 

necessary and a corollary of our 

proposal that MA plans be responsible 

for at least 50 percent of total MA plan 

liability for basic benefits, whether 

furnished in-network or out-of-network. 

As this FC clarifies that our cost sharing 

limits apply at the service category level 

(or a reasonable group of benefits), we 

are finalizing regulation text to 

explicitly protect enrollees from paying 

more cost sharing than the estimated 

total MA plan financial liability for the 

covered service(s). 

When CMS evaluates compliance, 

either through reviewing bids or other 

oversight activities, it may not examine 

in detail a plan’s compliance with cost 

sharing standards for every service 

category. Also, CMS might not calculate 

and publish actuarially equivalent 

copayment values for every service 

category or situation. Nevertheless, the 

regulations we are finalizing here will 

continue to apply to all MA cost sharing 

charged for basic benefits. Sections 

II.B.5.b. through II.B.5.f. of this FC 

finalize specific cost sharing 

requirements for some in-network 

benefits in addition to the rule in 

paragraph (f)(6)(i) for all other innetwork and out-of-network benefits (for 

example, certain categories of benefits 

in § 422.100(f)(6)(iii) and (iv) and 

specific services and categories in 

§ 422.100(j)(1)). Section II.B.5.d. of this 

FC also finalizes specific cost sharing 

limits for emergency and urgently 

needed services in § 422.113(b)(2). MA 

plans (at the segment-level, if 

applicable) must comply with all of 

these requirements. To ensure clarity on 

this point, the introductory text in 

paragraph (f)(6) requires that an MA 

organization must establish cost sharing 

for basic benefits that complies with the 

standards in §§ 422.100(f)(6) and (j) and 

422.113(b)(2) and codifies longstanding 

policy of how CMS completes cost 

sharing evaluations at the plan (or 

segment) level. These standards include 

coinsurance and specific copayment 

limits specified in the regulations or 

copayment limits calculated by CMS 

using the methodology identified in 

those regulations. As proposed and 

finalized with clarifying edits and 

additions, § 422.100(f)(6) states that 

these requirements are in addition to 

other limits and rules applicable to MA 

cost sharing, such as the requirement 

that the overall MA cost sharing for 

basic benefits be actuarially equivalent 

to Medicare FFS cost sharing (that is, 

the PMPM actuarial equivalence 

evaluation in § 422.254(b)(4) and as 

finalized in paragraph (j)(2)). In 

situations where CMS does not calculate 

a copayment limit for a particular 

service category specified in these 

regulations, then the copayment amount 

that the MA organization sets for that 

service must not exceed the actuarially 

equivalent value limit of the applicable 

coinsurance for the MOOP limit of the 

plan. Consistent with this, we are 

generally maintaining the current 

language in paragraph (f)(6) regarding 

how cost sharing for basic benefits 

specified by CMS must not exceed 


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22338 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

33Call Letters communicating CMS policy for 

contract years prior to 2021 may be accessed here: 

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

MedicareAdvtgSpecRateStats/Announcements-andDocuments. 

34See Table 5: CY 2021 In-Network Service 

Category Cost Sharing Requirements from the 

levels annually determined by CMS to 

be discriminatory for such services. This 

is consistent with how, currently, MA 

organizations establish copayment 

amounts that do not exceed maximum 

coinsurance limits in those instances 

where CMS does not calculate a specific 

copayment limit. We are also finalizing 

rules for the data to be used in 

calculating the actuarially equivalent 

values that would be used in CMS’s 

calculation of copayment limits and 

evaluation of MA plan copayments. 

We are finalizing at § 422.100(f)(6)(i) 

with a rule prohibiting MA plans from 

paying less than 50 percent of the 

estimated total MA plan financial 

liability for that contract year or the 

average Medicare FFS allowable amount 

for the plan service area for the benefit, 

which is generally what we proposed in 

paragraph (f)(6)(i)(A) with additions for 

clarity that remain consistent with our 

longstanding policy. For example, as 

discussed in more detail subsequently 

in this response, the addition of 

‘‘estimated’’ to the term ‘‘total MA plan 

financial liability’’ in paragraph (f)(6)(i) 

recognizes that MA organizations may 

not have the data necessary to 

determine the final total MA plan 

financial liability for the benefit 

sufficiently in advance of the bid 

submission deadline. In addition, 

instead of stating the rule as how much 

an MA plan must pay, we are finalizing 

the rule as a limit on the cost sharing 

that an MA plan may impose on 

enrollees. As proposed, this rule 

regarding the 50 percent limit on cost 

sharing applies to all out-of-network 

basic benefits. While the proposed 

paragraph (f)(6)(i)(A) referred to 

paragraph (f)(6)(i), this FC clarifies that 

the 50 percent coinsurance limit applies 

to service categories that are not subject 

to other specific cost sharing standards 

set under §§ 422.100(f)(6) and (j)(1) and 

422.113(b)(2). While we proposed (and 

are finalizing in sections II.B.5.b. 

through II.B.5.e. of this FC.) separate 

cost sharing standards and requirements 

for professional services, inpatient 

hospital service categories, emergency 

services, and a prohibition on cost 

sharing for certain specific benefits that 

exceeds the cost sharing under original 

Medicare, we believe that additional 

clarity on this point improves the 

regulation. 

Setting limits on cost sharing for 

covered services and ensuring MA 

organizations comply with these limits 

are important ways to ensure that the 

cost sharing aspect of a plan design does 

not discriminate against or discourage 

enrollment in an MA plan by 

beneficiaries who have high health care 

needs. CMS has historically evaluated 

bid and market data to identify areas of 

concern and conduct research, and has 

added new service category cost sharing 

limits based on these analyses. For 

example, prior to contract year 2017, 

CMS did not set a copayment limit for 

cardiac rehabilitation. In the CY 2017 

Call Letter,33 we noted that cardiac 

rehabilitation (a professional service 

that will be subject to the cost sharing 

limits in § 422.100(f)(6)(iii)) was an area 

of concern and, as part of reviewing bids 

for contract year 2017 through 2019, we 

asked MA organizations to justify cost 

sharing above $50 for cardiac 

rehabilitation services. Then, for 

contract year 2020 we added specific 

cost sharing standards for cardiac 

rehabilitation services that MA plans 

could not exceed. As a result, the 

services for which we announce cost 

sharing limits and how CMS evaluates 

an MA plan’s cost sharing have 

operationally varied in past years to be 

responsive to changes to market 

conditions and Medicare FFS payment 

policy. We intend to continue this 

approach to how CMS expends its 

resources in calculating copayment 

values under this FC, in general 

oversight activities, and in evaluating 

bid submissions. For example, we have 

not previously set a specific copayment 

limit for each specific category of DME 

but since the February 2020 proposed 

rule we have reviewed contract year 

2023 Medicare FFS data projections 

(based on 2017–2021 Medicare FFS 

data) to calculate a contract year 2023 

copayment limit for the ‘‘DME—shoes 

or inserts’’ and ‘‘DME—diabetes 

monitoring supplies’’ service categories 

for MA plans that establish a lower or 

intermediate MOOP limit. This 

copayment limit is actuarially 

equivalent to the longstanding 50 

percent coinsurance limit, which will 

continue to apply to these categories per 

§ 422.100(f)(6)(i). The calculations of the 

final contract year 2023 copayment 

limits for those DME service categories 

using the rules in paragraph (f)(6)(i) are 

included subsequently in this response. 

In addition, the complete list of final 

contract year 2023 cost sharing limits 

for in-network services are summarized 

in Table 28. While not applicable for 

contract year 2023, we are evaluating 

Medicare FFS data projections and 

considering future copayment limits for 

other categories that are subject to 

paragraph (f)(6)(i) that are not included 

in Table 28, such as ambulance services. 

If we determine that it is appropriate to 

apply the rules in § 422.100(f)(6)(i) to 

calculate a copayment value that is 

actuarially equivalent to the mandatory 

50 percent coinsurance limit, we may 

announce that copayment limit using 

the guidance issued under 

§ 422.100(f)(7)(iii) for contract year 2024 

or another future year. 

As MA organizations may continue to 

establish coinsurance up to 50 percent, 

we do not believe that CMS retaining 

flexibility to calculate a copayment limit 

that equates to that coinsurance level 

reflects a change from current practice. 

Nor does the manner by which CMS 

calculates the copayment limits under 

this FC represent a drastic change. 

When CMS calculates an actuarially 

equivalent copayment limit for a service 

category subject to § 422.100(f)(6)(i), the 

administrative burden for MA plans 

may be reduced. In the past, when CMS 

did not set a copayment limit, MA 

organizations that use copayments 

instead of coinsurance generally had to 

submit supporting documentation to 

show how the MA plan’s copayment 

met the 50 percent coinsurance 

standard. While, going forward, we may 

not require documentation 

demonstrating the calculation of every 

copayment used by an MA plan, 

documentation or justifications may be 

necessary in some cases to demonstrate 

compliance with the regulation. For 

service categories where we calculate a 

copayment that is actuarially equivalent 

to 50 percent coinsurance (such as 

‘‘DME—diabetic shoes or inserts’’ as 

shown in Table 28), MA organizations 

will not need to provide supporting 

documentation if the MA plan’s 

copayments are below the values 

calculated and issued by CMS under 

§ 422.100(f)(6). 

We are including information in Table 

28 to illustrate how the 50 percent cap 

on cost sharing for basic benefits that 

are not addressed by other regulations 

will interact with the other regulations 

specifying cost sharing limits. Table 28 

identifies 50 percent coinsurance as the 

cost sharing limit for all the DME 

service categories for MA plans that 

establish a lower or intermediate MOOP 

limit. This is a clarifying update from 

the ‘‘N/A’’ designations for the same 

service categories and types of MOOP 

limits in the February 2020 proposed 

rule’s Table 5 (Illustrative Contract Year 

2022 In-Network Service Category Cost 

Sharing Limits) and from subregulatory 

guidance in prior contract years for MA 

plans that established a voluntary 

MOOP limit.34 Other services not 


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Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22339 

HPMS memorandum titled ‘‘Final Contract Year 

2021 Part C Benefits Review and Evaluation,’’ 

issued April 8, 2020. 

included on the chart continue to be 

subject to paragraph § 422.100(f)(6)(i), 

such as ambulance services (50 percent 

coinsurance limit regardless of MOOP 

type). We believe these clarifications 

will increase understanding and 

transparency in how § 422.100(f)(6)(i) 

applies. 

As finalized, § 422.100(f)(6)(i) 

imposes limits on the cost sharing that 

may be charged to enrollees for out-ofnetwork and in-network basic benefits 

for which another regulation has not 

otherwise calculated a cost sharing 

standard. This rule provides flexibility 

for CMS to calculate the value for 

copayment limits for new categories of 

basic benefits when CMS determines it 

is appropriate. This flexibility and how 

we intend to use it are consistent with 

CMS’s prior practice for calculating 

copayment limits. For benefits subject to 

§ 422.100(f)(6)(i), the enrollee 

coinsurance cannot exceed 50 percent 

and the copayment must be no greater 

than an actuarially equivalent value for 

that coinsurance regardless of the type 

of MOOP limit established by the plan 

(with one exception for the DME service 

categories for the mandatory MOOP 

limit, as discussed in section II.B.5.e. of 

this FC). Similarly, as proposed at 

§ 422.100(f)(6)(iii)(C) (finalized with 

clarifying additions at 

§ 422.100(f)(6)(iii)(C)–(F)), an MA plan 

must pay at least a specified percentage 

of the estimated total MA plan financial 

liability for the covered benefit for that 

contract year. As discussed in a 

subsequent response to comment in this 

section, the cost sharing limits imposed 

by § 422.100(f)(6)(i), like other cost 

sharing limits finalized in this FC, are 

also subject to the rounding rules 

finalized in paragraph (f)(6)(ii). 

As also discussed in section II.A. of 

this FC, calculation of the MOOP and 

cost sharing limits using the 

methodologies and standards finalized 

in §§ 422.100(f) and (j) and 422.101(d) 

requires the exercise of actuarial 

judgment and the use of generally 

accepted actuarial principles and 

practices. Our proposal in the February 

2020 proposed rule implicitly 

acknowledged the use of these 

principles and practices as a 

longstanding part of how CMS 

calculates cost sharing limits and it is 

inherent in how the OACT performs 

many of the projections and 

calculations. Specifically, the February 

2020 proposed rule discussed how the 

OACT conducted necessary analyses 

and projections in the past and made 

clear that the OACT would be involved 

in applying the methodologies to 

calculate the MOOP and cost sharing 

limits we were proposing. As a result, 

while not explicitly proposed, CMS is 

finalizing a new regulation at 

§ 422.100(f)(7)(i) that addresses use of 

generally accepted actuarial principles 

and practices by CMS and MA 

organizations to ensure that this FC 

provides more detail regarding the 

actuarial nature of how costs are 

projected (which we believe is better 

stated in the regulation text). This new 

provision describes how generally 

accepted actuarial principles and 

practices will be used in: (1) Developing 

the beneficiary cost sharing projections 

used to calculate the MOOP limits in 

§ 422.100(f)(4) and (f)(5) and 

§ 422.101(d)(2) and (d)(3) and the 

inpatient hospital acute and psychiatric 

service category cost sharing limits in 

§ 422.100(f)(6)(iv); (2) calculating the 

copayment values that are actuarially 

equivalent to the coinsurance limits set 

for service categories in 

§ 422.100(f)(6)(i), for professional 

services in § 422.100(f)(6)(iii), and for 

the benefits for which MA cost sharing 

may not exceed cost sharing under 

original Medicare in § 422.100(j)(1); (3) 

evaluating MA organization compliance 

with §§ 422.100(f)(6) and (j); and (4) 

developing the projections and 

calculations used in applying 

§ 422.100(f)(8) for transitioning current 

(contract year 2022) copayment limits to 

the copayment limits produced by the 

methodology adopted in 

§ 422.100(f)(6)(iii), (f)(7)(ii), and (j)(1), as 

discussed in more detail in section 

II.B.5.b. and e. of this FC. Under 

§ 422.100(f)(7)(i), CMS and MA 

organizations must use generally 

accepted actuarial principles and 

practices for these purposes. As a result, 

in paragraph (f)(6)(i) we refer to 

paragraph (f)(7) as applying when CMS 

calculates copayment limits that are at 

an actuarially equivalent value to 50 

percent coinsurance for service 

categories representing in-network basic 

benefits that are not otherwise 

addressed in paragraph (f)(6), (j)(1), or in 

§ 422.113(b)(2). 

CMS’s longstanding practice in 

developing and setting MOOP and cost 

sharing limits has been to use generally 

accepted actuarial principles and 

practices in developing the projections 

of beneficiary costs. In projecting out-ofpocket costs and utilization based on 

the Medicare FFS data projections (as 

defined in § 422.100(f)(4)(i)) for CMS to 

use in calculating MOOP and cost 

sharing limits for contract year 2023 and 

future years, the OACT will continue to 

use generally accepted actuarial 

principles and practices. In the past, we 

have considered all or some of the 

following information when setting 

copayment limits: (1) Projected median 

or average total Medicare FFS allowed 

amounts (occasionally weighted by 

utilization, including place of service 

and/or provider type, as applicable); 

and (2) a Medicare FFS claims cost 

distribution. In continuing this practice 

under the rules adopted in paragraph 

(f)(7)(i)(A) when calculating cost sharing 

limits, we may take into account the 

number of visits or sessions a 

beneficiary typically receives in order to 

reach an actuarially equivalent 

copayment amount for a service 

category that is subject to a wide-range 

of costs. For example, as discussed in 

the February 2020 proposed rule, we 

calculated the illustrative copayment 

limit for the ‘‘mental health specialty 

services’’ service category in Table 5 

(Illustrative Contract Year 2022 InNetwork Service Category Cost Sharing 

Limits) from the February 2020 

proposed rule by weighting the average 

Medicare FFS allowed amount by the 

utilization of specific relevant provider 

specialty types (clinical psychologist, 

licensed clinical social worker, and 

psychiatry). As discussed in section 

II.B.5.b., the contract year 2023 

actuarially equivalent copayment value 

for the ‘‘mental health specialty 

services’’ service category is calculated 

by weighting the average Medicare FFS 

allowed amount by the utilization of the 

same provider specialty types using 

updated Medicare FFS data projections. 

We will also consider the purpose of the 

cost sharing limits and their role in the 

MA program when deciding among 

different approaches and, if it is 

appropriate, to take additional data into 

consideration in making projections and 

calculating cost sharing and MOOP 

limits using generally accepted actuarial 

principles and practices. As codified in 

paragraph (f)(7)(i)(A), information such 

as changes in legislation (such as, 

changes in Medicare benefits), Medicare 

payment policy, trends over several 

years of data, and external variables 

(such as public health emergencies) may 

be taken into account when performing 

the calculations and projections used to 

set the MOOP limits and cost sharing 

limits. The OACT considers these 

variables as they develop their 

projections by applying trend factors 

(that are consistent with the most recent 

Medicare Trustees Report). In addition, 

future impacts of laws and regulations 

are factored into OACT’s projections. 

Specifically, actuaries use their 

professional judgment when selecting 


lotter on DSK11XQN23PROD with RULES2
22340 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

35See Actuarial Standards Board, Actuarial 

Standard of Practice No. 1, adopted March 2013, 

Sections 2.9 and 3.1.4 https://

www.actuarialstandardsboard.org/wp-content/ 

uploads/2013/10/asop001_170.pdf) and http://

www.actuarialstandardsboard.org/profcounts/asopno-1-and-professional-judgment/. 

methods and assumptions, conducting 

an analysis, and reaching a conclusion 

which is consistent with generally 

accepted actuarial standards and 

principles.35 For example, the OACT is 

applying trend factors that reflect the 

expected volatility and impact of 

COVID–19 on the Medicare FFS 

utilization data from prior years in order 

to determine the Medicare FFS data 

projections for 2023 and subsequent 

years that CMS will use to calculate the 

MOOP and cost sharing limits for those 

future years. This is an example of how 

external variables may be taken into 

account. Actuarial judgment will be 

exercised in other matters as 

appropriate in applying the regulatory 

standards. When MA organizations use 

and apply generally accepted actuarial 

principles and practices to calculate 

actuarially equivalent copayment values 

when required under this FC, we 

anticipate that, MA organizations will 

take similar considerations into account. 

In addition, paragraph (f)(7)(i)(B) 

codifies that MA organizations must 

also use generally accepted actuarial 

principles and practices in complying 

with the regulations in paragraphs (f)(6) 

and (j) of this section. Finally, paragraph 

(f)(7)(i)(C) requires the same principles 

and practices to be used by CMS in 

evaluating MA plan compliance with 

paragraphs (f)(6) and (j). In summary, 

the approach allowing for actuarial 

professional judgments in making the 

projections and calculations used in 

applying the methodologies to set and 

comply with the cost sharing limits 

from this FC is adopted in paragraph 

(f)(7)(i), to clarify our intent and to be 

consistent with prior practice. 

In addition to complying with 

§ 422.100(f)(7)(i), we will follow the 

same process and apply the same 

considerations in calculating the values 

needed for copayment limits that are 

actuarially equivalent to the 

coinsurance percentages specified in the 

regulation text in § 422.100(f)(6)(i), 

(f)(6)(iii), and (j)(1). Rather than repeat 

those standards in each regulation, we 

are codifying them in a new provision 

at § 422.100(f)(7)(ii). As discussed 

previously, CMS may not calculate a 

specific copayment limit for every 

service category; if we do, it will be in 

compliance with paragraph (f)(7). New 

paragraph (f)(7)(ii) provides that CMS 

calculates copayment limits as feasible 

and appropriate to carry out program 

purposes and paragraphs (f)(7)(ii)(A) 

through (E) outline the process and 

standards for that. Paragraphs 

(f)(7)(ii)(A) and (B) address the data 

CMS will use in calculating copayment 

limits. As referenced in the February 

2020 proposed rule, CMS has annually 

analyzed Medicare program data to set 

the various cost sharing limits under 

current law and to publish guidance on 

MA cost sharing limits. The relevant 

Medicare data has included the most 

recent Medicare FFS data, including 

cost and utilization data and, in some 

cases, MA patient utilization 

information from MA encounter data. 

For example, CMS has used patient 

utilization from MA encounter data to 

inform inpatient hospital acute and 

psychiatric length of stay scenarios used 

in identifying MA plan cost sharing 

standards that are not discriminatory. 

Paragraph (f)(7)(ii)(A) codifies how CMS 

will use Medicare FFS data projections 

(as defined in paragraph (f)(4)(i)) for the 

applicable year and service category in 

order to calculate copayment limits for 

service categories subject to paragraph 

(f)(6)(i), (iii), and (j)(1). Development of 

the Medicare FFS data projections are 

based on Medicare FFS cost and 

utilization data for specific services and 

service categories. If available and 

where appropriate to consider 

utilization differences between 

Medicare FFS beneficiaries and MA 

enrollees to reach a value that most 

closely reflects an actuarially equivalent 

copayment for the benefit and 

beneficiary population, paragraph 

(f)(7)(ii)(B) codifies how CMS may also 

use patient utilization information from 

MA encounter data in our calculations. 

For example, if the utilization of 

different settings of service (such as, 

outpatient hospital compared to 

physician office) were available, 

comparable, and significantly different 

between Medicare FFS and MA 

encounter data, we may weight 

Medicare FFS cost data projections by 

MA encounter utilization of the relevant 

facility and provider types in order to 

calculate a cost sharing limit that is 

most closely actuarially equivalent to 

what MA enrollees may typically 

experience. In many cases, we may 

determine that MA encounter data is 

sufficiently available and recent for the 

relevant service category in order to 

apply analyses of MA utilization 

encounter data in our copayment limit 

calculations. CMS will complete 

accuracy checks in determining whether 

and when to use MA encounter data 

when paragraphs (f)(6)(iv) and (f)(7)(ii) 

permit use of that data. (See section 

II.B.5.c. of this FC for discussion of 

§ 422.100(f)(6)(iv).) As a result, we 

clarify here that the use of MA 

encounter data is not mandatory under 

paragraph (f)(7)(ii)(B) for calculating 

cost sharing limits. Rather, use of MA 

encounter data may be informative for 

CMS and the OACT to consider in 

making decisions about the actuarial 

approach to apply to the Medicare FFS 

data projections. 

Consistent with prior practice and as 

finalized in new § 422.100(f)(7)(ii)(C), 

CMS will be guided by what is 

appropriate to carry out program 

purposes when deciding how to 

calculate copayment limits for a service 

category identified in these regulations 

using the data described in paragraphs 

(f)(7)(ii)(A) and (B). Program purposes 

include such considerations as setting 

copayment limits that most closely 

reflect an actuarially equivalent 

copayment for the benefit and 

beneficiary population, protecting 

against discriminatory cost sharing, and 

avoiding unnecessary fluctuations in 

cost sharing that may confuse 

beneficiaries. These considerations will 

guide how judgement is exercised when 

generally accepted actuarial principles 

and practices provide choices and 

discretion. In situations where there are 

multiple or a range of actuarially 

equivalent copayment values for a 

service category, CMS will select a 

particular approach to calculate an 

actuarially equivalent copayment value 

in order to carry out those program 

purposes. For example, CMS may 

choose the methodology that results in 

the lowest possible increase or change 

in cost sharing for enrollees from the 

prior year, if there are multiple 

methodologies that are actuarially 

acceptable in calculating an actuarially 

equivalent copayment value. This 

approach is consistent with the stated 

goal in the February 2020 proposed rule 

to protect enrollees from increases in 

cost sharing when possible and 

including it in the regulation text 

provides additional transparency for 

stakeholders. In addition, in a situation 

where there are multiple approaches 

resulting in multiple actuarially 

equivalent values, CMS may choose the 

actuarial approach that is most 

consistent with trends and patterns in 

MA utilization and costs, if such 

information is available. For example, in 

the February 2020 proposed rule we 

explained that CMS proposed to add 

new cost sharing limits for an inpatient 

hospital acute 3-day length of stay 

scenario because it represented the 

median length of stay based on separate 

analyses of Medicare FFS and MA 

encounter data (for the same time 


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period). A similar comparison may be 

completed if MA encounter data is also 

available related to a service category 

subject to paragraph (f)(6)(i), (f)(6)(iii), 

or (j)(1). While helpful for comparison 

purposes and to inform which measure 

of central tendency CMS should use, 

MA encounter cost data will not be used 

to calculate the copayment limits. This 

approach further protects beneficiaries 

and plan designs from potentially 

disruptive changes to cost sharing. 

As discussed in section II.B.5.b. and 

e. of this FC, we are finalizing at 

§ 422.100(f)(8) a transition for 

copayment limits calculated under this 

FC. New paragraph (f)(7)(ii)(D) provides 

that actuarially equivalent copayment 

limits will be consistent with that 

transition. The actuarially equivalent 

copayment transition finalized at 

§ 422.100(f)(8) is only applicable to 

service categories subject to paragraphs 

(f)(6)(iii) and (j)(1). Similarly, as 

discussed in section II.A. and II.B.5.c. of 

this FC, the transition of ESRD costs 

(finalized in paragraph (f)(4)(vi)) is only 

applicable for the methodology CMS 

uses to calculate MOOP and inpatient 

hospital cost sharing limits. 

Specifically, service categories subject 

to paragraph (f)(6)(i) are not subject to 

paragraph (f)(4)(vi) (the ESRD cost 

transition) or paragraph (f)(8) (the 

transition to actuarially equivalent 

copayments) because CMS has not 

historically calculated copayment limits 

in addition to the 50 percent 

coinsurance limit for most of these 

benefits in prior years. Finally, 

§ 422.100(f)(7)(ii)(E) applies the 

rounding rules in paragraph (f)(6)(ii) as 

a necessary part of the copayment limit 

calculations. The rounding rules are 

discussed in more detail in a subsequent 

response to comment in this section. 

In summary, § 422.100(f)(7)(i) and (ii) 

generally codify elements of our existing 

practice and policy for cost sharing 

limits and clarifies how the necessary 

judgment will be used in developing 

actuarially sound projections of 

beneficiary out-of-pocket costs (to 

calculate MOOP limits) and actuarially 

equivalent copayment amounts. As in 

the past when calculating cost sharing 

limits, CMS will conduct analyses and 

make projections using the various data 

described in the regulation. Taken 

together, § 422.100(f)(6), (f)(6)(i), and 

(f)(7) require an MA plan use cost 

sharing that is no greater than 50 

percent coinsurance or an actuarially 

equivalent copayment value, with that 

copayment value calculated and 

announced by CMS or, if CMS does not 

calculate a copayment limit, based on 

the average Medicare FFS allowable 

amount for the plan service area or the 

estimated total MA plan financial 

liability for that contract year, for innetwork benefits that are not otherwise 

addressed in §§ 422.100(f)(6), (j)(1), or 

422.113(b)(2) and for out-of-network 

basic benefits. 

To illustrate application of the 

methodology and how we intend to 

interpret and rely on § 422.100(f)(7)(i) 

and (ii) for a service category subject to 

paragraph (f)(6)(i), we explain here the 

development of final contract year 2023 

copayment limits for the specific service 

category of ‘‘DME—diabetic shoes or 

inserts.’’ The copayment limit must be 

actuarially equivalent to 50 percent 

coinsurance for MA plans that establish 

a lower or intermediate MOOP amount. 

(As discussed in section II.B.5.e. of this 

FC, MA plans that establish a 

mandatory MOOP amount must have 

cost sharing that does not exceed cost 

sharing in original Medicare (that is, 20 

percent coinsurance) for the specific 

service categories of DME specified in 

§ 422.100(j)(1)(i)(E).) We acknowledge 

that the February 2020 proposed rule 

stated that the ‘‘DME’’ service category 

was one of several categories identified 

as subject to a higher variation in cost 

or unique provider contracting 

arrangements, which makes Medicare 

FFS average or median cost data less 

suitable for developing a standardized 

actuarially equivalent copayment value. 

Since then, we have worked closely 

with the OACT to analyze additional 

and updated Medicare FFS data 

projections for these service categories. 

CMS has been able to make progress to 

address and apply actuarial approaches 

(consistent with finalized paragraphs 

(f)(7)(i) and (ii)) to address these 

concerns (such as, weighting by the 

number of visits or sessions a 

beneficiary typically receives in order to 

reach an actuarially equivalent 

copayment amount for a service 

category that is subject to a wide range 

of costs). Table 10 includes the 

calculations of the actuarially 

equivalent copayment values for both 

the DME ‘‘diabetic shoes or inserts’’ and 

‘‘diabetes monitoring supplies’’ service 

categories for the lower and 

intermediate MOOP types using 

contract year 2023 Medicare FFS data 

projections (based on 2017–2021 

Medicare FFS data). Table 28 illustrates 

the results of applying paragraphs (f)(6), 

(f)(7), (f)(8), and (j)(1) to set final 

contract year 2023 in-network service 

category cost sharing limits. As a result, 

the actuarially equivalent copayment 

values from row D in Table 10 are 

included in Table 28 as the final 

contract year 2023 copayment limits for 

those DME service categories and 

MOOP types. The copayment values 

listed in Tables 10 and 28 for a lower 

and intermediate MOOP limit for the 

‘‘DME—diabetic shoes or inserts’’ 

service category are the CMS-calculated 

actuarial equivalent value for a 50 

percent coinsurance cost sharing limit. 

As illustrated in Table 10, to calculate 

this actuarially equivalent copayment 

value, we started with the contract year 

2023 Medicare FFS data projections 

from the OACT. Based on HCPCS codes 

from the Medicare FFS data projections, 

the projected weighted average total 

Medicare FFS allowed amount for the 

‘‘DME—diabetic shoes or inserts’’ 

service category equals $47.51 for 

contract year 2023. CMS weighted this 

projected average Medicare FFS allowed 

amount by utilization of pairs of 

diabetic shoes, inserts, and shoe 

modifications. We chose to weight the 

relevant HCPCS codes (A5500, A5501, 

A5512, A5513, and A5500) by 

utilization as there was a relatively wide 

range of costs projected for 2023, 

approximately $30 to $220, depending 

on whether the item was a custom 

molded shoe, insert, or shoe 

modification. Weighting the projected 

average costs by utilization results in a 

value that more accurately represents an 

actuarially equivalent value to the costs 

the OACT projects will be experienced 

by Medicare FFS beneficiaries. Using 50 

percent of the projected Medicare FFS 

weighted average amount ($23.76), and 

applying the rounding rules in 

paragraph (f)(6)(ii), we reached $25.00 

as an actuarially equivalent copayment 

value to 50 percent coinsurance for this 

service category for MA plans that 

establish a lower or intermediate MOOP 

amount in contract year 2023. CMS 

completed similar analyses to calculate 

and set a final contract year 2023 

copayment limit that is actuarially 

equivalent to 50 percent coinsurance for 

the ‘‘DME—diabetes monitoring 

supplies’’ service category in Table 28. 

As CMS did not set copayment limits 

for service categories subject to the 

longstanding 50 percent coinsurance 

limit in prior years, the limits we are 

adopting in paragraph (f)(8) to transition 

to actuarially equivalent values are not 

relevant for the DME service categories 

for MA plans that establish a lower or 

intermediate MOOP. Accordingly, Table 

28 reflects a final contract year 2023 $25 

copayment limit for the ‘‘DME—diabetic 

shoes or inserts’’ service category and a 

$20 copayment limit for the ‘‘DME— 

diabetes monitoring supplies’’ service 

category for MA plans with a lower or 

intermediate MOOP limit in addition to 

the 50 percent coinsurance limit. As 

discussed in section II.B.5.e. of this FC, 


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22342 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

the same starting figures ($47.51 and 

$39.48 for the DME ‘‘diabetic shoes or 

inserts’’ and ‘‘diabetes monitoring 

supplies’’ service categories, 

respectively) were used to calculate an 

actuarially equivalent copayment value 

to 20 percent coinsurance to reach the 

final contract year 2023 copayment 

limits for the mandatory MOOP type. 

Applicable MA encounter utilization 

data was not available at the time CMS 

was making these calculations, so all 

final contract year 2023 copayment 

limits in Table 28 are solely based on 

Medicare FFS costs and utilization 

(including for the DME service 

categories). In addition, based on the 

available Medicare FFS data projections, 

CMS (in consultation with the OACT) 

did not conclude that another approach 

would be better suited to calculate an 

actuarially equivalent copayment value 

for these DME service categories. 

Consistent with § 422.100(f)(7), we 

may calculate actuarially equivalent 

copayment limits for the other DME 

service categories and other categories 

subject to § 422.100(f)(6)(i) (such as 

ambulance services) in future years (as 

those categories do not have final 

contract year 2023 copayment limits in 

Table 28) as feasible and appropriate to 

carry out program purposes. 

Considerations include whether 

additional Medicare FFS data 

projections are available and suitable 

(based on paragraph (f)(7)(i)), the need 

for CMS to prioritize use of its 

resources, and whether calculating a 

copayment limit would assist CMS in 

protecting against discriminatory cost 

sharing and avoiding unnecessary 

fluctuations in cost sharing that may 

confuse beneficiaries. These 

considerations and calculations of 

copayment limits will be completed 

annually based on the Medicare FFS 

data projections for the applicable year 

and service category. Conversely, there 

may be years where CMS does not 

exercise its authority to apply the 

methodology in these regulations to 

calculate a specific copayment limit for 

a particular basic benefit. In this case, if 

the MA organization wants to establish 

a copayment for a benefit where CMS 

has not calculated the actuarially 

equivalent copayment limit, the MA 

organization must apply these 

regulations to calculate the actuarially 

equivalent value of a particular 

coinsurance percentage for that basic 

benefit using the data specified in the 

regulations (for example, the MA plan’s 

estimated total financial liability for that 

contract year). The reasons for CMS’s 

approach each year may vary, such as 

that CMS resources may be better 

devoted to other program 

responsibilities or available data 

projections are insufficient to produce 

an actuarially equivalent copayment 

value for that year. However, 

preliminary analyses could indicate that 

there is a copayment level which clearly 

does not exceed the limits set in this 

regulation for copayments. It might be 

beneficial for CMS to provide that 

information along with an indication 

that CMS does not believe that scrutiny 

is required of copayments established 

by an MA plan at or below that level. 

In those cases, as no copayment limit 

has been officially issued by CMS, MA 

plans would need to be able to validate 

how a copayment established above that 

copayment level complies with the 

regulatory standards. 

Under this FC, MA organizations may 

choose a copayment or coinsurance 

form of cost sharing for any in-network 

or out-of-network benefit. If the plan 

chooses to establish a copayment, the 

amount is limited to an actuarially 

equivalent value based on the 

applicable regulation standard. When 

using copayments for benefits where 

CMS has not calculated the value that 

is actuarially equivalent to the 

maximum coinsurance percentage 

value, MA organizations must also use 

generally accepted actuarial principles 

and practices and the type of data that 

is described in paragraphs (f)(6)(i) and 

(iii). We are finalizing § 422.100(f)(6) 

and (f)(6)(i) with changes from the 

proposal and finalizing new paragraph 

(f)(7) to provide context and clarity 

regarding how CMS will implement and 

apply the regulations and also how MA 

organizations may implement and 

demonstrate compliance with the cost 

sharing limitations and protections 

adopted in this FC. 

MA organizations are not expected to 

experience any greater burden when 

demonstrating compliance with the 

service category cost sharing standards 


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TABLE 10: CMS CALCULATIONS OF THE FINAL CONTRACT YEAR 2023 

COP A YMENT LIMITS FOR THE DME "DIABETIC SHOES OR INSERTS" AND 

"DIABETES MONITORING SUPPLIES" SERVICE CATEGORIES SUBJECT TO§ 

422.100(f)(6)(i) FOR THE LOWER AND INTERMEDIATE MOOP TYPES USING 

CONTRACT YEAR 2023 MEDICARE FFS DATA PROJECTIONS (BASED ON 2017 -

2021 MEDICARE FFS DATA} 

Row Description DME - Diabetic DME - Diabetes 

Reference Shoes or Inserts Monitoring 

Sunnlies 

A Contract year 2023 Medicare FFS projections of total weighted $47.51 $39.48 

average cost* 

B Contract year 2023 coinsurance limit per § 422.100(f)(6)(i) 50% 

C Unrounded actuarially equivalent copayment value to contract year $23.76 $19.74 

2023 coinsurance limit per§ 422.100(f)(6)(i) (row A multiplied by 

rowB) 

D Rounded actuarially equivalent copayment value to contract year $25.00 $20.00 

2023 coinsurance limit (row C rounded per§ 422.100(f)(6)(ii)) 

*The OACT employed generally accepted actuarial principles and practices in calculating these projected amounts (as finalized 

in§ 422.100(f)(7)). 
Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22343 

in these regulations than MA 

organizations have had in the past when 

CMS reviewed MA plan benefit 

packages (PBPs) in the annual MA bids. 

Consistent with prior contract years, the 

PBP software includes validations to 

prevent an MA organization from 

entering cost sharing (coinsurance and 

copayment amounts) for a particular 

service category that is above the cost 

sharing limit. This process is expected 

to be maintained in future years for 

service categories, using the coinsurance 

limits in these regulations and the 

copayment limits that CMS calculates 

applying the rules in these regulations. 

MA organizations must submit 

documentation (either with their initial 

bid or upon request) that clearly 

demonstrates how the copayment 

amount satisfies the regulatory 

requirements for each applicable plan 

where CMS has not calculated a 

copayment or coinsurance limit under 

these regulations and programmed the 

PBP with that limit. Next, we address 

how MA plans should: (1) Generally 

prepare and submit supporting 

documentation for the service category 

or for a reasonable group of benefits, if 

necessary; (2) calculate the estimated 

total MA plan financial liability for that 

contract year; (3) calculate the average 

Medicare FFS allowed amount for the 

plan service area; (4) modify supporting 

documentation for different provider 

payment structures; and (5) address 

three specific components of the 

supporting documentation that may be 

used to satisfy the regulatory 

requirements. Further guidance on these 

topics will be issued by CMS, as 

necessary. 

For service categories where CMS 

does not calculate the specific 

copayment limits, each plan bid with a 

copayment for that benefit would need 

to be prepared and evaluated in relation 

to the estimated total MA plan financial 

liability for that contract year or the 

average Medicare FFS allowed amount 

for the benefit in the plan service area. 

Section 422.100(f)(6)(i) permits use of 

either of these. As discussed in sections 

II.B.5.b. and II.B.5.e. of this FC, 

paragraph (f)(6)(iii) requires use of only 

the estimated total MA plan financial 

liability for that contract year and 

§ 422.100(j)(1) permits use of either set 

of data. We may request supporting 

documentation from the MA 

organization that shows how the plan’s 

copayment amount satisfies the cost 

sharing standards finalized in 

paragraphs (f)(6) and (j)(1) as part of our 

evaluation of plan bids. The data MA 

organizations may use to develop 

supporting documentation for the cost 

sharing included in their PBP(s) are 

clarified in paragraphs (f)(6)(i), (iii)(B), 

and (j)(1)(ii) and are more completely 

discussed subsequently in this response. 

CMS, consistent with past years, will 

direct MA organizations through annual 

guidance, such as HPMS memoranda or 

bid instructions, on whether supporting 

documentation must be submitted with 

their initial bid or submitted upon 

request depending on the service 

category. MA organizations must 

identify this documentation separately 

from other supporting documentation 

submitted as part of the BPT. MA 

organizations may include information 

for multiple plans in one set of 

documentation, but calculations must 

be presented for each plan individually 

(or plan segment, if applicable). The MA 

organization’s calculations and 

documentation must reflect cost sharing 

amounts that combines the enrollee’s 

entire cost sharing responsibility as a 

single, total copayment as finalized in 

§ 422.100(f)(9), even if the MA plan has 

contract arrangements involving 

separate payments to facilities and 

professional providers. This is 

consistent with our current practice of 

having MA organizations submit 

supporting documentation with the bid. 

For example, under current (contract 

year 2022) and previous policy, if an 

MA organization used copayments for 

the ‘‘DME—Equipment’’ service 

category and established a mandatory 

MOOP amount, it would have submitted 

supporting documentation in order to 

demonstrate how the copayment 

satisfied the cost sharing standards 

because only a coinsurance limit has 

been traditionally provided for that 

service category. This approach remains 

the same for contract year 2023 for the 

‘‘DME—Equipment’’ service category 

and other DME service categories 

without final contract year 2023 

copayment limits in Table 28. In 

addition, MA organizations with 

inpatient hospital acute and psychiatric 

and SNF coinsurance plan benefit 

designs in contract year 2022 and prior 

years submitted supporting 

documentation in order to demonstrate 

how their coinsurance met the cost 

sharing standards because we do not 

have a coinsurance limit for those 

service categories. This requirement also 

continues to apply for contract year 

2023, as CMS has not included 

coinsurance limits for those service 

categories in the final contract year 2023 

cost sharing limits provided in Table 28. 

The February 2020 proposed rule 

noted that MA organizations must 

maintain (and provide to CMS upon 

request) supporting documentation for 

actuarial justifications for cost sharing, 

including the methods used in 

calculating the total MA plan financial 

liability. We proposed that regardless of 

the type of cost sharing used, an MA 

plan must not pay less than a specified 

percentage of the total MA plan 

financial liability for in-network 

benefits in proposed § 422.100(f)(6)(i), 

(iii), and (j)(1)(iv). The February 2020 

proposed rule stated that the term ‘‘total 

MA plan financial liability’’ means the 

total payment paid and includes both 

the enrollee cost sharing and the MA 

organization’s payment. In this FC we 

modified paragraphs (f)(6)(i), (f)(6)(iii), 

and (j)(1)(ii) to use the term ‘‘estimated 

total MA plan financial liability for that 

contract year’’ to clarify that MA 

organizations may use more than one 

year of data to project this amount 

(following generally accepted actuarial 

principles and practices as required by 

paragraph (f)(7)). As a result of using 

this term consistently in the regulations, 

the mechanics of this process for 

calculating the copayment amount 

when CMS has not calculated an 

actuarially equivalent copayment limit 

are quite similar for paragraphs (f)(6)(i), 

(f)(6)(iii), and (j)(1). (The specified 

percentage of the estimated total MA 

plan financial liability for that contract 

year will vary based on the type of 

MOOP limit used by the plan for 

benefits subject to paragraph (f)(6)(iii).) 

For each provision, the copayment 

amount must be equal to, or less than, 

the copayment limit calculated by CMS 

or a dollar amount that is actuarially 

equivalent to a specified percentage of 

the estimated total MA plan financial 

liability for that contract year (or the 

average Medicare FFS allowable amount 

for the plan service area for benefits 

subject to paragraph (f)(6)(i) or (j)(1)). 

We are generally finalizing those 

polices, with some modifications as 

discussed throughout section II.B of this 

FC. As a result, in the absence of a 

copayment limit calculated by CMS, the 

MA plan must pay at least the specified 

percentage of the estimated total MA 

plan financial liability for that contract 

year or average Medicare FFS allowable 

amount (as applicable) for the service 

category or for a reasonable group of 

benefits in the PBP. We are finalizing 

explicit regulation text to be clear in 

paragraphs (f)(6)(i), (f)(6)(iii)(B), and 

(j)(1)(ii) what data the MA organization 

may use in calculating a dollar amount, 

if CMS does not calculate a copayment 

limit. It is not necessary for an MA 

organization to use one data source over 

the other (estimated total MA plan 

financial liability for that contract year 

or average Medicare FFS allowable 


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22344 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

amount) when complying with 

§ 422.100(f)(6)(i)(B) and (j)(1)(ii), which 

both provide the choice. However, as 

proposed and discussed in more detail 

in section II.B.5.b. of this FC, MA 

organizations must pay a minimum 

percentage of the estimated total MA 

plan financial liability for in-network 

basic benefits that are professional 

services; this necessarily means that in 

calculating copayment dollar amounts 

for service categories subject to 

paragraph (f)(6)(iii), the MA plans must 

use data about the estimated total MA 

plan financial liability for that contract 

year. 

In response to the comment 

requesting that CMS allow the average 

contracted rate to be calculated at the 

parent organization level, we clarify 

here that MA organizations may use the 

estimated total financial liability for that 

contract year calculated at the MA plan 

level where this FC permits use of data 

about the MA plan’s financial liability. 

A minority of MA organizations use 

segmented plans and, in those cases, the 

estimated total financial liability for that 

contract year would be calculated at the 

segment level (CMS will also complete 

the cost sharing evaluation at the 

segment level). However, in calculating 

actuarially equivalent copayment 

standards CMS will use aggregate (or 

nationally representative) projections 

from the OACT. In comparison, MA 

organizations will use aggregate 

payment data for their plan service area 

about the service category, or for a 

reasonable group of benefits, to which 

the cost sharing applies when 

determining the dollar figure that is 

actuarially equivalent to the 

coinsurance standard. Conducting the 

evaluation at the plan (or segment) level 

is the better policy, and the one we are 

finalizing here, as it: (1) Reflects the cost 

sharing experienced by enrollees in the 

plan’s service area; (2) protects against 

possible distortions from aggregating the 

average payment rate calculation across 

a larger organizational level that may 

not sufficiently reflect the plan’s service 

area; and (3) coincides with the MA 

organization’s provider contracts that 

may vary geographically. MA 

organizations that are new may 

calculate the estimated total MA plan 

financial liability for new plans based 

on projections of available provider 

contracts and expected enrollment 

trends for that contract year. In addition, 

MA organizations that are entering a 

new service area may calculate the 

estimated total MA plan financial 

liability for that plan based on the total 

MA plan financial liability for the 

benefit in the organization’s existing 

service area and also take into 

consideration projections of available 

provider contracts and expected 

enrollment trends in that new service 

area for that contract year. To address 

the potential that the MA organization 

may have insufficient data about the 

specific service area, CMS will 

implement and enforce the rules 

adopted in this FC to permit use of data 

on the MA plan financial liability that 

is not limited to the specific service area 

for new plans and new service areas. 

For in-network benefits, the estimated 

total MA plan financial liability for that 

contract year is based on the provider 

contracting arrangements and expected 

enrollee utilization for the particular 

provider type and service. MA plans 

and their network providers negotiate 

payment arrangements without 

interference by CMS and may have 

varying enrollee utilization experience; 

CMS lacks information on those 

specifics and understands that plans 

may contract with providers through a 

variety of arrangements (such as, FFS, 

capitation, salary, or value-based 

arrangements). As a result, if CMS does 

not calculate a copayment limit for an 

in-network professional service category 

for a particular contract year, calculating 

a dollar amount that is actuarially 

equivalent to the coinsurance value will 

require analysis by the MA organization 

and that analysis must consider the 

various amounts that the MA plan 

expects to pay for that basic benefit in 

the applicable year. An MA organization 

may consider the various types of 

payment arrangements it has with 

network providers and aggregate this 

information to calculate a dollar amount 

that is actuarially equivalent to the 

applicable coinsurance limit for service 

categories subject to § 422.100(f)(6)(i), 

(iii), and (j)(1). In addition, an MA 

organization may weigh the aggregated 

data in calculating this dollar amount 

(that is, the actuarially equivalent value 

to the applicable coinsurance limit) 

using past utilization and variation of 

provider payments. For example, to 

comply with the requirements in 

paragraph (f)(6)(i) for in-network 

copayments, an MA organization may 

use their contracted payment rates for 

the providers that furnish the service(s) 

to determine the estimated total MA 

plan financial liability for those 

service(s); the estimated total MA plan 

financial liability for that contract year 

is compared to the plan’s cost sharing 

on a percentage basis to determine if the 

cost sharing exceeds an actuarially 

equivalent copayment amount to the 50 

percent cost sharing standard. This 

process is consistent with the 

supporting documentation CMS has 

accepted in prior years. 

For covered out-of-network basic 

benefits, the estimated total MA plan 

financial liability for that contract year 

must necessarily be based on the 

average Medicare FFS allowable amount 

for the plan service area because MA 

plans are required to ensure that out-ofnetwork providers receive the Medicare 

FFS payment for the basic benefit that 

has been furnished to the enrollee. As 

a result, we are clarifying that, while 

§ 422.100(f)(6)(i) describes the use of the 

estimated total MA plan financial 

liability for that contract year and the 

average Medicare FFS allowable 

amount, to comply with the requirement 

in paragraph (f)(6)(i) for out-of-network 

benefits, the plan must use the average 

Medicare FFS allowable amount for 

these determinations because the MA 

plan is required to pay, at a minimum, 

the Medicare FFS allowable amount for 

these benefits. If an MA organization is 

using copayment amounts for out-ofnetwork services, the plan must use the 

average Medicare FFS allowable amount 

for all providers for the applicable 

service category or reasonable group of 

services in its plan service area as the 

basis for their calculations of the 

actuarially equivalent dollar amount. In 

addition, an MA organization may 

weigh the average Medicare FFS 

allowable amount using the plan’s past 

utilization (such as including the 

Medicare FFS payment for each 

applicable provider type to administer 

the benefit) in calculating this dollar 

amount (that is, the actuarially 

equivalent value to the 50 percent 

coinsurance limit for out-of-network 

basic benefits). MA organizations 

establish cost sharing at the plan-level 

and we reiterate here that any 

calculations must be done at the plan 

(segment, if applicable) level to reflect 

the benefit design. This approach may 

be modified as necessary to comply 

with generally accepted actuarial 

principles and standards as described in 

paragraph (f)(7)(i). However, an MA 

organization that relies on paragraph 

(f)(7)(i) to use data and analyses from 

other than the plan’s estimated total 

financial liability and service area must 

explain and support such a 

determination. 

In summary, and as required by 

§ 422.100(f)(6) and (j)(1) as finalized in 

this FC, MA organizations must 

establish either: (1) A coinsurance level 

that does not exceed the coinsurance 

percentage in the regulation; or (2) in 

the absence of a specific cost sharing 

limit calculated by CMS, a copayment 

that does not exceed the value that is 

actuarially equivalent to the specified 


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Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22345 

36The annual OACT MA bidding guidance may 

be accessed from CMS’s page on Bid Forms & 

Instructions from the website: https://www.cms.gov/ 

Medicare/Health-Plans/MedicareAdvtgSpec

RateStats/Bid-Forms-Instructions. 

percentage of the MA plan’s estimated 

total financial liability for the benefit for 

that contract year (or the average 

Medicare FFS allowable amount for the 

plan service area for benefits subject to 

paragraph (f)(6)(i) and (j)(1)(i)). 

Specifically, to comply with paragraph 

(f)(6)(i), as well as demonstrate 

compliance, when CMS has not 

calculated a copayment limit, an MA 

organization must calculate the average 

Medicare FFS allowable amount of the 

plan service area or its estimated total 

MA plan financial liability for the 

service category or for a reasonable 

group of benefits or services covered 

under the plan in order to establish a 

maximum copayment amount (that is, 

dollar amount) that is actuarially 

equivalent to, or less than, 50 percent. 

If using copayments, the MA plan must 

use a copayment that is no greater than 

that maximum copayment amount. 

Similarly, as discussed in section 

II.B.5.e. of this FC, finalized paragraph 

(j)(1) provides that cost sharing 

established by the MA organization may 

not exceed the cost sharing required 

under original Medicare for the 

specified services; that means the cost 

sharing may be a copayment limit that 

is actuarially equivalent to the 

coinsurance used in original Medicare, 

which would be a dollar limit 

calculated by CMS or, if CMS did not 

calculate a copayment limit, a dollar 

limit calculated by the MA organization 

based on the average Medicare FFS 

allowable amount or the estimated total 

MA plan financial liability for that 

benefit in the plan’s service area. The 

MA plan may have a copayment that is 

less than that maximum amount, but 

may not exceed that limit. As a result, 

the process MA organizations take to 

develop supporting documentation and 

to comply with paragraph (j)(1) when 

CMS has not calculated and issued a 

specific copayment limit is the same as 

for paragraph (f)(6)(i). The MA 

organization must use the average 

Medicare FFS allowable amount for the 

plan service area, or the estimated total 

MA plan financial liability for the 

benefit in order to calculate and 

establish a copayment amount (that is, 

dollar amount) that is actuarially 

equivalent to, or less than, the cost 

sharing under original Medicare for the 

benefit. In order to be consistent in 

applying this approach for benefits that 

cannot exceed cost sharing under 

original Medicare, we are not finalizing 

part of proposed paragraph (j)(1)(iv) 

(which is otherwise finalized as 

paragraph (j)(1)(i)(D)) related to basing a 

copayment on the total MA plan 

financial liability for home health 

services. The policies being finalized at 

§ 422.100(j)(1) are more completely 

discussed in section II.B.5.e. of this FC. 

In addition, to comply with paragraph 

(f)(6)(iii) in situations where CMS has 

not calculated and issued a copayment 

limit for a particular service category, an 

MA organization must calculate an 

actuarially equivalent copayment 

amount to ensure that the MA 

organization does not pay less than the 

specified percentage of the estimated 

total MA plan financial liability for the 

applicable type of MOOP limit. This 

will allow MA plans to establish a 

copayment amount for a professional 

service category that is equal to or less 

than an actuarially equivalent value to 

the coinsurance limit required by 

paragraph (f)(6)(iii) based on the 

estimated total MA plan financial 

liability for the benefit. An MA 

organization is not required to ensure 

that every service for every enrollee 

meets the requirement that the MA plan 

pay no less than the specified 

percentage of the estimated total MA 

plan financial liability for that contract 

year when the MA organization is using 

copayment structures. 

CMS’s evaluations for purposes of 

determining compliance with 

§ 422.100(f)(6) and (j)(1), if CMS has not 

published a copayment standard (or 

coinsurance limit for inpatient hospital 

standards set in paragraph (f)(6)(iv)), 

will align with OACT bidding 

guidance 36 and follow generally 

accepted actuarial standards of practice 

in accordance with paragraph (f)(7)(i). 

The estimated total MA plan financial 

liability for that contract year and 

Medicare FFS allowed amount should 

consider credibility based on OACT 

bidding guidance and be adjusted to 

meet actuarial principles and practices. 

In addition, copayment amounts will be 

calculated using the rounding rules 

finalized in paragraph (f)(6)(ii). This 

approach to develop and evaluate 

supporting documentation is consistent 

with current OACT bidding guidance, 

supports cost sharing stability for 

beneficiaries, and allows MA 

organizations to establish plan benefit 

structures that incorporate copayments. 

We acknowledge that MA organizations 

may have different provider 

arrangements (for example, fee-forservice and capitation) so determining 

that an in-network copayment amount is 

not more than the specified coinsurance 

percentage of the estimated total MA 

plan financial liability for the applicable 

service category may require planspecific approaches; we expect to take 

this into account when determining if 

an MA plan’s (or segment-level) cost 

sharing complies with paragraphs 

(f)(6)(i), (f)(6)(iii), and (j)(1). In 

evaluating an MA organization’s 

supporting documentation for service 

categories subject to paragraphs (f)(6)(i), 

(iii), and (j)(1), CMS may accept 

information that considers the MA 

plan’s estimated total financial liability 

for that contract year using these 

provider payment arrangements or a 

combination of these arrangements, as 

long as it is reflects the plan’s service 

area (or the service area of a segment). 

For example, if upon request, the MA 

organization submits supporting 

documentation at the contract level with 

sufficient actuarial justification, instead 

of calculating at the plan level (such as, 

unique provider payment 

arrangements), CMS will take this under 

consideration. Likewise, if CMS were to 

request an MA organization to provide 

a justification for the copayment 

included in their contract year 2023 PBP 

for Medicare-covered podiatry (which is 

subject to § 422.100(f)(6)(i) and lacks a 

CMS set copayment limit for contract 

year 2023 as it is not included in Table 

28), we may consider actuarial 

justifications that are specific to and 

reflect capitated payment arrangements 

with different providers (and different 

types of providers) that furnish 

Medicare-covered podiatry services, if 

applicable. 

Because the analyses performed by 

MA organizations must use generally 

accepted actuarial principles and 

practices pursuant to § 422.100(f)(7)(i), 

supporting documentation must be 

consistent with generally accepted 

actuarial principles and practices. The 

MA organization’s analysis must 

demonstrate how plan cost sharing 

complies with the regulations in 

§ 422.100(f)(6)(i), (iii), and (j)(1). As a 

result, the documentation must 

demonstrate: 

• How the MA organization 

calculated the plan’s estimated total 

financial liability for the benefit for that 

contract year (or the average Medicare 

FFS allowable amount for the service 

area for benefits subject to 

§ 422.100(f)(6)(i) and (j)(1)); 

• The percentage the copayment 

represents of the plan’s estimated total 

financial liability for the benefit for that 

contract year (or the average Medicare 

FFS allowable amount for the service 

area for benefits subject to 

§ 422.100(f)(6)(i) and (j)(1)); and 

• How the cost sharing does not 

exceed, as applicable, an actuarially 


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equivalent amount to the 50 percent 

estimated total MA plan financial 

liability requirement (established at 

§ 422.100(f)(6)(i)), the range of cost 

sharing requirement based on the type 

of MOOP limit (established at paragraph 

(f)(6)(iii)), and cost sharing under 

original Medicare (established at 

§ 422.100(j)(1) and (2)). 

MA organizations must develop and 

maintain documentation that 

demonstrates how plan cost sharing 

satisfies the estimated total MA plan 

financial liability for that contract year 

and average Medicare FFS allowable 

amount requirements and other 

applicable cost sharing coinsurance 

limits for covered benefits. If CMS 

requests information as part of bid 

review or general oversight of the plan’s 

copayment or coinsurance amounts for 

specific service categories, an MA 

organization may submit an analysis 

that addresses each of the three 

components described previously, or 

use a PMPM analysis that addresses 

multiple components simultaneously. 

For example, the copayment may be 

represented as a percentage of the 

estimated total MA plan financial 

liability for that contract year or the 

average Medicare FFS allowed amount 

for the benefit. If necessary, we expect 

that supporting documentation and data 

may include information on provider 

payments or costs, enrollee enrollment 

and utilization, and cost sharing paid by 

enrollees (both in terms of dollar figures 

and as a percentage of the estimated 

total MA plan financial liability for that 

contract year or average Medicare FFS 

allowable amount for the benefit) to 

demonstrate how the plan’s cost sharing 

amounts satisfy requirements being 

finalized in this rule. We provide in 

Table 11 an illustration of one way an 

MA organization can approach 

developing and summarizing supporting 

documentation that addresses the three 

components described previously for 

some select service categories. We 

would expect MA organizations to also 

include any necessary payment, cost, 

and/or utilization data or assumptions. 

Requiring supporting documentation as 

described in this response protects 

enrollees from high cost sharing 

(generally and in relation to specific 

service categories, such as physical 

therapy and speech-language pathology, 

as summarized in section II.B.5.b. of this 

FC) by ensuring that MA plan 

copayments satisfy cost sharing 

requirements in various scenarios. 

CMS intends to work with MA 

organizations when requesting 

supporting documentation to address 

any unique situations and ensure 

calculations and subsequent evaluations 

comply with generally accepted 

actuarial principles and standards. We 

may also provide additional information 

on how MA organizations should 

prepare their cost sharing supporting 

documentation and data (such as, 

potential formats and information to be 

included in documentation) through 

instructions, such as HPMS memoranda 

or bidding instructions. Individuals and 

organizations may request placement on 

the HPMS listserv at https://

hpms.cms.gov/app/ng/home/ to ensure 

that they receive HPMS memoranda. 

Comment: A commenter requested 

CMS make the 50 percent total financial 

liability determination subject to the 

nearest $5 rounding rule, proposed at 

§ 422.100(f)(6)(ii)(A), to help with year 

over year benefit design stability. 

Response: Having MA plans apply the 

same rounding methodology specified 

in § 422.100(f)(6)(ii) does not appear to 

result in any harm, especially as CMS 

will be using those rounding rules for 

calculating cost sharing limits. In 

addition, applying the same rounding 

rules to calculate actuarially equivalent 

copayment values regardless if the 

calculations are completed by CMS or 

by an MA organization will promote 

consistency in determining compliance 

with the regulatory standards being set 

through this FC. Accordingly, we are 

finalizing here that MA organizations 

will use the rounding rules in paragraph 

(f)(6)(ii) when calculating actuarially 

equivalent cost sharing values for the 

regulatory standards in § 422.100(f)(6), 

(f)(7), and (j)(1). This will allow MA 

organizations to round to the nearest $5 

increment (or lower $5 increment where 

the amount is exactly between two 


lotter on DSK11XQN23PROD with RULES2ER14AP22.012</GPH>

TABLE 11: GENERAL ILLUSTRATION OF SUMMARY OF SUPPORTING 

DOCUMENTATION FOR AN MA PLAN WITH A LOWER MOOP LIMIT TO 

EVALUATE COMPLIANCE WITH§§ 422.100(f)(6)(i), 422.100(f)(6)(iii)(C), AND 

422.1 00(j)(l) 

Percent of 

Estimated Total Estimated 

Cost MA Plan Total MA 

Sharing Financial PBP Cost Plan Financial Pass/Fail 

Plan ID PBP Service Category Standard Liability1 Sharing Liability1 Test 

H0000-001-1 DME - Equipment 50%2 $100 $30 30% PASS 

H0000-001-2 Example Service Category A 50%3 $100 $75 75% FAIL 

H0000-001-3 Example Service Category B 20%4 $250 $45 18% PASS 

1 The Medicare FFS allowed amount for the benefit may also be used for service categories subject to 

§ 422.100(f)(6)(i) and G)(l) and must be an average for the plan service area. The estimated total MA plan financial 

liability for that contract year and Medicare FFS allowed amount should consider credibility based on OACT 

bidding guidance and be adjusted to meet actuarial principles and practices. 

2 For MA plans with a lower MOOP limit, the cost sharing limit for the "DME - Equipment" service category is 

50% in accordance with§ 422.100(f)(6)(i) and G)(l). 

3 For MA plans with a lower MOOP limit, the cost sharing limit for the "Example Service Category A" is 50% 

coinsurance in accordance with § 422.100( f)( 6)(iii). 

4 The cost sharing limit for the "Example Service Category B" is 20% coinsurance in accordance with 

§ 422.lO0G)(l). 
Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22347 

increments) when calculating an 

actuarially equivalent copayment for 

benefits that must satisfy the 50 percent 

coinsurance obligation under paragraph 

(f)(6)(i), professional services subject to 

paragraph (f)(6)(iii), and benefits listed 

in paragraph (j)(1)(i). In addition, MA 

plans may round to the nearest whole 

$1 for out-of-network inpatient acute 

and psychiatric and skilled nursing 

facility cost sharing, also rounding 

down when the actuarially equivalent 

copayment is projected to be exactly 

between two increments, when 

calculating values that comply with 

paragraph (f)(6)(iv). This rounding rule 

for inpatient hospital cost sharing was 

proposed in paragraph (f)(6)(ii)(A) and 

is finalized generally as proposed in 

paragraph (f)(6)(ii)(B). As finalized, 

paragraph (f)(6)(ii) is clear that the 

rounding rules will be used in 

calculating copayment limits and 

evaluating whether an MA plan’s cost 

sharing complies with the cost sharing 

limits. 

Based on the changes to 

§ 422.100(f)(6)(i) and new paragraph 

(f)(7), the transition schedule we are 

adopting in new paragraph (f)(8), and 

changes we are finalizing in § 422.100(j) 

(as discussed in section II.B.5.e. of this 

FC), we are finalizing proposed 

paragraph (f)(6)(ii) with modifications. 

First, as finalized, paragraph (f)(6)(ii)(A) 

will apply the $5 rounding rules 

proposed for professional service 

categories and benefits that are subject 

to § 422.100(f)(6)(i), (f)(6)(iii), and 

(j)(1)(i). As a result, in calculating 

copayment limits and in evaluating an 

MA plan’s compliance with paragraphs 

(f)(6)(i), (f)(6)(iii), and (j)(1), CMS will 

round to the nearest whole $5 

increment. The exception to this is 

copayments for inpatient hospital acute 

and psychiatric and SNF services, 

where paragraph (f)(6)(ii)(B) explicitly 

provides that the $1 rounding rule 

applies. In addition, MA plans that 

calculate actuarially equivalent 

copayments values because CMS has 

not calculated a copayment limit will 

round to the nearest whole $5 increment 

for service categories for which 

paragraph (f)(6)(ii)(A) applies. For cases 

in which the copayment limit is 

projected to be exactly between two 

increments, the final actuarially 

equivalent copayment value is rounded 

(by CMS and by MA plans) to the lower 

dollar amount. Consistent with current 

practice, this application of the 

rounding rules does not prevent an MA 

plan from establishing a copayment that 

is not a $5 increment. For example, if 

CMS does not set a copayment limit for 

a service category subject to paragraph 

(f)(6)(iii), an MA organization may 

choose to establish a $13 copayment if, 

in following the rules in paragraph 

(f)(6)(ii) and (f)(6)(iii), the calculations 

of an actuarially equivalent value to the 

applicable coinsurance standard 

equaled $12.52, rounded to $15. This 

ensures consistency in how actuarially 

equivalent copayment values are 

calculated using the rounding rules 

while maintaining flexibility for MA 

organizations to establish copayments 

below the actuarially equivalent value. 

In comparison, if CMS had the same 

result in calculating an actuarially 

equivalent copayment for a service 

category subject to paragraph (f)(6)(iii), 

$12.52, rounded to $15, we would issue 

the copayment limit at the $5 

increment, or $15. Second, we added 

references to paragraphs (f)(6)(iv) and 

(j)(1)(i)(C) to paragraph (f)(6)(ii)(B) to 

clarify which regulations are subject to 

the inpatient hospital cost sharing 

rounding rules. Third, in making these 

changes we added introductory 

language to paragraph (f)(6)(ii) and 

reorganized (f)(6)(ii) for clarity. As a 

result, the proposed requirement in 

paragraph (f)(6)(ii)(B) that the 

actuarially equivalent copayment value 

is rounded down to the lower dollar 

amount is finalized generally as 

proposed in paragraph (f)(6)(ii)(C). 

Fourth, as discussed in a prior response 

to comment in this section, new 

paragraph (f)(7) codifies the use of 

actuarial principles and practices and 

the requirements to calculate actuarially 

equivalent copayment limits. To ensure 

these requirements are applied 

consistently with the proposed 

rounding rules, § 422.100(f)(7)(ii)(E) 

refers to paragraph (f)(6)(ii) as part of the 

steps for CMS calculation of copayment 

limits. Fifth, as discussed in section 

II.B.5.b. of this FC, we are adopting a 

transition schedule for certain cost 

sharing standards; we are finalizing a 

reference to that schedule (which is in 

paragraph (f)(8)) in paragraph (f)(6)(ii) to 

clarify that the rounding rules will be 

used for those transitional copayment 

limits as well. 

Comment: A commenter encouraged 

CMS to codify an explicit requirement 

for MA organizations to demonstrate 

compliance with the regulation 

standards proposed at § 422.100(f)(6) by 

providing CMS with information 

substantiating their contracted rates for 

professional services and their cost 

sharing limits for basic benefits. 

Response: CMS thanks the commenter 

for their feedback. In this FC, we are not 

adopting an explicit regulatory 

provision to require MA organizations 

to demonstrate compliance with the 

regulation standards in § 422.100(f)(6), 

as we believe that CMS’s bid review 

processes will generally address this 

and that CMS’s oversight and 

monitoring authority would support any 

requests for information and necessary 

documentation from MA organizations. 

Compliance program, record keeping, 

audit and access requirements in 

§§ 422.503 and 422.504, in conjunction 

with longstanding bid review policy, 

adequately establish CMS’s authority to 

investigate compliance with the MA 

program and benefit requirements 

adopted in this FC. In addition, the 

regulation at § 422.254(b)(5), (c)(5), and 

(c)(6) requires that MA organization bid 

submissions for coordinated care plans, 

including regional MA plans and 

specialized MA plans for special needs 

beneficiaries (described at 

§ 422.4(a)(1)(iv)), and for MA private 

fee-for-service plans must be prepared 

in accordance with CMS actuarial 

guidelines based on generally accepted 

actuarial principles and must include 

the actuarial bases of the bid, a 

description of cost sharing applicable 

under the plan, and the actuarial value 

of the cost sharing. If we find, through 

future bid review or general oversight 

activities, that greater clarification in 

regulatory text in needed, we will 

pursue future rulemaking. 

In general, MA organizations are 

required to provide CMS with 

information that demonstrates how their 

bid and plan design (including 

coinsurance or copayment amounts) 

satisfy the regulatory requirements, if 

necessary as part of CMS’s bid review 

process or at any time during the year 

for general oversight activities. For 

example, for MA plans that choose to 

establish a coinsurance cost sharing for 

inpatient hospital scenarios or SNF 

service categories, CMS will typically 

use plan information to evaluate, 

consistent with current practice, 

whether the coinsurance exceeds the 

applicable copayment dollar amounts 

calculated and issued for that contract 

year. This evaluation is based on 

actuarial information and analyses. 

b. Range of Cost Sharing Limits for 

Certain Outpatient and Professional 

Services (§ 422.100(f)(6)(iii) and (f)(8)) 

Comment: Comments were mixed 

regarding CMS’s proposal to codify the 

methodology used to set the MA cost 

sharing standards for professional 

services and to establish a range of cost 

sharing limits for benefits furnished on 

an in-network basis, based upon the 

type of MOOP limit established by the 

MA plan. A commenter supported 

differentiating cost sharing limits based 

on the plan’s MOOP limit and requested 

CMS better differentiate the maximum 


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copayment limits between the voluntary 

and mandatory MOOP limits for 

primary care physician (PCP), physician 

specialist, emergency/post-stabilization 

services, and home health services. The 

commenter stated that currently, the 

maximum copayments for the ‘‘PCP’’ 

and ‘‘physician specialist’’ service 

categories are the same under the 

voluntary and mandatory MOOP limits 

set by CMS. The commenter stated that 

CMS should make greater differentiation 

in the cost sharing levels for service 

categories for the various MOOP limits, 

especially for those services that have 

higher utilization rates (which will 

increase the actuarial value of the 

copayments). The commenter stated that 

these changes would make it more 

likely that an MA plan would choose to 

offer the voluntary MOOP limit. 

Response: We appreciate the 

commenters’ feedback on our proposal 

at § 422.100(f)(6)(iii). We do not believe 

that it is necessary to finalize a more 

significant difference between the cost 

sharing levels permitted for each MOOP 

type in paragraph (f)(6)(iii). We 

proposed a 10-percentage point 

difference between the coinsurance 

levels based on the type of MOOP limit 

and thus sufficiently differentiated cost 

sharing limits for these categories 

without creating potentially 

discriminatory cost sharing for 

beneficiaries. As discussed in the 

February 2020 proposed rule, we 

arrived at the specified percentages of 

30 percent, 40 percent, and 50 percent 

for the underlying benefit, tied to use of 

the mandatory (highest), intermediate, 

and lower MOOP limits, by assigning 

the highest coinsurance amount that we 

believe is not discriminatory (50 

percent) to the lowest MOOP limit; and 

30 percent coinsurance (which is most 

closely related to copayment limits from 

prior contract years) to the mandatory 

MOOP limit, to balance the MA plan’s 

incentives to use each type of MOOP 

limit. Then, we established the 

midpoint (40 percent) for the 

intermediate MOOP limit. By 

establishing these limits to range from 

the highest amount, we will permit cost 

sharing amounts the MA market is used 

to from prior contract years for several 

service categories. Our intention is to 

balance several goals: (1) Protect 

beneficiaries from discriminatory cost 

sharing amounts; (2) avoid disruptive 

changes in MA plan designs; and (3) 

create cost sharing standards that would 

result in a clear increase in MA 

organization financial responsibility for 

professional services if the MA plan 

establishes a mandatory MOOP limit 

rather than a lower or intermediate 

MOOP limit. 

We agree with the commenter that 

increasing the number of service 

categories for which cost sharing limits 

can be differentiated by the type of 

MOOP limit from prior contract years 

may be an incentive for MA 

organizations to offer lower MOOP 

limits. We also believe differentiating 

these cost sharing limits may encourage 

innovative plan designs, such as those 

that are trying to improve health care 

outcomes. This may include changing 

cost sharing for certain service 

categories to encourage enrollees to seek 

preventive health care or high-value 

services. CMS supports value-based 

insurance design and expects that 

providing increased flexibility in plan 

designs, within non-discriminatory cost 

sharing ranges, will encourage 

competition and innovation by MA 

plans. However, we do not believe that 

a greater number of differentiated 

service categories would necessarily 

increase the actuarial value of cost 

sharing for that plan’s benefit design. 

The actuarial value of the plan’s cost 

sharing depends on the given benefit 

compared to other benefits. If a service 

type with a lower amount of cost 

sharing has a high rate of utilization, 

then that would likely lower the plan’s 

actuarial value of cost sharing. For 

example, if an MA plan establishes a 

mandatory MOOP limit which has 

lower cost sharing standard amounts 

compared to prior contract years across 

a number of service categories then the 

plan may have a lower actuarial value 

of cost sharing. Finally, MA 

organizations establish cost sharing 

amounts based on a number of factors 

such as competition, provider contracts, 

and needs of beneficiaries in their 

service area. While CMS can set cost 

sharing requirements to discourage 

discrimination against beneficiaries 

with high health care needs and 

encourage MA plans to lower the 

financial burden on enrollees, we do not 

believe CMS should dictate identical 

cost sharing for all basic benefits for all 

MA plans and we did not propose to do 

so in this rulemaking. 

Comment: A commenter stated 

doctors of optometry may be considered 

a ‘‘physician specialty’’ or a ‘‘primary 

care physician’’ for the purpose of the 

cost sharing limits set in this FC, but 

noted their preference was the primary 

care category to ensure the lower cost 

sharing limit would apply to prevent 

financial barriers hindering beneficiary 

access to needed eye care. This 

commenter explained that doctors of 

optometry play an important role in 

patient care with respect to general 

health and the management of systemic 

diseases with ocular manifestations and 

as such, provide primary care. 

Response: For purposes of the PBP, 

the longstanding practice has grouped 

doctors of optometry (namely, 

specialties of ophthalmology and 

optometry) with physician specialties 

and CMS expects to maintain this 

approach in future years. In addition, 

applying the copayment limits 

calculated for the ‘‘physician specialist’’ 

service category to doctors of optometry 

is consistent with the current network 

adequacy requirements (in that doctors 

of optometry are not used to determine 

if a plan’s provider network for primary 

care services is sufficient). As a result, 

we are not implementing the 

recommendation that we characterize 

optometry services as primary care 

services in this FC for purposes of 

applying § 422.100(f)(6)(iii). We note the 

current (and longstanding) service 

category description of primary care 

services in the PBP is as follows: 

Internal Medicine, General Practice, or 

Family Practice Services provided by a 

medical doctor or a doctor of osteopathy: 

General Physicians’ services are the 

professional services performed by a 

physician for a patient including diagnosis, 

therapy, surgery, consultation, and care plan 

oversight. The services must be rendered by 

the physician or incident to physician’s 

services. A service may be considered to be 

a physician’s service where the physician 

either examines the patient in person or is 

able to visualize some aspect of the patient’s 

condition without the interposition of a third 

person’s judgment. Direct visualization 

would be possible by means of X-rays, 

electrocardiogram and electroencephalogram 

tapes, tissue samples, telecommunications, 

etc. References: 42 CFR 410.10 and 410.26 

and the Medicare Benefit Policy Manual, 

Chapter 15. 

Original Medicare does not currently 

cover eye exams furnished by 

optometrists. However, original 

Medicare does cover some other 

services that may be provided by 

optometrists, such as screening for 

glaucoma. 

We may change the list of provider 

specialties that are used to calculate 

actuarially equivalent copayments in 

future years and would generally 

describe such a change in the annual 

guidance required by § 422.100(f)(7)(iii). 

For example, in this FC, we are 

modifying the data used to calculate the 

final contract year 2023 copayment 

limits for the ‘‘primary care physician’’ 

and ‘‘physician specialist’’ service 

categories to better align the applicable 

provider specialties for these categories 

with network adequacy standards and 

typical standards of care. In the 

February 2020 proposed rule, we 


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37See the HSD reference file for the: https://

www.cms.gov/medicare/medicare-advantage/ 

medicareadvantageapps. In the June 2020 final rule 

(85 FR 33853), CMS identified the types of 

providers considered primary care providers by 

reference to the HSD reference file as well. 

described using the following provider 

specialty types to calculate a copayment 

limit for the ‘‘physician specialist’’ and 

‘‘primary care physician’’ service 

categories: 

• Physician Specialist: Cardiology; 

Geriatrics; Gastroenterology; 

Nephrology; and Otolaryngology 

(ENT) 

• Primary Care Physician: Family 

Practice; General Practice; and 

Internal Medicine 

These groupings of provider specialties 

do not exactly match the list of provider 

specialties that are used to determine 

provider network adequacy for the same 

professional service categories. 

Currently, network adequacy 

requirements only allow MA plans to 

list credentialed providers for the 

following specialties to count towards 

meeting our standards for primary care 

providers: General Practice, Family 

Practice, Internal Medicine, and 

Geriatrics.37 Considering how provider 

or facility-specialty types may change 

for a network adequacy evaluation 

annually (as discussed in the January 

2021 Final Rule and codified in 

§ 422.116(b)(3)), we believe maintaining 

a certain level of flexibility to add or 

remove a provider specialty type in the 

calculations of actuarially equivalent 

copayment limits will ensure 

copayment limits reflect the providers 

the cost sharing is applied to. CMS’s 

current position is that the geriatrics 

provider type furnishes services that we 

would consider as primary care rather 

than a specialist and geriatricians are 

responsible for the whole patient. 

Usually, specialists treat a limited 

disease area, often with a limited patient 

population. In addition, provider 

specialists often have equipment and 

perform procedures that support 

diagnoses in the disease domain in 

which they specialize. In general, 

provider specialists are not responsible 

for general preventive services and 

screening. As a result of these 

considerations, we are using the 

following provider specialty types to 

calculate the final contract year 2023 

copayment limits for the ‘‘physician 

specialist’’ and ‘‘primary care 

physician’’ service categories in this FC: 

• Physician Specialist: Cardiology; 

Gastroenterology; Nephrology; 

Otolaryngology (ENT) 

• Primary Care Physician: Family 

Practice; General Practice; Internal 

Medicine; Geriatrics 

Although we are including flexibility to 

use a slightly modified list of provider 

specialties, the rules in this FC for the 

process and methodology for calculation 

of the actuarially equivalent copayment 

limits, which are generally as proposed, 

will continue to apply in future years. 

The final contract year 2023 in-network 

copayment limits for the ‘‘primary care 

physician’’ and ‘‘physician specialist’’ 

service categories in Table 28 reflect this 

update as well as the changes in 

implementing the range of cost sharing 

limits proposed, as discussed in a 

subsequent response to comment in this 

section, and use of contract year 2023 

Medicare FFS data projections (based on 

2017–2021 Medicare FFS data). Finally, 

moving the ‘‘geriatrics’’ provider 

specialty to inform the calculations of 

an actuarially equivalent copayment for 

the ‘‘primary care physician’’ service 

category did not, in itself, produce 

significant changes in comparison to the 

illustrative copayment limits for both of 

the ‘‘primary care physician’’ and 

‘‘physician specialist’’ service categories 

from the February 2020 proposed rule. 

If we had used these different lists of 

provider specialties to calculate the 

illustrative copayment limits provided 

in Table 5 in the February 2020 

proposed rule, the only difference in 

those copayment amounts would have 

been the illustrative copayment for the 

‘‘physician specialist’’ service category 

for the lower MOOP limit; using this 

different list of provider specialties, the 

actuarially equivalent copayment value 

to 50 percent coinsurance for the lower 

MOOP limit would have increased from 

$80 to $85 after application of the 

proposed rounding rules in that table. 

Comment: A commenter requested 

that CMS implement the proposal of 

establishing a range of cost sharing 

limits for professional services (in 

§ 422.100(f)(6)(iii)) over several years to 

reduce disruption in the market and for 

beneficiaries. This commenter noted 

that because MA plans are still going to 

be required to satisfy the Total 

Beneficiary Cost (TBC) standard, 

requiring plans with a mandatory 

MOOP limit to meet these new cost 

sharing standards in a single year could 

prove to be very disruptive. The 

commenter stated that MA plans will be 

forced to make drastic changes on short 

notice, which, in some cases, would 

cause some plans to be non-renewed. In 

addition, the commenter provided an 

example of a schedule to implement a 

multiyear phase-in of the policy in 

paragraph (f)(6)(iii). This example, 

illustrating a multiyear transition to 

reach the proposed range of cost sharing 

by the type of MOOP limit by 2025, is 

presented in its entirety as Table 12, 

‘‘Example of a Multiyear Phase-in for 

Cost Sharing Limits Based on the MOOP 

Type.’’ In the commenter’s example, the 

lower MOOP retains the 50 percent cost 

sharing limit we currently use (and 

proposed for MA plans that use the 

lower MOOP limit) while the cost 

sharing limit tied to the mandatory 

MOOP limit decreases from the current 

level of 50 percent by 5 percentage 

points annually until it reaches 30 

percent; under this example, the cost 

sharing limit tied to the intermediate 

MOOP limit is calculated as the 

percentage that is the mid-point of the 

other two MOOP limits, which is 

consistent with our proposed approach 

for MA plans that use the intermediate 

MOOP limit. 

As referenced in other comment 

summaries in this section and in 

sections II.B.5.d and e. of this FC, 

several commenters were also 

concerned about the proposed level of 

allowable cost sharing overall or for 

specific service categories (including the 

‘‘dialysis services’’ and ‘‘physical 

therapy and speech-language 

pathology’’ service categories). For the 

‘‘physical therapy and speech-language 

pathology’’ service category, a 

commenter on that topic was similarly 

concerned about the projected increase 

in the copayment limit from contract 

year 2021 limits being unreasonably 

high for enrollees. 


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Response: We appreciate the concerns 

about providing time for MA 

organizations to adjust to the new cost 

sharing limits to minimize potential 

market and beneficiary disruption and 

agree that a transition over several years 

to the new cost sharing limits is 

appropriate. In this response we explain 

the changes CMS is making to address 

the commenter’s concerns and 

additional changes that impact our 

proposals in § 422.100(f)(6)(iii) in order 

to comprehensively present the 

finalized requirements. As discussed in 

section II.B.5.a. of this FC in relation to 

new § 422.100(f)(7), we are 

consolidating and clarifying the data 

and requirements CMS uses to calculate 

copayment limits for service categories 

subject to § 422.100(f)(6)(i), (f)(6)(iii), 

and (j)(1). As a result, we are finalizing 

proposed paragraph (f)(6)(iii) with 

modifications to incorporate references 

to paragraph (f)(7) as well to include 

new transition provisions. 

We proposed and are finalizing that 

the cost sharing for in-network basic 

benefits that are professional services 

must not exceed specific coinsurance 

thresholds and actuarially equivalent 

copayment values, with those cost 

sharing thresholds tied to the type of 

MOOP limit used by the MA plan; in 

addition, the MA plan must not pay less 

than an identified percentage of the 

estimated total MA plan financial 

liability for these basic benefits for that 

contract year. We are finalizing a 

schedule for implementing the use of 

the 30 percent, 40 percent, and 50 

percent cost sharing limits for use of the 

mandatory, intermediate and lower 

MOOP limits; that transition will be 

from 2023 through 2026 and is finalized 

in paragraphs (f)(6)(iii)(C) through (F). 

We are also finalizing an additional 

provision in new paragraph (f)(8) to 

limit increases to copayment limits 

calculated by CMS over the same 

transition period from 2023 to 2026. 

New paragraph (f)(8) will control how 

CMS calculates and issues copayment 

limits in order to transition from 

contract year 2022 copayment limits to 

values that are actuarially equivalent to 

the range of coinsurance limits that are 

finalized in paragraph (f)(6)(iii)(F) for 

contract year 2026. When CMS does not 

calculate the copayment limit for a 

professional service category, MA 

organizations must follow the transition 

schedule in paragraphs (f)(6)(iii)(C) 

through (F) for both coinsurance and 

copayments. In addition, we are 

finalizing a provision to more clearly 

address in paragraphs (f)(7) and 

(f)(8)(ii)(D) the specific methodology 

CMS will apply, in using the data 

described in proposed paragraph 

(f)(6)(iii)(B), to calculate copayment 

limits. The new provisions provide 

more detail, which we believe was 

implicit in the descriptions in the 

preamble of the February 2020 proposed 

rule but is better stated in the regulation 

text. Under this FC, the cost sharing 

limits set in paragraph (f)(6)(iii) are 

subject to new paragraph (f)(7). Overall, 

the changes from our February 2020 

proposed rule regarding the limits on 

cost sharing for professional services 

that are basic benefits are to include 

transition provisions (for both 

coinsurance limits and copayment 

limits) and to more explicitly address 

the data and standards used to calculate 

values for copayment limits that are 

actuarially equivalent to the 

coinsurance limits. 

We are finalizing 

§ 422.100(f)(6)(iii)(A) substantially as 

proposed to prohibit MA plans from 

having cost sharing for in-network basic 

benefits that exceeds the limits in 

paragraph (f)(6)(iii) for the MOOP limit 

established by the plan, with a 

correction to reference paragraph 

(f)(6)(iii) as intended. We note this 

change does not affect how the rounding 

rules in paragraph (f)(6)(ii) will be 

applied to copayments for professional 

services. (Section II.B.5.a. of this FC 

discusses how the rounding rules are 

being finalized substantially as 

proposed.) Proposed paragraph 

(f)(6)(iii)(B) identified the data that CMS 

would use when calculating the cost 

sharing limits for in-network basic 

benefits that are professional services 

but as finalized specifies the rules for 

calculating copayment limits. In 

revising paragraph (f)(6)(iii)(B) to be 

subject to paragraph (f)(7), the standard 

for the data that CMS may use is now 

addressed in paragraphs (f)(7)(ii)(A) and 

(B). Specifically, CMS will use Medicare 

FFS data projections (as defined in 

paragraph (f)(4)(i) and discussed in 

detail in section II.A.4.b. of this FC) 

which includes cost and utilization data 

from beneficiaries with and without 

ESRD. In addition, CMS may use 

available MA encounter data if available 

and where appropriate (which is 

codified in paragraph (f)(7)(ii)(B)). 

While we only proposed use of MA 

encounter data in calculating cost 

sharing for inpatient services, we 

believe that it is appropriate to also 

permit use of MA encounter data for 

calculating other cost sharing in order to 

consider utilization differences between 

Medicare FFS beneficiaries and MA 

enrollees; these utilization differences 

may be useful to reach an amount that 

most closely reflects an actuarially 

equivalent copayment to the applicable 

coinsurance percentage for the service 

category and beneficiary population. For 

example, if the utilization of different 

physician types (such as, physical 

therapists compared to speech-language 

pathologists) was significantly different 

between Medicare FFS and MA 

encounter data, we may consider 

weighting Medicare FFS cost data by 

utilization reflected in available MA 

encounter data for the relevant facility 

and provider types in order to reach a 

copayment value that is most closely 

actuarially equivalent to what MA 

enrollees may typically experience at 

the applicable coinsurance level for the 

type of MOOP limit. CMS did not apply 

any MA encounter utilization data in 

our calculations to reach the final 

contract year 2023 copayment limits 

shown in Table 28. However, we believe 

that this is an important flexibility for 

ensuring that copayment limits are 

actuarially equivalent to the maximum 

coinsurance percentages set in the 

regulation. In addition, using MA 

encounter utilization data in this 

manner may be one of the topics on 

which we could solicit comment 

through the subregulatory process 

finalized in paragraph (f)(7)(iii) for 

contract year 2024 and future years. 

Finally, use of MA encounter data will 

also be limited to the encounter data 


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TABLE 12: EXAMPLE OF AMULTIYEARPHASE-INFORCOST SHARING 

LIMTS BASED ON THE MOOP TYPE 

MOOPLevel 2022 2023 2024 2025 

Lower 50% 50% 50% 50% 

Intermediate 47.5% 45% 42.5% 40% 

Mandato 45% 40% 35% 30% 
Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22351 

that is available at the time of the 

necessary analyses and projections and 

appropriate for that use. Per 

§ 422.310(g), MA organizations 

generally have until the January 2 years 

after the year in which an encounter 

occurred to submit all encounter data. 

As a result, this timeframe means that 

CMS does not always have complete 

years of MA encounter data that is as 

recent as the Medicare FFS claims data 

CMS will use in calculating MOOP and 

cost sharing limits. We will consider 

factors like this when deciding whether 

and when it is appropriate to use MA 

encounter data and whether sufficient 

MA encounter data is available to be 

used in calculating copayment limits 

under this FC. 

CMS is also modifying the cost 

sharing regulations to clarify that the 

cost sharing limits may be a coinsurance 

limit or a copayment limit that is an 

actuarially equivalent dollar amount to 

the applicable coinsurance limit (subject 

to § 422.100(f)(7) and (8)) and clarify 

that the copayment limits may be 

calculated by CMS, or, if CMS does not 

calculate a copayment limit, the MA 

plan must establish a copayment that 

does not exceed the actuarially 

equivalent dollar amount to the 

applicable coinsurance limit. This is 

also discussed in section II.B.5.a. of this 

FC in relation to finalized paragraph 

(f)(6)(i). To be clear on this point in 

relation to cost sharing limits for 

professional services, we are finalizing 

new text in paragraph (f)(6)(iii)(B). We 

also clarify that where CMS does not 

calculate a copayment limit, finalized 

paragraph (f)(6)(iii)(B) nonetheless 

requires that the copayment amount 

used by the MA plan not exceed the 

actuarial equivalent of the coinsurance 

percentage, based on the estimated total 

MA plan financial liability for that 

benefit and contract year. While the 

proposed regulation text stated an 

absolute requirement in paragraphs 

(f)(6)(iii)(C)(1) through (3) that MA plans 

must pay not less than the specified 

percentage, we believe that additional 

clarity on this point improves the 

regulation. Under this FC, the 

copayment limits calculated by CMS 

take precedence but CMS does not 

intend to calculate and issue copayment 

limits for every imaginable benefit 

covered by Parts A and B. As discussed 

in section II.B.5.a. of this FC, new 

paragraphs (f)(7)(i) and (ii) codify how 

CMS uses Medicare FFS data 

projections in accordance with generally 

accepted actuarial principles and 

practices when calculating actuarially 

equivalent copayment values when 

multiple approaches are available. 

Referencing paragraph (f)(7) in 

paragraph (f)(6)(iii)(B) makes clear in 

the regulation that: (1) These standards 

apply to the copayment limits CMS 

calculates for professional services for 

contract year 2023 and subsequent 

years; and (2) the copayment limits will 

be updated annually based on the 

Medicare FFS data projections. In 

addition, the reference to paragraph 

(f)(8) in paragraph (f)(6)(iii)(B) applies 

the limit on increases to copayment 

limits and the copayment transition for 

how CMS calculates copayment limits 

for these professional services 

(discussed in more detail subsequently 

in this response). Paragraphs (f)(4)(i), 

(f)(6)(iii)(B), (f)(7), and (f)(8) together 

describe the Medicare FFS data 

projections and the process CMS uses in 

calculating cost sharing limits for 

professional services. Further, the 

process of identifying the data to be 

used will be subject to new paragraph 

(f)(7)(i) and its requirement to use 

actuarial principles and practices in 

calculating copayment limits under 

paragraphs (f) and (j). 

As discussed in section II.B.5.a. of 

this FC, in relation to new 

§ 422.100(f)(7)(i) and (ii), CMS intends 

to only issue and maintain copayment 

limits for service categories subject to 

§ 422.100(f)(6) and (j)(1) when: (1) An 

actuarially equivalent copayment can be 

calculated using Medicare FFS data 

projections available to CMS and using 

generally accepted actuarial principles 

and practices; and (2) CMS believes 

calculating such a copayment limit is 

appropriate to carry out program 

purposes, including setting copayment 

limits that most closely reflect an 

actuarially equivalent copayment for the 

benefit and beneficiary population, 

protecting against discriminatory cost 

sharing, and avoiding unnecessary 

fluctuations in cost sharing that may 

confuse beneficiaries. Where CMS does 

not calculate the copayment limit, MA 

organizations must establish copayment 

amounts that comply with paragraph 

(f)(6)(iii) based on their estimated total 

MA plan financial liability for the 

benefit for that contract year. In doing 

so, MA organizations may use their data 

about cost and utilization of the relevant 

services in the plan (or segment, if 

applicable) and must also use generally 

accepted actuarial principles and 

practices. A decision by CMS not to 

calculate a copayment limit applying 

the rules in paragraphs (f)(6), (7), and (8) 

for a particular year will not prevent 

CMS from calculating and issuing the 

copayment limit in future years. 

Because paragraph (f)(6)(iii) 

purposefully does not include a 

complete list of professional services 

that are basic benefits, but is rather 

representative of examples of 

professional services, CMS may need to 

request supportive documentation from 

MA organizations regarding various 

covered services in cases where an MA 

plan has calculated an actuarially 

equivalent value to establish the 

copayment for a particular service. We 

note instructional guidance is provided 

in section II.B.5.a. of this FC on how 

MA organizations can prepare 

supporting documentation for 

copayments subject to paragraph 

(f)(6)(iii). Next, we discuss the 

commenter’s specific recommendation 

to conduct a multiyear transition to 

reach the proposed range of cost sharing 

by the type of MOOP limit by contract 

year 2025. 

We agree with the commenters that 

CMS should minimize potential market 

and beneficiary disruption as we shift 

away from cost sharing limits that have 

not been updated in recent years to the 

cost sharing limits we proposed and are 

finalizing. In addition, as we considered 

our proposal to make annual changes to 

the copayment limits for professional 

services based on updated Medicare 

FFS data projections, we examined how 

other policies proposed and finalized in 

§ 422.100(f)(4) through (f)(6) include 

protections to guard against volatility 

and significant changes from one year to 

the next. For example, we structured the 

proposals in sections VI.A. and B. of the 

February 2020 proposed rule to 

transition changes, such as the proposed 

multiyear incorporation of ESRD costs 

into the methodology that CMS uses to 

calculate MOOP and inpatient hospital 

cost sharing limits. We also proposed, 

and are finalizing with modifications (as 

discussed in section II.A. of this FC), 

guardrails in paragraph (f)(4)(iv) and 

(f)(4)(v) to limit the amount of change 

from one year to the next in the MOOP 

limits. CMS’s goal is to provide MA 

organizations the flexibility to design 

stable benefit structures from 1 year to 

the next as well as ensure that enrollee 

cost sharing does not discriminate 

against beneficiaries with high health 

care needs. We believe that having 

MOOP and cost sharing standards that 

are predictable and stable from 1 year to 

the next supports this goal. To ensure 

that this goal is met in connection with 

the cost sharing polices as well, we 

must also take into account the change 

from the current (contract years 2021 

and 2022) cost sharing limits, 

particularly copayment limits, to cost 

sharing limits that will be set under this 

rule. 

We developed our proposal to create 

reasonable differences (which took into 


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38Loewenstein G, Friedman JY, McGill B, Ahmad 

S, Linck S, Sinkula S, Beshears J, J.Choi J, Kolstad 

J, Laibson D, Madrian BC, List JA, Volpp KG. 

‘‘Consumers’ misunderstanding of health 

insurance’’. Journal of Health Economics 

2013;32(5):850–862. Retrieved from: https://

scholar.harvard.edu/laibson/publications/ 

consumers-misunderstanding-health-insurance. 

consideration the effect of the $5 

increment rounding proposal for 

professional service categories) in the 

cost sharing permitted for different 

types of MOOP limit in order to create 

meaningful incentives for MA 

organizations to offer plans with lower 

MOOP limits. However, some of the 

contract year 2022 copayment limits 

have been in place for a number of years 

and were set to prohibit discriminatory 

cost sharing by striking a balance 

between limiting beneficiary out-ofpocket costs and the potential impact to 

plan design and costs, with the goal of 

ensuring beneficiary access to affordable 

and sustainable benefit packages. In the 

February 2020 proposed rule, we noted 

that we chose to assign actuarially 

equivalent copayments to 30 percent 

coinsurance for MA plans that establish 

a mandatory MOOP limit in order to be 

closer to the limits in the CY 2020 Call 

Letter for professional services. While 

MA plans (regardless of the type of 

MOOP limit) could have established a 

coinsurance up to 50 percent for 

professional services in contract year 

2020, the copayment limits for the same 

professional service categories were 

approximately equal to 30 percent 

coinsurance for several of the 

professional service categories (based on 

the Medicare FFS data projections 

available at the time of the February 

2020 proposed rule). As a result, while 

our proposal was designed to keep some 

copayment limits aligned with prior 

years by using a copayment limit that 

would be actuarially equivalent to 30 

percent coinsurance, changing the 

coinsurance limit from 50 percent to 30 

percent in one year represented a more 

significant change for MA plans that 

establish a mandatory MOOP limit. 

While MA plans may consider 

establishing lower MOOP limits based 

on the cost sharing flexibilities (which 

maintain a 50 percent coinsurance limit 

from prior years), we recognize that 

most plans currently utilize a 

mandatory MOOP limit and 

organizations may need time to modify 

provider contracts and their plan 

designs to accommodate a lower MOOP 

limit or a 20 percent increase in MA 

plan financial liability across several 

professional service categories. 

Our proposed methodology to 

calculate copayment limits based on 

coinsurance percentages that are unique 

to the plan’s MOOP limit type and the 

most recent Medicare FFS data 

projections available was, in effect, a 

proposal to recalibrate and update 

current copayment limits, using a 

methodology based on long-standing 

CMS policy with some changes. As a 

result, some of the illustrative 

copayment limits in Table 5 (Illustrative 

Contract Year 2022 In-Network Service 

Category Cost Sharing Limits) from the 

February 2020 proposed rule 

represented substantial shifts from the 

2020 and 2021 contract years. For 

example, as referenced by some 

commenters, the illustrative $85 

copayment limit in the February 2020 

proposed rule for the ‘‘physical therapy 

and speech-language pathology’’ service 

category (for MA plans that establish a 

mandatory MOOP limit) represented an 

increase of $45 from the contract year 

2021 copayment limit for that service 

category. Similarly, the illustrative $80 

copayment limit for the ‘‘physician 

specialist’’ service category in the 

February 2020 proposed rule (for MA 

plans that establish a lower MOOP 

limit) reflected an increase of $50 from 

the copayment limit established for 

2021. These illustrative copayment 

limits (and the updated actuarially 

equivalent copayment values in Tables 

14A, 14B, and 15) show how some of 

the copayment limits from contract year 

2022 represent a significantly lower 

actuarially equivalent value than 50 

percent coinsurance based on more 

recent Medicare FFS data projections. 

Despite the increases, CMS expects 

annually updating, based on the most 

recent Medicare FFS data projections, 

these long-standing copayment limits to 

values that are actuarially equivalent to 

coinsurance percentages will be an 

improvement from prior years. If CMS 

maintained copayment limits at lower 

amounts, MA organizations would still 

be able to establish higher cost sharing 

using coinsurance structures. Adopting 

requirements where the cost sharing 

limits are more equalized for 

coinsurance and copayment structures 

will provide transparency and more 

uniformity into the actual costs 

beneficiaries may experience. 

We expect updating copayment limits 

to align with coinsurance limits based 

on the most recent Medicare FFS data 

projections will encourage the use of 

copayments in MA plan designs. We 

anticipate that MA organizations may 

take advantage of the increased 

flexibility for copayments resulting from 

this FC when establishing cost sharing 

for these service categories in future 

years. As stated in Chapter 4 of the 

MMCM, enrollees generally find 

copayment amounts more predictable 

and less confusing than coinsurance.38

This is the case because copayments are 

defined amounts while coinsurance may 

have a unique cost sharing amount 

based on the particular provider and the 

amount that provider has negotiated 

with the MA plan as payment. 

Specifically, beneficiaries can more 

easily predict potential out-of-pocket 

costs for their expected health care 

needs over the year before receiving the 

services if copayment designs are used. 

If coinsurance designs are used, 

beneficiaries cannot make as accurate 

predictions until the unique cost 

sharing amount for the providers and 

services they expect to utilize are 

known. Therefore, changes that 

encourage the use of copayments may 

support beneficiaries in understanding 

their expected out of pocket costs in MA 

plans. We recognize that MA 

organizations may need time to modify 

provider contracts and prepare for 

implementing a copayment structure if 

they have previously used coinsurance 

structures in their plan designs. 

Updating the copayment limits to reflect 

the most recently developed actuarially 

equivalent values will also address the 

advances in medical technology utilized 

by the professional specialties, the costs 

MA organizations are expected to incur 

in providing these services for MA 

enrollees, and appropriate adjustments 

for medical inflation since the current 

copayment limits were last set. The cost 

sharing limits set in contract year 2022 

have been in place for a number of 

years, so we are cognizant that an 

immediate change to the coinsurance 

and copayment limits established in this 

FC could be disruptive for some service 

categories if there is not a transition 

period. But we still expect that a 

transition to actuarially equivalent 

values for copayment limits, calculated 

at the coinsurance percentages that 

provide a meaningful differentiation 

between the types of MOOP limits, will 

ultimately result in stable benefit 

packages by ensuring cost sharing limits 

are calculated following established 

actuarial methods, using the most recent 

Medicare FFS data projections available, 

and by keeping copayment limits 

aligned with coinsurance limits. 

In an effort to minimize the risk of 

disruptive changes and be responsive to 

commenters’ concerns, we are finalizing 

a process to transition from current 

practice to the range of coinsurance and 

actuarially equivalent copayment limits 

based on the type of MOOP limit 

proposed in § 422.100(f)(6)(iii). We 

expect that a multiyear implementation 

schedule could be helpful to: (1) 


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Mitigate potentially disruptive changes 

based on the substantial projected 

increases to certain service category 

copayment limits resulting from using 

recent Medicare FFS data projections; 

and (2) be responsive to commenter 

requests to provide time for MA 

organizations and enrollees to adjust to 

updated cost sharing limits. We thank 

the commenter for providing the 

example (reproduced in Table 12) of 

how CMS could conduct a multiyear 

phase in to implement a range of cost 

sharing standards by the type of MOOP 

limit for professional services. We 

believe this recommendation effectively 

addresses the concerns to provide time 

for MA organizations and enrollees to 

adjust to updated coinsurance limits, 

with edits based on the timing of this FC 

and to remain consistent with our 

rounding proposal in paragraph 

(f)(6)(ii). Specifically, in the 

commenter’s example the intermediate 

MOOP limit equaled 47.5 percent and 

42.5 percent for contract years 2022 and 

2024. As we proposed general rules to 

govern how CMS rounds down to the 

lower dollar amount in cases where the 

copayment limit is projected to be 

exactly between two increments in 

paragraph (f)(6)(ii)(B), we believe 

applying this methodology to the 

coinsurance limits (that are applied to 

the same service categories as those 

rounded copayment limits) is 

appropriate to continue protecting 

enrollees from higher costs by rounding 

down whenever possible. We also 

believe whole percentages would be 

more easily understood by beneficiaries 

and implemented by MA plans that use 

coinsurance structures. In addition, 

incorporating decimal point differences 

would necessitate changes to the 

existing PBP software while applying 

the rounding rules avoids such 

modifications. Further, CMS is delaying 

applicability of this provision to begin 

for contract year 2023 as discussed 

previously in section II.B.5. of this FC 

based on the timing of this FC, so we are 

not adopting the commenter’s specific 

recommendation as reflected in Table 

12. CMS is adopting a multiyear 

transition similar to the commenter’s 

recommendation, to transition 

coinsurance limits from the prior 50 

percent coinsurance standard. The 

transition schedule we are finalizing in 

§ 422.100(f)(6)(iii) is in Table 13, which 

includes the coinsurance limits used for 

contract year 2022 to provide context. 

To implement the multiyear transition 

in Table 13 to the proposed coinsurance 

limits, CMS is finalizing additional 

paragraphs at § 422.100(f)(6)(iii)(D)–(F). 

The substance of what was proposed at 

paragraph (f)(6)(iii)(C) is being finalized 

at paragraph (f)(6)(iii)(F) to govern the 

cost sharing that is permitted for MA 

plans using the different MOOP types 

beginning with coverage in 2026. 

Specifically, for contract year 2023, as 

finalized at paragraph (f)(6)(iii)(C), MA 

plans must not exceed the cost sharing 

limits for professional service categories 

as follows: 

• Mandatory MOOP limit: 45 percent 

coinsurance or an actuarially equivalent 

copayment value and the MA plan must 

not pay less than 55 percent of the 

estimated total MA plan financial 

liability for the benefit. 

• Intermediate MOOP limit: 47 

percent coinsurance or an actuarially 

equivalent copayment value and the MA 

plan must not pay less than 53 percent 

of the estimated total MA plan financial 

liability for the benefit. 

• Lower MOOP limit: 50 percent 

coinsurance or an actuarially equivalent 

copayment value and the MA plan must 

not pay less than 50 percent of the 

estimated total MA plan financial 

liability. 

As finalized, § 422.100(f)(6)(iii)(B) 

directs how copayment limits calculated 

by CMS take precedence over amounts 

MA organizations may calculate and 

applies to paragraphs (f)(6)(iii)(C)–(F). In 

addition, paragraph (f)(6)(iii)(C) no 

longer references paragraph (f)(6)(ii)(A) 

to reduce repetitive references to the 

rounding rules. All of the rounding 

rules under paragraph (f)(6)(ii) are 

applicable to the copayments calculated 

under paragraph (f)(6)(iii). Paragraphs 

(f)(6)(iii)(D) through (F) reflect the 

transition after contract year 2023, as 

included in Table 13. 

Although this transition schedule we 

are finalizing in § 422.100(f)(6)(iii)(C) 

through (F) addresses our concerns 

about sudden changes to the permitted 

level of coinsurance, it does not fully 

address our concerns about how the 

majority of copayment limits for 

professional service categories that 

apply for contract year 2022 (which are 

similar if not the same as copayment 

limits in earlier years) are roughly an 

actuarial equivalent value to, or less 

than, 30 percent coinsurance (as 

discussed previously in this response). 

We believe additional steps are 

necessary to smooth the transition from 

the copayment limits announced for 

contract year 2022 for MA plans that use 

copayment structures instead of 

coinsurance. For example, the contract 

year 2022 copayment limit for the 

‘‘primary care physician’’ service 

category was $35 (for both the voluntary 

and mandatory MOOP limits) and 

calculating copayment limits at 

actuarially equivalent values to 45, 47, 

and 50 percent for contract year 2023 

(using contract year 2023 Medicare FFS 

data projections based on 2017 to 2021 

Medicare FFS data), would increase the 

copayment limits to $50, $55, and $60 

for the mandatory, intermediate, and 

lower MOOP limits, respectively. Then, 

in applying the coinsurance percentages 

finalized for contract 2026, our 

projections show the limits would 

decrease over the subsequent years to 

$35, $45, and $60 (the $35 and $45 

amounts are the same as the illustrative 


lotter on DSK11XQN23PROD with RULES2ER14AP22.014</GPH>

TABLE 13: FINAL MULTIYEAR PHASE-IN FOR COINSURANCE LIMTS 

BASED ON THE MOOP TYPE FOR SERVICE CATEGORIES SUBJECT TO§ 

422.100(f)(6)(iii) 

MOOPType 2022 2023 2024 2025 2026 and Future 

Years 

Lower (Previously 50% 50% 50% 50% 50% 

"voluntarv") 

Intermediate NIA 47% 45% 42% 40% 

Mandatory 50% 45% 40% 35% 30% 
22354 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

copayment limits for this service 

category in Table 5: ‘‘Illustrative 

Contract Year 2022 In-Network Service 

Category Cost Sharing Limits’’ in the 

February 2020 proposed rule, while the 

illustrative copayment for the lower 

MOOP type was $55 based on 2015– 

2019 Medicare FFS data projections). 

This is because, as we discussed 

previously, contract year 2022 

copayment limits for most professional 

service categories do not reflect 

actuarially equivalent dollar amounts to 

50 percent coinsurance that are 

calculated using contract year 2023 

Medicare FFS data projections (based on 

2017–2021 Medicare FFS data). In 

comparison, the separate methodology 

we are finalizing in paragraph (f)(8) to 

transition copayment limits does not 

produce this type of fluctuation. For 

example, using the methodology in 

paragraph (f)(8) results in final contract 

year 2023 primary care copayment 

limits of $35, $40, and $40 for the 

mandatory, intermediate, and lower 

MOOP limits, respectively (as shown in 

Table 28). We prevent potentially 

disruptive changes to copayment limits 

during the transition of coinsurance 

limits if we use a separate transition for 

copayment limits. We next address new 

paragraph (f)(8) and the final rule policy 

to apply additional steps to transition 

the copayment limits that are subject to 

paragraph (f)(6)(iii). 

New § 422.100(f)(8) provides a 

multiyear transition for how CMS will 

change copayment limits from their 

current (contract year 2022) level to 

actuarially equivalent values for service 

categories subject to paragraph (f)(6)(iii) 

(and § 422.100(j)(1) as discussed in 

section II.B.5.e. of this FC). This 

transition will also be conducted over 

contract years 2023 through 2025, and 

result in CMS calculating, for contract 

year 2026 and subsequent years, 

copayment limits using actuarial 

equivalent values to the coinsurance 

percentages proposed for each MOOP 

type. However, this transition for (and 

cap on increases for) copayment limits 

in paragraph (f)(8) will not apply to the 

service categories subject to paragraph 

(f)(6)(i) and (f)(6)(iv). We proposed 

separate approaches for calculating the 

cost sharing limits for the services 

addressed in paragraph (f)(6)(i) and 

(f)(6)(iv). For contract year 2023, CMS 

calculated copayment limits for two 

service categories included in the PBP 

that are subject to paragraph (f)(6)(i) 

based on a review of the contract year 

2023 Medicare FFS data projections and 

consultation with the OACT. These two 

service categories are the ‘‘DME— 

Diabetic Shoes or Inserts’’ and ‘‘DME— 

Diabetes Monitoring Supplies’’ service 

categories (for the lower MOOP type). 

Because CMS has not previously issued 

copayment limits for these service 

categories for MA plans that establish a 

lower MOOP limit, a copayment 

transition is not necessary for the 

‘‘DME—Diabetic Shoes or Inserts’’ or the 

‘‘DME—Diabetes Monitoring Supplies’’ 

service categories or for the other 

service categories subject to paragraph 

(f)(6)(i) that did not have a specific 

copayment limit for contract year 2022. 

Our final policy for the service 

categories subject to paragraph (f)(6)(i) 

and (f)(6)(iv) is more comprehensively 

addressed in sections II.B.5.a. and c. of 

this FC. For contract year 2026 and 

subsequent years, when CMS calculates 

copayment limits for in-network 

professional services that are basic 

benefits, it will do so using the 

methodology in paragraphs (f)(6)(iii), 

(f)(7), and (j)(1) but not paragraph (f)(8). 

Section 422.100(f)(8) limits the 

amount of annual increase in 

copayment limits for a service category 

subject to § 422.100(f)(6)(iii) or (j)(1) 

during the transition. Specifically, 

paragraph (f)(8) requires CMS to set 

these copayment limits at an amount 

that is the lesser of: (1) An actuarially 

equivalent value to the applicable cost 

sharing standard (from paragraph 

(f)(6)(iii) or (j)(1)); or (2) the value 

resulting from the actuarially equivalent 

copayment transition in paragraph 

(f)(8)(ii) for that service category. In 

addition, these copayment limits are all 

rounded as provided in paragraph 

(f)(6)(ii). The copayment limits 

calculated using the formula in 

paragraph (f)(8)(ii) act as a cap on the 

copayment limits CMS sets following 

the requirements in paragraph 

(f)(6)(iii)(C) through (E). By ‘‘cap’’ here 

and in the regulation text, we mean that 

increases to the copayment limit will be 

governed by the formula in paragraph 

(f)(8)(ii). For example, if the value that 

is actuarially equivalent to 40 percent 

coinsurance (the coinsurance limit 

applicable for contract year 2024 for the 

mandatory MOOP type) for a given 

professional service category is $100 

when applying paragraph (f)(6)(iii)(D)(1) 

and the value is $75 when applying the 

formula in paragraph (f)(8)(ii), then the 

copayment limit set by CMS for that 

professional service in 2024 for MA 

plans that establish a mandatory MOOP 

amount is $75. In applying paragraphs 

(f)(6)(iii) and (f)(8), coinsurance and 

copayment limits are simultaneously 

transitioned to reach the proposed cost 

sharing limits by contract year 2026. As 

a result, the cost sharing limits 

(coinsurance and copayments) will be 

equalized (or actuarially equivalent to 

one another) by contract year 2026. 

Section 422.100(f)(8)(i) defines the 

main component of the formula used in 

paragraph (f)(8)(ii) for this transition of 

copayment limits: The actuarially 

equivalent copayment differential. The 

methodology under paragraph (f)(8)(ii) 

occurs over 4 years (beginning for 

contract year 2023) and is structured in 

a similar manner as proposed (and 

finalized) for ESRD costs (as discussed 

in sections II.A. and II.B.5.c. of this FC). 

Similar to the ESRD cost transition, this 

actuarially equivalent copayment 

transition factors in an increasing 

percentage of the difference between 

two values. The ‘‘actuarially equivalent 

copayment differential’’ is defined in 

paragraph (f)(8)(i) as: 

• For cost sharing at the mandatory 

and lower MOOP limits, the difference 

between, first, the copayment limit set 

for a plan benefit package service 

category based on the MOOP type for 

2022 and second, the projected 

actuarially equivalent copayment value 

for the same service category and MOOP 

type based on the coinsurance limits in 

§§ 422.100(f)(6)(iii) and (j)(1) that apply 

in 2026. 

• For cost sharing at the intermediate 

MOOP limit, the difference between, 

first, the copayment limit set for a plan 

benefit package service category based 

on the mandatory MOOP type for 2022 

and second, the projected actuarially 

equivalent copayment value for the 

same service category based on the 

coinsurance limits in 

§§ 422.100(f)(6)(iii) and (j)(1) that apply 

for the intermediate MOOP type in 

2026. 

Given the limited number of 

professional service categories in 

contract year 2022 that had cost sharing 

limits differentiated by the type of 

MOOP limit, the first value (for most 

comparisons) will be based on the same 

figure for each professional service 

category for which CMS may calculate 

copayment limits during the transition. 

The second value (the actuarially 

equivalent copayment to the applicable 

cost sharing standard) will be 

recalculated each year using updated 

Medicare FFS data projections, 

consistent with the standards in 

paragraph (f)(7). This definition of the 

‘‘actuarially equivalent copayment 

differential’’ means that each year, for 

each service category subject to 

paragraph (f)(6)(iii) to which paragraph 

(f)(8)(i) applies, CMS will calculate the 

difference between these two figures for 

each service category: 

• For the mandatory MOOP limit: 

The copayment limit set for contract 

year 2022 for the mandatory MOOP 


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limit and the copayment value that is 

actuarially equivalent to 30 percent (the 

coinsurance limit that applies in 2026) 

using the Medicare FFS data projections 

(updated each year) to reflect the costs 

of the contract year for which the 

copayment limit will apply. 

• For the intermediate MOOP limit: 

The copayment limit set for contract 

year 2022 for the mandatory MOOP 

limit and the copayment value that is 

actuarially equivalent to 40 percent (the 

coinsurance limit that applies in 2026) 

using the Medicare FFS data projections 

(updated each year) to reflect the costs 

of the contract year for which the 

copayment limit will apply. 

• For the lower MOOP limit: The 

copayment limit set for contract year 

2022 for the voluntary MOOP limit and 

the copayment value that is actuarially 

equivalent to 50 percent (the 

coinsurance limit that applies in 2026) 

using the Medicare FFS data projections 

(updated each year) to reflect the costs 

of the contract year for which the 

copayment limit will apply. 

In comparison, the ‘‘actuarially 

equivalent copayment differential’’ as 

defined and applied to service 

categories subject to § 422.100(j)(1) (as 

discussed in section II.B.5.e. of this FC) 

means that CMS will calculate, for all 

MOOP limits (unless otherwise 

specified in paragraph (j)(1)(i)), the 

difference between these two figures for 

each service category: (1) The 

copayment limit set for contract year 

2022 and (2) the copayment value that 

is actuarially equivalent to cost sharing 

under original Medicare that applies in 

2026 using the Medicare FFS data 

projections (updated each year) to 

reflect the costs of the contract year for 

which the copayment limit will apply. 

Assuming that there are no changes to 

cost sharing rules in original Medicare, 

this second figure will be an actuarially 

equivalent value to 20 percent 

coinsurance for most of the services 

listed in § 422.100(j)(1). 

As a result, the value of the 

‘‘actuarially equivalent copayment 

differential’’ is unique for each service 

category, MOOP type, and contract year. 

Tables 14A, 14B, and 15 illustrate how 

the actuarially equivalent copayment 

differential is calculated in row H in 

each table. 

Section 422.100(f)(8)(ii) provides the 

specific formula CMS will follow to 

complete the actuarially equivalent 

copayment transition. Specifically, CMS 

will add a percentage of the ‘‘actuarially 

equivalent copayment differential’’ 

identified for each service category, 

MOOP type, and contract year to the 

copayment limit set for contract year 

2022 for that service category. The 

percentage of the actuarially equivalent 

copayment differential that will be used 

each year is as follows: 

• Contract Year 2023: 25 percent. 

• Contract Year 2024: 50 percent. 

• Contract Year 2025: 75 percent. 

This means that for each year and 

service category subject to 

§ 422.100(f)(6)(iii) or (j)(1) to which 

(f)(8)(ii) applies, CMS will calculate the 

transitional value under paragraph (f)(8) 

that will be compared to what is 

actuarially equivalent to the applicable 

coinsurance limit for that contract year 

to determine which is the lesser value. 

Each year, CMS will use the most recent 

Medicare FFS data projections for the 

contract year to calculate these figures. 

Specifically, for contract year 2023, the 

formula to calculate the transitional 

value is as follows: 

• For the mandatory and lower 

MOOP limits: The respective copayment 

limits set for 2022 plus 25 percent of the 

actuarially equivalent copayment 

differential. 

• For the intermediate MOOP limit: 

The copayment limits set for 2022 for 

the mandatory MOOP limit plus 25 

percent of the actuarially equivalent 

copayment differential. 

By capping the copayment limits to 

the ‘‘lesser of’’ value for years 2023 

through 2025, we aim to smooth the 

transition from the current (contract 

year 2022) copayment limits to the 

copayment limits that will be based on 

the coinsurance levels permitted for 

each type of MOOP limit. The transition 

adopted at § 422.100(f)(8) applies only 

to copayment limits that were set for 

contract year 2022. If CMS calculates a 

copayment limit for a new service 

category (where a copayment limit was 

not set for contract year 2022) that 

would be subject to either 

§ 422.100(f)(6)(iii) or (j)(1) during this 

transition period, those copayment 

limits for those new service categories 

would be calculated at a value that is 

actuarially equivalent to the 

coinsurance percentage for the 

applicable MOOP limit under the rules 

in paragraphs (f)(6)(iii) and (j)(i). 

As referenced in section II.B.5.a. of 

this FC, CMS may calculate copayment 

limits for any category of professional 

services that are basic benefits for 2023 

and future years. Our intention is to 

calculate copayment limits for as many 

service categories as possible that are 

subject to § 422.100(f)(6)(i), (iii), and 

(j)(1). In this FC, we apply 

§ 422.100(f)(6)(iii) to calculate final 

contract year 2023 copayment limits for 

the same professional service categories 

for which CMS set copayment limits in 

contract year 2022. Tables 14A and 14B 

show the calculations of contract year 

2023 copayment limits for several 

professional services categories for MA 

plans that establish a mandatory MOOP 

type; CMS used contract year 2023 

Medicare FFS data projections (based on 

2017–2021 Medicare FFS data) to 

develop these tables. Calculations 

similar to those shown in Tables 14A 

and 14B was used to reach the final 

contract year 2023 copayment limits 

included in Table 28 for MA plans that 

establish a lower or intermediate MOOP 

type. As an example, calculations of the 

contract year 2023 copayment limits for 

the ‘‘cardiac rehabilitation’’ service 

category for all MOOP types is provided 

in Table 15. The calculation of a 

contract year 2023 copayment limit for 

the ‘‘Part B drugs—Other’’ service 

category is not included in Table 14A or 

14B, as CMS is not finalizing a range of 

coinsurance limits based on the type of 

MOOP limit for this service category, as 

discussed in section II.B.5.e. of this FC. 

Tables 14A and 14B illustrate how 

CMS applies the methodology in 

§ 422.100(f)(8) to calculate transitional 

copayment limits for service categories 

subject to paragraph (f)(6)(iii) for 

contract year 2023. The total projected 

Medicare FFS cost for each service 

category in Tables 14A, 14B, and 15 is 

based solely on Medicare FFS data (MA 

encounter data for the same time period 

was unavailable at the time of writing 

this FC). In addition, the total projected 

Medicare FFS cost reflects the lesser 

value (that is, when a median and 

weighted average amount were 

compared, we selected the lesser value) 

for the service categories in Tables 14A, 

14B, and 15 except for ‘‘urgently needed 

services’’. The total projected Medicare 

FFS weighted average and median 

amounts for ‘‘urgently needed services’’ 

for contract year 2023 are $134.00 and 

$113.00, respectively. The standard 

finalized in paragraph (f)(7)(ii)(C) 

authorizes CMS to select among 

different approaches to avoid 

unnecessary fluctuations in the 

copayment limit, so we choose to use 

the higher amount ($134.00) as the 

contract year 2023 total Medicare FFS 

projected cost for this service category. 

Specifically, using the higher $134.00 

weighted average to calculate contract 

year 2023 copayment limits for the 

‘‘urgently needed services’’ service 

category decreases the amount of change 

from the contract year 2022 copayment 

limit ($65 for both MOOP types) in 

comparison to the transitional 

copayment limits that would result from 

using the $113.00 median value. 

As shown in Tables 14A, 14B, and 15, 

CMS calculated an actuarially 

equivalent copayment to the 

coinsurance limit applicable for contract 


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22356 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

year 2023 (45 percent for the mandatory 

MOOP limit, per paragraph (f)(6)(iii)(C)) 

for each service category by using the 

total projected Medicare FFS cost (in 

row B from Tables 14A, 14B, and 15). 

CMS calculated the transitional 

copayment value using the methodology 

finalized in paragraph (f)(8)(ii). As 

shown in Tables 14A and 14B, we 

calculated the actuarially equivalent 

copayment value based on 30 percent 

coinsurance of the total projected 

Medicare FFS cost (that is, the 

coinsurance limit for contract year 2026 

for the mandatory MOOP limit, per 

paragraph (c)(6)(iii)(F)) and compared 

that value to the contract year 2022 

copayment limit for the same service 

category and MOOP limit to reach the 

‘‘actuarially equivalent copayment 

differential’’. Then, we took 25 percent 

of the ‘‘actuarially equivalent 

copayment differential’’ and added it to 

the contract year 2022 copayment 

amount and applied the rounding rules 

in paragraph (f)(6)(ii) to reach the 

transitional contract year 2023 

copayment value for that service 

category and MOOP type (the values in 

row K in Tables 14A and 14B). Then, we 

compared the transitional copayment 

values (calculated following paragraph 

(f)(8)(ii)) to the actuarially equivalent 

value of the applicable cost sharing 

standard for contract year 2023 

(calculated following paragraph 

(f)(6)(iii)(C)). The lesser value between 

these two amounts is included in row L 

of Tables 14A and 14B as the contract 

year 2023 copayment limit for that 

service category and MOOP type. 

For example, as shown in Table 14B, 

the contract year 2022 ‘‘primary care 

physician’’ service category copayment 

limit for MA plans that established a 

mandatory or voluntary (lower) MOOP 

amount was $35. Using contract year 

2023 Medicare FFS data projections 

(based on 2017–2021 Medicare FFS 

data), a $35 copayment is actuarially 

equivalent to 30 percent coinsurance. In 

essence, this means that the final 

contract year 2023 copayment limit for 

the ‘‘primary care physician’’ service 

category and mandatory MOOP type 

reflects an actuarially equivalent 

copayment to the 2026 standard for that 

MOOP type in paragraph (f)(6)(iii)(F). In 

comparison, the copayment limit for 

this service category and the lower 

MOOP type is a transitional value, and 

not fully actuarially equivalent to the 

2026 standard for that MOOP type 

(increasing from $35 for contract year 

2022 to $40 for contract year 2023 as 

shown in Table 28). As a result, the 

multiyear transition in paragraph (f)(8) 

for CMS to calculate actuarially 

equivalent copayment limits avoids 

unnecessary changes to the copayment 

limits from year to year. 

The ‘‘lesser of’’ values in row L of 

Tables 14A, 14B, and 15 are in Table 28 

as the final contract year 2023 

copayment limits for the respective 

MOOP types. Table 28 updates the 

illustrative cost sharing limits for all 

three MOOP types from the February 

2020 proposed rule’s Table 5 

(Illustrative Contract Year 2022 InNetwork Service Category Cost Sharing 

Limits), using contract year 2023 

Medicare FFS data projections (based on 

2017–2021 Medicare FFS data) and 

applying the requirements finalized in 

paragraphs (f)(6), (7), (8), and 

§ 422.100(j)(1). As a result, the final 

contract year 2023 copayment limits in 

Table 28 are consistent with how 

paragraph (f)(8) provides that the lesser 

of values calculated under paragraphs 

(f)(6)(iii) and (j)(1) and values calculated 

under paragraph (f)(8) will be used as 

the copayment limit for a particular 

service category and cost sharing level. 

In addition, Table 28 includes final 

contract year 2023 copayment limits for 

several service categories that did not 

have illustrative copayment limits in the 

February 2020 proposed rule. Final 

contract year 2023 copayment limits for 

the following professional service 

categories are in Table 28 but were not 

illustrated in the similar table in the 

February 2020 proposed rule: Cardiac 

rehabilitation; intensive cardiac 

rehabilitation; pulmonary rehabilitation; 

Supervised exercise therapy (SET) for 

Symptomatic peripheral artery disease 

(PAD); and partial hospitalization. 

These are all professional services 

subject to the methodology finalized in 

§ 422.100(f)(6)(iii), (f)(7), and (f)(8). This 

is consistent with the general approach 

we proposed that the same rules would 

apply for all professional services if 

CMS issues copayment limits, 

regardless of whether we had calculated 

a copayment limit for the category in the 

past. By following the ‘‘lesser of’’ 

requirement in paragraph (f)(8), 

choosing the measure of central 

tendency which produces the least 

amount of change from the prior 

contract year (as allowed in paragraph 

(f)(7)) when calculating actuarially 

equivalent values, and setting 

copayment limits for the service 

categories we have historically used for 

contract year 2023, we aim to avoid 

potentially disruptive copayment 

changes, such as copayment limits that 

fluctuate up and down over short 

periods of time, for enrollees and plan 

designs. 

Tables 14A, 14B, and 15 also illustrate 

how CMS will generally approach 

applying the methodology in 

§ 422.100(f)(8) for service categories 

subject to paragraph (f)(6)(iii) for 

contract years 2024 and 2025. 

Specifically, CMS will complete similar 

calculations of the copayment limits for 

contract years 2024 and 2025 as shown 

in Tables 14A, 14B, and 15 with 

modifications to reflect the specific 

coinsurance limits for each year, 

increases in the actuarial equivalent 

copayment differential used (per 

paragraph (f)(8)), and updates to the 

total Medicare FFS costs for each 

service category using the most recent 

Medicare FFS data projections. 

BILLING CODE 4120–01–P 


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TABLE 14A: CMS CALCULATIONS OF THE CONTRACT YEAR 2023 ACTUARIALLY EQUIVALE

TRANSITION(§ 422.100(1)(8)) FOR SERVICE CATEGORIES IN PBP SECTIONS 3, 4b, AND 5 SU

422.100(t)(6)(iii) FOR THE MANDATORY MOOP TYPE USING CONTRACT YEAR 2023 MEDICA

PROJECTIONS (BASED ON 2017 - 2021 MEDICARE FFS DATA) 

Row Intensive Cardiac Pulmonary U

Reference Description Rehabilitation Rehabilitation SET for PAD Need

A 

B 

C 

D 

E 

F 

G 

H 

I 

J 

K 

L 

Contract year 2022 copayment limit $100.00 $30.00 $30.00 

Contract vear 2023 total Medicare FFS oroiected cost' $132.002 $39.002 $65.002 

Contract year 2023 coinsurance limit per 45% 45% 45% 

& 422.100([)( 6)(iii)(C)(J) 

Unrounded actuarially equivalent copayment value to $59.40 $17.55 $29.25 

contract year 2023 coinsurance limit per 

& 422.100(f)(6)(iii)(C) (row B multiplied bv row C) 

Rounded actuarially equivalent copayment value to $60.00 $20.00 $30.00 

contract year 2023 coinsurance limit per 

§ 422.100(t)(6)(iii)(C) (row D rounded per 

& 422.100(f)(6)(ii)) 

Contract year 2026 coinsurance limit per § 30% 30% 30% 

422.1 00(f)( 6)(iii)(F)( J) 

Unrounded actuarially equivalent copayment value to $39.60 $11.70 $19.50 

contract year 2026 coinsurance limit per § 

422.100(f)(6)(iii)(F) (row B multiolied bv row F) 

Actuarially Equivalent Copayment Differential per § ($60.40) ($18.30) ($10.50) 

422.100(f)(8)(i) (difference between row G and row A) 

25% of the Actuarially Equivalent Copayment ($15.10) ($4.58) ($2.63) 

Differential per § 422.100(t)(8)(ii)(A) (row H multiplied 

by 0.25) 

Unrounded copayment value result from actuarially $84.90 $25.43 $27.38 

equivalent copayment transition formula for contract year 

2023 per§ 422.100(f)(8)(ii)(A) (row A plus row I) 

Rounded copayment value result from actuarially $85.00 $25.00 $25.00 

equivalent copayment transition formula for contract year 

2023 per§ 422.100(t)(8)(ii)(A) (row J rounded per§ 

422.1 00(f)( 6)(ii)) 

Contract year 2023 "lesser of' copayment value per § $60.00 $20.00 $25.00 

422.100([)(8) (the lesser value of row E and row K) 

1The OACT employed generally accepted actuarial principles and practices in calculating these projected amounts (as finalized in§ 422.100(f)(7). 

2These amounts represent the total projected Medicare FFS average per session allowed amount for the service category in contract year 2023, weighte

(such as, hospital outpatient departments and provider offices). 

3This amount for the "urgently needed services" service category represents the total projected Medicare FFS weighted average per visit allowed amou

4This amount for the "partial hospitalization" service category represents the total projected Medicare FFS average per day allowed amount, weighted b

as, hospital outpatient departments and community mental health centers). 

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TABLE 14B: CMS CALCULATIONS OF THE CONTRACT YEAR 2023 ACTUARIALLY EQUIVALE

TRANSITION(§ 422.100(f)(8)) FOR SERVICE CATEGORIES IN PBP SECTIONS 7a - 7e and 7h-7i 

422.100(f)(6)(iii) FOR THE MANDATORY MOOP TYPE USING CONTRACT YEAR 2023 MEDICA

PROJECTIONS (BASED ON 2017 - 2021 MEDICARE FFS DATA) 

Mental 

Primary Health 

Row Care Chiropractic Occupational Physician Specialty 

Reference Description Physician Care Therapy Specialist Services 

A Contract year 2022 copayment limit $35.00 $20.00 $40.00 $50.00 $40.001 

B Contract year 2023 total Medicare FFS $115.91 $52.00 $125.00 $179.64 $153.30 

oroiected cost2 

C Contract year 2023 coinsurance limit per 45% 45% 45% 45% 45% 

§ 422.1 00(f)( 6)(iii)(C)(J) 

D Unrounded actuarially equivalent $52.16 $23.40 $56.25 $80.84 $68.99 

copayment value to contract year 2023 coinsurance limit per § 

422.100(f)(6)(iii)(C) (row B multiplied 

bvrow C) 

E Rounded actuarially equivalent $50.00 $25.00 $55.00 $80.00 $70.00 

copayment value to contract year 2023 

coinsurance limit per § 

422.100(f)(6)(iii)(C) (row D rounded per 

§ 422.100(f)(6)(ii)) 

F Contract year 2026 coinsurance limit per 30% 30% 30% 30% 30% 

§ 422.1 00(f)( 6)(iii)(F)(J) 

G Unrounded actuarially equivalent $34.77 $15.60 $37.50 $53.89 $45.99 

copayment value to contract year 2026 coinsurance limit per § 

422.100(f)(6)(iii)(F) (row B multiplied 

byrowF) 

H Actuarially Equivalent Copayment ($0.23) ($4.40) ($2.50) $3.89 $5.99 

Differential per§ 422.100(f)(8)(i) 

( difference between row G and row A) 

l 25% of the Actuarially Equivalent ($0.06) ($1.10) ($0.63) $0.97 $1.50 

Copayment Differential per § 

422.100(f)(8)(ii)(A) (row H multiplied 

by 0.25) 

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Mental 

Primary Health 

Row Care Chiropractic Occupational Physician Specialty 

Reference Description Physician Care Therapy Specialist Services 

J K L 

Unrounded copayment value result from $34.94 $18.90 $39.38 $50.97 $41.50 

actuarially equivalent copayment 

transition formula for contract year 2023 

per§ 422.100(f)(8)(ii)(A) (row A plus 

row I) 

Rounded copayment value result from $35.00 $20.00 $40.00 $50.00 $40.00 

actuarially equivalent copayment 

transition formula for contract year 2023 

per § 422.1 00(f)(8)(ii)(A) (row J 

rounded per§ 422.100(t)(6)(ii)) 

Contract year 2023 "lesser of' $35.00 $20.00 $40.00 $50.00 $40.00 

copayment value per§ 422.100(t)(8) 

(the lesser value ofrow E and row K)3 

1This amount reflects the copayment limit for the "psychiatric and mental health specialty services" service category as it was named for contract year 2

2Each amount represents the total average per visit Medicare FFS allowed amount for the service category, weighted by specialty type utilization (such 

practice, internal medicine, and geriatric medicine for the primary care physician service category). The OACT employed generally accepted actuarial 

calculating these projected amounts (as finalized in§ 422.100(±)(7)). 
BILLING CODE 4120–01–C 


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Row 

TABLE 15: CMS CALCULATIONS OF THE CONTRACT YEAR 2023 ACTUARIALLY EQUIVALEN

TRANSITION(§ 422.lO0(f)(S)) FOR THE CARDIAC REHABILITATION SERVICE CATEGORY (

422.100(f)(6)(iii)) USING CONTRACT YEAR 2023 MEDICARE FFS DATA PROJECTIONS (BASED 

MEDICARE FFS DATA) 

Mandatory 

MOOP 

Reference Description Limit 

A 

B 

C 

D 

E 

F 

G 

H 

l 

J 

K 

L 

Contract year 2022 copayment limit $50.00 

Contract year 2023 total Medicare FFS projected cost Contract year 2023 coinsurance limit per§ 422.l00(f)(6)(iii)(C) 45% 

Unrounded actuarially equivalent copayment value to contract year 2023 coinsurance limit per § $37.80 

422.l00(f)(6)(iii)(C) (row B multiplied by row C) 

Rounded actuarially equivalent copayment value to contract year 2023 coinsurance limit per § $40.00 

422. lOO(t)( 6)(iii)(C) (row D rounded per § 422.1 00(f)( 6)(ii)) 

Contract year 2026 coinsurance limit per§ 422.100(t)(6)(iii)(F) 30% 

Unrounded actuarially equivalent copayment value to contract year 2026 coinsurance limit per § $25.20 

422.100(f)(6)(iii)(F) (row B multiplied by row F) 

Actuarially Equivalent Copayment Differential per§ 422.l00(f)(S)(i) (difference between row G and row A) ($24.80) 

25% of the Actuarially Equivalent Copavment Differential per§ 422.l00(f)(8)(ii)(A) (row H multiplied by 0.25) ($6.20) 

Unrounded copayment value result from actuarially equivalent copayment transition formula for contract year $43.80 

2023 per§ 422.100(f\(8)(ii)(A) (row A plus row I) 

Rounded copayment value result from actuarially equivalent copayment transition formula for contract year $45.00 

2023 per§ 422.100(f)(8)(ii)(A) (row J rounded per§ 422.100(f)(6)(ii)) 

Contract year 2023 "lesser of' copayment value per§ 422.l00(f)(8) (the lesser value of row E and row K) $40.00 

1This amount represents the total average Medicare FFS per session allowed amount for the service category, weighted by the type of setting (such as, h

departments and provider offices) for contract year 2023. The OACT employed generally accepted actuarial principles and practices in calculating this 

finalized in § 422.100(f)(7). 

2For purposes of calculating these values for the intermediate MOOP limit, the comparison amount in row A for the mandatory MOOP limit is used per 
Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22361 

As shown in Tables 15 and 28, some 

contract year 2023 service category 

copayment limits are the same amount 

for multiple MOOP types (for example, 

a $40 ‘‘cardiac rehabilitation services’’ 

service category copayment limit for all 

MOOP types in contract year 2023). 

Some copayment limits are the same in 

the beginning of the transition because 

most professional categories have the 

same contract year 2022 copayment 

limit, along with the rounding rules. We 

do not expect the number of 

professional service categories with the 

same copayment limit will result in the 

number of MA plans with lower MOOP 

limits decreasing significantly because 

the cost sharing flexibilities generally 

provide differentiation for most service 

categories by MOOP type throughout 

the transition period. In addition, we 

currently project (based on contract year 

2023 Medicare FFS data projections) 

that all service categories subject to 

paragraph (f)(6)(iii) will have 

differentiated copayment limits based 

on the MOOP type once the transition 

in paragraph (f)(8) is completed in 

contract year 2026. Under this FC, the 

OACT will annually update the 

Medicare FFS data projections used to 

calculate copayment limits, so the 

actual copayment limits for professional 

services for contract year 2024 and 

subsequent years, calculated by 

applying the rules in § 422.100(f)(6)(iii), 

(7), and (8), could increase or decrease 

accordingly. 

As shown in Tables 14A, 15, and 28, 

the contract year 2023 copayment limits 

for the cardiac rehabilitation, intensive 

cardiac rehabilitation, and pulmonary 

rehabilitation service categories reflect 

decreases from the corresponding 

contract year 2022 copayment limits for 

both MOOP types. CMS calculated 

actuarially equivalent copayments for 

these service categories by using the 

contract year 2023 Medicare FFS data 

projections (based on 2017–2021 

Medicare FFS data) of the total average 

per session cost (weighted by utilization 

of office and outpatient facilities). As a 

result, Medicare FFS data reflects 

changes in CMS payment policies, 

provider billing practices, and where 

services are provided (for example, 

hospital outpatient department or 

physician’s office). In addition, the 

contract year 2023 copayment limits set 

for these service categories reflect 

application of the ‘‘lesser of’’ 

requirement in § 422.100(f)(8); the 

actuarially equivalent value to the 

coinsurance limit for contract year 2023 

is less than the value resulting from the 

actuarially equivalent copayment 

transition (after application of the 

rounding rules) for all MOOP types. The 

projected Medicare FFS amounts for 

cardiac rehabilitation and intensive 

cardiac rehabilitation also comply with 

Medicare FFS payment requirements 

from sections 1848(A)(5) and 1861(E) of 

the Act. These factors in combination 

result in the decreases in copayments 

limits for these three service categories 

from the contract year 2022 copayment 

limits. 

As finalized in new 

§ 422.100(f)(8)(ii)(D), the transition to 

actuarially equivalent copayment limits 

will be complete by contract year 2026 

and no cap on increases in copayment 

limits apply for contract year 2026 or 

later years. For contract year 2026 and 

subsequent years, CMS may calculate 

copayment limits for— 

• In-network professional services 

that are basic benefits: At an actuarially 

equivalent copayment value to the 

coinsurance percentage required for the 

type of MOOP limit, under paragraph 

(f)(6)(iii)(F); and 

• In-network benefits subject to 

§ 422.100(j)(1)(i): At actuarially 

equivalent values to the cost sharing 

under original Medicare (see additional 

discussion in section II.B.5.e. of this 

FC). 

In essence, we are finalizing a process 

of continuous recalibration of 

copayment limits for service categories 

subject to paragraph (f)(6)(iii) or (j)(1) to 

ensure those limits are appropriately 

updated to align with the coinsurance 

limits based on annually updated 

Medicare FFS data projections. This is 

consistent with our proposal to set the 

actuarially equivalent copayment values 

each year, by working with the OACT to 

establish copayment limits that are 

approximately equal to the identified 

coinsurance percentage limit based on 

the most recent Medicare FFS data 

projections. 

Using contract year 2023 Medicare 

FFS data projections (based on 2017– 

2021 Medicare FFS data), applying 

§ 422.100(f)(8), combined with the effect 

of applying the rounding rules, results 

in some service categories for particular 

MOOP types reaching an actuarially 

equivalent copayment value before 

contract year 2026 while others are 

currently expected to take the full 4 

years to reach a copayment limit that is 

an actuarially equivalent value to the 

applicable coinsurance requirement. 

Some of these potential outcomes for 

professional service categories are 

illustrated in Tables 16 and 17. 

Table 16 illustrates how CMS would 

calculate the actuarially equivalent 

copayment transition (including the 

‘‘lesser of’’ requirement) over the 4 years 

for the ‘‘SET for PAD’’ service category 

using contract year 2023 Medicare FFS 

data projections (based on 2017–2021 

Medicare FFS data). (We reiterate that 

the transition provided in § 422.100(f)(8) 

only applies when: (1) CMS is 

calculating a copayment limit under 

paragraph (f)(6)(iii) for basic benefits 

that are professional services and 

§ 422.100(j)(1) for basic benefits for 

which the cost sharing may not exceed 

cost sharing in original Medicare; and 

(2) there was a copayment limit 

published for contract year 2022 for that 

service category. When CMS does not 

calculate the copayment limit as a 

specific dollar amount, the MA plan 

would be in the position of calculating 

an actuarially equivalent value that the 

MA plan’s copayments may not exceed.) 

For contract year 2022, the cost sharing 

limits for the ‘‘SET for PAD’’ service 

category are 50 percent coinsurance or 

a $30 copayment for MA plans with the 

voluntary or mandatory MOOP type. As 

shown in Table 16, the mandatory 

MOOP limit is currently projected to 

reach an actuarially equivalent value 

based on 30 percent coinsurance in 

contract year 2025 for the ‘‘SET for 

PAD’’ service category, while the lower 

MOOP limit retains its copayment limit 

from contract year 2022 as that is the 

projected actuarially equivalent value to 

50 percent coinsurance. Although the 

February 2020 proposed rule stated that 

30 percent coinsurance is most closely 

related to the professional service 

category copayment limits from the CY 

2020 Call Letter, that is not the case for 

every service category. For example, 

using contract year 2023 Medicare FFS 

data projections (based on 2017–2021 

Medicare FFS data), the contract year 

2022 copayment limits for the ‘‘urgently 

needed services’’ and ‘‘SET for PAD’’ 

service categories reflect an actuarially 

equivalent copayment value to 50 

percent coinsurance. As a result, the 

lower MOOP type retains the contract 

year 2022 copayment limit for the 

‘‘urgently needed services’’ and ‘‘SET 

for PAD’’ service categories for contract 

year 2023 and the copayment limit for 

the mandatory MOOP type reflects a 

decrease from the contract year 2022 

copayment limit in the first year of the 

transition to the lower coinsurance 

standard for that MOOP type. However, 

we emphasize that the copayment limits 

contained in Table 16 for contract years 

2024–2026 are illustrative in nature and 

may change based on updated Medicare 

FFS data projections. 


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22362 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

Table 17 illustrates how CMS will 

apply both the copayment and 

coinsurance transitions to the 

‘‘physician specialist’’ service category 

through contract year 2026, using 

contract year 2023 Medicare FFS data 

projections (based on 2017–2021 

Medicare FFS data). Cost projections for 

contract years after 2023 were not 

available at the time of writing this FC, 

however Table 17 illustrates the 

potential impact of the transition rule in 

calculating cost sharing limits for 

contract years 2024 through 2026. For 

example, Table 17 shows that in 

implementing a 4-year transition, an 

actuarially equivalent copayment limit 

to 30 percent coinsurance for the 

mandatory MOOP type may take the full 

4 years to reach for the ‘‘physician 

specialist’’ service category. We reiterate 

that while the transition of the 

applicable coinsurance percentage and 

the rules for CMS to calculate the 

copayment limits are set in this FC, the 

copayment limits provided in Tables 16 

and 17 for contract years 2024 through 

2026 are illustrative in nature and may 

change based on updated Medicare FFS 

data projections in future years. Tables 

16 and 17 highlight how the transition 

schedules result in annual incremental 

changes in order to reach the cost 

sharing limits that we proposed by 

contract year 2026. 

The multiyear transition schedule for 

copayment limits calculated by CMS 

will generally be applied consistently 

across professional services (including 

urgently needed services) and benefits 

for which cost sharing must not exceed 

cost sharing in original Medicare (as 

discussed previously in this response 

and in sections II.B.5.d. and e. of this 

FC) in order to streamline the 

methodology and preserve transparency 

as much as possible while meeting our 

goals of avoiding significant year-to-year 

changes in copayment limits. We expect 

the completion of the multiyear 

transition to the range of cost sharing 

limits proposed will: (1) Improve the 

accuracy of copayment limits by using 


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TABLE 16: FINAL CONTRACT YEAR2023 AND ILLUSTRATIVE CONTRACT YEAR 

2024 - 2026 COST SHARING LIMITS FOR THE "SET FOR PAD" SERVICE 

CATEGORY DURING THE MULTIYEAR TRANSITION(§ 422.100(f)(6)(iii) AND 

(f)(8)(i)) USING CONTRACT YEAR 2023 MEDICARE FFS DATA PROJECTIONS 

(BASED ON 2017 - 2021 MEDICARE FFS DATA) 

MOOPType Contract Contract Contract Contract Contract 

Year 20221 Year 20232 Year 20243 Year 20253 Year 20263 

Mandatory 50% I $30 45%1 $25 40%1 $25 35% I $204 30% 1$20 

Intermediate NIA 47%1 $30 45% I $30 42% I $255 40% 1$25 

Lower (Previously "voluntary") 50% I $30 50% I $306 50% I $30 50% I $30 50% I $30 

1Cost sharing limits for contract year 2022 provided for comparison purposes. 

2The contract year 2023 cost sharing limits are final and calculated using§ 422.IO0(f)(6), (f)(7), and (f)(8). 

3The copayment limits for these years are illustrative and final amounts will be announced using the subregulatory process at § 

422.IO0(f)(7)(iii). The coinsurance limits for these years are final per§ 422.IO0(f)(6)(iii). 

4This is the projected year in which the copayment limit will reach an actuarially equivalent value to 30 percent coinsurance for 

the mandatory MOOP limit. 

5 This is the projected year in which the copayment limit will reach an actuarially equivalent value to 40 percent coinsurance for 

the intermediate MOOP limit. 

6 The contract year 2023 copayment limit for the lower MOOP limit reflects an actuarially equivalent value to 50 percent 

coinsurance. 

TABLE 17: FINAL CONTRACT YEAR2023 AND ILLUSTRATIVE CONTRACT YEAR 

2024 - 2026 COST SHARING LIMITS FOR THE "PHYSICIAN SPECIALIST" 

SERVICE CATEGORY DURING THE MULTIYEAR TRANSTION (§ 422.100(f)(6)(iii) 

AND (f)(8)(i)) USING CONTRACT YEAR 2023 MEDICARE FFS DATA PROJECTIONS 

(BASED ON 2017 - 2021 MEDICARE FFS DATA) 

MOOPType Contract Contract Contract Contract Contract 

Year 20221 Year 20232 Year 20243 Year 20253 Year 20263•

4 

Mandatory 50% I $50 45% I $50 40%1 $50 35% I $55 30% I $55 

Intermediate NIA 47% I $55 45%1 $60 42%1 $65 40%1 $70 

Lower (Previously "voluntarv") 50% I $50 50%1 $60 50%1 $70 50% I $80 50%1 $90 

1Cost sharing limits for contract year 2022 provided for comparison purposes. 

2The contract year 2023 cost sharing limits are final and calculated using§ 422.IO0(f)(6), (f)(7), and (f)(8). 

3The copayment limits for these years are illustrative and final amounts will be announced using the subregulatory process at § 

422.IO0(f)(7)(iii). The coinsurance limits for these years are final per§ 422.IO0(f)(6)(iii). 

4 This is the projected year in which the copayment limits will reach actuarially equivalent values to the coinsurance standard that 

applies for 2026 for each MOOP type. 
Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22363 

39See pages 159–161 of the CY 2020 draft Call 

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

Advance2020Part2.pdf. 

annually updated Medicare FFS data 

projections; (2) increase the flexibility 

MA organizations have in establishing 

copayments; (3) encourage the use of 

copayments and lower MOOP limits 

among MA plans; and (4) mitigate 

potential premium increases or benefit 

reductions if copayment limits did not 

accurately reflect projected costs. 

In summary, we believe that using the 

multiyear transitions (for contract years 

2023 through 2026) finalized in 

§ 422.100(f)(6)(iii)(C)–(F) and (f)(8) 

provide sufficient time for MA 

organizations to address the upcoming 

changes to these cost sharing 

requirements; we do not expect this 

policy to directly cause plans to nonrenew or to cause considerable 

disruption in the MA market or for 

beneficiaries. CMS requested comments 

and suggestions on its application and 

interpretation of the existing MOOP and 

cost sharing standards, as well as on 

adding a third, MOOP limit to allow 

additional cost sharing flexibility for 

future years, as part of the CY 2020 Call 

Letter 39 process. CMS took the 

suggestions received then into account 

when developing the February 2020 

proposed rule. We therefore expect that 

these opportunities to comment on 

these concepts provided MA 

organizations and other stakeholders 

with additional time to anticipate and 

prepare for changes like those we are 

adopting here. 

To provide additional transparency 

regarding how § 422.100(f)(6)(iii), (f)(7), 

and (f)(8) will be applied in future 

contract years, we provide an example 

of the steps CMS will take to calculate 

copayment limits for the ‘‘physician 

specialist’’ service category for contract 

year 2027 or a subsequent year. First, 

CMS will consider and decide whether 

issuing a copayment limit for the 

‘‘physician specialist’’ service category 

is appropriate; we intend to review and 

consider the following using the most 

recent Medicare FFS data projections as 

part of this decision: 

• The projected Medicare FFS costs 

and utilization for the relevant provider 

specialties for furnishing specialty 

physician services, such as average costs 

and utilization for the following 

provider specialties: Cardiology, 

gastroenterology, nephrology, and 

otolaryngology (ENT); and 

• Updated analyses of actuarially 

acceptable approaches to calculate an 

actuarially equivalent value to the 

applicable cost sharing standard in 

§ 422.100(f)(6)(iii) from the OACT (for 

example, with or without waiting for 

utilization, or projected median total 

Medicare FFS allowed amounts or a 

Medicare FFS projected claims cost 

distribution). 

As a result, some potential outcomes 

of applying paragraphs (f)(6)(iii)(F), 

(f)(7), and (f)(8)(ii)(D) to calculate 

copayment limits for the ‘‘physician 

specialist’’ service category for contract 

year 2027 may include the following: 

• Maintaining the contract year 2026 

copayment limits for contract year 2027 

if the most recent Medicare FFS 

projections of the weighted average do 

not result in different actuarially 

equivalent values to the range of cost 

sharing standard (after application of 

the rounding rules in § 422.100(f)(6)(ii)). 

• Calculating updated copayment 

limits for contract year 2027 if the 

Medicare FFS data projections for the 

relevant provider specialties for 

furnishing specialty physician services 

result in different actuarially equivalent 

values to the range of cost sharing 

standard (after application of the 

rounding rules in § 422.100(f)(6)(ii)). 

• Calculating updated copayment 

limits for contract year 2027 that are 

based on different actuarial approaches 

to calculating an actuarially equivalent 

value (for example, adjusting for outliers 

by using the median allowed amounts of 

the various provider specialties) if the 

different approach reflects an actuarially 

acceptable approach and avoids 

disruptive changes (in essence, higher 

increases to the copayment limit) for 

beneficiaries and plan designs, 

consistent with § 422.100(f)(7)(ii)(C). For 

example, if using the median allowed 

amount compared to the average 

allowed amount would result in a lesser 

increase to the copayment limit from the 

prior year while still reflecting an 

actuarially equivalent copayment for the 

benefit and beneficiary population. 

• Not calculating an actuarially 

equivalent value to be the copayment 

limit, thus permitting MA plans to 

analyze their own data on the estimated 

total MA plan financial liability for that 

contract year to calculate the dollar 

amount that is actuarially equivalent to 

the applicable coinsurance percentage 

and establish the MA plan’s copayment 

at or below that dollar amount. Each of 

these potential outcomes would include 

compliance with § 422.100(f)(7)(iii), 

which provides for an opportunity for 

public notice and comment. 

By applying the requirements in 

§ 422.100(f)(6)(iii), (f)(7), and (f)(8) to 

recalibrate copayment limits based on 

Medicare FFS data projections on an 

annual basis, we will ensure copayment 

limits continually align with the 

coinsurance limits for service categories 

subject to paragraphs (f)(6)(i), (iii), and 

(j)(1) in future years. As discussed in 

section II.A. of this FC, we are also 

annually recalibrating MOOP limits 

based on Medicare FFS data projections 

to accurately reflect changes in expected 

costs, subject to the limit on changes in 

the MOOP limit of more than 10 percent 

from one year to the next. We believe 

that updates of this type are appropriate 

to carry out the goal of the February 

2020 proposed rule to continue 

balancing limits on enrollee cost sharing 

and changes in benefits with 

maintaining beneficiary access the 

affordable and sustainable benefit 

packages and protecting against 

discriminatory cost sharing. The 

methodology in this FC coordinates the 

updates to the MOOP limits and cost 

sharing standards for contract year 2023 

and future years. 

In summary, as discussed in the 

February 2020 proposed rule, we 

believe providing MA organizations 

with the cost sharing flexibilities in 

§ 422.100(f)(6)(iii) will ultimately act as 

an incentive to encourage more 

favorable benefit designs for 

beneficiaries. While we are finalizing 

transitions to the proposed coinsurance 

and copayment limits in paragraphs 

(f)(6)(iii)(C)–(F) and (f)(8), we do not 

expect the breadth of cost sharing 

flexibilities will be substantially limited 

between the three MOOP types during 

the transition. Specifically, we believe 

the policies in this FC may incentivize 

MA organizations to design favorable 

benefit packages such as through 

establishing lower or intermediate 

MOOP amounts and adopt cost sharing 

that is lower or comparable when 

compared to existing benefit packages 

while protecting enrollees from 

significant annual changes during the 

transition period. 

With respect to the commenter’s 

concern about MA plans being 

challenged to satisfy the total 

beneficiary cost (TBC) standard if cost 

sharing requirements are changed to the 

range of cost sharing limits proposed in 

a single year, the TBC standard 

evaluates year-over-year plan changes in 

premiums and benefits for purposes of 

CMS’s review and acceptance of bids. 

The TBC change threshold is 

determined each year based on a 

number of factors. CMS has authority to 

reject bids that propose significant 

increases in beneficiary costs or 

decreases in benefits under § 422.254 

and uses the TBC evaluation to identify 

bids that make such significant changes 

compared to the prior year. See also 

section 1854(a)(5)(C)(ii) of the Act and 

§ 422.256(a). The TBC threshold for 


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22364 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

40See the HPMS memorandum titled ‘‘Final 

Contract Year 2021 Part C Benefits Review and 

Evaluation,’’ issued April 8, 2020. 41See the HPMS memorandum titled ‘‘Final 

Contract Year 2022 Part C Benefits Review and 

Evaluation,’’ issued May 20, 2021. 

42Milliman. October 2020. ‘‘Star Rating Changes: 

How Medicare Advantage Plans React’’ may be 

accessed at: https://us.milliman.com/en/insight/ 

Star-rating-changes-How-Medicare-Advantageplans-react. 

contract year 2021 was increased to 

account for changes in ESRD enrollment 

policy and to provide greater flexibility 

to MA plans in navigating related 

MOOP limit changes.40 The TBC 

threshold for contract year 2022 was 

maintained from contract year 2021.41

CMS released an HPMS memorandum 

titled ‘‘Preliminary Contract Year 2023 

Part C Benefits Review and Evaluation’’ 

on March 3, 2022 (with a comment 

period) that includes potential changes 

to the TBC threshold for contract year 

2023. CMS will also consider soliciting 

comment on how CMS sets the TBC 

threshold for contract year 2024 and 

future years, if necessary. By finalizing 

the multiyear transition to the proposed 

range of cost sharing limits based on the 

MOOP type in § 422.100(f)(6)(iii) and 

(f)(8), we do not expect unreasonable 

challenges for an MA organization to 

satisfy the TBC evaluation. We intend to 

continue use of the TBC evaluation to 

make sure enrollees who continue 

enrollment in the same plan are not 

exposed to significant cost increases. 

Comment: A commenter requested 

CMS add cost sharing limits for 

observation services and ambulance 

services, and clearly differentiate the 

maximum copayment limits for these 

services by the type of MOOP limit. 

Response: Ambulance services and 

observation services (as bundled 

services under outpatient hospital 

services) are not inpatient services 

(§ 422.100(f)(6)(iv)), and are not 

necessarily professional services 

(paragraph (f)(6)(iii)), or among the 

specified categories of services for 

which cost sharing must not exceed the 

cost sharing in original Medicare 

(§ 422.100(j)(1)). Therefore, cost sharing 

for these services must comply with 

§ 422.100(f)(6)(i) and may not exceed 50 

percent coinsurance or actuarially 

equivalent copayment values (including 

copayment limits calculated by CMS as 

discussed in section II.B.5.a. of this FC). 

The MA plan must not pay less than 50 

percent of the estimated total MA plan 

financial liability for that contract year 

for these benefits. MA plans may design 

their benefit package to: (1) Apply one 

cost sharing amount for all observation 

services; or (2) apply cost sharing based 

on the individual services provided 

during the observation stay (for 

example, cost sharing amount for each 

specialist visit and cost sharing for 

diagnostic services). If a plan applies 

cost sharing based on individual 

services provided during the 

observation stay, it is possible that some 

of those services may be subject to CMS 

service category cost sharing standards 

in paragraph (f)(6)(iii) or paragraph 

(j)(1). In addition, ambulance services 

are not subject to the cost sharing limit 

proposed and finalized for 

§ 422.113(b)(2)(v) because they are not 

within the definition of emergency 

services at paragraph (b)(1)(ii). We 

direct the commenter to the comments 

and responses about § 422.113 and cost 

sharing requirements for emergency 

services in section II.B.5.d. of this FC 

and to § 422.113(a), which requires MA 

organizations to be responsible for 

ambulance services where other means 

of transportation would endanger the 

beneficiary’s health. CMS will monitor 

cost sharing structures and 

implementation of this regulation; as 

necessary, we will consider future 

rulemaking to change the limits 

applicable to these services, if 

appropriate. 

Comment: A few commenters who 

were opposed to establishing a range of 

cost sharing limits based on the type of 

MOOP stated that this proposal would 

make comparing and choosing between 

health plan options more difficult for 

beneficiaries. Commenters stated MA 

plan benefits should be more 

standardized from a consumer advocacy 

perspective. These commenters also 

noted CMS should not establish varying 

cost sharing limits for various service 

categories in order to avoid placing 

more burden on the beneficiary to 

understand complicated coverage terms. 

Response: We do not expect that 

calculating a range of cost sharing limits 

that are based on the MOOP type 

established by the MA plan would make 

comparing and choosing a plan more 

difficult for beneficiaries. CMS expects 

that beneficiaries may consider the 

MOOP amount, cost sharing amounts, 

along with many other factors such as 

perception of brand, premium, plan 

type, benefits, quality ratings, and 

provider network when choosing a 

health care plan,42 and this information 

will continue to be available as they 

review their MA plan options for the 

upcoming contract year. From a 

beneficiary perspective, the individual 

will have the ability to review 

information about the MOOP amounts 

and cost sharing structures used by MA 

plans as they review their coverage 

options. We do not expect beneficiaries 

to learn or be aware of the options and 

flexibilities that MA organizations have 

to establish certain MOOP types and 

cost sharing amounts. Rather, we expect 

they will mostly compare the specific 

benefit and cost sharing designs from 

the MA plans that are available to them. 

In addition, we expect that the 

incentives in this FC for MA plans to 

establish copayment amounts over 

coinsurances will ultimately improve 

transparency for MA beneficiaries to 

understand expected cost sharing 

between plans if MA organizations 

increasingly use copayments in their bid 

designs. 

CMS does not expect MA 

organizations to necessarily offer more 

plan options than they currently do as 

a result of this provision. MA 

organizations are not required to offer 

plans that use each MOOP type and cost 

sharing possibility. In our experience, 

MA organizations typically limit the 

number of plan options in their product 

portfolio to avoid beneficiary confusion 

in considering the options. For example, 

in past years (including contract year 

2021) most MA organizations offer an 

average of 2 to 3 plans per plan type in 

each service area (excluding employer, 

D–SNP, and MSA plans). We expect this 

rule on cost sharing standards will: (1) 

Promote transparency for those who 

care to learn how CMS calculates 

copayment limits; and (2) incentivize 

MA organizations to offer MA plans 

with lower MOOP limits by aligning the 

cost sharing limits based on the MOOP 

type established by the MA plan with 

lower MOOP limits having the most cost 

sharing flexibility, which may benefit 

enrollees. In addition, CMS will 

continue conducting reviews and 

enforcing its current authority 

prohibiting plans from misleading 

beneficiaries in their marketing and 

communication materials and activities 

and continue to improve plan 

comparison tools and resources (for 

example, Medicare plan finder, 

Medicare & You and 1–800– 

MEDICARE). 

Comment: Several commenters raised 

concerns regarding discrimination 

against beneficiaries with high or 

specific health care needs. A few 

commenters opposed the proposal to 

allow MA plans with lower MOOP 

limits to establish up to a 50 percent 

coinsurance and indicated that 

requiring such significant cost sharing 

would make obtaining medically 

necessary care out of reach, financially, 

for a large number of beneficiaries. A 

commenter explained that the majority 

of Medicare beneficiaries live on limited 

fixed incomes and have little or no 

savings. As such, the commenter 

believed these beneficiaries would not 


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be able to access medically necessary 

care because cost sharing amounts are 

unaffordable. The commenters, 

however, did not suggest an alternative 

safeguard for CMS to use to protect 

against this type of harm; rather the 

commenters seem to suggest that CMS 

should not finalize the proposal to 

permit cost sharing up to 50 percent of 

the total MA plan liability for a service 

in any situation. Another commenter 

suggested CMS be cautious about 

increased cost sharing for an already 

vulnerable patient population but did 

not specifically tie that concern to a 

particular proposal; the commenter 

expressed concern that high cost sharing 

levels discriminate against enrollees 

who need those services. 

A commenter opposed CMS’s 

proposal to allow MA plans that 

establish a lower MOOP limit to set cost 

sharing as high as 50 percent or the 

actuarially equivalent copayment limit 

(projected as $85 in the February 2020 

proposed rule) for physical therapy and 

speech-language pathology. The 

commenter was concerned that 

permitting cost sharing at these levels 

would result in MA plans establishing 

cost sharing that would pose a 

significant financial burden and barrier 

to access for beneficiaries who need 

those services, particularly for services 

such as physical therapy that are 

typically associated with a higher 

frequency in visits. In reference to those 

concerns, the commenter requested that 

CMS: (1) Acknowledge the reality of the 

financial implications of copays that are 

required for each physical therapist visit 

on beneficiaries; (2) add physical 

therapy to the list of services for which 

an MA plan may not exceed cost sharing 

required under original Medicare (to 

make the cost sharing limits more 

reasonable for physical therapy 

services); and (3) set lower cost sharing 

limits for all categories of services that 

have a higher frequency in visits. The 

commenter noted appreciation for 

CMS’s rationale for allowing greater 

flexibility and that CMS will, in its 

annual review of plan cost sharing, 

monitor both copayment amounts and 

coinsurance percentages; however, the 

commenter had serious concerns with 

the cost sharing MA plans have imposed 

for physical therapy. This commenter 

acknowledged that MA plans may 

establish one cost sharing amount for 

multiple visits provided during an 

episode of care (for example, several 

sessions of cardiac rehabilitation) as 

long as the overall cost sharing amount 

satisfies CMS standards. However, the 

commenter noted they were not aware 

of any plans that have adopted one cost 

sharing amount for multiple visits 

provided during a physical therapy 

episode of care. In addition, this 

commenter stated that some enrollees 

have reported paying copayments that 

were higher than the amount the 

enrollee’s Explanation of Benefits 

showed as the MA plan’s payment to 

the physical therapist; the commenter 

gave the example of an MA plan 

reimbursing the physical therapist $25 

while the enrollee’s copay was $65 for 

each visit. In addition, the commenter 

reported the cost sharing established by 

MA plans for physical therapy imposes 

a significant barrier to care for 

beneficiaries and copayments for 

physical therapy are frequently cited as 

a reason that some consumers opt to 

reduce their frequency of care or forgo 

medically necessary care. The 

commenter compared the impact of 

higher cost sharing for physical therapy 

in relation to primary care and other 

specialist providers to illustrate the 

concern that high cost sharing for 

repetitively utilized services 

discriminates against patients who need 

such services. Enrollees typically 

require multiple physical therapy visits 

over an extended period to properly 

recover from an injury or alleviate 

symptoms related to an acute or chronic 

condition, while visits to primary care 

providers and other specialists are 

typically less frequent. Based on that 

utilization difference, the commenter 

noted that higher cost sharing 

requirements for physical therapy create 

a significant financial burden for 

enrollees in need of multiple visits for 

a full recovery and may be a deterrent 

to accessing care. The commenter stated 

that as a consequence of high physical 

therapy cost sharing, enrollees who fail 

to receive the rehabilitative care they 

need from a physical therapist are more 

likely to require higher-cost 

interventions to remain functional— 

potentially resulting in the development 

or recurrence of severe functional 

impairments and downstream costs, 

including surgery, imaging, and 

pharmacy. 

Response: We appreciate the 

commenters’ feedback and acknowledge 

the concerns about higher cost sharing 

being a significant financial burden for 

beneficiaries. As discussed in the 

February 2020 proposed rule, the policy 

requiring MA organizations to pay at 

least 50 percent of the total plan 

financial liability for benefits has been 

in place for some time and has its 

origins in prohibiting discrimination 

against individuals based on health 

status, particularly discriminating 

against beneficiaries that need the 

particular benefit for which the plan 

payment is a smaller percentage of the 

total cost. In our proposal and this FC, 

we limit this flexibility to use 50 

percent cost sharing for in-network 

professional services to MA plans with 

lower MOOP limits. In addition, we are 

codifying the prohibition on cost 

sharing that exceeds 50 percent of the 

estimated total MA plan financial 

liability for that contract year for Part A 

and Part B benefits that are furnished by 

an out-of-network provider. 

As discussed previously in a response 

to comment in this section, based on 

comments and further consideration of 

strategies CMS can employ to avoid 

potential disruption for enrollees and 

plan designs, we are finalizing a 4-year 

transition from contract year 2022 cost 

sharing limits to the 30, 40, and 50 

percent coinsurance and related 

actuarially equivalent copayments for 

professional services that are Part A and 

B benefits (that is, basic benefits) 

proposed in § 422.100(f)(6)(iii). The cost 

sharing limits resulting from the first 

year of applying this transition (contract 

year 2023) are reflected in Table 28, 

including for the ‘‘physical therapy and 

speech-language pathology’’ service 

category. Compared to the February 

2020 proposed rule’s illustrative cost 

sharing limits for the ‘‘physical therapy 

and speech-language pathology’’ service 

category (30 percent/$50, 40 percent/ 

$65, and 50 percent/$85 for the 

mandatory, intermediate, and lower 

MOOP limit respectively), the final 

contract year 2023 copayment limits (as 

shown in Table 28: 45 percent/$45, 47 

percent/$50, and 50 percent/$50 for the 

mandatory, intermediate, and lower 

MOOP limit respectively) are 

substantively lower due to the transition 

and ‘‘lesser of’’ requirement finalized in 

§ 422.100(f)(8). We used contract year 

2023 Medicare FFS data projections 

(based on 2017–2021 Medicare FFS 

data) to calculate the final cost sharing 

limits for contract year 2023. The 

calculations CMS made to reach these 

final contract year 2023 copayment 

limits for the ‘‘physical therapy and 

speech-language pathology’’ service 

category (for plans that establish a 

mandatory MOOP limit) are available in 

Table 14B. Similar calculations were 

made to reach the final contract year 

2023 copayment limits in Table 28 for 

the other professional service categories 

and types of MOOP limits. 

Although this rule continues to 

permit certain MA plans to have cost 

sharing obligations of up to 50 percent 

for certain basic benefits, the cost 

sharing standards and the MOOP limit 

requirements (section II.A. of this FC) 

will apply together to protect enrollees. 


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43See page 202 of the CY 2019 Final Call Letter 

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

MedicareAdvtgSpecRateStats/Downloads/ 

Announcement2019.pdf. 

44The online Medicare Compliant Form may be 

accessed and submitted at: https://

www.medicare.gov/medicarecomplaintform/ 

home.aspx. 

We expect this, in conjunction with the 

other cost sharing standards being 

finalized in this FC, to produce a 

corresponding level of beneficiary and 

plan incentive that is unique to each 

type of MOOP limit, because plans with 

lower MOOP limits receive the most 

cost sharing flexibility. Under section 

1854(a)(5)(C)(ii) of the Act, CMS is 

authorized to deny a plan bid if the bid 

proposes significant increases in 

enrollee costs or decrease in benefits 

from one plan year to the next. A plan’s 

TBC is the sum of the plan-specific Part 

B premium, plan premium, and 

estimated enrollee out-of-pocket costs. 

The TBC evaluation is applied at the 

plan level to ensure enrollees in each 

applicable plan are not subject to too 

significant an increase in costs or 

decrease in benefits from one plan year 

to the next. As stated previously, MA 

organizations typically offer benefits 

with lower cost sharing amounts than 

the annual limits published by CMS; we 

believe this is due to multiple factors 

(other than the TBC standard), including 

the principles and incentives inherent 

in managed care, effective negotiations 

between organizations and providers, 

and market competition. For MA plans 

that choose to establish the highest level 

of cost sharing permitted by 

§ 422.100(f)(6), they must also ensure 

that: (1) Total MA cost sharing for all 

basic benefits, excluding out of network 

benefits covered by a regional MA plan, 

must not exceed cost sharing for those 

benefits in original Medicare on a per 

member per month actuarially 

equivalent basis; (2) for specific basic 

benefits in § 422.100(j), in-network cost 

sharing established by an MA plan must 

not exceed the cost sharing required 

under original Medicare; and (3) 

additional cost sharing standards for the 

plan benefit package service category or 

for a reasonable group of benefits or 

services covered under the plan must be 

met. In addition, in evaluating which 

benefits would have the highest cost 

sharing, MA organizations must be 

mindful not to discriminate against 

enrollees based on health status. For 

example, for contract year 2019,43 the 

cardiac and pulmonary rehabilitation 

service categories (utilized by enrollees 

with certain health conditions such as 

heart failure and Chronic Obstructive 

Pulmonary Disease (COPD)) were areas 

of concern and CMS conducted 

additional scrutiny of MA plans with 

higher cost sharing amounts for those 

services to ensure that the plan designs 

were not discriminatory. CMS has the 

authority to continue to evaluate plans 

for potential discrimination through 

these mechanisms as discussed is 

section II.B.5.a. of this FC. 

We note the example provided by a 

commenter of a $65 copayment for a 

physical therapy visit is above the $40 

copayment limit for the in-network 

‘‘physical therapy and speech-language 

pathology’’ service category for 

approved bids for contract year 2020 

(which was in effect at the time of the 

public comment period and for contract 

year 2021 and 2022). MA organizations 

contract with providers, including 

physical therapists, to provide services 

to enrollees. The terms of contractual 

arrangements include provider 

reimbursement, which may also include 

enrollee cost sharing that the provider is 

permitted to collect. If enrollees believe 

that an MA organization is not 

providing adequate access to services or 

its contracted providers are not billing 

enrollees correctly, complaints may be 

submitted online 44 or by calling 1–800– 

MEDICARE. CMS monitors and 

investigates complaints related to plan 

coverage and CMS caseworkers assist in 

the resolution of issues with MA 

organizations. To protect enrollees, CMS 

may take compliance or enforcement 

actions against an MA organization for 

failing to meet any contract 

requirements, such as providing 

adequate access to medically necessary 

services, as warranted. In addition, 

enrollees who have complaints about 

their MA plan may file a grievance 

under § 422.564 and, if they believe that 

benefits have been improperly denied, 

file an appeal under the rules in 

§§ 422.562 through 422.619. 

We appreciate the feedback and are 

finalizing our proposals for cost sharing 

for professional services with moderate 

modifications; we are finalizing the 

methodology used to calculate MA cost 

sharing standards for professional 

services and calculating a range of cost 

sharing limits for benefits furnished on 

an in-network basis based on the MOOP 

type established by the MA plan. The 

modifications include using a 4-year 

transition to the proposed 30, 40, and 50 

percent coinsurance and actuarially 

equivalent copayment limits (finalized 

at § 422.100(f)(6)(iii) and (f)(8)). In 

addition, we are finalizing various edits 

and restructuring of the regulation text 

to improve clarity in the regulations. By 

implementing more than two levels of 

MOOP limits and limiting the scope of 

services on which the highest allowable 

cost sharing could be imposed (50 

percent), we expect to encourage plan 

offerings with favorable benefit designs 

so that beneficiaries can choose MA 

plans that meet their needs. CMS will 

monitor whether changes from this FC 

result in beneficiaries having access to 

plan offerings with MOOP limits below 

the mandatory MOOP limit and lower or 

comparable cost sharing when 

compared to existing benefit packages 

over time. 

This rule is focused on addressing 

particular ways that cost sharing 

structures could be used to discourage 

enrollment by beneficiaries with 

significant or costly health needs. 

Prohibitions on discrimination continue 

to apply in the MA program and CMS 

takes its role in guarding against 

discrimination on the basis of health 

status seriously. CMS reviews cost 

sharing based on the current limits that 

are intended to address discrimination 

based on health needs and based on 

other standards regulating cost sharing, 

such as requirements in current 

§ 422.100(j) and (k) for certain services 

to have cost sharing that does not 

exceed cost sharing in original 

Medicare. CMS will incorporate the 

standards adopted in this FC into those 

reviews, beginning with reviews of bids 

for contract year 2023. We will not 

approve a plan bid if its proposed 

benefit design substantially discourages 

enrollment in that plan by certain 

Medicare-eligible individuals, and cost 

sharing structures are an important 

consideration in our reviews. For 

example, CMS analyzes plan bid 

submissions to evaluate whether cost 

sharing levels satisfy MA requirements 

and are defined or administered in a 

manner that may discriminate against 

sicker or higher-cost beneficiaries. 

These analyses also may evaluate the 

impact of benefit design on beneficiary 

health status and/or certain disease 

states. CMS contacts MA organizations 

to discuss any issues that are identified 

in MA plan bids as a result of these 

analyses and seeks correction or 

adjustment of the bid as necessary. CMS 

is not required to accept every bid and 

has authority to negotiate the benefits 

offered by MA plans under section 

1854(a)(5) and (6) of the Act. CMS will 

also continue evaluations and 

enforcement of the current authority 

prohibiting plans from misleading 

beneficiaries in their communication 

materials and continue efforts to 

improve plan comparison tools and 

resources (for example, Medicare Plan 

Finder, Medicare & You, and 1–800– 

MEDICARE). 


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In CMS’s experience, for the most part 

MA organizations typically offer 

benefits with lower cost sharing 

amounts than the standards CMS 

calculates. However, we are concerned 

about benefit designs that have innetwork cost sharing at the highest 

allowable level for a subset of benefits, 

including mental health services as 

discussed in section III. of this FC. In 

light of these concerns, we are 

considering whether cost sharing limits 

for mental health care, such as mental 

health specialty services, psychiatric 

services, partial hospitalization, opioid 

treatment program services, and 

treatment for substance use disorders 

should be subject to additional cost 

sharing limits, such as a requirement 

that cost sharing for those service not 

exceed cost sharing in original 

Medicare. As discussed in section III. of 

this FC, we seek comments for 

consideration should we choose to 

pursue future rulemaking on this topic. 

While we do not expect to release new 

rulemaking on this topic in time to 

apply to contract year 2023, we will rely 

on our existing authority to closely 

review plan designs for potential 

disparity in cost sharing for mental 

health and psychiatric services 

compared to other professional services 

and to review significant increases in 

enrollee costs. CMS may not approve a 

plan if the MA organization cannot 

sufficiently explain how their plan 

design is not discriminating against 

beneficiaries that need mental health 

and psychiatric services. 

c. Cost Sharing Limits for Inpatient 

Hospital Acute and Psychiatric Services 

(§ 422.100(f)(6)(iv)) 

Comment: A few commenters were 

generally supportive of CMS’s proposals 

in section VI.B.2. of the February 2020 

proposed rule related to inpatient 

hospital acute and psychiatric services. 

A commenter supported CMS adding a 

3-day length of stay scenario for 

inpatient hospital acute services and an 

8-day length of stay scenario for 

inpatient hospital psychiatric services. 

This commenter noted that inpatient 

hospital services have a high Medicare 

utilization and therefore provide a large 

actuarial value and greater incentive for 

a plan to choose to establish a lower 

(previously ‘‘voluntary’’) MOOP limit. 

Response: We thank commenters for 

supporting our proposal related to 

additional length of stay scenarios for 

inpatient hospital acute and psychiatric 

services and differentiating the cost 

sharing limits by the MOOP type 

established by the MA plan. We agree 

that permitting greater variation in cost 

sharing for inpatient hospital services 

may provide an incentive for MA 

organizations to offer plans with lower 

MOOP types. This flexibility allows MA 

organizations to vary cost sharing for 

highly utilized services in exchange for 

a lower MOOP amount that may better 

meet enrollee needs. 

We are finalizing § 422.100(f)(6)(iv) 

and (f)(6)(iv)(A)–(D) with additional 

edits to consistently use the same 

language to reference the inpatient 

hospital acute and psychiatric service 

categories for which CMS calculates 

cost sharing limits and the length of stay 

scenarios used by CMS to evaluate plan 

cost sharing for those inpatient 

scenarios. Cost sharing for in-network 

basic benefits that are inpatient hospital 

acute and psychiatric service categories 

must not exceed a specified percentage 

of original Medicare cost sharing for the 

length of stay scenarios based on 

original Medicare cost sharing for a new 

benefit period. As finalized in paragraph 

(f)(6)(iv)(A), this requirement is subject 

to new paragraph (f)(7) (discussed in 

detail in section II.B.5.a. of this FC). In 

brief, this means that the inpatient 

hospital cost sharing limits are 

calculated (and plan cost sharing 

amounts are evaluated) using generally 

accepted actuarial principles and 

practices (as finalized in paragraph 

(f)(7)(i)). In addition, the inpatient 

hospital cost sharing limits for contract 

year 2024 and future years will be 

issued annually through the 

subregulatory process in paragraph 

(f)(7)(iii). In paragraph (f)(6)(iv)(B), we 

are not finalizing the reference to an 

inpatient facility as we believe 

individuals could interpret the word 

facility in a stricter fashion than how 

the cost sharing limits will be applied; 

finalizing paragraph (f)(6)(iv)(B) without 

this reference will more accurately 

reflect how the cost sharing limits in 

paragraph (f)(6)(iv) work and how MA 

organizations may deliver inpatient 

services. In addition, we are revising the 

descriptions of the length of stay 

scenarios to focus on the purpose of the 

stay (acute versus psychiatric). We are 

finalizing the proposed rounding rules 

for inpatient hospital acute and 

psychiatric cost sharing limits in 

paragraph (f)(6)(ii) and we are not 

including a reference to those rounding 

rules in paragraph (f)(6)(iv) because we 

believe paragraph (f)(6)(ii) is sufficiently 

clear about when the rounding rules 

apply. 

We clarify in § 422.100(f)(6)(iv)(C) 

that CMS calculates the inpatient 

hospital acute and psychiatric service 

category cost sharing limits annually 

using projections of out-of-pocket costs 

and utilization for the applicable year 

and length of stay scenario and factors 

in out-of-pocket costs incurred by 

beneficiaries with diagnoses of ESRD on 

the transition schedule described in 

paragraphs (f)(4)(vi)(A) through (B); the 

cross reference is updated from the 

proposed reference to paragraphs 

(f)(4)(vii)(A) through (D) based on 

reorganization of the regulation text 

addressing the ESRD cost transition, as 

discussed in section II.A. of this FC. In 

addition, we removed the reference to 

exceptions for MOOP limit calculations 

in paragraphs (f)(4)(v)(A) and (C) in 

paragraph (f)(4)(iv)(C) as this FC does 

not include the provision that delays the 

schedule of incorporating ESRD costs 

into the methodology CMS uses to 

calculate MOOP limits (as discussed in 

section II.A. of this FC). This means that 

CMS is calculating the inpatient 

hospital acute and psychiatric service 

category cost sharing limits for contract 

year 2023 using projected Medicare FFS 

beneficiary out-of-pocket spending, 

which necessarily includes both costs 

and utilization data, for beneficiaries 

without diagnoses of ESRD plus 70 

percent of the ESRD cost differential. 

Then, for contract year 2024 and 

subsequent years CMS will calculate the 

inpatient hospital acute and psychiatric 

service category cost sharing limits 

using Medicare FFS data projections (as 

defined in paragraph (f)(4)(i), which 

includes data for beneficiaries with and 

without diagnoses of ESRD). In 

addition, as proposed, we are finalizing 

that CMS may also use patient 

utilization information from MA 

encounter data in developing the length 

of stay scenarios. In summary, CMS 

implements the inpatient hospital cost 

sharing limits set in paragraph (f)(6)(iv) 

by evaluating the plan’s cost sharing for 

each length of stay scenario in 

comparison to the specific limits that 

are calculated and published annually 

(as finalized in paragraphs (f)(6)(iv)(C) 

and (f)(7)(iii)). Inpatient hospital cost 

sharing above the annual limits for any 

one of the length-of-stay scenarios is not 

permissible. 

In finalizing § 422.100(f)(6)(iv)(D), we 

are including several clarifying 

modifications. Final paragraph (f)(6)(iv) 

includes the requirement that the total 

cost sharing for the inpatient benefit 

must not exceed the plan’s MOOP limit 

or overall cost sharing for those benefits 

in original Medicare on a per member 

per month actuarially equivalent basis. 

We are not finalizing this provision only 

in paragraph (f)(6)(iv)(D)(3), which was 

proposed, because we intend this 

requirement to apply regardless of the 

type of MOOP limit used by the MA 

plan. This modification clarifies our 

policy and makes paragraph (f)(6)(iv) 


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consistent with our proposal in section 

VI.B.4. in the February 2020 proposed 

rule (and finalized in section II.B.5.f. of 

this FC) to include in 

§ 422.100(j)(2)(i)(A) that MA cost 

sharing for inpatient hospital acute and 

psychiatric services must not exceed the 

cost sharing in original Medicare (for 

the period during which original 

Medicare has cost sharing) on a per 

member per month actuarially 

equivalent basis. Our proposal in 

paragraph (j)(2)(i)(A) was to codify that 

this requirement applies for any type of 

MOOP limit. Considering how our 

proposals in paragraphs (f)(6)(iv) and 

(j)(2)(i)(A) combine for cost sharing 

standards for the inpatient hospital 

service categories, we believe stating 

this requirement in paragraph 

(f)(6)(iv)(D) to apply to all MOOP types 

is clearer and ensures that the overall 

cost sharing limit policies are 

consistent. 

We are finalizing 

§ 422.100(f)(6)(iv)(D)(1) and (3) with 

minor modifications to clarify that the 

cost sharing limits for inpatient hospital 

acute and psychiatric length of stay 

scenarios are based on the projected Part 

A deductible and related Part B costs, 

which is consistent with the illustrative 

calculations in the February 2020 

proposed rule, the final contract year 

2023 inpatient hospital cost sharing 

limits included in Table 28, and 

longstanding CMS methodology. Our 

proposal did not include the word 

‘‘projected,’’ and we wish to ensure 

clarity and consistency on this point 

that the projected Part A deductible and 

related Part B costs for the applicable 

year will be used. The February 2020 

proposed rule would have permitted 

MA plans with a lower MOOP amount 

to establish cost sharing above 125 

percent of estimated Medicare FFS cost 

sharing for the inpatient acute 60-day 

length of stay, as long as the total 

inpatient benefit cost sharing does not 

exceed the MOOP limit or cost sharing 

for those benefits in original Medicare 

on a per member per month actuarially 

equivalent basis. This was proposed as 

part of paragraph (f)(6)(iv)(D)(3) and is 

largely being finalized as proposed. 

Even though the MA plan may use cost 

sharing that, for this specific 60-day 

scenario, is higher than 125 percent of 

original Medicare cost sharing for that 

scenario, the cost sharing for that length 

of stay is capped at the lower MOOP 

amount, and overall cost sharing for 

inpatient services must not exceed 

original Medicare cost sharing for that 

benefit category on a PMPM basis. 

While CMS provides this flexibility for 

plans that establish a lower MOOP 

amount, we expect that the competition 

to offer plans that attract beneficiaries is 

an important incentive for MA 

organizations and will factor into how 

MA organizations establish cost sharing 

for the inpatient hospital benefit portion 

of the basic benefit package. In 

summary, the modifications to 

paragraphs (f)(6)(iv)(D)(1) and (3) 

include clarifying: (1) The cost sharing 

for the entire inpatient benefit must not 

exceed the MOOP amount for the MA 

plan; (2) projected cost sharing for the 

Medicare FFS program will be used; and 

(3) that the flexibility to establish cost 

sharing above 125 percent of estimated 

Medicare FFS cost sharing is limited to 

MA plans with a lower MOOP amount 

and only to the inpatient hospital acute 

60-day length of stay scenario. 

We are finalizing 

§ 422.100(f)(6)(iv)(D)(2) with revisions 

as well. The revised text adjusts 

inpatient hospital acute and psychiatric 

cost sharing limits for MA plans that 

establish an intermediate MOOP limit in 

order to address flexibilities and unique 

situations. We proposed that inpatient 

hospital acute and psychiatric cost 

sharing limits for MA plans that 

establish an intermediate MOOP limit 

be based on the numeric midpoint 

between the cost sharing limits 

established for the mandatory and lower 

MOOP limits. As proposed and 

finalized in paragraph (f)(6)(iv)(D) and 

(f)(6)(iv)(D)(3), MA plans with a lower 

MOOP limit have the flexibility to 

establish cost sharing above 125 percent 

of estimated Medicare FFS cost sharing 

in limited situations (discussed in the 

previous paragraph). Given this 

flexibility, we believe the cost sharing 

limit for MA plans that use an 

intermediate MOOP limit is more 

clearly stated as the numeric midpoint 

between the cost sharing limits 

established for the mandatory and lower 

MOOP limits for the same inpatient 

hospital length of stay scenario, before 

application of the rounding rules in 

paragraph (f)(6)(ii). While MA plans that 

establish a lower MOOP amount have 

the flexibility to establish cost sharing 

above 125 percent in limited situations, 

operationally the cost sharing limit is 

capped at the lower MOOP amount for 

that contract year. This will result in all 

of the inpatient hospital length of stay 

scenarios having a more precise cost 

sharing limit for the intermediate MOOP 

limit as that cost sharing limit will be 

based on a numeric midpoint between 

the cost sharing limits set for the 

mandatory and lower MOOP types (with 

ESRD costs factored in using the 

transition schedule in paragraph 

(f)(4)(vi) as finalized in paragraph 

(f)(6)(iv)(C)) after application of the 

MOOP limit cap. In addition, this 

revision will avoid the rounding rules in 

paragraph (f)(6)(ii) being unnecessarily 

applied twice in the calculation of the 

inpatient cost sharing limit for MA 

plans that use an intermediate MOOP 

type. For example, the cost sharing 

limits calculated for the inpatient acute 

3-day length of stay for the mandatory 

and lower MOOP limits have already 

been rounded when calculated to apply 

to MA plans with those types of MOOP 

limits and calculating a numeric 

midpoint between them could produce 

an amount that requires additional 

rounding in order to reach a whole 

dollar amount. In order to address these 

complexities, we are modifying 

paragraph (f)(6)(iv)(D)(2), so that cost 

sharing for the intermediate MOOP limit 

is based on the numeric midpoint 

between the cost sharing limits 

established in paragraphs (f)(6)(iv)(D)(1) 

and (3) for the same inpatient hospital 

length of stay scenario. The rounding 

rules finalized at § 422.100(f)(6)(ii) will 

then be applied to that dollar amount. 

This change would not have 

substantially affected most of the 

illustrative inpatient hospital acute and 

psychiatric cost sharing limits that were 

included in Table 5 (Illustrative 

Contract Year 2022 In-Network Service 

Category Cost Sharing Limits) in the 

February 2020 proposed rule. For 

example, by using the numeric 

midpoint between the illustrative 

copayment limits for the mandatory and 

lower MOOP types before the 

application of the rounding rules based 

on the same data used in the February 

2020 proposed rule and the proposed 

ESRD cost transition schedule, the 

illustrative contract year 2022 inpatient 

hospital acute 3-day length of stay 

scenario cost sharing limit for the 

intermediate MOOP limit would have 

been $2,106 (a $1 increase from the 

illustrative amount included in Table 5 

from the February 2020 proposed rule). 

However, using this more precise 

numeric midpoint would have 

substantially affected the illustrative 

inpatient hospital acute cost sharing 

limit for the 60-day length of stay 

scenario that was included in Table 5 in 

the February 2020 proposed rule for the 

intermediate MOOP limit. The 

illustrative value for the inpatient 

hospital acute 60-day length of stay for 

the intermediate MOOP limit in Table 5 

of the February 2020 proposed rule was 

$5,514. This value was calculated using 

the proposed ESRD cost transition 

schedule and was based on the numeric 

midpoint between 125 and 100 percent 

of estimated Medicare FFS cost sharing 


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for an inpatient hospital acute 60-day 

length of stay. As a result, the $5,514 

illustrative copayment limit did not 

reflect the numeric midpoint between 

the $4,902 illustrative copayment for the 

mandatory MOOP limit and the cap of 

the lower MOOP limit ($3,450 for 

contract year 2022 as illustrated in 

Table 4 of the February 2020 proposed 

rule) that would be applied in this 

scenario (reflected as ‘‘N/A’’ in Table 5 

of the February 2020 proposed rule). 

Instead, the illustrative copayment limit 

for the intermediate MOOP type (based 

on the same data used in the February 

2020 proposed rule and the proposed 

ESRD cost transition schedule) using the 

precise numeric midpoint should have 

been $4,176 (a $1,338 decrease from the 

$5,514 illustrative amount for the 

inpatient hospital acute 60-day length of 

stay scenario included in Table 5 from 

the February 2020 proposed rule). Using 

the numeric midpoint between the 

actual, calculated cost sharing limits 

(that is the dollar amounts) for the 

mandatory and lower MOOP types 

would be consistent with all of the other 

illustrative inpatient hospital cost 

sharing limits for all of the other length 

of stay scenarios applied to the 

intermediate MOOP. The other cost 

sharing limits for the intermediate 

MOOP were not impacted by the cap of 

the lower or mandatory MOOP limits for 

the other length of stay scenarios as 

those amounts did not exceed the 

illustrative MOOP limits for that 

contract year. This approach of using 

the precise numeric midpoint of the cost 

sharing limits applied to the mandatory 

and lower MOOP types to calculate the 

cost sharing limit for the same length of 

stay scenario for the intermediate 

MOOP limit, as finalized in paragraph 

(f)(6)(iv)(D)(2), is reflected in the final 

contract year 2023 inpatient hospital 

acute and psychiatric cost sharing limits 

in Table 28. The figures in Table 28 are 

calculated using projections of 2017– 

2021 Medicare FFS data and the 

finalized ESRD cost transition schedule 

as discussed in a following response to 

comment in this section. 

We believe it is important to reiterate 

that cost sharing limits applicable for 

any service category cannot exceed the 

associated MOOP limit, including the 

inpatient hospital acute and psychiatric 

length of stay scenarios as finalized in 

§ 422.100(f)(6)(iv). CMS did not propose 

to allow, and would not approve a plan 

bid that allowed, inpatient hospital cost 

sharing above the related MOOP amount 

for that plan. The flexibility to establish 

cost sharing above 125 percent of 

estimated Medicare FFS cost sharing for 

the inpatient hospital acute 60-day 

length of stay scenario for MA plans 

with a lower MOOP amount (in 

paragraph (f)(6)(iv)(D)(3)) is effectively 

capped at the lower MOOP limit. In 

addition, if the MA plan establishes a 

MOOP amount less than the highest 

allowable lower MOOP limit, then the 

cost sharing for the inpatient hospital 

acute 60-day length of stay scenario 

would also be capped at the MA plan’s 

actual MOOP amount. Consistent with 

current practice, for MA plans that 

establish a coinsurance for inpatient 

hospital standards, supporting 

documentation must be submitted with 

the initial bid showing how the plan’s 

coinsurance amount satisfies the 

standards under § 422.100(f)(6)(iv). This 

will follow the same process discussed 

in section II.B.5.a. of this FC for when 

an MA plan must provide 

documentation to support its cost 

sharing and CMS would generally 

review this documentation as part of its 

bid evaluation. This is consistent with 

the overall standard of MA plans not 

being able to charge the enrollee an 

amount higher than the MOOP amount 

they establish. 

In Table 5 (Illustrative Contract Year 

2022 In-Network Service Category Cost 

Sharing Limits) from the February 2020 

proposed rule, we listed the cost sharing 

limit for the inpatient hospital acute 60- 

day length of stay scenario for MA plans 

that establish a lower MOOP amount as 

‘‘N/A’’ to reflect the flexibility MA 

organizations have in establishing cost 

sharing above 125 percent of estimated 

Medicare FFS cost sharing. However, 

using projections of Medicare FFS data 

from 2015–2019 that was available at 

the time of writing the February 2020 

proposed rule, a cost sharing limit at 

125 percent of estimated Medicare FFS 

cost sharing (plus 80 percent of the 

ESRD cost differential for contract year 

2022 as proposed) would have been 

$6,127. This amount is $2,677 higher 

than the illustrative contract year 2022 

in-network lower MOOP limit of $3,450 

shown in Table 4 (Illustrative Example 

of In-Network MOOP Limits Based on 

Most Recent Medicare FFS Data 

Projections) of the February 2020 

proposed rule. The value of 125 percent 

of estimated Medicare FFS cost sharing 

using updated projections of Medicare 

FFS data (from 2017–2021) and the 

finalized ESRD cost transition schedule 

for the inpatient hospital acute 60-day 

length of stay scenario also exceeds the 

final contract year 2023 lower MOOP 

limit ($7,162 compared to $3,650). In 

order to be clear about the highest 

allowable inpatient hospital cost sharing 

that an enrollee could experience, we 

updated the ‘‘N/A’’ for the 60-day length 

of stay scenario to the final contract year 

2023 in-network lower MOOP limit 

amount in Table 28 (that is, $3,650 as 

listed in Table 5 and discussed in 

section II.A. of this FC). The complete 

list of final contract year 2023 inpatient 

hospital cost sharing limits is available 

in Table 28, which were calculated 

using the rules finalized in 

§ 422.100(f)(6)(iv) and the data 

described in § 422.100(f)(4)(vi)(A) (that 

is, projected Medicare beneficiary out of 

pocket spending for 2023 for 

beneficiaries without diagnoses of ESRD 

plus 70 percent of the ESRD cost 

differential). 

MA plans that establish a lower 

MOOP amount will effectively have a 

cost sharing limit for the inpatient acute 

60-day length of stay scenario that is 

calculated at the in-network lower 

MOOP limit amount whenever the 

calculations of 125 percent of Medicare 

FFS cost sharing exceed the lower 

MOOP limit. The dollar amount which 

is applied as the cost sharing limit, 

before rounding, is used in the 

calculation of the inpatient acute 60-day 

length of stay scenario cost sharing limit 

for MA plans that establish an 

intermediate MOOP limit (as discussed 

previously in this response and 

finalized in § 422.100(f)(6)(iv)(D)(2)).The 

cost sharing limits for the intermediate 

MOOP limit will be calculated using the 

numeric midpoint of the cost sharing 

limits established for the mandatory and 

lower MOOP limits, consistent with 

proposed § 422.100(f)(6)(iv)(D)(2). Based 

on the methodology finalized to 

calculate the cost sharing limit for an 

inpatient acute hospital 60-day length of 

stay for the intermediate MOOP limit 

and the projections of Medicare FFS 

out-of-pocket costs and utilization based 

on 2017–2021 Medicare FFS data and 

using 70 percent of the ESRD cost 

differential, the associated cost sharing 

calculation for contract year 2023 equals 

$4,690 after applying the rounding rules 

in § 422.100(f)(6)(ii). In comparison, the 

final contract year 2023 in-network 

intermediate MOOP limit is $6,000 (as 

listed in Table 5 and discussed in 

section II.A. of this FC). As a result, for 

MA plans with an intermediate MOOP, 

the final contract year 2023 cost sharing 

limit for this 60-day length of stay 

inpatient hospital acute scenario is 

$4,690 (as listed in Table 28) as it does 

not exceed the associated MOOP limit 

for contract year 2023. CMS will 

continue this process of comparing cost 

sharing limits calculated using the 

methodology in paragraph (f)(6)(iv) to 

the related MOOP limit before issuing 

the specific cost sharing limits for 


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inpatient services for contract year 2024 

and future years. 

In summary, we believe listing 

specific dollar amounts (instead of ‘‘N/ 

A’’) in Table 28 clarifies and avoids 

potential confusion about the level of 

flexibility MA plans have, including 

those that establish a lower MOOP 

amount, under § 422.100(f)(6)(iv). 

Listing the in-network MOOP amounts 

when applicable for particular inpatient 

length of stay scenarios in Table 28 and 

in subregulatory guidance for future 

contract years does not nullify the 

requirement that the total cost sharing 

for the inpatient benefit must not exceed 

the cost sharing for inpatient benefits in 

original Medicare on a per member per 

month actuarially equivalent basis. In 

addition, CMS provides instructions 

describing how excess cost sharing is 

evaluated using BPT information to 

satisfy the per member per month 

actuarially equivalent requirement for 

the benefit categories subject to 

§ 422.100(j)(2) (including inpatient) in 

section II.B.5.f. of this FC. Our 

evaluations of the per member per 

month limits are specific to each MA 

plan bid and will happen during CMS 

review of bids, consistent with 

longstanding practice. For contract year 

2024 and future years, instructions on 

these topics will be provided as part of 

the annual issuance of subregulatory 

guidance required by paragraph 

(f)(7)(iii). 

Comment: A commenter generally 

supported CMS’s proposal to 

consistently implement a multiyear 

transition of ESRD costs into the 

methodology CMS uses to set inpatient 

hospital acute and psychiatric cost 

sharing limits and MOOP limits. This 

commenter requested that CMS 

accelerate the transition of ESRD costs 

to align with the OACT’s projections of 

how quickly beneficiaries with 

diagnoses of ESRD may enroll in the 

MA program and apply the accelerated 

transition schedule to the methodology 

CMS uses to set inpatient hospital acute 

and psychiatric services cost sharing 

limits and MOOP limits. The 

commenter included an example of a 

shortened schedule CMS could consider 

that would incorporate the ESRD cost 

differential as follows: 50 percent in 

2021, 75 percent in 2022, and 100 

percent in 2023. In addition, a 

commenter requested CMS release the 

methodology used for setting inpatient 

hospital acute and psychiatric services 

cost sharing limits in subregulatory 

guidance each year consistent with 

guidance on the MOOP limit 

methodology. 

Another commenter opposed CMS 

transitioning any ESRD costs into the 

methodology CMS uses to set inpatient 

hospital acute and psychiatric cost 

sharing limits. The commenter noted 

that by transitioning ESRD costs into the 

methodology that CMS uses to establish 

cost sharing limits for the 60-day length 

of stay scenario for inpatient hospital 

acute services, the resulting maximum 

cost sharing limits exceed 100 percent 

of the Medicare FFS cost sharing for 

individuals without diagnoses of ESRD. 

They explained that this results in cost 

sharing limits for the inpatient hospital 

acute service category that are not 

actuarially equivalent for the population 

of beneficiaries without diagnoses of 

ESRD and including ESRD costs in the 

methodology CMS uses to set inpatient 

hospital acute and psychiatric cost 

sharing limits could cause unintended 

disruption or unmanageable costs for 

beneficiaries without diagnoses of 

ESRD. In addition, the commenter noted 

establishing inpatient hospital cost 

sharing limits that are not actuarially 

equivalent for the non-ESRD population 

is illustrative of the concerns they have 

in general with the changes CMS 

proposed to address the increased MA 

plan cost due to changes in eligibility 

for beneficiaries with ESRD. The 

commenter explained that the changes 

CMS proposed involve various forms of 

cost subsidization by enrollees without 

diagnoses of ESRD, such as use of the 

ESRD subsidy in the Bid Pricing Tool 

(BPT), MOOP limit increases, and 

increases in Part C cost sharing limits. 

The commenter believed this non-ESRD 

enrollee cost subsidization will 

financially strain MA organizations and 

beneficiaries, and as a consequence, 

may reduce competition and beneficiary 

choice. 

Response: We appreciate the feedback 

on our proposed schedule of 

transitioning ESRD costs into the 

methodology CMS uses to calculate cost 

sharing limits for inpatient hospital 

acute and psychiatric services and have 

taken these concerns and suggestions 

under consideration. We agree that the 

ESRD cost transition should be 

consistently applied to both 

methodologies: For calculating cost 

sharing for inpatient hospital services 

and for calculating MOOP limits. This 

use of a consistent transition and 

approach to incorporating the ESRD 

costs will provide stability to MA 

organizations as they can anticipate 

changes for the upcoming years. In 

addition, a consistent application will 

ease administrative burden (by avoiding 

an overly complicated methodology) 

and be more transparent and 

understandable to stakeholders. As 

discussed in section II.B.5.b. and e. of 

this FC, the actuarially equivalent 

copayment transition in § 422.100(f)(8) 

is only applicable to service categories 

subject to § 422.100(f)(6)(iii) and (j)(1). 

Specifically, we are not incorporating an 

actuarially equivalent copayment 

differential (finalized in paragraph 

(f)(8)(i)) to the inpatient services cost 

sharing standards in paragraph (f)(6)(iv). 

Combining the ESRD cost and 

actuarially equivalent copayment 

transitions would result in an overly 

complicated methodology for the cost 

sharing limits for inpatient hospital 

acute and psychiatric services. Further, 

we proposed a specific and separate 

methodology (the ESRD cost transition) 

in order to mitigate potentially 

disruptive changes to the cost sharing 

limits for inpatient hospital acute and 

psychiatric services. We believe our 

final policy for paragraph (f)(6)(iv) 

(discussed subsequently in this 

response) is sufficient to mitigate 

disruptive changes. 

We agree that inpatient acute cost 

sharing limits are projected to continue 

increasing at a greater rate than if ESRD 

costs were excluded and understand the 

commenter’s concern about non-ESRD 

enrollees subsidizing the costs related to 

the expansion of enrollment into the 

MA program by beneficiaries with 

diagnoses of ESRD. However, the 21st 

Century Cures Act required CMS to lift 

the enrollment restrictions for 

beneficiaries with diagnoses of ESRD 

beginning in 2021 and those 

beneficiaries are now eligible for MA 

enrollment on the same basis as other 

beneficiaries. Setting up separate benefit 

structures by using different cost 

sharing for MA enrollees based on 

whether they have been diagnosed with 

ESRD is not consistent with the 

Medicare statute, particularly sections 

1852 and 1854(c) of the Act. 

Beneficiaries with diagnoses of ESRD 

are entitled to Medicare and therefore 

entitled to the same benefits and benefit 

options as other beneficiaries. The plan 

benefit package (PBP) portion of the bid 

requires uniformity in benefits and cost 

sharing pursuant to the uniformity 

requirements in §§ 422.4 (the definition 

of an MA plan), 422.100(d) and 

422.254(b)(2). Characterizing benefit 

analysis by pitting healthier enrollees 

against sicker enrollees ignores the 

uniformity requirements and would 

discourage enrollment by less healthy 

beneficiaries into MA plans. Our 

approach to incorporate costs of 

beneficiaries with diagnoses of ESRD in 

setting inpatient hospital cost sharing 

limits is consistent with the approach 

CMS has historically used of spreading 

the burden of medical costs across all 


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45See the HPMS memorandum titled ‘‘Final 

Contract Year 2021 Part C Benefits Review and 

Evaluation,’’ issued April 8, 2020 for information 

on MOOP limits for contract year 2021. 

46See the HPMS memorandum titled ‘‘Final 

Contract Year 2022 Part C Benefits Review and 

Evaluation,’’ issued May 20, 2021 for information 

on MOOP limits for contract year 2022. 

potential MA enrollees uniformly 

through the continued use of the 

projected Part A deductible and related 

Part B costs for the population that is 

eligible to enroll in an MA plan. In 

addition, we proposed to transition 

ESRD costs over multiple years in a 

transparent and standardized approach 

to avoid sudden, significant disruption 

and unexpectedly higher costs for 

beneficiaries. Specifically, we expect 

conducting a multiyear transition of 

ESRD costs into our methodology to 

calculate MOOP and cost sharing limits 

is an important and necessary step to 

ensure plan designs are not 

discriminatory and protect beneficiaries 

from significant changes in financial 

costs regardless of the MA plan they 

choose. Bids are based on the projected 

revenue requirements of the MA plan to 

furnish benefits to the expected enrollee 

population of the plan. MA plan 

payments for enrollees with ESRD 

include separate (higher) ESRD 

capitation rates and an ESRD risk 

adjustment model for furnishing 

covered benefits on a uniform basis. 

CMS acknowledges and understands 

that some plans may adopt the 

mandatory MOOP limit, raise cost 

sharing for specific benefits where 

possible under the new cost sharing 

limits in this FC, or increase enrollee 

premiums, in part due to the costs they 

expect to incur to cover services for 

their enrollees. While some MA 

organizations have experience managing 

the health care services for beneficiaries 

with diagnoses of ESRD under the prior 

enrollment policy and during the first 

year of expanded enrollment eligibility, 

our proposal and the final policies 

provide incentives to MA organizations 

to adopt MOOP limits below the 

mandatory level and establish lower or 

comparable cost sharing when 

compared to existing benefit packages 

and utilize effective risk mitigation 

strategies. Our MOOP limit provision in 

section II.A. of this FC and the cost 

sharing limit policies addressed in 

section II.B. of this FC do not limit 

market competition and we expect 

beneficiary choice will continue to act 

as an incentive for MA organizations to 

offer favorable benefit designs. For 

example, we expect beneficiary choice 

will continue to drive MA organizations 

to offer supplemental benefits, such as 

vision and dental services. In addition, 

MA organizations can use multiple 

strategies to manage care and costs 

through provider contracting, 

reinsurance, care coordination, case 

management, plan benefit designs, and 

benefit flexibilities including additional 

telehealth benefits, Special 

Supplemental Benefits for the 

Chronically Ill (SSBCI), and our 

reinterpretation of the MA uniformity 

requirement (§ 422.100(d)(2)(ii)). We 

direct commenters to the June 2020 final 

rule (85 FR 33796) for how CMS 

finalized policies related to reinsurance 

(section IV.A.), SSBCI (section II.A.), 

and kidney acquisition costs (sections 

III.B. and III.B.) In addition, under 

section 1854(a)(5)(C) of the Act, CMS is 

authorized to deny a plan bid, including 

if it determines the bid proposes 

significant increases in enrollee costs or 

decrease in benefits from one plan year 

to the next. CMS is also authorized to 

negotiate with MA organizations 

regarding their bids by section 

1854(6)(B) of the Act. The cost sharing 

requirements adopted under this FC 

reflect what is minimally acceptable, for 

the various reasons discussed in detail 

throughout the February 2020 proposed 

rule and this FC, and by codifying them 

in regulations, these standards are 

transparent for MA organizations. If an 

MA organization’s bid represents too 

significant an increase in costs or 

decrease in benefits from the prior year, 

we have an established evaluation to 

identify that and engage with the MA 

organization to revise its bid. A plan’s 

TBC is the sum of the plan-specific Part 

B premium, plan premium, and 

estimated enrollee out-of-pocket costs. 

CMS uses the TBC standard to evaluate 

year over year changes when bids are 

submitted for the upcoming contract 

year. The TBC standard is applied at the 

plan level to ensure enrollees in each 

applicable plan are not subject to too 

significant an increase in costs or 

decrease in benefits from one plan year 

to the next. Because of the availability 

of these strategies and plan 

requirements, we do not expect that MA 

organizations will automatically pass on 

the anticipated increased costs 

associated with enrollees with 

diagnoses of ESRD onto the MA 

population as a whole. In fact, CMS has 

observed that historically MA 

organizations tend to reduce their profit 

margins, rather than substantially 

change their benefit package from one 

year to the next. While we appreciate 

the commenter’s suggestion to align the 

ESRD cost transition schedule with 

OACT’s projected rate of ESRD 

enrollment, we believe this would add 

another layer of complexity and 

potentially delay the transition process. 

As discussed in section II.A. of this FC, 

we did not propose to set the schedule 

for transitioning ESRD costs into MOOP 

and inpatient hospital cost sharing 

limits based upon OACT’s projection of 

ESRD enrollment because actual 

enrollment per plan may vary and 

OACT’s analysis reflects expectations 

for the MA program as a whole. As 

discussed in the February 2020 

proposed rule, the OACT expected 

ESRD enrollment in MA plans to 

increase by 83,000 beneficiaries as a 

result of the 21st Century Cures Act 

provision. The OACT assumed the 

increase would be phased in over 6 

years, with half of those beneficiaries 

(41,500) enrolling during 2021; the 

remaining 41,500 additional 

beneficiaries were expected to enroll in 

MA plans during the years 2022 to 2026 

under the assumption that the number 

of additional enrollees who have 

diagnoses of ESRD will continue to 

increase during that time frame though 

at a decreasing rate in later years. Based 

on actual 2021 enrollment data, the 

OACT continues to project that 83,000 

beneficiaries with diagnoses of ESRD 

will enroll in the MA program over 6 

years. If CMS were to match the 

transition of incorporating ESRD costs 

to that of OACT’s enrollment 

projections, we would be forced to delay 

the full transition of ESRD costs until 

2026. After publication of the February 

2020 proposed rule, CMS announced 

that it would take the Medicare FFS 

costs of beneficiaries with diagnoses 

ESRD into account in developing MOOP 

and cost sharing limits for 2021.45 The 

contract year 2021 inpatient hospital 

cost sharing limits (which encompassed 

40 percent of the ESRD cost differential) 

were maintained for contract year 2022 

while enrollment of beneficiaries with 

diagnoses of ESRD is projected to 

increase.46 As a result, CMS believes 

any further delays to the ESRD cost 

transition would not be beneficial as 

only 40 percent of the ESRD cost 

differential has been incorporated up to 

contract year 2022, the year the OACT 

projected total enrollment of 

beneficiaries with diagnoses of ESRD 

into the MA program to exceed 50 

percent. In addition, when developing 

our proposed ESRD cost transition 

schedule, we considered how OACT’s 

aggregate projections may not reflect the 

experiences in all geographic locations, 

which could have different rates of 

transition and changes in expenditures 

for providing care to beneficiaries with 

diagnoses of ESRD. Given these factors, 

we are not incorporating the request to 

set the schedule of transitioning ESRD 


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47See the HPMS memorandum titled ‘‘Final 

Contract Year 2022 Part C Benefits Review and 

Evaluation,’’ issued May 20, 2021. 

costs into MOOP and cost sharing limits 

based exactly on OACT’s projection of 

ESRD enrollment. 

For 2021, CMS set the voluntary and 

mandatory MOOP limits by applying 

the standard in current §§ 422.100(f)(4) 

and (5) and 422.101(d)(2) and (3). 

Because of the expected changes in 

enrollment in MA plans by beneficiaries 

with diagnoses of ESRD, we 

incorporated 40 percent of the ESRD 

cost differential for 2021 which 

increased both types of MOOP limits 

from 2020. The proposed 3-year 

transition schedule would have 

incorporated the ESRD cost differential 

as follows: 60 percent in 2022; 80 

percent in 2023 or next year; and 100 

percent in 2024 or the final year of 

transition. Our proposal attempted to 

strike a balance between providing plan 

stability while also protecting enrollees 

from rapid and significant cost and 

benefit changes. Based on the timing of 

this FC, the contract year 2021 MOOP 

limits were maintained for contract year 

2022 (applying the existing standard in 

current §§ 422.100(f)(4) and (5) and 

422.101(d)(2) and (3)). As a result, for 

purposes of the regulation text, our 

finalized methodology utilizes 2023 as 

the first year of the ESRD cost transition 

schedule. As discussed in section II.A. 

of this FC, we finalized the completion 

of the ESRD cost transition in the 

proposed time frame with a slightly 

lower incorporation of ESRD costs for 

contract year 2023; this change in 

schedule will also apply to the 

methodology CMS uses to calculate the 

inpatient hospital acute and psychiatric 

cost sharing limits as proposed and 

finalized in paragraph (f)(6)(iv)(C). In 

lowering the ESRD cost differential 

percentage for contract year 2023 

compared to our proposal for 2023, we 

aim to strike a balance between curbing 

potential disruptive changes in MOOP 

and inpatient services cost sharing 

limits from contract year 2022 and 

providing MA organizations the ability 

to continue offering all plan enrollees, 

regardless of their ESRD status, quality 

care and service while keeping 

premiums and cost sharing at nondiscriminatory levels. In summary, the 

final 2-year transition schedule we are 

codifying in paragraph (f)(4)(vi) 

incorporates the ESRD cost differential 

into the Medicare FFS data used for 

setting inpatient cost sharing limits as 

follows: 70 percent in 2023; and 100 

percent in 2024 or the final year of 

transition. This builds on how CMS has 

incorporated 40 percent of the ESRD 

cost differential in setting the inpatient 

hospital cost sharing limits for 2021 and 

2022. This transition schedule of ESRD 

costs remains a part of the final 

methodology CMS uses to calculate 

inpatient hospital cost sharing limits. 

As proposed and finalized in 

§ 422.100(f)(6)(iv)(C), the data used to 

calculate the inpatient hospital acute 

and psychiatric cost sharing limits will 

be aligned with the data used to 

calculate MOOP limits with regard to 

using the updated transition schedule to 

incorporate ESRD costs finalized in 

section II.A. of this FC. In applying this 

ESRD cost transition schedule, as 

finalized in section II.A. of this FC, the 

cross-reference is being updated to 

paragraph (f)(4)(vi)(A) through (B) and 

the reference to paragraph (f)(4)(v)(C) is 

being removed in the final regulation in 

paragraph (f)(6)(iv)(C). In addition, 

paragraph (f)(6)(iv)(C) has a slight 

modification to make the regulation text 

more consistent with the other 

modifications to the rules finalized for 

MOOP and cost sharing limits as 

discussed in sections II.A and II.B. of 

this FC. Specifically, the regulation text 

consistently refers to the out-of-pocket 

costs ‘‘incurred by’’ (rather than 

‘‘representing’’) beneficiaries with 

diagnoses of ESRD in describing the 

Medicare FFS data CMS would be using 

are projections for the applicable year 

and length of stay scenario in paragraph 

(f)(6)(iv)(C). This use of the phrase 

‘‘incurred by’’ here is not relevant to the 

cost sharing that MA plans must count 

toward the MOOP limit when 

determining if the MOOP has been 

reached by a particular enrollee. These 

changes are consistent with the 

language finalized in § 422.100(f)(4)(vii), 

(f)(6)(i)(B), (f)(6)(iii)(B), and (j)(1)(i)(F)(2) 

to clearly describe how Medicare FFS 

data projections are being used across 

MOOP limits and cost sharing 

standards. These changes are aligned 

with our proposals, the calculations of 

the illustrative inpatient hospital acute 

and psychiatric cost sharing limits from 

the February 2020 proposed rule, and 

the final contract year 2023 limits 

included in Table 28. 

As finalized, CMS is applying the 

ESRD cost transition consistently to the 

methodology for calculating cost sharing 

limits for inpatient hospital services and 

the methodology for calculating MOOP 

limits to provide stability to MA 

organizations. We are finalizing the 

proposal to use the same data and the 

transition schedule finalized for 

incorporating the ESRD cost differential 

that we adopted in connection with the 

MOOP limits, through the updated 

reference to paragraphs (f)(4)(vi)(A) 

through (B) in paragraph (f)(6)(iv)(C). 

We are not finalizing the tolling 

provision for incorporating the ESRD 

cost differential, so there is no need to 

address that part of the proposal in final 

§ 422.100(f)(6)(iv). Inpatient hospital 

cost sharing limits for contract year 

2021 were finalized through the HPMS 

memorandum titled ‘‘Final Contract 

Year 2021 Part C Benefits Review and 

Evaluation’’ issued April 8, 2020, and 

are not addressed in this rule; we used 

40 percent of the ESRD cost differential 

to set those cost sharing limits. In 

addition, the inpatient hospital cost 

sharing limits were maintained from 

contract year 2021 for contract year 

2022.47

Tables 18 and 19 illustrate how CMS 

calculated the final contract year 2023 

inpatient hospital acute cost sharing 

limits based on the MOOP type for the 

10-day length of stay scenario using the 

finalized policy in § 422.100(f)(6)(iv) 

and projections of contract year 2023 

costs based on 2017–2021 Medicare FFS 

data. In addition, Tables 20 and 21 

provide similar projections for the same 

inpatient hospital acute 10-day length of 

stay scenario to illustrate cost sharing 

limits for contract year 2024 using 

contract year 2023 Medicare FFS data 

projections (as projections for contract 

year 2024 were not available at the time 

of writing this FC). Tables 20 and 21 

illustrate how the completion of the 

finalized ESRD cost differential 

transition may affect the inpatient 

hospital cost sharing limits for contract 

year 2024. Tables 18 through 21 are 

similar to Table 4 (Illustrative Example 

of Cost Sharing Limits Based on Current 

Medicare FFS Data For Inpatient 

Hospital Acute 10-day Length of Stay 

Scenario) in the February 2020 

proposed rule, with updates to apply 

the methodology as finalized for 

comparison purposes. Specifically, the 

inpatient hospital cost sharing limits in 

Tables 18 through 21 were developed 

by: (1) Incorporating 70 percent of the 

projected ESRD cost differential for 

2023 and 100 percent of the ESRD cost 

differential for 2024 (the final year of 

the ESRD cost transition); (2) applying 

the modified methodology to calculate 

inpatient hospital cost sharing limits for 

MA plans with an intermediate MOOP 

limit (as discussed previously in a 

response to comment in this section); 

and (3) applying the rounding rules 

finalized in § 422.100(f)(6)(ii). Similar 

calculations as shown in Tables 18 and 

19 were completed to reach the final 

contract year 2023 inpatient hospital 

cost sharing limits for the other length 

of stay scenarios include in Table 28. 

As shown in Tables 18, 19, and 28, 

modifying the ESRD cost transition from 


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the proposed 80 percent to 70 percent 

in contract year 2023 and basing the 

amounts on projections using Medicare 

FFS data from 2017–2021 (compared to 

the 2015–2019 data available at the time 

of the February 2020 proposed rule) 

produced an increase from the amounts 

projected in the February 2020 proposed 

rule, using the proposed methodology; 

the highest allowable amount for an 

inpatient hospital acute 10-day length of 

stay scenario in contract year 2023 for 

an MA plan that establishes a 

mandatory MOOP amount increased by 

$242. However, we reiterate that the 

contract year 2024 inpatient hospital 

cost sharing limits in Tables 20 and 21 

are illustrative in nature and are subject 

to update using more recent Medicare 

FFS data projections when CMS issues 

the final cost sharing limits for contract 

year 2024 through the annual 

subregulatory process in 

§ 422.100(f)(7)(iii). We currently intend 

to calculate and set contract year 2024 

cost sharing limits using contract year 

2024 Medicare FFS data projections 

(based on 2018–2022 Medicare FFS 

data) after publication of this FC, which 

may vary from the illustrations in 

Tables 20 and 21. 

BILLING CODE 4120–01–P 


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TABLE 18: CMS CALCULATIONS OF THE FINAL CONTRACT YEAR 2023 

INPATIENT HOSPITAL ACUTE 10-DAY LENGTH OF STAY SCENARIO COST 

SHARING LIMITS FOR THE MANDATORY AND LOWER MOOP TYPES USING 

PROJECTIONS FROM 2017 - 2021 MEDICARE FFS DATA AND THE ESRD COST 

DIFFERENTIAL TRANSITION 

Mandatory Lower 

Row MOOP MOOP 

Reference Description Type Type 

A Projected Part A Deductible* $1,572.00 

B Projected Part B Professional Costs for a 10-day length $955.00 

of stay (with ESRD costs)* 

C Total estimated Medicare FFS cost sharing for a 10- $2,527.00 

day length of stay with ESRD costs (row A plus row 

B) 

D Projected Part B Professional Costs for a 10-day length $863.00 

of stay (without ESRD costs) 

E Total estimated Medicare FFS cost sharing for a 10- $2,435.00 

day length of stay without ESRD costs (row A plus 

rowD) 

F Allowable percentage of Medicare FFS estimated cost 100% 125% 

sharing by MOOP type per§ 422.100(f)(4)(iv) 

G Total cost sharing with ESRD costs (row C multiplied $2,527.00 $3,158.75 

by rowF) 

H Total cost sharing without ESRD costs (row E $2,435.00 $3,043.75 

multiplied by row F) 

I ESRD cost differential per§ 422.100(f)(4)(vi) (row G- $92.00 $115.00 

rowH) 

J 70% ofESRD cost differential per§ 422.100(f)(4)(vi) $64.40 $80.50 

(row I multiplied by 0.7) 

K Unrounded contract year 2023 cost sharing limit (row $2,499.40 $3,124.25 

H plus row J) 

L Rounded final contract year 2023 cost sharing limit per $2,499.00 $3,124.00 

§ 422.100(f)(6)(iv) (row K rounded per § 

422.1 00(f)(6)(ii)) 

*The OACT employed generally accepted actuarial principles and practices in calculating this projected amount (as finalized in§ 

422.100(f)(7). 
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TABLE 19: CMS CALCULATIONS OF THE FINAL CONTRACT YEAR 2023 

INPATIENT HOSPITAL ACUTE 10-DAY LENGTH OF STAY SCENARIO COST 

SHARING LIMIT FOR THE INTERMEDIATE MOOP TYPE USING PROJECTIONS 

FROM 2017 - 2021 MEDICARE FFS DATA AND THE ESRD COST DIFFERENTIAL 

TRANSITION 

Row Intermediate 

Reference Description MOOPType 

A Unrounded contract year 2023 inpatient hospital acute 10-day $2,499.40 

length of stay scenario cost sharing limit for the mandatary 

MOOP type per§ 422.100(f)(4)(vi) (row K, mandatory MOOP 

limit column in Table 18) 

B Unrounded contract year 2023 inpatient hospital acute 10-day $3,124.25 

length of stay scenario cost sharing limit for the lower MOOP 

type per§ 422.100(f)(4)(vi) (row K, lower MOOP limit column 

in Table 18) 

C Unrounded contract year 2023 cost sharing limit per § $2,811.83 

422.100(f)(6)(iv) (numeric midpoint between row A and row B) 

D Rounded contract year 2023 inpatient hospital acute 10-day $2,812.00 

length of stay cost sharing limit for an intermediate MOOP limit 

per§ 422.100(f)(4)(vi) and (f)(6)(iv) (row C rounded per§ 

422.100( f)( 6)(ii)) 

TABLE 20: CMS CALCULATIONS OF ILLUSTRATIVE CONTRACT YEAR 2024 

INPATIENT HOSPITAL ACUTE 10-DAY LENGTH OF STAY SCENARIO COST 

SHARING LIMITS FOR THE MANDATORY AND LOWER MOOP TYPES USING 

CONTRACT YEAR 2023 MEDICARE FFS DATA PROJECTIONS (BASED ON 2017 -

2021 MEDICARE FFS DATA) 

Mandatory Lower 

Row MOOP MOOP 

Reference Description Type Type 

A Projected Part A Deductible* $1,572.00 

B Projected Part B Professional Costs for a 10-day length $955.00 

of stay (with ESRD costs)* 

C Total estimated Medicare FFS cost sharing for a 10- $2,527.00 

day length of stay with ESRD costs (row A plus row 

B) 

D Allowable percentage of Medicare FFS estimated cost 100% 125% 

sharing by MOOP type per§ 422.100(f)(4)(iv) 

E Unrounded illustrative contract year 2024 cost sharing $2,527.00 $3,158.75 

limit (row C multiplied by row D) 

F Rounded illustrative contract year 2024 cost sharing $2,527.00 $3,159.00 

limit (row E rounded per § 422.100(f)(6)(ii) 

*These amounts are for illustrative purposes only and are the values for contract year 2023 from rows A and B in Table 18. CMS 

will use updated projected Part A deductible and Part B professional costs to calculate the final contract year 2024 inpatient 

hospital cost sharing limits. 
Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22375 

48Centers for Disease Control and Prevention 

National Hospital Ambulatory Medical Care Survey: 

2017 Emergency Department Summary Tables, 

available at: https://www.cdc.gov/nchs/data/ 

nhamcs/web_tables/2017_ed_web_tables-508.pdf. 

BILLING CODE 4120–01–C 

As discussed in section II.A. of this 

FC, CMS will monitor the percentage of 

beneficiaries with diagnoses of ESRD 

enrolled in MA plans compared to 

Medicare FFS. If appropriate, we will 

consider future rulemaking to alter the 

methodology CMS uses to calculate 

MOOP and cost sharing limits if there 

are significant unforeseen impacts or 

negative consequences that need to be 

addressed. We would also consider 

whether additional changes would 

outweigh the interests of maintaining a 

settled methodology for calculating the 

MOOP and cost sharing limits and 

sufficiently protect enrollees from 

changes in cost sharing and benefits 

from 1 year to the next. In addition, as 

proposed and finalized, 

§ 422.113(f)(6)(iv)(C) provides that CMS 

may also use patient utilization 

information from MA encounter data. In 

the February 2020 proposed rule we 

explained that CMS compared inpatient 

hospital utilization information from 

both Medicare FFS and MA encounter 

data to determine the specific length of 

stay scenarios for which we proposed to 

calculate cost sharing limits. As 

finalized, CMS may pursue future 

rulemaking to add, remove, or modify 

the length of stay scenarios applied to 

inpatient hospital acute and psychiatric 

cost sharing limits based on 

comparisons of inpatient hospital 

utilization information from both 

Medicare FFS and MA encounter data. 

d. Emergency/Post-Stabilization 

Services and Urgently Needed Services 

(§ 422.113(b)(2)(v) and (vi)) 

Comment: Comments were mixed for 

CMS’s proposals (in section VI.B.3.b. of 

the February 2020 proposed rule) 

related to emergency/post-stabilization 

services. A commenter generally 

supported increasing the copayment 

limits and the differential in cost 

sharing tied to the types of MOOP limit 

for the ‘‘emergency/post-stabilization 

services’’ service category. This 

commenter noted this was an important 

service category to change as it would 

incentivize MA plans to offer lower 

MOOP limits and enrollees to use the 

appropriate level of care, such as 

physicians’ offices or urgent care 

centers, and not overutilize the higher 

cost emergency room services. 

A few other commenters opposed 

increasing the cost sharing limit for 

emergency/post-stabilization services. 

The commenters were concerned that 

increasing the cost sharing limit (and by 

extension, permitting increased cost 

sharing) would have the undesirable 

outcome of deterring beneficiaries from 

going to the emergency room when 

medically necessary, even when 

immediate medical care is truly needed, 

as many Medicare beneficiaries will 

simply be unable to afford the cost 

sharing. In reference to those concerns, 

the commenters requested CMS lower or 

maintain the contract year 2021 

emergency/post-stabilization services 

cost sharing limits ($120 for the lower, 

voluntary MOOP limit and $90 for the 

mandatory MOOP limit). The 

commenters did not specifically address 

a cost sharing limit (or approach) for 

emergency/post-stabilization services 

for MA plans that establish an 

intermediate MOOP limit. 

A commenter stated that CMS is 

unfairly penalizing Medicare 

beneficiaries who receive emergency 

services as CMS has increased the cost 

sharing limits for emergency services for 

the voluntary and mandatory MOOP 

limits by 60 percent and 20 percent 

respectively over the last several years. 

In addition, a commenter stated survey 

results from the Centers for Disease 

Control and Prevention (CDC) show that 

only a small percentage of emergency 

department visits are avoidable.48 This 

commenter noted that in many cases, 

Medicare beneficiaries cannot tell 

whether their condition is lifethreatening or not and regardless of the 

final diagnosis, if the beneficiary 


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TABLE 21: CMS CALCULATIONS OF ILLUSTRATIVE CONTRACT YEAR 2024 

INPATIENT HOSPITAL ACUTE 10-DAY LENGTH OF STAY SCENARIO COST 

SHARING LIMIT FOR THE INTERMEDIATE MOOP TYPE USING CONTRACT 

YEAR 2023 MEDICARE FFS DATA PROJECTIONS (BASED ON 2017 - 2021 

MEDICARE FFS DATA) 

Row Intermediate 

Reference Description MOOPType 

A Unrounded illustrative contract year 2024 inpatient hospital acute $2,527.00 

10-day length of stay scenario cost sharing limit for the 

mandatary MOOP type per§ 422.100(f)(4)(vi) (row E, 

mandatory MOOP limit column in Table 20) 

B Unrounded illustrative contract year 2024 inpatient hospital acute $3,158.75 

10-day length of stay scenario cost sharing limit for the lower 

MOOP type per§ 422.100(f)(4)(vi) (row E, lower MOOP limit 

column in Table 20) 

C Unrounded illustrative contract year 2024 cost sharing limit per§ $2,842.88 

422.100(f)(4)(iv) (numeric midpoint between row A and row B) 

D Rounded illustrative contract year 2024 inpatient hospital acute $2,843.00 

10-day length of stay cost sharing limit for an intermediate 

MOOP limit per§ 422.100(f)(4)(iv) (row C rounded per 

§ 422.100(f)(6)(ii)) 
22376 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

reasonably believes that they have a 

medical emergency, they are entitled to 

go to the emergency department and be 

treated. Similarly, another commenter 

stated that while CMS has increased the 

cost sharing limits in various service 

categories year by year, such increases 

can be particularly harmful to 

beneficiaries in the emergency services 

context. This commenter explained that 

due to the age and vulnerability of the 

Medicare population, visits to the 

emergency department are necessary 

and not substitutes for primary care. 

Response: We agree with the 

commenters that excessive cost sharing 

rates discriminate against enrollees who 

need those services. CMS has a longstanding interpretation that payment of 

less than 50 percent of the estimated 

total MA plan financial liability 

discriminates against enrollees who 

need those services. We understand 

emergency services, by nature, are 

typically associated with critical health 

care needs and we agree that it is 

important that enrollees do not face 

unexpected and unreasonable financial 

hardships in accessing needed health 

care services. In addition, section 

1852(d)(3) of the Act and our existing 

regulation at § 422.113 are clear that the 

determination whether an emergency 

medical condition exists is based on the 

prudent layperson standard. Our 

proposal was not designed to discourage 

enrollees from seeking or receiving 

emergency services to address an 

emergency medical condition. Our 

proposed cost sharing standards for 

emergency and post-stabilization care 

services were to set the maximum outof-pocket cost sharing amount that an 

MA plan may require an enrollee to pay 

for a visit to an emergency room, 

inclusive of any variability in the costs 

of services provided during the 

emergency visit. Enrollees who are not 

in need of emergency care typically 

have access to care with lower or no 

cost sharing. For example, urgent care, 

additional telehealth, or supplemental 

benefits for nursing hotlines or 

transportation related to medical 

services are often available to enrollees. 

For example, based on March 2021 plan 

data (excluding employer and D–SNPs) 

approximately 40.6 percent of contract 

year 2021 plans (reflecting 38.5 percent 

of total enrollment) offer a 

transportation supplemental benefit for 

medical purposes and approximately 

65.0 percent offered a nursing hotline 

(reflecting 66.6 percent of total 

enrollment). We expect that these types 

of services assist with care coordination 

and support enrollees in accessing the 

most appropriate place of care for their 

condition. In addition, beneficiaries 

eligible for full Medicaid benefits and 

the Qualified Medicare Beneficiary 

(QMB) program generally would not pay 

Medicare cost sharing for emergency 

services in MA plans, including D– 

SNPs. 

Our proposal based the dollar limits 

on the projected Medicare FFS median 

total allowed amount for emergency 

services (including visit and related 

procedure costs, $755) using contract 

year 2021 Medicare FFS data 

projections that were based on the 

2015–2019 Medicare FFS data available 

at the time of the February 2020 

proposed rule. We reviewed both the 

projected median and average total 

allowed amount from the OACT when 

determining the methodology for setting 

cost sharing limits for this category. If 

we had proposed to base our 

methodology on the projected average 

total allowed Medicare FFS amount 

($998 including visit and related 

procedure costs), the highest allowable 

cost sharing for a plan that established 

a lower MOOP limit would have been 

$200, $50 higher than our proposal to 

use the projected median. However, we 

chose to use the projected median, 

which means that roughly half of 

Medicare beneficiaries in the Medicare 

FFS program were expected to incur 

cost sharing that was likely higher than 

these costs. Since the February 2020 

proposed rule, updated contract year 

2023 Medicare FFS data projections 

using Medicare FFS data from 2017– 

2021 increases the projected median 

and average total allowed amounts for 

emergency services (including visit and 

related procedure costs) to $861 and 

$1,106, respectively. The maximum cost 

sharing limits for emergency services 

are not being changed to reflect these 

updated projections because our 

proposal was to calculate specific dollar 

amounts for cost sharing limits for 

emergency and post-stabilization 

services. But understanding the out-ofpocket costs experienced in the 

Medicare FFS program provides 

important context for the cost sharing 

limits that we are adopting in this FC. 

As discussed in the February 2020 

proposed rule, to calculate the proposed 

emergency and post-stabilization care 

services cost sharing limits for the 

mandatory and lower MOOP limits 

(Mandatory—$115 and Lower—$150), 

CMS took 15 percent and 20 percent of 

the projected median total allowed 

amount ($755) respectively, rounded to 

the nearest whole $5 increment. In 

addition, the proposed cost sharing 

limit for an intermediate MOOP limit 

($130) was calculated based on the 

numeric midpoint of the related cost 

sharing limits for MA plans with 

mandatary and lower MOOP limits, 

rounded to the nearest whole $5 

increment. We realized that using up to 

20 percent of this projected Medicare 

FFS median total allowed amount to set 

an emergency cost sharing amount for 

an MA plan that establishes a lower 

MOOP limit would result in an increase 

of the MA cost sharing limit, compared 

to the prior contract year. However, the 

cost sharing standard we proposed at 

§ 422.113(b)(2)(v) for MA plans that 

establish a lower MOOP limit is 

comparable to what a beneficiary in 

Medicare FFS would be required to pay 

for a similar trip to the emergency room 

after reaching the Part B deductible, 

based on 20 percent of Medicare FFS 

costs. Therefore, we do not believe that 

setting a cost sharing standard that is 

based on costs that are 15 percent (for 

the mandatory MOOP limit) and 20 

percent (for the lower MOOP limit) of 

the median projected total cost for 

emergency services (including visit and 

related procedure costs) experienced in 

the Medicare FFS program is 

discriminatory. Nor do we believe 

utilizing the numeric midpoint of those 

limits to set a cost sharing limit for 

intermediate MOOP limit is 

discriminatory. We believe that basing 

the MA cost sharing limits for these 

services to the projected costs for 

beneficiaries in the Medicare FFS 

program reasonably addresses and 

balances our goals for adopting cost 

sharing limits overall. 

We proposed to align the highest 

permissible cost sharing amount (which 

is available for MA plans that use the 

lower MOOP limit) with original 

Medicare, by allowing a maximum 

emergency services cost sharing limit 

permitted per visit of $150, as an 

incentive for plans to offer a lower 

MOOP limit, which is another 

important financial protection for 

beneficiaries. If the cost sharing limits 

for emergency services do not change 

from the current amounts to reflect more 

recent Medicare FFS data projections 

and trends, we expect that the limits 

will act as a disincentive for MA plans 

to offer lower MOOP amounts. For 

example, for contract year 2021 (based 

on March 2021 plan data) 

approximately 85 percent of MA and 

MA–PD plans (excluding D–SNPs) 

established the highest allowable cost 

sharing for this service category based 

on the type of MOOP limit, suggesting 

that these upper limits may not fully 

reflect the costs MA organizations are 

experiencing to cover emergency 

services for enrollees. Conversely, while 

increasing flexibility in cost sharing 


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49 Kaiser Family Foundation. 2017 Employer 

Health Benefits Survey—Section 7: Employee Cost 

Sharing. Published September 19, 2017. Retrieved 

from https://www.kff.org/report-section/ehbs-2017- 

section-7-employee-cost-sharing/. 

50 Kaiser Family Foundation. Employer Health 

Benefits Annual Survey Archives. Published 

November 10, 2021. Retrieved from: https://

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

51 Kaiser Family Foundation. The Cost of Care 

with Marketplace Coverage. Published February 11, 

2015. Retrieved from https://www.kff.org/healthcosts/issue-brief/the-cost-of-care-with-marketplacecoverage/. 

52 Kaiser Family Foundation. Patient Cost-Sharing 

in Marketplace Plans, 2016. Published November 

13, 2015. Retrieved from: https://www.kff.org/ 

health-costs/issue-brief/patient-cost-sharing-inmarketplace-plans-2016/. 

standards may provide an incentive for 

plans to offer lower MOOP limits, we 

deliberately did not use percentages 

higher than 20 percent because we 

believe it is important to align with the 

coinsurance percentage that applies to 

most original Medicare Part B services. 

Therefore, we continue to believe that 

the dollar figures we proposed ($115, 

$130, and $150) as the cost sharing 

limits for MA plans that use the 

mandatory, intermediate or lower 

MOOP limit are the appropriate final 

cost sharing limits to adopt for 

emergency services. 

The cost sharing limits proposed at 

§ 422.113 are reasonably close to 

emergency room copayment levels for 

employer and Qualified Health Plans. 

For example, the Kaiser Family 

Foundation (KFF) found that the 

majority of covered workers either have 

a coinsurance or copayment for an 

emergency room visit with the average 

coinsurance rate of 20 percent and the 

average copayment of $180 based on a 

2017 employer health benefits survey.49

The annual employer health benefits 

survey reports since the 2017 survey 

from KFF have not updated the average 

emergency room cost sharing rates at the 

time of writing this FC but are available 

online.50 In addition, utilizing 2015 data 

from the Exchanges, KFF found that the 

average Qualified Health Plan 

copayment ranged from $155 to $318 

and the average coinsurance ranged 

from 20 percent to 32 percent based on 

the type of plan (bronze, silver, gold, or 

platinum).51 This report was last 

updated using 2016 data from the 

Exchanges, and KFF found that the 

average Qualified Health Plan 

copayment increased to $171–$430 and 

the average coinsurance changed to 19 

percent to 34 percent based on the type 

of plan (bronze, silver, gold, or 

platinum).52 While setting cost sharing 

limits based on 15 and 20 percent of 

Medicare FFS costs in itself is not 

discriminatory or out of line with the 

market, we acknowledge that a 

substantial change in cost sharing limits 

from one year to the next may produce 

disruption for enrollees. As discussed in 

sections II.B.5.b. and e. of this FC, CMS 

is making several changes in 

implementing the proposed cost sharing 

policies addressed in this FC to 

minimize potential disruption in 

implementing the changes in cost 

sharing proposed in this rulemaking. 

For example, we are using a 4-year 

transition to reach the proposed range of 

cost sharing limits for professional 

services. As discussed in section V.H.2. 

of this FC, CMS also considered several 

alternatives to implementing the 

proposed cost sharing limits for 

emergency services (renamed for clarity 

as discussed in a following response to 

comment in this section) to minimize 

potential enrollee disruption. After 

consideration of those alternatives, we 

believe a multiyear transition to the 

proposed cost sharing limits for 

emergency services would be beneficial 

and responsive to comments. Applying 

a transition to the new copayment limits 

(for emergency services) and use of 

maximum coinsurance percentages and 

actuarially equivalent copayment 

amounts (for urgently needed services) 

should be helpful as it will: (1) Smooth 

the possible changes in cost sharing for 

these service categories over several 

years to avoid potentially disruptive 

increases in costs for enrollees; and (2) 

provide MA organizations several years 

of advance notice of what the specific 

cost sharing limits will be (for 

emergency services) and what the 

coinsurance limits will be (for urgently 

needy services) to consider whether it 

makes sense for their plans to use the 

maximum permitted cost sharing when 

planning their bid designs. As a result, 

we are modifying § 422.113(b)(2)(v) to 

apply a 4-year transition to reach the 

proposed cost sharing limits based on 

the type of MOOP limit for emergency 

services. With regard to urgently needed 

services, where we proposed and are 

finalizing that the cost sharing limits for 

in-network basic benefits that are 

professional services apply to MA plans, 

the transition adopted in 

§ 422.100(f)(6)(iii) and (f)(8) will also 

apply. This applies regardless whether 

the urgently needed services are 

furnished in-network or out-of-network 

because § 422.113 requires MA plans to 

cover urgently needed services without 

regard to whether the services are 

furnished by an in-network provider or 

prior authorization. As a result, we are 

adopting a transition for the cost sharing 

limits proposed for both emergency 

services and urgently needed services. 

We believe this approach to implement 

these cost sharing proposals in 

§§ 422.100(f)(6)(iii), (j)(1), and 

422.113(b)(2) through a 4-year transition 

will support a consistent and 

streamlined approach in updating 

MOOP and cost sharing limits. 

We developed the transition schedule 

finalized in § 422.113(b)(2)(v) by taking 

the difference between the proposed 

cost sharing amounts for emergency 

services and the current (contract year 

2022) cost sharing limits and 

incorporating 25 percent of the 

difference each year over a 4-year period 

and applying the rounding rules. In 

addition, contract year 2023 will be the 

first year CMS sets an intermediate 

MOOP limit. For purposes of calculating 

the transitional cost sharing limits for 

the intermediate MOOP limit, CMS used 

the numeric midpoint between the 

transitional cost sharing limits for the 

mandatory and lower MOOP limits 

before application of the rounding rules, 

then applied the rounding rules to that 

midpoint amount. This is consistent 

with our proposal to set maximum cost 

sharing limits for MA plans with an 

intermediate MOOP limit based on the 

numeric midpoint of the related cost 

sharing limits for MA plans with 

mandatory and lower MOOP limits, 

rounded to the nearest whole $5 

increment. The calculations CMS 

completed to reach the final contract 

year 2023 emergency services cost 

sharing limits are available in Table 22 

and 23. Similar calculations as shown in 

Tables 22 and 23 were completed to 

reach the final cost sharing limits for the 

following years of the transition, 

contract years 2024 through 2026. In 

summary, applying this transition and 

the rounding rules in § 422.100(f)(6)(ii) 

results in the emergency services cost 

sharing limits summarized in Table 24 

for contract year 2023 and future years, 

which is what we are finalizing in 

§ 422.113(b)(2)(v). Specifically, 

emergency services cost sharing limits 

will be transitioned to the amounts 

proposed for contract year 2026 and 

maintained for subsequent years. CMS 

modified the cost sharing limits 

proposed in paragraphs 

§ 422.113(b)(2)(v)(1), (2), and (3) and is 

finalizing a new paragraph (b)(2)(v)(4) to 

set the cost sharing limits as shown in 

Table 24. The final contract year 2023 

emergency services cost sharing limits 

are also summarized in Table 28 which 

updates the illustrative cost sharing 

limits from the February 2020 proposed 

rule’s Table 5 (Illustrative Contract Year 

2022 In-Network Service Category Cost 


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Sharing Limits) for comparison 

purposes. 

BILLING CODE 4120–01–P 


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TABLE 22: CMS CALCULATIONS OF FINAL CONTRACT YEAR 2023 

EMERGENCY SERVICES COST SHARING LIMITS FOR THE MANDATORY AND 

LOWER MOOP TYPES(§ 422.113(b)(2)(v)) 

Row Lower Mandatory 

Reference Description MOOP MOOP 

A Contract year 2022 emergency care/post $120.00 $90.00 

stabilization care cost sharing limits 

B Proposed emergency care/post stabilization care cost $150.00 $115.00 

sharing limits 

C Total Difference (row A minus row B) $30.00 $25.00 

D 25% of the Difference (row C multiplied by 0.25) $7.50 $6.25 

E Unrounded contract year 2023 emergency $127.50 $96.25 

services cost sharing limits (row A plus row D) 

F Rounded contract year 2023 emergency services $125.00 $95.00 

cost sharing limits (row E rounded per 

§ 422. lO0(f)( 6)(ii)) 

TABLE 23: CMS CALCULATIONS OF THE FINAL CONTRACT YEAR 2023 

EMERGENCY SERVICES COST SHARING LIMIT FOR THE INTERMEDIATE 

MOOP TYPE(§ 422.113(b)(2)(v)) 

Row Intermediate 

Reference Description MOOP 

A Unrounded contract year 2023 emergency services cost sharing limit $127.50 

for the lower MOOP limit (value in row E for the lower MOOP 

column from Table 22) 

B Unrounded contract year 2023 emergency services cost sharing limit $96.25 

for the mandatory MOOP limit (value in row E for the mandatory 

MOOP column from Table 22) 

C Unrounded contract year 2023 emergency services cost sharing $111.88 

limit for the intermediate MOOP limit (numeric midpoint between 

row A and row B) 

D Rounded contract year 2023 emergency services cost sharing limit $110.00 

for the intermediate MOOP limit (row C rounded per 

& 422.100(f)(6)(ii)) 
Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22379 

BILLING CODE 4120–01–C 

In setting a 4-year transition to the 

proposed cost sharing limits, CMS is 

attempting to strike a balance between 

the needs of beneficiaries to seek 

emergency care and plan costs 

associated with the variety and expense 

of services included in the cost sharing 

limit. The dollar amounts for emergency 

services represent the maximum cost 

sharing permitted per visit (including 

related procedure costs) and are not 

subject to plan level deductibles or 

network restrictions. CMS will continue 

to track Medicare FFS cost trends for 

emergency services and may consider 

future rulemaking to update these cost 

sharing limits, if appropriate. For 

example, we will continue to review the 

projected average and median Medicare 

FFS allowed amounts from the OACT 

annually, consult with the OACT on 

whether any applicable cost trends are 

expected to be consistent for future 

contract years, and consider how market 

competition or payment policies may 

affect or necessitate changes to the 

methodology CMS used to calculate cost 

sharing limits proposed and finalized 

here. 

We are also finalizing the proposal, at 

§ 422.113(b)(2)(vi), that cost sharing for 

urgently needed services must not 

exceed the limits on cost sharing that 

are specified for professional services in 

§ 422.100(f)(6)(iii). This means that cost 

sharing limits for urgently needed 

services may vary with the type of 

MOOP limit. Further, as with 

professional services, the cost sharing 

for urgently needed services may not 

exceed a set coinsurance percentage or 

an actuarially equivalent copayment 

value, and the values for copayment 

limits may be calculated by CMS 

applying the methodology in this FC or 

by the MA organization based on the 

estimated total MA plan financial 

liability for that contract year if CMS 

does not calculate the copayment limit 

for the specific service or service 

category. In addition, our proposed innetwork cost sharing standards for 

urgently needed services represent the 

maximum out-of-pocket cost sharing 

amount that an MA plan may require an 

enrollee to pay for these services, 

inclusive of any variability in the costs 

provided during the visit. Specifically, 

CMS may calculate copayment limits for 

urgently needed services based on 

§ 422.100(f)(6)(iii) (and new paragraph 

(f)(8)(i) during the transition to 

actuarially equivalent copayment 

limits). A more complete discussion 

related to the requirement for cost 

sharing for professional services, the 

range of permissible cost sharing, and 

the transition to actuarially equivalent 

copayment limits is available in section 

II.B.5.b. of this FC. 

We are finalizing our proposals 

related to emergency services and 

urgently needed services generally as 

proposed, with 4-year transitions to 

reach the proposed cost sharing limits. 

We are not finalizing the proposal to 

consolidate the cost sharing limits for 

emergency and post-stabilization 

services (as discussed in a following 

response to comment in this section). 

Comment: A commenter was 

concerned that increasing the cost 

sharing limits for emergency/poststabilization services (and by extension, 

permitting increased cost sharing 

amounts) may further burden hospitals 

with uncollectable bad debts. The 

commenter believed this proposed 

increase in cost sharing would burden 

hospitals because: (1) Many Medicare 

beneficiaries will be unable to afford the 

cost sharing; (2) MA organizations are 

not required to pass along to hospitals 

(or other providers) payments of 

uncollected cost sharing (that is, bad 

debt) that are built into the capitated 

payments that MA organizations receive 

from CMS; and (3) MA organizations 

have considerable bargaining power 

over their network providers— 

particularly as the payer market has 

consolidated nationwide—which makes 

it unrealistic to expect an MA 

organization would agree to pass on 

these payments to providers. As a 

comparison, this commenter noted that 

the traditional Medicare program 

accounts for beneficiaries not being able 

to afford emergency room cost sharing 

and reimburses providers for 

uncollected cost sharing, such as 

copayments and co-insurance. In 

addition, the commenter noted that 

while it may be suggested that this is a 

matter for MA organizations and 

providers to resolve through their 

private agreements, it is unclear why 

providers should not be reimbursed for 

uncollected cost sharing amounts solely 

because the patient is enrolled in an MA 

plan instead of Medicare FFS. Due to 

these factors, the commenter requested 

CMS require MA organizations 

reimburse providers for uncollected cost 

sharing from beneficiaries. 

Response: To clarify information in 

the comment, under Medicare FFS, 

CMS permits inclusion of uncollectible 

Medicare deductible and coinsurance 

amounts in allowable costs for certain 

providers (42 CFR 413.89) and 

reimburses these amounts subject to the 

limitations set forth in § 413.89(h), 

however this reimbursement does not 

apply to MA plans. We agree with the 

commenter that currently MA 

organizations, hospitals, and provider 

groups negotiate contractual terms, 

including payment arrangements, to 

meet the needs of each party, including 

how uncollected cost sharing is 

handled. Allowing for private 

organizations to negotiate with one 

another to provide health care services 

for beneficiaries is core to the MA 

program. We believe the MA program 

affords flexibility and allows market 

competition to provide plan options that 

meet the needs of beneficiaries. Further, 

and perhaps most importantly, section 


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TABLE 24: FINAL MULTIYEAR TRANSITION FOR EMERGENCY 

SERVICES COST SHARING LIMITS BASED ON THE MOOP TYPE 

(§ 422.113(b)(2)(v)) 

2026 and 

Future 

MOOPLevel 2022* 2023 2024 2025 Years 

Lower (Previously "voluntary") $120 $125 $135 $140 $150 

Intermediate NIA $110 $120 $125 $130 

Mandatory $90 $95 $100 $110 $115 

*Cost sharing limits for contract year 2022 provided for comparison purposes. 
22380 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

1854(a)(6)(B)(iii) of the Act and 

§ 422.256(a)(2)(ii) prohibit CMS from 

requiring a particular price structure to 

be used between MA organizations and 

their contracted providers; we view this 

issue regarding payment by the MA 

organization of certain amounts to a 

contracted provider to be within the 

scope of this prohibition. In addition, 

the commenter’s overarching request 

that CMS require MA organizations to 

reimburse providers for uncollected cost 

sharing from beneficiaries (for all cost 

sharing, not limited to emergency and 

post-stabilization care services) is outof-scope of our proposal. We proposed 

to adopt specific cost sharing limits for 

this service category based on a 

particular methodology. 

Comment: A few commenters 

supported CMS creating a single cost 

sharing limit for emergency/poststabilization services. A commenter that 

supported a single cost sharing limit 

(using a specific dollar amount) for 

emergency/post-stabilization services 

appreciated the greater transparency the 

February 2020 proposed rule provided 

in how CMS establishes these cost 

sharing limits and agreed that it can be 

difficult for enrollees to differentiate 

emergency services from poststabilization services. Another 

commenter requested CMS confirm and 

provide clarification that the 

emergency/post-stabilization services 

category will remain consistent with the 

current industry practice regarding 

which services are included (services 

provided while in the emergency 

department) and which are excluded 

(inpatient acute care services). This 

commenter noted that if inpatient 

services were included this would be 

contrary to and a drastic change from 

current industry practice. 

Response: We thank the commenters 

for their feedback on our proposal to 

create a single cost sharing limit for 

emergency and post-stabilization care 

services. Currently, § 422.113(b)(1)(ii) 

and (c)(1) defines the terms ‘‘emergency 

services’’ and ‘‘post-stabilization care 

services.’’ ‘‘Emergency services,’’ which 

is also defined in section 1852(d)(3) of 

the Act, means, with respect to an 

individual enrolled with an MA 

organization, covered inpatient and 

outpatient services that are furnished by 

a provider qualified to furnish 

emergency services and needed to 

evaluate or stabilize an emergency 

medical condition. ‘‘Post-stabilization 

care services’’ means covered services 

related to an emergency medical 

condition, that are provided after an 

enrollee is stabilized in order to 

maintain the stabilized condition, or, 

under the circumstances described in 

§ 422.113(c)(2)(iii), to improve or 

resolve the enrollee’s condition. We also 

direct readers to section 1852 of the Act 

and § 422.113(c) which require MA 

organizations to cover post-stabilization 

care services in specified circumstances. 

Although post-stabilization may 

encompass a wide variety of services, 

we proposed to include poststabilization care services with the 

emergency services category in order to 

reflect the services the enrollee receives 

immediately following stabilization in 

the emergency department. We agree 

with the commenter that including poststabilization care services received as an 

admitted inpatient in the hospital as 

subject to the dollar limits proposed in 

§ 422.113(b)(2)(v) would be a significant 

change from current industry practice. 

CMS has not and does not intend to 

include inpatient acute care services in 

these dollar limits because we proposed 

(and finalized as discussed in section 

II.B.5.c. of this FC) separate cost sharing 

limits for inpatient hospital acute and 

psychiatric length of stays in 

§ 422.100(f)(6)(iv). MA plans must limit 

charges to enrollees for poststabilization care services to an amount 

no greater than what the organization 

would charge the enrollee if he or she 

had obtained the services through the 

MA organization and for purposes of 

cost sharing, post-stabilization care 

services begin upon inpatient admission 

under § 422.113(c)(2)(iv). Limiting poststabilization care services—and thus 

limiting the cost sharing limit for those 

services—to services that begin upon 

inpatient admission continues a policy 

in place since at least 2005 (70 FR 4632– 

33) and we did not propose to revise 

§ 422.113(c)(2)(iv). As a result, we are 

finalizing the cost sharing limits 

proposed for emergency services under 

§ 422.113(b)(2)(v) without reference to 

post-stabilization care services. 

CMS described how post-stabilization 

may encompass a wide variety of 

services but is used in § 422.113 to 

reflect the services the enrollee receives 

immediately following stabilization in 

the emergency department in the CY 

2019 Final Call Letter (issued April 2, 

2018). This approach separates poststabilization care services received as an 

admitted inpatient from emergency 

services and is also consistent with 

CMS’s policy in the ‘‘Medicare Program; 

Establishment of the Medicare 

Advantage Program; Final Rule’’ 

published January 28, 2005 (referred to 

as the January 2005 final rule). For 

example, comments summarized in the 

January 2005 final rule supported CMS’s 

clarification that the cost sharing limit 

for emergency services applied only to 

emergency department services and the 

notion that once an MA enrollee is 

admitted to a hospital, normal hospital 

cost sharing levels apply, even if the 

inpatient admission originates in the 

emergency department. As such, we 

clarify and reiterate that while the 

definition of emergency services 

references covered inpatient and 

outpatient services, CMS is not 

including post-stabilization inpatient 

acute care services for purposes of 

setting the cost sharing limits for 

emergency services in paragraph 

(b)(2)(v). 

This distinction between services 

furnished in an emergency department 

from inpatient services after admission 

was used in our development of the cost 

sharing limits we are finalizing in 

§ 422.113(b)(2)(v) for emergency 

services. As discussed previously in this 

section and in the February 2020 

proposed rule, we used the projected 

median total allowed amount for 

emergency services (including visit and 

related procedure costs), based on the 

Medicare FFS data projections available 

at the time of the February 2020 

proposed rule. These data were based 

on a sample of approximately 10,000 

beneficiaries, excluding those that were 

admitted from the emergency room to 

the hospital as an inpatient within 3 

days. In those cases where the 

beneficiary was admitted to the 

hospital, the emergency room or 

outpatient department services are paid 

for as part of the inpatient stay based on 

Medicare’s ‘‘3-day payment window’’ 

for inpatient admissions. As a result, the 

projected median total allowed amount 

for emergency services used to calculate 

the proposed dollar limits did not need 

to be recalculated to remove any poststabilization care costs related to 

services beneficiaries received once 

admitted to the hospital as an inpatient. 

Likewise, our proposed (and finalized) 

methodology to calculate inpatient 

hospital acute and psychiatric cost 

sharing limits did not require 

modification because post-stabilization 

care costs received as an inpatient are 

included in the projected Part B costs. 

We are finalizing the proposed 

provisions regarding cost sharing for 

emergency services with modifications 

to apply a 4-year transition to reach the 

proposed cost sharing limits, remove 

post-stabilization care services language 

in § 422.113(b)(2)(v), and complete nonsubstantive formatting changes to 

ensure consistency in the regulation text 

in paragraphs (b)(2)(v)(1), (2), (3), and 

(4). We are not revising 

§ 422.113(c)(2)(iv) and therefore 

continue current policy that for 

purposes of cost sharing, postVerDate Sep<11>2014 18:34 Apr 13, 2022 Jkt 256001 PO 00000 Frm 00092 Fmt 4701 Sfmt 4700 E:\FR\FM\14APR2.SGM 14APR2

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Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22381 

53See the HPMS memorandum titled ‘‘Final 

Contract Year 2021 Part C Benefits Review and 

Evaluation,’’ issued April 8, 2020, for information 

on MOOP and cost sharing limits for contract year 

2021 and the HPMS memorandum titled ‘‘Final 

Contract Year 2022 Part C Benefits Review and 

Evaluation,’’ issued May 20, 2021, for information 

on MOOP and cost sharing limits for contract year 

2022. 

54Chapter 4 of the MMMCM can be accessed at 

https://www.cms.gov/Regulations-and-Guidance/ 

Guidance/Manuals/Downloads/mc86c04.pdf. 

stabilization care services begin upon 

inpatient admission; the cost sharing 

limits finalized at § 422.112(c)(2)(v) do 

not apply to post-stabilization inpatient 

acute care services. We note here that as 

ambulance services are not emergency 

or post-stabilization care services, there 

may be a separate cost sharing amount 

required for ambulance services. As 

discussed in section II.B.5.b. of this FC, 

ambulance services are not professional 

services for which cost sharing is set 

under § 422.100(f)(6)(iii) but are subject 

to the cost sharing limits set under 

§ 422.100(f)(6)(i). 

e. Services No Greater Than Original 

Medicare (§ 422.100(j)(1)) 

Comment: As discussed in other 

comment summaries in section II.B.5. of 

this FC and in this section, some 

commenters suggested that the proposed 

cost sharing limits in general and for 

specific service categories (including 

those subject to the statutory 

requirements in section 1852 (1)(B)(iv) 

of the Act, such as dialysis services) are 

discriminatory, pose too significant 

increases from the prior contract year, 

and would substantially discourage 

enrollment by beneficiaries who require 

those services. In addition, as referenced 

in other comment summaries in section 

II.A.4. and II.B.5. of this FC, a few 

commenters had concerns that the 

proposed changes to the MOOP and cost 

sharing standards within one year 

would negatively affect a plan’s ability 

to meet the TBC standard. While these 

comments explicitly referred to specific 

parts of the MOOP and cost sharing 

proposals, the commenters’ concerns 

regarding TBC are also relevant to the 

cost sharing proposals at § 422.100(j)(1) 

as they will also impact the TBC 

standard. 

Response: We appreciate the feedback 

from commenters and address specific 

service category concerns in other 

responses to comment in section II.B.5. 

of this FC. Here, we address the general 

changes CMS is incorporating to address 

commenter concerns about potentially 

disruptive or discriminatory increases to 

cost sharing limits within one year as 

they relate to service categories subject 

to § 422.100(j)(1). As proposed and 

finalized paragraph (j)(1) requires MA 

plans to have cost sharing that does not 

exceed cost sharing in original Medicare 

for specified service categories. In 

section III. of this FC, CMS is soliciting 

comment for future additions to the cost 

sharing regulations as well. 

As referenced in section II.B.5.a. of 

this FC, CMS may calculate copayment 

limits for any category of in-network 

professional services for 2023 and future 

years and our intention is to calculate 

copayment limits using the 

methodology in this FC for as many 

service categories as possible, including 

those service categories that are subject 

to § 422.100(j)(1). We believe calculating 

and issuing limits on cost sharing for 

covered services and ensuring MA 

organizations comply with these limits 

are important ways to ensure that the 

cost sharing aspect of a plan design does 

not discriminate against or discourage 

enrollment in an MA plan by 

beneficiaries who have high health care 

needs. CMS issued annual limits on cost 

sharing for covered services and 

guidance addressing discriminatory cost 

sharing, as applied to specific benefits 

and to categories of benefits, in the 

annual Call Letter (issue dates prior to 

2020 53) and in bidding instructions. In 

addition, Chapter 4 of the Medicare 

Managed Care Manual (MMCM) 54 has 

contained long-standing polices 

regarding discriminatory cost sharing 

based on the requirements under 

paragraph § 422.100(f). The review of 

bids can be streamlined and simplified 

if CMS has specific copayment limits to 

apply as well as coinsurance limits for 

the service categories in the bid. While 

the coinsurance limits are also 

applicable, we believe that copayments 

are more readily understood by 

beneficiaries and provide beneficiaries 

with more definite means to predict 

their out-of-pocket costs when selecting 

among Medicare coverage options. 

Section 1852(a)(1)(B) of the Act 

specifies that MA plans may not charge 

higher cost sharing than is charged 

under original Medicare for certain 

benefits and provides authority for CMS 

to add other benefits for which enrollees 

will have this protection. CMS believes 

that calculating copayment limits at 

actuarially equivalent values to cost 

sharing required under original 

Medicare (based on the most recent 

Medicare FFS data projections) for these 

services will protect enrollees. This 

approach provides a clearer standard for 

both types of cost sharing (coinsurance 

and copayments). We are finalizing 

paragraph (j)(1) with some 

reorganization and edits for clarification 

and additional policies related to the 

policy. In order to better address this in 

the regulation and accommodate other 

changes as discussed in this response, 

proposed paragraphs (j)(1)(i)–(v) are redesignated as paragraphs (j)(1)(i)(A)–(E) 

in this FC. 

We are finalizing § 422.100(j)(1) and 

(j)(1)(i) with the substance of proposed 

paragraph (j)(1) that in-network cost 

sharing established by an MA plan may 

not exceed the cost sharing required 

under original Medicare for the specific 

basic benefits and categories of basic 

benefits identified in paragraphs 

(j)(1)(i)(A) through (F). The revisions in 

this FC clarify that this requirement 

applies to coinsurance and copayments 

used by MA plans, that copayment 

limits are subject to the rounding rules 

finalizing in § 422.100(f)(6)(ii), and that 

when CMS calculates a copayment limit 

under paragraph (j)(1)(ii), copayments 

used by MA plans must not exceed 

those copayment limits. Copayments 

used by MA plans for the benefits listed 

in paragraph (j)(1) would generally be 

calculated at values that are actuarially 

equivalent to the cost sharing used in 

original Medicare, subject to limits on 

the increase in copayment levels when 

CMS calculates the copayment limit 

during a 4-year transition period. The 

transition period for the copayments for 

the service categories specified in 

paragraph (j)(1)(i) is the same as the 

transition period finalized for innetwork basic benefits that are 

professional services specified in 

§ 422.100(f)(6)(iii) and is codified at 

§ 422.100(f)(8) (as discussed in more 

detail in section II.B.5.b. of this FC and 

subsequently in this response). We 

reiterate that MA plans always have the 

option to use either coinsurance or 

copayments in establishing the cost 

sharing obligations for their enrollees. 

The maximum coinsurance percentage 

permitted as cost sharing for the service 

categories listed in paragraph (j)(1)(i) 

regardless of MOOP type (excluding 

skilled nursing care, home health, and 

DME service categories) is 20 percent, 

which is the coinsurance used in 

original Medicare for those benefits. 

We are finalizing the rules for 

calculating the copayment limits 

applicable to these services in 

§ 422.100(j)(1)(ii). Section 

422.100(j)(1)(i) requires that any 

copayment for these benefits used by an 

MA plan must not exceed the 

actuarially equivalent value calculated 

using the rules in paragraph (j)(1)(ii). 

When CMS calculates the copayment 

limit, we will follow the methodology in 

paragraphs (f)(7) and (8), as discussed in 

section II.B.5.a. of this FC. In brief, this 

means that CMS will use Medicare FFS 

data projections (as defined in 

§ 422.100(f)(4)(i)) for the applicable year 

and service category and, where 


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22382 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

consistent with paragraph (f)(7)(ii), MA 

encounter data. In addition, CMS will 

calculate copayment limits to be 

actuarially equivalent to the 

coinsurance required under original 

Medicare for the specified benefits and 

service categories in paragraph (j)(1), 

subject to the annual cap on increases 

to copayment limits calculated by CMS 

from year to year during the transition 

period in paragraph (f)(8). As with all of 

the projections and calculations 

performed under this FC, the final 

regulation requires that generally 

accepted actuarial principles and 

practices will be followed. If CMS does 

not calculate a copayment limit for a 

service category listed in paragraph 

(j)(1) and an MA plan wishes to use a 

copayment, it must establish a 

copayment that is equal to or less than 

an actuarially equivalent value to cost 

sharing required under original 

Medicare. Paragraph (j)(1)(ii) provides 

that an MA plan may use either the 

average Medicare FFS allowed amount 

in the plan’s service area or the 

estimated total MA plan financial 

liability for that benefit for that contract 

year in calculating the actuarially 

equivalent value. Allowing MA 

organizations to use the estimated total 

MA plan financial liability for that 

contract year is consistent with 

longstanding practice for the supporting 

documentation process CMS has used 

when we have not calculated a 

copayment limit but a coinsurance limit 

does apply, as discussed in section 

II.B.5.a. of this FC. We are finalizing the 

flexibility for MA plans to also use the 

average Medicare FFS allowed amount 

as that data would clearly reflect cost 

sharing under original Medicare for the 

benefit and service area and may reduce 

burden for MA plans. It is not necessary 

for an MA organization to use one data 

source over the other. Regardless of 

whether the MA organization uses the 

average Medicare FFS allowed amount 

for the benefit and service area or the 

estimated total MA plan financial 

liability for that contract year to 

calculate actuarially equivalent 

copayments, the calculations would be 

calculated at the plan level (or segment, 

if applicable). 

Following the finalized methodology 

set through this FC, CMS calculated 

copayment limits for most of the service 

categories listed in § 422.100(j)(1) for 

contract year 2023. CMS does not expect 

that calculating copayment limits for the 

same service categories subject to 

paragraph (j)(1) as we have traditionally 

done in past years, will increase the 

burden of complying with these 

standards for MA organizations. The 

PBP software includes validations to 

prevent an MA organization from 

entering cost sharing for a particular 

service category that is above the cost 

sharing limit calculated and issued by 

CMS. This process will be maintained 

for contract year 2023 using the final 

cost sharing limits in Table 28. In 

addition, CMS expects to maintain this 

PBP validation in future years. This 

approach will help manage the 

administrative burden in developing 

and reviewing plan bids because 

without a copayment limit calculated by 

CMS, each plan bid would need to be 

prepared and evaluated in relation to 

either the average Medicare FFS 

allowed amount for the plan service 

area or the estimated total MA plan 

financial liability for the benefit for that 

contract year. In the absence of specific 

copayment limits, MA organizations 

may need to prepare supporting 

documentation for the cost sharing 

established. A more detailed discussion 

about how MA organizations may 

approach preparing supporting 

documentation for service categories 

subject to paragraph (j)(1) is available in 

section II.B.5.a. of this FC. 

Our intention in this rulemaking is to 

set and codify a body of cost sharing 

standards that by themselves, and in 

combination with one another, guard 

against discriminatory plan designs by 

limiting the amount of cost sharing and 

out-of-pocket costs that MA plans may 

impose on enrollees for basic benefits. 

Since contract year 2011, we have 

calculated cost sharing limits for this 

purpose, but codifying the methodology 

will provide additional transparency for 

stakeholders and stability for the MA 

program. This FC will result in changes 

from the cost sharing limits that apply 

for contract year 2022, primarily for 

copayment limits, for many service 

categories. As discussed in section 

II.B.5.b. and d. of this FC in relation to 

copayment limit changes for 

professional services and emergency 

services, we agree with commenters that 

substantive changes to copayment limits 

should be implemented over several 

years to reduce disruption in the market 

and for enrollees. Use of a transition 

period to smooth these changes also 

aligns with our approach in several 

places in the February 2020 proposed 

rule, such as the multiyear 

incorporation of ESRD costs into the 

methodology that CMS uses to calculate 

MOOP and inpatient hospital cost 

sharing limits. Further, we acknowledge 

the concerns from commenters 

regarding changes resulting from this FC 

impacting the TBC standard. We expect 

the changes we are finalizing here 

(including a transitional period to 

update copayment limits for service 

categories subject to § 422.100(j)(1)) 

combined with the TBC evaluation will 

ensure that enrollees who continue 

enrollment in the same plan from one 

year to the next are not exposed to 

significant cost increases (or benefit 

decreases) in one year while, at the 

same time, ensure that MA 

organizations do not face unreasonable 

challenges to satisfy the TBC evaluation. 

Table 28 includes final contract year 

2023 cost sharing limits for most of the 

service categories that we proposed to 

add to § 422.100(j). The copayment 

values in Table 28 also reflect the 

requirements in new § 422.100(f)(7) and 

(8). As discussed in section II.B.5.b. of 

this FC, the copayment limits set for 

some service categories in past years do 

not reflect values that are actuarially 

equivalent to the applicable coinsurance 

levels, including those service 

categories subject to paragraph (j)(1) 

where the comparison is to 20 percent 

coinsurance used in original Medicare. 

Rather, some of the contract year 2022 

copayment limit amounts have been in 

place without change for a number of 

years and were originally set to strike a 

balance between limiting beneficiary 

out-of-pocket costs and the potential 

impact to plan design and costs. The 

overarching goal of these copayment 

limits was to ensure beneficiary access 

to affordable and sustainable benefit 

packages rather than to be precisely tied 

to cost sharing in original Medicare each 

year. Our proposed methodology to 

calculate copayment limits based on 

actuarially equivalent values to the 

coinsurance limit, in effect, would 

recalibrate copayment limits within 1 

year by using the methodology finalized 

here (while coinsurance limits for the 

service categories subject to paragraph 

(j)(1) remain consistent with 

longstanding practice by being set at the 

cost sharing required under original 

Medicare). Following this methodology, 

some of the illustrative copayment 

limits for professional services provided 

in Table 5 (Illustrative Contract Year 

2022 In-Network Service Category Cost 

Sharing Limits) in the February 2020 

proposed rule reflected potentially 

substantial increases from the prior 

contract year. Table 5 from the February 

2020 proposed rule illustrated that the 

copayment limits were projected to 

increase, despite decreasing the 

coinsurance limits based on the MOOP 

type for the professional service 

categories from past years, as a result of 

using the most recent Medicare FFS 

data available to calculate actuarially 

equivalent copayment values at the time 


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55Loewenstein G, Friedman JY, McGill B, Ahmad 

S, Linck S, Sinkula S, Beshears J, J.Choi J, Kolstad 

J, Laibson D, Madrian BC, List JA, Volpp KG. 

‘‘Consumers’ misunderstanding of health 

insurance’’. Journal of Health Economics 

2013;32(5):850–862. Retrieved from: https://

scholar.harvard.edu/laibson/publications/ 

consumers-misunderstanding-health-insurance. 

of the February 2020 proposed rule. 

Several commenters submitted general 

concerns about cost sharing increases, 

including for particular service 

categories. While illustrative copayment 

limits that were actuarially equivalent to 

the cost sharing under original Medicare 

for all of the services categories subject 

to paragraph (j)(1) were not provided in 

the February 2020 proposed rule (rather, 

only coinsurance limits were provided 

in Table 5), based on the comments 

received, and in relation to the ‘‘Part B 

drugs—Other’’ service category (as 

discussed in section II.B.5.f. of this FC 

and a subsequent response to comment 

in this section), we believe feedback 

from the commenters was clear that 

enrollees should be protected from 

potentially significant increases in 

copayment amounts, especially within a 

one year timeframe. 

Using on contract year 2023 Medicare 

FFS data projections (based on Medicare 

FFS data from 2017–2021), the 

actuarially equivalent values to 20 

percent coinsurance for certain service 

categories subject to § 422.100(j)(1) 

would produce significant increases to 

the copayment limits compared to those 

set for contract year 2022. For example, 

the contract year 2023 projected total 

median cost per session for the ‘‘Part 

B—chemotherapy/radiation drugs’’ 

service category equals $1,397.00 and 

the total weighted average cost per 

session equals $4,038.00 based on 

contract year 2023 Medicare FFS data 

projections. Using these projections, an 

actuarially equivalent copayment limit 

to the 20 percent coinsurance limit 

would be $280 (based on the total 

median cost per session) or $810 (based 

on the total weighted average cost per 

session), after applying the rounding 

rules in § 422.100(f)(6)(ii). In 

comparison, the contract year 2022 

copayment limit was $75 for the ‘‘Part 

B—chemotherapy/radiation drugs’’ 

service category. As a result, calculating 

a copayment limit at an actuarially 

equivalent dollar amount to 20 percent 

of $1,397.00 or $4,038.00 in contract 

year 2023 would be a substantial 

increase (from $75 in contract year 2022 

to $280 or $810 in contract year 2023 

based on the projected median and 

average per session costs, respectively) 

and would not adequately protect 

enrollees from potentially disruptive 

changes compared to the prior contract 

year. However, not updating the 

copayment limits to reflect the most 

recent actuarially equivalent values 

would not be consistent with our 

proposal, would result in copayment 

limits that require MA plans to have 

copayments that are significantly less 

than the cost sharing in original 

Medicare when section 1852(a)(1)(B) of 

the Act imposes the cost sharing in 

original Medicare as the maximum 

permitted for an MA plan, and would 

not address the rapid scientific 

advancements in cancer treatments and 

the costs MA organizations are expected 

to incur in providing these services for 

MA enrollees. For example, the OACT 

is projecting the utilization of chimeric 

antigen receptor T cells (CAR–T) 

therapy and other expensive 

immunological treatments will increase 

and substantively impact aggregate costs 

for the ‘‘Part B drug—chemotherapy/ 

radiation drugs’’ service category 

starting in 2022. A similar increase in 

expensive drugs is projected for the 

Medicare FFS data that CMS may use 

for the copayment limits for the ‘‘Part B 

drugs—Other’’ service category (as 

discussed in a subsequent response to 

comment in this section and shown in 

Table 25B). As discussed in the 

February 2020 proposed rule, enrollees 

generally find copayments more 

predictable and less confusing than 

coinsurance.55 As discussed in a 

subsequent response to comment in this 

section, currently, the vast majority of 

MA plans have designed their ‘‘Part B 

drugs—other’’ benefit with cost sharing 

greater than zero and use coinsurance 

rather than a copayment. For contract 

year 2021 (based on March 2021 plan 

data) approximately 2 percent of MA 

and MA–PD plans (excluding employer, 

D–SNPs, and MSA plans) established a 

copayment for the ‘‘Part B drugs— 

other’’ service category ($50 or greater 

than zero), suggesting that the upper 

copayment limits for contract year 2021 

(which were maintained for contract 

year 2022) may not fully reflect the costs 

MA organizations are experiencing to 

cover this benefit for enrollees or the 

out-of-pocket payments required from 

most MA enrollees. We believe 

recalibrating copayment limits to be 

actuarially equivalent to the 

coinsurance percentage used for the 

benefits listed in paragraph (j)(1) may 

incentivize MA organizations to design 

benefit packages using copayment 

structures for more service categories 

than in prior years. 

Based on the potentially disruptive 

changes from updating contract year 

2022 copayment limits to actuarially 

equivalent values for service categories 

subject to § 422.100(j)(1) for contract 

year 2023, concerns from commenters 

regarding discriminatory benefit designs 

for service categories subject to 

paragraph (j)(1) (such as dialysis 

services as discussed in a subsequent 

response to comment in this section), 

and the variability of provider 

contracting arrangements among MA 

organizations, we considered 

alternatives to ensure that copayment 

limits would be appropriately updated 

to reflect the most recent Medicare FFS 

data projections while also limiting the 

amount of change that could be 

incorporated within one year to protect 

enrollees. The alternatives we 

considered are discussed in section V.H. 

of this FC. After consideration of those 

alternatives, we believe a multiyear 

transition to actuarially equivalent 

copayment limits based on the most 

recent Medicare FFS data projections for 

service categories subject to paragraph 

(j)(1) would be beneficial and 

responsive to comments. Specifically, 

applying a multiyear transition to 

actuarially equivalent copayments 

during a period of potential disruption 

should be helpful as it will facilitate 

incremental changes and provide 

advance notice for MA organizations to 

consider in planning their bid designs. 

As discussed in section II.B.5.b. of 

this FC, we are finalizing at 

§ 422.100(f)(8) a provision that will cap 

the amount of change in copayment 

limits from year to year. That constraint 

permits a gradual transition from the 

copayment limits that are in place for 

contract year 2022 to copayment limits 

that are calculated using the actuarially 

equivalent value to cost sharing under 

original Medicare. If CMS calculates 

copayment limits for the services listed 

in § 422.100(j)(1), we will apply new 

paragraph (f)(8) to those copayment 

limits for the transition period of 2023 

through 2026. This is explicit in 

§ 422.100(j)(1)(ii) as finalized here. This 

copayment transition is discussed in 

detail in section II.B.5.b. of this FC as it 

is being operationalized in the same 

manner for service categories subject to 

paragraph (f)(6)(iii). The only 

substantive difference between service 

categories subject to paragraph (f)(6)(iii) 

and (j)(1) is the applicable coinsurance 

limit(s) used to calculate actuarially 

equivalent values. Under paragraph 

(j)(1), most of the service categories 

(excluding skilled nursing care, home 

health, and DME) are subject to a 20 

percent coinsurance limit regardless of 

the MOOP type which is the cost 

sharing beneficiaries must pay under 

original Medicare; our current guidance 

on cost sharing limits for those services 


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22384 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

where MA plans cannot exceed the cost 

sharing in original Medicare also 

reflects this 20 percent coinsurance and 

it was included in Table 5 (Illustrative 

Contract Year 2022 In-Network Service 

Category Cost Sharing Limits) in the 

February 2020 proposed rule. Also 

consistent with Table 5 from the 

February 2020 proposed rule: The cost 

sharing limit for home health is 20 

percent coinsurance for MA plans that 

choose a lower MOOP type and the cost 

sharing limit for each of the DME 

service categories is 20 percent 

coinsurance for MA plans that choose a 

mandatory MOOP type. As such, 

making a transition to that coinsurance 

limit is unnecessary (even for standards 

applied to the intermediate MOOP limit 

finalized in section II.A. of this FC, 

which are technically newly codified 

but are consistent with standards for the 

voluntary and mandatory MOOP limits 

from prior contract years). For example, 

in contract year 2022 the coinsurance 

limit for the ‘‘therapeutic radiological 

services’’ service category for MA plans 

is 20 percent, regardless of the MOOP 

type chosen. Following the 

methodology set through this FC, the 

‘‘therapeutic radiological services’’ 

service category coinsurance limit that 

will be applicable for contract year 2023 

and future years for MA plans that 

establish an intermediate MOOP limit 

will be 20 percent. MA organizations 

were able to, and may continue to, 

establish cost sharing equal to original 

Medicare for all benefits subject to 

paragraph (j)(1) in contract year 2021 

and prior years by using coinsurance 

structures, which some MA 

organizations may have chosen to do 

because of geographic variation in 

health care costs. 

For purposes of calculating the 

actuarially equivalent copayment 

differential defined in § 422.100(f)(8)(i), 

the actuarially equivalent copayment 

values for service categories subject to 

§ 422.100(j)(1) are based on 20 percent 

coinsurance, except for: Skilled nursing 

care (as finalized in paragraph 

(j)(1)(i)(C)), home health services (for 

MA plans with an intermediate or 

mandatory MOOP, as finalized in 

paragraph (j)(1)(i)(D)), and each of the 

DME service categories (for MA plans 

with a lower or intermediate MOOP, as 

finalized in paragraph (j)(1)(i)(E)). We 

clarify this point because paragraph 

(f)(8)(i) requires use of the coinsurance 

limits that would apply in 2026, which 

is necessary for service categories 

subject to paragraph (f)(6)(iii), where the 

coinsurance percentages are changing 

over time. For purposes of paragraph 

(j)(1), the applicable coinsurance 

percentage is the same for contract years 

2023 through 2026 and thereafter, 

unless the cost sharing requirements in 

original Medicare change. We are 

including a reference to paragraph (f)(8) 

in paragraph (j)(1) to apply the multiyear transition for copayment limits to 

the copayment limits calculated for 

these services. 

CMS may calculate copayment limits 

for service categories subject to 

§ 422.100(f)(6) and (j)(1) in contract year 

2023 and subsequent years if we believe 

calculating such a copayment limit is 

feasible and appropriate to carry out 

program purposes, such as to protect 

beneficiaries against discriminatory cost 

sharing or to have further oversight of 

MA plans to ensure compliance with 

the regulatory standards. While certain 

factors complicated providing 

illustrative copayment amounts for all 

of the service categories listed in 

paragraph (j)(1) at the time of the 

February 2020 proposed rule, we are 

providing final contract year 2023 

copayment limits in Table 28 for most 

of these service categories. The 

calculations to reach the contract year 

2023 copayment limits for service 

categories subject to paragraph (j)(1) in 

Table 28 use contract year 2023 

Medicare FFS data projections (based on 

2017—2021 Medicare FFS data) and 

comply with the requirements in new 

paragraphs (f)(7) and (8). This includes 

projecting cost sharing which may be 

incurred by beneficiaries in 2023 using 

generally accepted actuarial principles 

and practices (as finalized in paragraph 

(f)(7)(i)). 

As described in § 422.100(f)(7)(ii)(C), 

when there may be multiple or a range 

of actuarially equivalent copayment 

values for a service category, CMS will 

select a particular approach to calculate 

an actuarially equivalent copayment 

value to avoid disruptive changes for 

beneficiaries and plan designs. For 

example, CMS may choose to use the 

median rather than the average 

Medicare FFS allowed amount to 

calculate an actuarially equivalent 

copayment value for a service category 

subject to § 422.100(j)(1) if that measure 

of central tendency results in the least 

amount of change to the copayment 

limit from the prior contract year. This 

approach is consistent with our prior 

approach to set copayment limits. We 

may also consider choosing the median 

or average Medicare FFS allowed 

amount based on which value is most 

consistent with trends and patterns in 

MA utilization and costs (if available). 

For example, in the February 2020 

proposed rule, we explained that CMS 

proposed to add new cost sharing limits 

for an inpatient hospital acute 3-day 

length of stay scenario because it 

represented the median length of stay 

based on separate analyses of Medicare 

FFS and MA encounter data (for the 

same time period). A similar 

comparison may be completed if MA 

encounter data is also available related 

to a service category subject to 

paragraph (j)(1). While helpful for 

comparison purposes and to inform 

which measure of central tendency CMS 

should use, MA encounter cost data will 

not be used to calculate the copayment 

limits. This approach further protects 

beneficiaries and plan designs from 

potentially disruptive changes to cost 

sharing. New paragraph (f)(7) is 

discussed in greater detail in section 

II.B.5.a. of this FC. 

Tables 25A and 25B show the 

calculations to reach the transitional 

contract year 2023 copayment limits for 

service categories subject to paragraphs 

§ 422.100(j)(1) and (f)(8). As shown in 

row D in Tables 25A and 25B, for most 

of the service categories subject to 

paragraph (j)(1), we calculated an 

actuarially equivalent value to the 

original Medicare coinsurance 

requirement using contract year 2023 

Medicare FFS data projections (based on 

2017–2021 Medicare FFS data). The 

total projected Medicare FFS cost for 

each service category in Tables 25A and 

25B is based solely on Medicare FFS 

data (MA encounter data for the same 

time period was unavailable at the time 

of writing this FC). In addition, the total 

projected Medicare FFS cost reflects the 

lesser value of the median and weighted 

average amount (in selecting among 

these actuarial approaches, we selected 

the lesser value) for each of the service 

categories in Tables 25A and 25B. This 

approach results in the least amount of 

change from the copayment limits set 

for contract year 2022 and is consistent 

with avoiding unnecessary fluctuations 

in cost sharing as finalized in paragraph 

(f)(7)(ii)(C). As a result, we calculate the 

actuarially equivalent values based on a 

20 percent coinsurance limit regardless 

of the type of MOOP limit for most of 

the service categories subject to 

paragraph (j)(1) (as illustrated in Tables 

25A and 25B). This excludes all of the 

DME service categories for the lower 

and intermediate MOOP types, for 

which actuarially equivalent copayment 

values are based on a 50 percent 

coinsurance limit as discussed in 

section II.B.5.a. of this FC. In addition, 

for the following two service categories 

subject to paragraph (j)(1) the original 

Medicare cost sharing limit is unique: 

$0 for the first twenty days and oneeighth of the projected Part A deductible 

per day for days 21–100 of skilled 


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Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22385 

nursing care (paragraph (j)(1)(i)(C)) and 

$0 for home health services (paragraph 

(j)(1)(i)(D)). Specifically, for those 

benefits, CMS is finalizing regulation 

text with specific cost sharing limits to 

ensure that MA plans use cost sharing 

that does not exceed cost sharing in 

original Medicare: 

• Skilled nursing care: Codifies 

specific cost sharing limits for days 1– 

20 in § 422.100(j)(1)(i)(C) based on the 

type of MOOP limit established and a 

specific methodology to calculate cost 

sharing limits for days 21–100, 

regardless of the MOOP amount 

established calculated, in paragraph 

(j)(1)(i)(C)(1). 

• Home health: Applies the original 

Medicare cost sharing of $0 for MA 

plans that establish a mandatory or 

intermediate MOOP type and uses an 

actuarially equivalent value to 20 

percent coinsurance to calculate the cost 

sharing limit for MA plans that establish 

a lower MOOP limit, in paragraph 

(j)(1)(i)(D). 

Barring these exceptions and as 

shown in Tables 25A and 25B, a value 

that is actuarially equivalent to 20 

percent coinsurance for a particular 

service category subject to 

§ 422.100(j)(1) was compared to the 

contract year 2022 copayment limit for 

the same service category. The 

difference between those two values 

equals the actuarially equivalent 

copayment differential (which is a 

unique figure for each service category 

and contract year). Then, we took 25 

percent of the actuarially equivalent 

copayment differential and added it to 

the contract year 2022 copayment 

amount and applied the rounding rules 

in § 422.100(f)(6)(ii) to reach the 

transitional copayment for that service 

category based on the first year of the 

actuarially equivalent copayment 

transition. The values in row I in Tables 

25A and 25B are the result of this 

application of the formula in paragraph 

(f)(8)(ii). As discussed in section 

II.B.5.b. of this FC, paragraph (f)(8) 

requires CMS to set the copayment limit 

for a given year at the value that is the 

lesser of amounts resulting from: (1) An 

actuarially equivalent value to the 

applicable cost sharing standard (in 

paragraphs (f)(6)(iii) and (j)(1)); and (2) 

an amount resulting from the actuarially 

equivalent copayment transition 

formula in paragraph (f)(8)(ii). To 

illustrate this comparison, row J in 

Tables 25A and 25B compares all of the 

transitional values from row I (resulting 

from paragraph (f)(8)(ii)) to the 

actuarially equivalent value to the 

applicable cost sharing standard in row 

E (20 percent coinsurance for most 

service categories subject to paragraph 

(j)(1)). As shown in row J of Tables 25A 

and 25B, all of the transitional values 

are less than (or equal to) the actuarially 

equivalent amount to cost sharing under 

original Medicare. As a result, the 

‘‘lesser of’’ values in row J of Tables 25A 

and 25B are used in Table 28 as the final 

contract year 2023 copayment limits for 

those service categories and applicable 

MOOP types. By following the ‘‘lesser 

of’’ requirement in paragraph (f)(8) and 

choosing the measure of central 

tendency which produces the least 

amount of change from the prior 

contract year (as allowed in paragraph 

(f)(7)) when calculating actuarially 

equivalent values, we aim to avoid 

potentially disruptive copayment 

changes for enrollees and plan designs. 

BILLING CODE 4120–01–P 


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ER14AP22.042</GPH>lotter on DSK11XQN23PROD with RULES2

TABLE 25A: CMS CALCULATIONS OF THE CONTRACT YEAR 2023 ACTUARIALLY EQUIVALE

TRANSITION(§ 422.100(1)(8)) FOR SERVICE CATEGORIES IN PBP SECTIONS 6A, 8B, AND 11C SU

SHARING NO GREATER THAN ORIGINAL MEDICARE(§ 422.lO0G)(l)) USING CONTRACT YEAR 

FFS DATA PROJECTIONS (BASED ON MEDICARE FFS DATA FROM 2017 - 2021

Therapeutic DM

Row Home Radiological S

Reference Description Health1 Services 

A 

B 

C 

D 

E 

F 

G 

H 

I 

J 

Contract year 2022 copayment limit $35.00 $60.00 

Contract vear 2023 total Medicare FFS oroiected cost3 $271.004 $414.005 

Coinsurance limit per § 422.1 00(i)(I) 

Unrounded actuarially equivalent copayment value to contract year 2023 coinsurance limit $54.20 $82.80 

per§ 422.l00G)(l) (row B multiplied by row C) (This figure is used to calculate the 

actuarially equivalent copayment differential as defmed in§ 422.l00(f)(8)(i).)7 

Rounded actuarially equivalent copayment value to coinsurance limit per § 422. lO0G)(l) $55.00 $85.00 

(row D rounded per§ 422.l00(f)(6)(ii)) 

Actuarially Equivalent Copayment Differential per§ 422.100(t)(8)(i) (difference between $19.20 $22.80 row A and row D) 

25% of the Actuarially Equivalent Copayment Differential per§ 422.100(t)(8)(ii)(A) (row $4.80 $5.70 

F multiplied bv 0.25) 

Unrounded copayment value result from actuarially equivalent copayment transition $39.80 $65.70 

formula for contract vear 2023 per § 422.100(f)(8)(ii)(A) (row A plus row G) 

Rounded copayment value result from actuarially equivalent copayment transition formula $40.00 $65.00 

for contract year 2023 per§ 422.100(f)(8)(ii)(A) (row J rounded per§ 422.100(t)(6)(ii)) 

Contract year 2023 "lesser of' copayment value per§ 422.100(t)(8) (the lesser value $40.00 $65.00 comparing row E and row I) 

1The 20 percent coinsurance limit for home health (reflected in this table) only applies to MA plans that use the lower MOOP limit per§ 422.I00(j)(l)(

copayment limit for the mandatory and intermediate MOOP limits is $0 in alignment with original Medicare that has no cost sharing for home health. 2The 20 percent coinsurance limit for the DME service categories (reflected in this table) only applies to the mandatory MOOP limit. As discussed in se

and as shown in Table 28, the 50 percent coinsurance limit and associated actuarially equivalent copayment limit for DME service categories applies on

intermediate MOOP limits. 

3The OACT employed generally accepted actuarial principles and practices in calculating these projected amounts (as finalized in§ 422.100(t)(7). 

4This amount for the "home health" service category represents the projected total Medicare FFS weighted average per visit cost for contract year 2023

Medicare FFS home health bundle (such as, nurse, aid, therapist, certain medical supplies and medications) but no other services (such as other medica

5This amount for the "therapeutic radiological services" service category represents the projected total Medicare FFS median per session cost for contra

6These amounts represent the projected total Medicare FFS weighted average cost for contract year 2023, weighted by utilization of the various types fo

or inserts" and "diabetes monitoring supplies" service categories. 7Section 422. IO0(f)(S)(i) requires use of Medicare FFS data projections based on the coinsurance limits that would apply in 2026, which is necessary fo

to paragraph (f)(6)(iii), where the coinsurance percentages are changing overtime. For purposes of paragraph (j)(l), the applicable coinsurance percent

years 2023 through 2026 and thereafter, unless the cost sharing requirements in original Medicare change. 
Tables 25A and 28 contain final 

contract year 2023 copayment limits for (specifically, the DME ‘‘diabetic shoes 

only two of the DME service categories 

supplies’’ service categories). CMS is 

or inserts’’ and ‘‘diabetes monitoring 


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TABLE 25B: CMS CALCULATIONS OF THE CONTRACT YEAR 2023 ACTUARIALLY EQUIVALEN

TRANSITION(§ 422.100(1)(8)) FOR SERVICE CATEGORIES IN PBP SECTIONS 12 AND 15 SUBJ

SHARING NO GREATER THAN ORIGINAL MEDICARE(§ 422.lO0G)(l)) USING CONTRACT YEAR 

FFS DATA PROJECTIONS (BASED ON MEDICARE FFS DATA FROM 2017 - 2021

Pa

Row Dialysis Che

Reference Description Services Rad

A 

B 

C 

D 

E 

F 

G 

H 

I 

J 

Contract year 2022 copayment limit $30.00 

Contract year 2023 total Medicare FFS oroiected cost' $321.002 

Coinsurance limit per 422. IO0(i)(l) 

Umounded actuarially equivalent copayment value to contract year 2023 coinsurance limit per $64.20 

§ 422.l00G)(l) (row B multiplied by row C) (This figure is used to calculate the actuarially equivalent 

copayment differential as defined in S 422.IO0(t)(8)(i).)5 

Rounded actuarially equivalent copayment value to coinsurance limit per § 422.1 00G)(l) (row D rounded per $65.00 

§ 422.IO0(t)(6)(ii)) 

Actuarially Equivalent Copayment Differential per§ 422. IO0(f)(8)(i) (difference between row A and row D) $34.20 

25% of the Actuarially Equivalent Copayment Differential per§ 422.1 00(t)(8)(ii)(A) (row F multiplied by $8.55 

0.25) 

Umounded copayment value result from actuarially equivalent copayment transition formula for contract $38.55 

year 2023 per~ 422.IO0(f)(8)(ii)(A) (row A plus row G) 

Rounded copayment value result from actuarially equivalent copayment transition formula for contract year $40.00 

2023 per§ 422.I00(t)(S)(ii)(A) (row J rounded per§ 422.I00(t)(6)(ii)) 

Contract year 2023 "lesser of' copayment value per§ 422.100(t)(8) (the lesser value comparing row E and $40.00 

row I) 

1The OACT employed generally accepted actuarial principles and practices in calculating these projected amounts (as finalized in § 422.1 00(t)(7). 2This amount for the "dialysis services" service category represents the total weighted average cost per session for contract year 2023 (including facility 

physician fees). This amount considers all types of dialysis and settings (such as, hospital outpatient departments and provider offices). 3This amount for the "Part B drugs-chemotherapy/radiation drugs" service category represents the projected total Medicare FFS median per session cos

This amount reflects costs from betos/HCPC codes that have a chemotherapy grouper and takes into consideration drug, administration, and place of se

4This amount for the "Part B drugs-other" service category represents the projected total Medicare FFS median allowed amount for contract year 2023. 

5Section 422. lOO(f)(S)(i) requires use of Medicare FFS data projections based on the coinsurance limits that would apply in 2026, which is necessary fo

to paragraph (f)(6)(iii), where the coinsurance percentages are changing overtime. For purposes of paragraph G)(l), the applicable coinsurance percenta

years 2023 through 2026 and thereafter, unless the cost sharing requirements in original Medicare change. 
22388 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

not calculating a copayment limit for 

the other DME service categories listed 

in § 422.100(j)(1)(i) for contract year 

2023. Therefore, MA organizations that 

use copayments for those other DME 

service categories in contract year 2023 

must establish a copayment that does 

not exceed an actuarially equivalent 

value to the coinsurance required under 

original Medicare. CMS may calculate 

copayment limits for the other DME 

service categories in a future year if 

sufficient Medicare FFS data projections 

become available and it is appropriate 

for program purposes, as provided in 

§ 422.100(f)(7)(ii). We reiterate that, 

beginning for contract year 2024, 

paragraph (f)(7)(iii) applies in that CMS 

will issue guidance and may solicit 

public comment on the actuarial 

approaches used to reach an actuarially 

equivalent copayment value for each 

copayment limit CMS calculates. In 

general, CMS will follow § 422.100(f)(7), 

(f)(8) and (j)(1) to calculate copayment 

limits for contract year 2023 and 

subsequent years for the benefits 

specified in paragraph (j)(1). This is 

consistent with the general approach we 

took in the February 2020 proposed rule 

in that the same rules would apply for 

the professional services if CMS issues 

copayment limits, regardless of whether 

we had illustrative cost sharing limits to 

share at the time of the February 2020 

proposed rule. 

We do not expect that calculating 

copayment limits at values that are less 

than a value that is actuarially 

equivalent to original Medicare (based 

on the most recent Medicare FFS data 

projections) during the applicable 

transition year(s) will directly result in 

MA organizations incorporating higher 

MOOP amounts, increasing premiums, 

or reducing supplemental benefits in 

their plan designs. This is because MA 

organizations can continue to use 

coinsurance that does not exceed cost 

sharing under original Medicare. 

Further, applying this methodology we 

are finalizing—to use actuarially 

equivalent values subject to a cap that 

acts to transition changes from the 

copayment limits set for contract year 

2022 copayment limits to actuarially 

equivalent values—is projected to 

increase copayment limits from the 

contract year 2022 levels for service 

categories subject to § 422.100(j)(1). In 

addition, if the actuarially equivalent 

copayment amount did not reflect a 

substantive change in comparison to the 

cost sharing limit set in contract year 

2022, the contract year 2023 copayment 

limit may reflect the full amount. As 

shown in Tables 25A and 28, this is the 

case for the DME ‘‘diabetic shoes and 

inserts’’ and ‘‘diabetes monitoring 

supplies’’ service categories for the 

mandatory MOOP limit. The $10 

copayment limit from contract year 

2022 for both of these service categories 

remains unchanged for contract year 

2023 because $10 reflects an actuarially 

equivalent value to 20 percent 

coinsurance after application of the 

rounding rules in § 422.100(f)(6)(ii), 

using contract year 2023 Medicare FFS 

data projections (based on 2017–2021 

Medicare FFS data). 

MA organizations may have benefit 

designs that include different 

copayment levels within the same 

service category (referred to as 

minimum and maximum copayment in 

the plan benefit package software). This 

capability helps address service 

categories that may include a wide 

range of items or services with lower 

and higher costs, such as Part B drugs. 

For example, a plan can have a lower 

copayment amount for lower cost 

services and a higher copayment 

amount for other higher cost services 

within the same service category, as 

long as the cost sharing satisfies CMS 

standards. 

Table 26 provides an illustrative 

example of how the copayment limits 

may change in future years for a 

particular service category subject to 

§ 422.100(j)(1) as more of the actuarially 

equivalent copayment differential is 

incorporated and the ‘‘lesser of’’ value is 

used to set copayment limits during the 

transitional period. Specifically, Table 

26 provides the final contract year 2023 

cost sharing limits and illustrative 

copayment limits across the multiyear 

transition schedule to actuarially 

equivalent values for the ‘‘Part B 

Drugs—chemotherapy/radiation drugs’’ 

service category using contract year 

2023 Medicare FFS data projections 

(based on 2017–2021 Medicare FFS 

data). We reiterate that the copayment 

limits for contract years 2024 through 

2026 in Table 26 remain illustrative in 

nature and may change based on 

updated and more recent Medicare FFS 

data projections in future years. 

Projections for contract years after 2023 

were not available at the time of writing 

this FC and the copayment limits for 

those years in Table 26 illustrate the 

transition over the 4 years. 


lotter on DSK11XQN23PROD with RULES2ER14AP22.029</GPH>

TABLE 26: FINAL CONTRACT YEAR 2023 AND ILLUSTRATIVE CONTRACT YEAR 

2024 - 2026 COST SHARING LIMITS FOR THE "PART B DRUGS -

CHEMOTHERAPY/RADIATION" SERVICE CATEGORY SUBJECT TO§ 422.lO0G)(l) 

USING ON CONTRACT YEAR 2023 MEDICARE FFS DATA PROJECTIONS (BASED 

ON 2017-2021 MEDICARE FFS DATA} 

Contract Year Cost Sharing Limit 

20221 20% I $75 

20232 20% I $125 

20243 20%/$175 

20253 20% I $230 

20263 20% I $2804 

1 The cost sharing limits for contract year 2022 are provided for comparison purposes. 

2The contract year 2023 cost sharing limits are final and calculated using § 422. IO0(f)(7), (f)(8), and G)(l ). 

3The copayment limits for these years are illustrative and final amounts will be announced using the subregulatory process at § 

422.100(f)(7)(iii) using updated Medicare FFS data projections. 

4This is the first year that the copayment limit is projected to reach an actuarially equivalent value to the 20 percent coinsurance 

limit. 
Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22389 

56Loewenstein G, Friedman JY, McGill B, Ahmad 

S, Linck S, Sinkula S, Beshears J, J.Choi J, Kolstad 

J, Laibson D, Madrian BC, List JA, Volpp KG. 

‘‘Consumers’ misunderstanding of health 

insurance’’. Journal of Health Economics 

2013;32(5):850–862. Retrieved from: https://

scholar.harvard.edu/laibson/publications/ 

consumers-misunderstanding-health-insurance. 

BILLING CODE 4120–01–C 

Table 26 illustrates how 

implementing a multiyear transition to 

actuarially equivalent copayment values 

with the ‘‘lesser of’’ requirement avoids 

the sudden significant and potentially 

disruptive increases that would occur 

without such a transition. Specifically, 

for the ‘‘Part B Drugs—Chemotherapy/ 

Radiation’’ service category, which had 

a $75 copayment limit in contract year 

2022, it transitions the $205 difference 

from the 2022 amount and the 

actuarially equivalent value of $280 by 

approximately $50 increments annually 

until the actuarially equivalent value is 

reached in contract year 2026. We 

acknowledge in order to reach an 

actuarially equivalent copayment limit 

during what we consider a reasonable 

transition timeframe of 4 years, the year 

over year change in the copayment limit 

for some service categories subject to 

paragraph (j)(1) is more than what CMS 

likely would have adopted in prior 

years. Applying this multiyear 

transition to benefits that must not 

exceed cost sharing under original 

Medicare will strike a balance in making 

the changes necessary to reach 

actuarially equivalent copayments while 

protecting beneficiaries. In addition, we 

believe that it is important to begin 

transitioning copayment limits to be 

actuarially equivalent to the cost sharing 

in original Medicare to encourage MA 

plans to consider copayments instead of 

coinsurance. As noted in the February 

2020 proposed rule, although MA plans 

have the flexibility to establish cost 

sharing amounts as copayments or 

coinsurance, enrollees generally find 

copayment amounts more predictable 

and less confusing than coinsurance.56

By updating copayment limits to reflect 

the expected costs of providing the 

benefit based on the most recent 

Medicare FFS data projections, we 

expect more MA organizations may 

consider copayment structures when 

designing their cost sharing. In addition, 

we expect that MA organizations will be 

able to plan aspects of their benefit 

designs several years in advance based 

on the projected copayment limits CMS 

is sharing through this FC and through 

the specific transition codified in 

§ 422.100(f)(8). We do not anticipate 

significant increases in enrollee cost 

sharing as a result of these changes in 

cost sharing standards. About 98 

percent of contract year 2021 MA plans 

(including D–SNPs and institutional 

and chronic condition SNPs) have 

supplemental benefits that reduce Part 

A and B cost sharing and 93 percent of 

these plans use a portion of their rebates 

to pay for some or all of the reduced 

cost sharing of Part A and B benefits 

(the other 7 percent and any amount 

remaining after applying a portion of 

rebates have the reduction of cost 

sharing paid for through the member’s 

premium). Excluding SNPs, 100 percent 

of contract year 2021 MA plans have 

supplemental benefits that reduce cost 

sharing and 94 percent use a portion of 

their rebates to pay for some or all of 

that benefit (after applying a portion of 

the rebates, any amount remaining is 

paid through the member’s premium). 

As also discussed in section II.B.5.b. 

of this FC, CMS is finalizing new 

§ 422.100(f)(8) to transition current 

(contract year 2022) copayment limits to 

actuarially equivalent values by contract 

year 2026. The completion of the 

transition to actuarially equivalent 

copayment values as provided in new 

paragraph (f)(8) means that CMS will 

annually update the copayment limits 

(including those subject to 

§ 422.100(j)(1)) to new actuarially 

equivalent values based on the most 

recent Medicare FFS data projections 

available (subject to the rounding rules 

in paragraph (f)(6)(ii)) beginning for 

contract year 2026 and subsequent 

years. We believe annually updating 

copayment limits ensures that all cost 

sharing limits are consistent with cost 

sharing in original Medicare, will 

provide a measure of predictability and 

stability for MA organizations, and 

ensures copayment limits do not 

become outdated in future years. 

Comment: A few commenters 

opposed implementing the statutory 

requirement (section 1852 (1)(B)(iv) of 

the Act, currently implemented 

§ 422.100(j)(2) and proposed to be redesignated in this rulemaking) that 

requires MA plans to establish cost 

sharing for renal dialysis services that 

does not exceed the cost sharing under 

original Medicare (that is, 20 percent 

coinsurance or an approximate 

actuarially equivalent copayment). 

These commenters suggested that this 

level of cost sharing is discriminatory 

and would substantially discourage 

enrollment by beneficiaries who require 

dialysis services. A commenter noted 

that the MOOP limit is insufficient to 

prevent enrollees with diagnoses of 

ESRD from experiencing costprohibitive dialysis cost sharing based 

on the MA organization’s ability to 

charge up to 20 percent coinsurance; the 

commenter also stated these situations 

are counter-productive to enrollees’ 

health should they be unable to afford 

such ongoing costs prior to the 

triggering the MOOP limit. The 

commenters requested that CMS: (1) 

Prohibit any cost sharing or, at the least, 

lower the cost sharing limit for dialysis 

services for all MA plans regardless of 

the MOOP limit established; and (2) 

issue clear statements to MA plans 

before the contract year 2021 bid 

deadline (June 1, 2020) that benefit 

designs that establish a 20 percent 

coinsurance for dialysis services are 

discriminatory and will not be allowed. 

A commenter noted a mandate of zero 

cost sharing for dialysis across all types 

of MOOP limits would ensure that all 

plans are on an even footing in their 

plan offerings, and beneficiaries would 

have access to the optimal benefit 

structure most likely to duplicate the 

positive results achieved by chronic 

condition SNPs (C–SNPs) and ESRD 

Seamless Care Organization (ESCOs). 

The commenter stated that while this 

approach is beneficiary-friendly, it does 

have a drawback in that MA plans 

which enroll a disproportionate share of 

ESRD patients could suffer relative to 

competitors. However, the commenter 

noted a zero-cost sharing mandate also 

would permit plans to encourage patient 

adherence to dialysis without fear of 

attracting too many ESRD patients. The 

commenter explained such a mandate 

would be consistent with the agency’s 

interest in promoting value-based 

insurance design (VBID) principles. 

Another commenter cited several 

provisions (the anti-discrimination 

provisions in section 1852(b)(1) of the 

Act and section 3202 of the Affordable 

Care Act (ACA), which added the 

statutory requirement that MA plans 

have cost sharing for renal dialysis (and 

other services) that does not exceed cost 

sharing in original Medicare, and 

§ 422.100(f)(2)), and CMS’s review of 

bids as the basis for requesting that CMS 

ensure MA plans’ cost sharing designs 

do not discriminate against individuals 

with ESRD. A commenter stated that 

charging maximum cost-sharing that is 

permissible under the law for a 

particular service used by a particular 

population could be viewed as 

discriminatory on its face. This 

commenter explained that the intent of 

cost sharing is to prevent the overutilization of health care services, but 

that dialysis is a regular, medically 

necessary service for a population with 

a particular diagnosis and not a service 

that is over-utilized by those diagnosed 

with ESRD. Therefore, the commenter 

believed that dialysis was not a service 

that would benefit from cost sharing 

limits that were designed to control 


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22390 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

57Call Letters communicating CMS policy for 

contract years prior to 2021 may be accessed here: 

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

MedicareAdvtgSpecRateStats/Announcements-andDocuments. 

58 See enrollment projections for ESRD 

enrollment, See page 14 from the 2020 Rate Notice 

and Final Call Letter, retrieved from https://

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

MedicareAdvtgSpecRateStats/Downloads/ 

Announcement2020.pdf. 

utilization. The commenter also stated 

that an MA plan that changes from zero 

cost sharing for dialysis services to a 20 

percent coinsurance from one contract 

year to next, may discourage individuals 

with ESRD from staying enrolled in the 

plan or may unintentionally discourage 

people requiring dialysis from enrolling 

in the plan. The commenter further 

noted that once the right for any 

Medicare beneficiary with ESRD to 

enroll in any MA plan is effective in 

2021, an MA plan’s use of 20 percent 

cost sharing would encourage such 

enrollees to look for plans that do not 

impose such costs. The commenter 

noted CMS has already approved benefit 

designs for the 2020 contract year that 

have 20 percent coinsurance for dialysis 

services. In effect, the commenter stated 

if benefit designs with 20 percent 

coinsurance for dialysis services 

becomes the norm, MA plans might 

attempt to dissuade enrollment by 

individuals with ESRD across the board. 

Response: Section 1852(a)(1)(B)(iv) of 

the Act and § 422.100(j) already require 

MA plans to have cost sharing that does 

not exceed that in original Medicare for 

renal dialysis services; our proposal was 

to re-designate that provision and it is 

being finalized as paragraph (j)(1)(i)(B). 

We appreciate the feedback on this 

provision and recommendations to 

adopt a stricter standard for cost sharing 

for renal dialysis. This regulation 

implements the statutory requirement in 

section 1852(a)(1)(B)(iv) of the Act, 

which has been in place since 2011, that 

MA plans use cost sharing that does not 

exceed the cost sharing in original 

Medicare for renal dialysis services (as 

defined in section 1881(b)(14)(B) of the 

Act). Under this statute, CMS has 

allowed MA organizations to establish a 

coinsurance up to 20 percent for 

dialysis services since 2011.57 We 

nonetheless do not believe the antidiscrimination provisions in section 

1852(b)(1) of the Act and § 422.100(f)(2) 

would be violated merely by permitting 

an MA plan to use the same coinsurance 

amounts that are used in the original 

Medicare program. This is consistent 

with longstanding MA program 

requirements that plan bids be at least 

actuarially equivalent to original 

Medicare on an overall basis. In 

addition, as the 20 percent coinsurance 

limit for dialysis services is equally 

applicable to the original Medicare and 

MA programs, the additional 

requirements of a MOOP limit and the 

ability to receive supplemental benefits 

through an MA plan may address the 

commenter’s concern about 

beneficiaries with diagnoses of ESRD 

being discouraged from enrolling in MA 

plans compared to the Medicare FFS 

program. In relation to the commenter’s 

request to mandate a zero cost sharing 

limit for dialysis across all types of 

MOOP limits to ensure that all plans are 

on an even footing in their plan 

offerings, we note that the MA program 

was established to provide options in 

addition to the original Medicare 

program for beneficiaries to obtain 

Medicare benefits and we believe this 

FC adopts policies to ensure the 

continued offering of MA plans that are 

viable options for Medicare 

beneficiaries as a whole. 

The percentage of MA and MA–PD 

plans (excluding employer, D–SNP, and 

Medicare MSA plans) with zero cost 

sharing for dialysis services has 

remained relatively consistent between 

contract year 2012 (approximately 2.6 

percent) and contract year 2021 

(approximately 2.9 percent) based on 

March 2021 data. The vast majority of 

MA plans have designed their dialysis 

benefit with cost sharing greater than 

zero and use coinsurance rather than a 

copayment. The percentage of these MA 

plans with non-zero cost sharing that 

established the same coinsurance as 

original Medicare for dialysis services 

was approximately 94.7 percent in 

contract year 2012 and is approximately 

99.9 percent for contract year 2021 (as 

a percentage of enrollment, 91.4 percent 

in contract year 2012 and 99.9 percent 

in contract year 2021). There are MA 

plans where coinsurance for dialysis 

services is equal to original Medicare 

and program enrollment of beneficiaries 

with diagnoses of ESRD has not 

decreased and, therefore, does not 

suggest that this aspect of MA plan 

designs is discouraging enrollment of 

enrollees with diagnoses of ESRD.58

While that enrollment experience was 

during a time when there were limits on 

the ability of beneficiaries with ESRD to 

enroll in MA plans, we believe it is 

persuasive that the ability for MA plans 

to have cost sharing for dialysis services 

that is equal to the cost sharing used in 

original Medicare does not in and of 

itself discourage enrollment of 

beneficiaries with diagnoses of ESRD. 

The contract year 2022 copayment 

limit of $30 for dialysis services has 

been in place for a number of years and 

does not reflect a current actuarially 

equivalent value equal to 20 percent 

coinsurance based on contract year 2023 

Medicare FFS data projections (based on 

2017–2021 Medicare FFS data). Under 

the current regulation at § 422.100(f)(6), 

the contract year 2022 copayment limit 

for dialysis services was originally set to 

strike a balance between limiting 

beneficiary out-of-pocket costs the and 

potential impact to plan design and 

costs, with the goal of ensuring 

beneficiary access to affordable and 

sustainable benefit packages. Since most 

MA plans use 20 percent coinsurance 

for the cost sharing for dialysis services, 

calculating a copayment limit that is 

lower than the coinsurance level does 

not actually result in lower out of 

pocket cost sharing payments by 

enrollees. Setting copayment limits 

using actuarially equivalent values to 

cost sharing under original Medicare (20 

percent coinsurance for most services 

categories subject to § 422.100(j)(1)) 

would, in effect, recalibrate copayment 

limits compared to current levels. We 

believe that this recalibration and better 

alignment of the copayment and 

coinsurance limits for dialysis services, 

like for the other services listed in 

§ 422.100(j)(1), is important to 

incentivize MA organizations in how 

they structure cost sharing for enrollees 

and to have a more transparent 

methodology and process for MA cost 

sharing limits. 

While an illustrative actuarially 

equivalent copayment limit for dialysis 

services was not available to share at the 

time of the February 2020 proposed 

rule, using contract year 2023 Medicare 

FFS data projections (based on 2017– 

2021 Medicare FFS data), calculating a 

copayment limit at an actuarially 

equivalent value equal to 20 percent 

coinsurance (after applying the 

rounding rules in § 422.100(f)(6)(ii)) 

would equal $65, a substantive increase 

from the $30 copayment limit used for 

contract year 2022. Less than 1 percent 

of 2021 plans that require cost sharing 

for dialysis (based on March 2021 data, 

excluding employer, D–SNP, and MSA 

plans) charge a copayment for these 

services in their benefit design. As 

previously discussed, we expect that 

transitioning copayment limits to be 

actuarially equivalent to the cost sharing 

in original Medicare will encourage MA 

plans to consider the use of copayments 

instead of coinsurance. However, given 

the potential disruption that could 

result from substantive increases in one 

year for those plans with copayments 

and to be responsive to commenters, 

CMS is adopting a multiyear transition 

to actuarially equivalent copayment 


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Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22391 

limits for service categories subject to 

§ 422.100(j)(1) (including dialysis 

services). This transition is finalized in 

new paragraph (f)(8) and explained 

more completely in section II.B.5.b. of 

this FC and in a prior response to 

comment in this section. In brief, 

applying this transition (and the ‘‘lesser 

of’’ requirement) moderated the increase 

to the copayment limit for dialysis 

services from $30 in contract year 2022 

to $40 for contract year 2023 (as 

calculated in Table 25B and finalized in 

Table 28). 

CMS contracts with MA organizations 

for one year at a time, and MA 

organizations may change their benefit 

designs and cost sharing structures 

annually within statutory and regulatory 

requirements. We remind commenters 

that existing statutory (Section 

1852(a)(1)(B)(iv) of the Act) and 

regulatory requirements (§ 422.100(j)) 

require that renal dialysis services not 

exceed cost sharing under original 

Medicare (that is, 20 percent 

coinsurance). CMS will continue to 

monitor MA plan benefit designs to 

observe whether there is information 

indicating potential discrimination or 

efforts by MA plans to discourage 

enrollment by beneficiaries with 

diagnoses of ESRD. We are finalizing 

our proposal to keep this existing 

requirement and updating the redesignation to § 422.100(j)(1)(i)(B) from 

proposed paragraph (j)(1)(ii). 

Comment: A few commenters 

generally supported the proposal (in 

section VI.B.3.c. of the February 2020 

proposed rule) to codify CMS’s existing 

policy to establish nominal cost sharing 

limits for the first 20 days in a skilled 

nursing facility (SNF) based on the type 

of MOOP limit. A commenter believed 

that the current level of differentiation 

between the cost sharing limits by the 

MOOP limit is reasonable and did not 

support increasing the differentiation 

any further. This commenter stated the 

utilization of this service is very low 

and increasing the cost sharing limit 

differentiation by the type of MOOP 

limit further would not provide a strong 

actuarial incentive for an MA 

organization to offer a lower (previously 

‘‘voluntary’’) MOOP limit. 

Response: We thank the commenters 

for their support. We proposed 

differentiating cost sharing limits across 

highly utilized services (for example, 

inpatient and primary care) and various 

other cost sharing services categories to 

produce a cumulative incentive for MA 

plans to use lower MOOP limits. We 

believe that MA organizations will have 

more incentive to establish an MA plan 

with lower total MOOP costs for 

enrollees as a result of this FC which 

provides the greatest flexibility in 

designing cost sharing to lower MOOP 

limits and are finalizing that policy 

approach. In addition, we are finalizing 

§ 422.100(j)(1)(i)(C) (which is an 

updated designation from paragraph 

(j)(1)(iii) in the February 2020 proposed 

rule) with additional requirements to 

address the per day cost sharing 

amounts for skilled nursing care that 

may be charged by MA plans that adopt 

the lower or intermediate MOOP type. 

Specifically, permissible cost sharing for 

the first 20 days must be no greater than 

$20 per day for a plan with a lower 

MOOP amount and $10 per day for plan 

with an intermediate MOOP amount; 

these are the nominal cost sharing 

figures from Table 5 (Illustrative 

Contract Year 2022 In-Network Service 

Category Cost Sharing Limits) in the 

February 2020 proposed rule for MA 

plans that use an intermediate or lower 

MOOP amount. Authority for these cost 

sharing amounts is limited to the first 20 

days of a SNF stay. We believe detailing 

specific per day cost sharing is 

appropriate to ensure clarity in the 

regulation text regarding our proposal 

from section VI.B.3. of the February 

2020 proposed rule. 

We also take this opportunity to 

provide guidance as to how we intend 

to implement the SNF cost sharing 

limits in the current PBP data entry 

options. Consistent with current 

practice, MA organizations may indicate 

in the PBP that the plan establishes a 

coinsurance for the SNF service 

category instead of using the specific 

per day copayment amounts that are 

permitted. The process of developing 

supporting documentation that shows 

how the coinsurance meets the cost 

sharing standard under § 422.100(j)(1) is 

consistent with prior years and is 

referenced in our general discussion 

related to supporting documentation in 

section II.B.5.a. of this FC. In addition, 

MA organizations may submit their plan 

bids based on the CMS SNF copayment 

limits (in the regulation for the first 20 

days and published prior to MA bid 

submission for days 21 through 100) or 

choose to indicate in the PBP SNF 

service category that the plan will use 

the actual Medicare FFS cost sharing 

amount for both SNF benefit periods, 

that is the first 20 days and days 21 

through 100. CMS typically publishes 

the original Medicare cost sharing 

parameters (for example, Part A and B 

deductibles) a few months prior to the 

upcoming year, but this generally 

happens well after the MA bid deadline. 

As explained in the preamble of the 

February 2020 proposed rule, we 

calculate the cost sharing limit for days 

21–100 in a SNF by taking one-eighth of 

the projected Part A deductible for the 

contract year. To ensure clarity in the 

regulation on these points, we are 

finalizing a change to 

§ 422.100(j)(1)(i)(C)(1) (that is an 

updated designation from 

§ 422.100(j)(1)(iii)(A) in the February 

2020 proposed rule), that the SNF cost 

sharing limit for days 21 to 100 is based 

on one-eighth (not the total amount) of 

the projected (or actual) Part A 

deductible. We are finalizing the 

remainder of what was proposed at 

§ 422.100(j)(1)(iii)(B) as paragraph 

(j)(1)(i)(C)(2) and clarifying that the total 

cost sharing for the overall SNF benefit 

must not be greater than the PMPM 

actuarially equivalent cost sharing in 

original Medicare. CMS will utilize 

these regulatory standards for 

calculating cost sharing limits for SNF 

and evaluating MA plans during bid 

review. 

Comment: A few commenters 

opposed allowing up to 20 percent 

coinsurance or the approximate 

actuarially equivalent copayment for 

home health services for MA plans with 

lower MOOP limits and allowing MA 

plans that establish a lower or 

intermediate MOOP limit the flexibility 

to set cost sharing limits for specific 

items of DME that exceed the cost 

sharing in original Medicare. These 

commenters requested CMS prohibit 

cost sharing for home health services 

consistently across all types of MOOP 

limits and not finalize the proposal to 

allow cost sharing flexibility for DME 

or, at the very least, require uniformity 

across MA plans with respect to cost 

sharing for DME. In lieu of prohibiting 

these cost sharing flexibilities for DME, 

the commenters requested that CMS 

provide guidance about what types of 

DME items can be subject to higher cost 

sharing rates under the proposal. They 

noted that cost sharing applied to 

certain DME that is typically used by 

beneficiaries with certain conditions 

can constitute discriminatory cost 

sharing on its face, particularly without 

guidance from CMS about what types of 

DME items can be subject to higher cost 

sharing rates under the proposal. In 

addition, the commenters stated that 

Medicare FFS does not charge cost 

sharing for home health and the 

application of the lower MOOP limit in 

the MA program should not be used to 

justify an MA plan charging cost sharing 

for services that that are insulated from 

any costs in traditional Medicare. 

Response: We appreciate the feedback 

on our proposals related to adding home 

health and DME to the list of services 

for which cost sharing charged by an 

MA plan may not exceed cost sharing 


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22392 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

required under original Medicare. The 

ability to use cost sharing for specific 

service categories of DME that exceeds 

the level of cost sharing used in the 

original Medicare program provides an 

acceptable level of incentive for MA 

organizations to offer plans with lower 

or intermediate MOOP limits, 

particularly when combined with the 

other flexibilities finalized in this FC, by 

balancing the overall protection for 

enrollees related to total out-of-pocket 

spending with the protection for cost 

sharing for specific benefits. As 

proposed and finalized, this flexibility 

is limited to use of the lower or 

intermediate MOOP limit and subject to 

both a requirement that the overall DME 

benefit be actuarially equivalent on a 

per member per month basis to cost 

sharing in original Medicare and the 

requirement that cost sharing for 

specific DME categories not exceed 50 

percent of the estimated total MA plan 

financial liability for that contract year. 

Further, the intermediate and lower 

MOOP types provide additional 

protection for enrollees. These policies 

regarding DME cost sharing are 

consistent with longstanding CMS 

policy and how benefits have been 

submitted through the PBP. Taken 

together, we believe that these proposals 

related to cost sharing for DME will 

provide protection to MA enrollees from 

high out-of-pocket costs related to DME. 

Based on this, we do not believe 

additional regulatory standards are 

necessary at this time. We will continue 

to evaluate experience with this 

longstanding CMS policy during bid 

review and may revisit these 

requirements, if necessary, to ensure 

that our overall goals for the cost 

sharing policies are met, including that 

beneficiaries are not subject to 

discriminatory cost sharing structures or 

benefit designs that discourage 

enrollment based on significant health 

needs. 

In approaching how to set cost 

sharing limits for DME, CMS is mindful 

that the category includes items and 

services that vary significantly in cost 

and that MA plans are not uniform in 

whether and to what extent the MA 

organization uses specific contracting 

arrangements permitted by § 422.100(l). 

We did not intend to require MA plans 

to establish cost sharing at the 

individual item or service level for DME 

and it would not follow current industry 

practice, nor how benefits are submitted 

through the PBP, to do so. As indicated 

in Table 5 (Illustrative Contract Year 

2022 In-Network Service Category Cost 

Sharing Limits) in the February 2020 

proposed rule, the proposed service 

categories with higher cost sharing 

flexibility for MA plans that establish 

lower or intermediate MOOP limits for 

DME are: Equipment, prosthetics, 

medical supplies, diabetes monitoring 

supplies, and diabetic shoes or inserts. 

However, this flexibility is limited by 

how, for all MA plans and regardless of 

MOOP type, the total cost sharing for all 

DME service categories combined must 

not exceed original Medicare on a per 

member per month actuarially 

equivalent basis. Under this FC, MA 

plans that establish a lower or 

intermediate MOOP limit may have cost 

sharing equal to or less than 50 percent 

coinsurance (or an actuarially 

equivalent copayment) for specific 

service categories of DME while MA 

plans that use a mandatory MOOP limit 

must have cost sharing that does not 

exceed cost sharing in original Medicare 

for DME in those categories. We finalize 

this flexibility in proposed 

§ 422.100(j)(1)(v) as paragraph (j)(1)(i)(E) 

with a modification to reference the 

specific service categories of DME 

(equipment, prosthetics, medical 

supplies, diabetes monitoring supplies, 

diabetic shoes or inserts). This 

flexibility is consistent with previous 

CMS policy and subject to the 

requirement in § 422.100(f)(6)(i) that an 

MA plan must pay at least 50 percent of 

the estimated total MA plan financial 

liability for that contract year where 

another, more specific rule on cost 

sharing limits does not apply. We 

provide a more complete discussion of 

this requirement in section II.B.5.a. of 

this FC. In brief, this rule that cost 

sharing cannot exceed 50 percent of the 

MA plan’s estimated total financial 

liability for that contract year applies to 

DME at the service category level and in 

addition to the specific cost sharing 

rules that apply to items and services 

under paragraph (j) or rules other than 

paragraph (f)(6). 

To provide additional transparency 

and better guidance on the level of cost 

sharing allowed for DME service 

categories for MA plans that establish a 

lower or intermediate MOOP amount, as 

discussed in section II.B.5.a. of this FC, 

the ‘‘N/A’’ descriptions that were used 

in Table 5 (Illustrative Contract Year 

2022 In-Network Service Category Cost 

Sharing Limits) from the February 2020 

proposed rule are updated to 50 percent 

in Table 28 (which generally updates 

the information from Table 5 in the 

February 2020 proposed rule). We 

believe this change better reflects how 

the requirement at § 422.100(f)(6)(i), that 

the MA plan pay at least 50 percent of 

estimated total MA plan financial 

liability for that contract year, applies to 

the cost sharing for service categories of 

DME for MA plans with the lower or 

intermediate MOOP amounts while the 

requirement of 20 percent coinsurance 

applies only to MA plans with a 

mandatory MOOP amount. As indicated 

in the footnotes of Table 28, all MA 

plans must have total cost sharing for 

the overall DME benefit that is not 

greater than the per member per month 

actuarially equivalent cost sharing for 

the DME benefit in original Medicare. 

The clarifications discussed previously 

are incorporated into the final language 

in § 422.100(j)(1)(i)(E). 

If CMS does not calculate an 

actuarially equivalent copayment limit 

for any of the DME service categories, 

MA organizations may still establish an 

actuarially equivalent copayment to the 

applicable coinsurance limit instead of 

using coinsurance. This is consistent 

with footnote 5 from Table 5 

(Illustrative Contract Year 2021 InNetwork Service Category Cost Sharing 

Limits) in the February 2020 proposed 

rule, which noted that MA plans may 

establish a copayment that is actuarially 

equivalent to, or less than, the 

applicable coinsurance limit for service 

categories for which CMS does not 

calculate a copayment limit (85 FR 

9087). The information in this footnote 

is updated to reflect our final policy in 

footnote 7 from Table 28. Specifically, 

for DME service categories without a 

copayment limit calculated by CMS, 

MA organizations may establish a 

copayment based on the average 

Medicare FFS allowable amount for the 

plan service area or their estimated total 

MA plan financial liability for the 

benefit (subject to the rounding rules in 

§ 422.100(f)(6)(ii)) as finalized in 

paragraph (f)(6)(i) (for the lower and 

intermediate MOOP limits) and 

§ 422.100(j)(1)(i) (for the mandatory 

MOOP limit). For example, CMS did not 

set a final contract year 2023 copayment 

limit for the DME ‘‘equipment’’ service 

category and MA plans may calculate an 

actuarially equivalent copayment for 

that service category using the rules in 

paragraph (j)(1)(ii) for that contract year. 

Further information on how MA 

organizations may calculate actuarially 

equivalent copayments and develop 

supporting documentation in the 

absence of a copayment limit calculated 

by CMS is available in section II.B.5.a. 

of this FC. CMS will continue to gather 

and review the data described in 

finalized § 422.100(f)(7)(ii) for use in 

calculating copayment limits related to 

the remaining DME service categories 

for future years and we may calculate 

copayment limits for these categories in 

the future. 


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CMS also proposed to codify our 

longstanding policy of limiting cost 

sharing for home health services for MA 

plans that establish a mandatory or 

intermediate MOOP amount to that 

charged under original Medicare and 20 

percent coinsurance for plans with a 

lower MOOP amount. As discussed in 

the February 2020 proposed rule, 

maintaining the maximum cost sharing 

flexibility for lower MOOP limits acts as 

an important incentive for plans to offer 

a lower MOOP amount, which is 

another important financial protection 

for beneficiaries. We generally rely on 

our authority at 1852(a)(1)(B)(iv)(IV) of 

the Act to apply original Medicare cost 

sharing limits to other Part A or B 

benefits that the Secretary determines 

appropriate; for benefits where cost 

sharing in original Medicare is zero, we 

also rely on our authority in section 

1856(b)(1) of the Act to calculate MA 

standards by regulation, and in section 

1857(e)(1) of the Act to impose 

additional terms and conditions found 

necessary and appropriate to require 

that cost sharing for these services 

under MA plans conform to that under 

original Medicare, meaning that no cost 

sharing could be imposed for these 

services. Despite the limitation in 

section 1852(a)(1)(B)(v) of the Act on 

our authority to identify additional 

benefits for which MA cost sharing must 

not exceed the cost sharing in original 

Medicare, we believe that it is necessary 

and appropriate to limit cost sharing for 

these services to avoid discouraging 

enrollment by beneficiaries who need 

those services and to incentivize MA 

plans to use the lower MOOP limits. 

This FC generally limits cost sharing to 

zero for those services where original 

Medicare does not impose costs only 

when an MA plan establishes a 

mandatory or intermediate MOOP 

amount. Therefore, an MA plan is not 

prohibited from using cost sharing for 

these services and may elect to use cost 

sharing for them by establishing a lower 

MOOP amount. In addition, codifying 

specific benefit standards that we 

believe are appropriate for MA plan 

designs provides transparency as to how 

CMS would use its authority under 

section 1854(a)(5)(C)(i) and (a)(6)(B) of 

the Act to evaluate and negotiate bids 

for MA contracts. Overall, this approach 

to regulating cost sharing is consistent 

with the statute as it protects 

beneficiaries while also preserving a 

measure of flexibility for MA plans. 

Finally, we believe that maintaining this 

longstanding standard does not limit 

market competition and we expect 

beneficiary choice will continue to act 

as an incentive for MA organizations to 

offer favorable benefit designs. 

With regard to comments about MA 

plans being able to include cost sharing 

for home health when original Medicare 

does not permit cost sharing, we note 

that commenters on 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’’ 

published April 15, 2011 (referred to as 

the April 2011 Final Rule), including 

MedPAC, opposed CMS’s prior proposal 

to limit cost sharing for home health 

services, under MA and cost plans at 

original Medicare levels. For example, 

in the April 2011 Final Rule, MedPAC 

commented that home health cost 

sharing should be one of the tools that 

MA plans can use at their discretion as 

a means of ensuring appropriate 

utilization. In addition, MedPAC’s 

March 2020 ‘‘Report to Congress: 

Medicare Payment Policy,’’ Chapter 9 

Home Health Care Services (page 258), 

states the following: ‘‘Medicare does not 

provide any incentives for beneficiaries 

or providers to consider alternatives to 

home health care, such as outpatient 

services. Beneficiaries who meet 

program coverage requirements can 

receive an unlimited number of home 

health episodes and face no cost 

sharing.’’ We agree that finalizing the 

flexibility for MA plans in connection 

with cost sharing for these benefits 

where original Medicare does not have 

cost sharing is appropriate for these 

reasons as well as others discussed 

throughout this FC for our cost sharing 

policies. MA plans that establish a 

lower MOOP amount may use cost 

sharing up to certain levels for specific 

services (as identified in 

§ 422.100(j)(1)(i)) as a means of 

incentivizing use of alternative services 

or ensuring an overall balance of 

enrollee payments and plan financial 

liability for the entire package of basic 

benefits is competitive and attractive to 

beneficiaries. 

CMS is finalizing the proposal 

concerning cost sharing for home health 

benefits—which was generally 

consistent with current policy—to 

require MA plans with a mandatory or 

intermediate MOOP amount to have 

cost sharing that does not exceed 

original Medicare for home health, but 

to permit MA plans with a lower MOOP 

amount to charge cost sharing up to 20 

percent coinsurance with a modification 

to avoid duplicative language in the 

regulation. As discussed in a previous 

response to comment in this section, 

§ 422.100(j)(1)(ii) requires that MA 

organizations use the average Medicare 

FFS allowable cost in the plan service 

area or the estimated total MA plan 

financial liability for the benefit for that 

contract year to calculate an actuarially 

equivalent copayment value to cost 

sharing under original Medicare, in the 

absence of a copayment limit calculated 

by CMS, for benefits subject to 

paragraph (j)(1). We are finalizing the 

rule for cost sharing for home health 

services largely as provided in proposed 

paragraph (j)(1)(iv) (re-designated to 

paragraph (j)(1)(i)(D)), with edits to be 

consistent with paragraph (j)(1)(ii) and 

to avoid limiting MA organizations to 

using only the estimated total MA plan 

financial liability for that contract year 

to calculate a copayment that is 

actuarially equivalent to, or less than, 20 

percent coinsurance. We note MA 

organizations may use the total MA plan 

financial liability to establish a 

copayment for home health services, as 

proposed, under the modifications 

finalized to paragraph (j)(1) if CMS does 

not set a copayment limit. CMS will 

continue to review plans’ cost sharing 

amounts to make sure that plan designs 

are consistent with MA rules, do not 

impose significant increases in cost 

sharing or decreases in benefits from the 

prior contract year, and are not 

discriminatory. 

Comment: A commenter supported 

our proposal to add home health 

services and DME to the list of services 

for which cost sharing charged by an 

MA plan may not exceed cost sharing 

required under original Medicare for 

plans with mandatory and intermediate 

MOOP limits. Another commenter 

noted that although they supported 

differentiating copayment limits for 

home health services by the type of 

MOOP limit, cost sharing limit 

differentiation for this service category 

does not equate to much actuarial value 

for MA plans given its low utilization 

and stated that many plans do not 

impose home health copayments, 

primarily because it is difficult to 

collect copays, and many home health 

agencies are not set up to collect cost 

sharing under Medicare. 

Response: We appreciate the 

commenters’ support. We expect 

differentiating cost sharing limits across 

highly utilized services (for example, 

inpatient and primary care) and various 

other cost sharing services categories 

(for example, home health) may produce 

a cumulative incentive for MA plans to 

use lower MOOP limits. CMS is 

finalizing the proposals, to codify cost 

sharing limits for chemotherapy 

administration services to include 

chemotherapy drugs and radiation 

therapy integral to the treatment 

regimen, dialysis, SNF, home health, 

and DME service categories at 


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§ 422.100(j)(1)(i)(A)–(E) (proposed in 

paragraphs (j)(1)(i)–(v)) and (j)(2)(i)(A), 

(B), and (D) with the modifications 

discussed in responses to comment in 

this section. 

Comment: A commenter opposed the 

proposal providing additional flexibility 

that could increase cost sharing limits 

for drugs and biologics covered under 

Part B. The commenter believed 

maintaining the current upper limits 

(which have been 20 percent 

coinsurance or $50 copayment) protects 

particular beneficiaries who might be 

impacted by cost sharing in excess of 

the amounts established for the original 

Medicare program. 

Response: We thank the commenter 

for their feedback on our proposal to 

apply a range of cost sharing limits in 

§ 422.100(f)(6)(iii) for the ‘‘Part B 

drugs—Other’’ service category. We 

agree with the commenter, as a result of 

an analysis of the most recent Medicare 

FFS data projections available at the 

time of this FC, that increasing the cost 

sharing limits from our longstanding 20 

percent coinsurance or $50 copayment 

limit to a range of cost sharing limits 

based on the type of MOOP limit (30, 

40, and 50 percent, respectively) in one 

year would likely result in disruption 

for enrollees. Using contract year 2023 

Medicare FFS data projections (based on 

2017–2021 Medicare FFS data), the 

projected total median cost for ‘‘Part B 

drugs—Other’’ service category equals 

$1,603.00 and the weighted average cost 

equals $2,437.00 (including drug and 

related service costs). To calculate a 

copayment limit for the ‘‘Part B drugs— 

Other’’ service category at an actuarially 

equivalent dollar amount to 50 percent 

using either of these projections when 

the contract year 2022 limit was 20 

percent or $50 does not adequately 

protect enrollees from potentially 

significant changes in costs. While the 

annual cap on change to copayment 

limits during the transition to 

actuarially equivalent values finalized 

in paragraph (f)(8) (as discussed in 

section II.B.5.b. of this FC) would help 

offset the increase in contract year 2023, 

it would be insufficient to fully protect 

beneficiaries from the potentially 

significant changes in their out of 

pocket costs. This is because despite 

applying paragraph (f)(8), the 

coinsurance limit for the ‘‘Part B 

drugs—Other’’ service category would 

still increase from 20 percent to 50 

percent for MA plans that establish a 

lower MOOP amount and the associated 

transitional copayment limit for the 

lower MOOP type would increase from 

$50 to $240 within one year (based on 

contract year 2023 Medicare FFS data 

projections and applying the rounding 

rules in paragraph (f)(6)(ii)). These 

increases represent the maximum 

permissible cost sharing, but not all MA 

plans may adopt cost sharing at these 

maximum levels. However, the potential 

for these increases in cost sharing, 

particularly a change from current 

policy for the ‘‘Part B drugs—Other’’ 

service category, requires us to 

reconsider this aspect of our proposal. 

After consideration of several 

alternatives as discussed in section 

V.H.2. of this FC, instead of finalizing 

this aspect of our proposal, CMS is 

maintaining and codifying our 

longstanding 20 percent coinsurance 

limit for the ‘‘Part B Drugs—Other’’ 

service category, by adding new 

§ 422.100(j)(1)(i)(F), which adds other 

drugs covered under Part B of original 

Medicare (that is, Part B drugs not 

included in paragraph (j)(1)(i)(A)) to the 

list of benefits for which cost sharing 

must not exceed cost sharing under 

original Medicare. The use of Part B 

drugs to treat serious illnesses and the 

potential for those drugs to be costly 

likely presents significant potential for 

discrimination against (or potential for 

discouraging enrollment by) 

beneficiaries who have health 

conditions treated by Part B drugs other 

than chemotherapy/radiation. We 

believe that maintaining our longstanding policy of having 20 percent 

coinsurance and copayment limits for 

all Part B drugs, in addition to a per 

member per month actuarially 

equivalent requirement for the Part B 

drug service category, protects 

beneficiaries with high health care 

needs from benefit designs that 

discriminate against or discourage 

enrollment in an MA plan, steer subsets 

of Medicare beneficiaries to particular 

MA plans, or inhibits access to services. 

The language in paragraph (j)(1)(i)(F) is 

clear that this requirement is separate 

from the service category specific to Part 

B chemotherapy drugs and radiation 

therapy. In comparison, these service 

categories were combined in our 

proposal to include ‘‘drugs and 

biologics covered under Part B of 

original Medicare (including both 

chemotherapy/radiation drugs integral 

to the treatment regimen and other 

drugs covered under Part B)’’ in 

paragraph (j)(2). Having coinsurance 

and copayment limits in addition to a 

PMPM actuarially equivalent 

requirement is consistent with our long 

standing practice and policy for cost 

sharing for Part B drugs. As a practical 

matter, in proposing both: (1) Applying 

a range of cost sharing limits to the 

‘‘Part B drugs—Other’’ service category; 

and (2) requiring cost sharing to be 

actuarially equivalent to Medicare FFS 

on a PMPM basis for Part B drugs 

(which is inclusive of the ‘‘Part B 

drugs—Other’’ service category), the 

flexibility that seems available by 

proposing a range of cost sharing limits 

up to 50 percent coinsurance or 

actuarially equivalent copayment for 

this service category is very limited. 

Currently, § 422.100(j)(1) requires MA 

plans to use cost sharing that does not 

exceed cost sharing in original Medicare 

for ‘‘chemotherapy administration 

services to include chemotherapy drugs 

and radiation therapy integral to the 

treatment regimen;’’ we proposed to 

revise the text to describe these benefits 

as ‘‘chemotherapy administration 

services to include chemotherapy/ 

radiation drugs integral to the treatment 

regimen’’ and to redesignate it as 

paragraph (j)(1)(i). We are finalizing 

continued application of this cost 

sharing limit, but redesignating it as 

paragraph (j)(1)(i)(A) and refining the 

text to clarify this limit applies to 

chemotherapy administration services 

to include chemotherapy/radiation 

drugs and radiation therapy integral to 

the treatment regimen. We are 

fundamentally maintaining the current 

regulatory description and aligning the 

language with the current structure of 

the PBP (which captures cost sharing 

information for therapeutic radiological 

services and chemotherapy/radiation 

drugs in separate sections). We are not 

making any changes to our longstanding 

bid review practices or policies related 

to this service category by making this 

change to the name of the benefit in 

paragraph (j)(1)(i)(A). 

As discussed in section II.B.5.b. of 

this FC, copayment limits set for certain 

service categories in past years do not 

reflect current actuarially equivalent 

values based on 20 percent coinsurance. 

Rather, our proposed methodology to 

calculate copayment limits based on 

values that are actuarially equivalent to 

the coinsurance limit, will result in 

recalibration of the copayment limits by 

applying a methodology adjusted from 

longstanding policy to the most recent 

Medicare FFS data projections available. 

Commenters expressed concerns about 

potentially significant increases to cost 

sharing limits within one year, such as 

for the ‘‘physical therapy and speechlanguage pathology’’ and ‘‘dialysis 

services’’ service categories in addition 

to the ‘‘Part B drugs—Other’’ service 

category. As discussed in other 

responses to comment in section II.B. of 

this FC, CMS agrees with the 

commenters that the proposed policies 

can be improved by providing for a 

transition process to recalibrate 

copayment limits over time. This 


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transition is also being applied to the 

‘‘Part B drugs—Other’’ service category. 

Specifically, we will transition from the 

$50 contract year 2022 copayment limit 

to an actuarially equivalent value to 20 

percent based on the most recent 

Medicare FFS data projections by 

contract year 2026 (as finalized in 

§ 422.100(j)(1)(ii), (f)(7), and (f)(8)). To 

illustrate the impact of applying an 

annual cap on changes to the copayment 

limits during the actuarially equivalent 

copayment transition for the ‘‘Part B 

drugs—Other’’ service category, the 

calculations to reach the final contract 

year 2023 copayment limit for the ‘‘Part 

B drugs—Other’’ service category are 

provided in Table 25B. As shown in 

Table 25B, the calculations of the 

transitional copayment limit for this 

service category are based on the 

median Medicare FFS cost projection of 

$1,603.00 using contract year 2023 

Medicare FFS data projections (based on 

2017–2021 Medicare FFS data). Using 

the median amount results in a lower 

copayment limit than if the weighted 

average Medicare FFS allowed amount 

was used; we choose between these 

actuarial approaches under 

§ 422.100(f)(7)(ii)(C) and were guided by 

the purposes of the MA program. As 

part of that, we considered how which 

approach would most closely reflect an 

actuarially equivalent copayment for the 

benefit and beneficiary population, 

protect against discriminatory cost 

sharing, and be in the best interests of 

beneficiaries, including protection 

against fluctuations in cost sharing or 

sudden, disruptive increases in cost 

sharing. In this specific case we believe 

choosing the lower actuarially 

equivalent copayment value would 

better protect beneficiaries from 

potentially disruptive increases to the 

cost sharing for that benefit in 

comparison to prior years. We 

emphasize that there is significant 

potential for discrimination against (or 

potential for discouraging enrollment 

by) beneficiaries who have health 

conditions treated by costly Part B 

drugs. We believe that choosing the 

lower actuarially equivalent copayment 

value protects beneficiaries with high 

health care needs from benefit designs 

that discriminate against or discourage 

enrollment in an MA plan, steer subsets 

of Medicare beneficiaries to particular 

MA plans, or inhibits access to services. 

Row J in Tables 25A and 25B 

illustrates the comparison CMS will 

complete after calculating both the 

actuarially equivalent value to cost 

sharing under original Medicare and the 

transitional copayment limit for each 

service category subject to paragraph 

(j)(1) during the multiyear transition to 

actuarially equivalent copayment limits. 

For example, as shown in row J in Table 

25B, the transitional copayment value 

for contract year 2023 is less than the 

actuarially equivalent value compared 

to cost sharing under original Medicare 

for the ‘‘Part B drugs—Other’’ service 

category. As a result of the ‘‘lesser of’’ 

requirement in paragraph (f)(8), this 

transitional copayment value from row 

J in Table 25B is included in Table 28 

as the final contract year 2023 

copayment limit for this service 

category. In addition, no transition is 

being applied to the coinsurance limit 

for the ‘‘Part B drugs—Other’’ service 

category because the 20 percent limit 

has been in place under our current 

policy since 2012. 

We acknowledge that under our final 

policy, the copayment limit for the ‘‘Part 

B drugs—Other’’ service category is still 

increasing from $50 in contract year 

2022 to $120 for contract year 2023 after 

incorporating 25 percent of the 

actuarially equivalent copayment 

differential in § 422.100(f)(8)(ii)(A) and 

application of the rounding rules in 

§ 422.100(f)(6)(ii). However, updating 

the copayment limits to reflect the most 

recent actuarially equivalent values will 

address the costs MA organizations are 

expected to incur in providing these 

services for MA enrollees and make 

appropriate adjustments for medical 

inflation since the current copayment 

limits were last updated. Currently, the 

vast majority of MA plans have 

designed their ‘‘Part B drugs—other’’ 

benefit with cost sharing greater than 

zero and use coinsurance rather than a 

copayment. For contract year 2021 

(based on March 2021 plan data) 

approximately 2 percent of MA and 

MA–PD plans (excluding employer, 

D–SNPs, and MSA plans) established a 

copayment for the ‘‘Part B drugs— 

other’’ service category ($50 or greater 

than zero), suggesting that the upper 

copayment limits for contract year 2022 

may not fully reflect the costs MA 

organizations are experiencing to cover 

this benefit for enrollees. This trend of 

a small percentage of plans offering a 

copayment has remained relatively 

consistent since 2012. In 2012, 

approximately 5 percent of MA and 

MA–PD plans (excluding employer, D– 

SNPs, and MSA plans) established a 

copayment of $50 or greater than zero 

for the ‘‘Part B drugs—other’’ service 

category. Considering the percent of 

plans and enrollees where coinsurance 

is equal to original Medicare for the 

‘‘Part B drugs—other’’ service category 

(approximately 97 percent and 93 

percent in contract year 2021, 

respectively), we believe it is persuasive 

that having a copayment set at an 

amount that is less than an actuarially 

equivalent value to the coinsurance 

limit does not necessarily result in 

lower cost sharing, but might encourage 

plans to use coinsurance instead. The 

copayment limits for the ‘‘Part B 

Drugs—Other’’ category set for contract 

year 2022 have been in place since at 

least 2012. We expect that this 

transition to actuarially equivalent 

values will ultimately result in stable 

benefit packages by ensuring cost 

sharing limits are calculated following 

established actuarial methods, using the 

most recent Medicare FFS data 

projections available, and by keeping 

copayment limits aligned with 

coinsurance limits. CMS will track cost 

sharing changes for the ‘‘Part B drugs— 

Other’’ service category and pursue 

future rulemaking, if appropriate. For 

example, we will continue to review the 

projected weighted average and median 

Medicare FFS allowed amounts from 

the OACT annually, consult with the 

OACT on whether any applicable cost 

trends are expected to be consistent for 

future contract years, and consider how 

market competition or payment policies 

may affect or necessitate changes to the 

methodology CMS used to calculate cost 

sharing limits finalized here. 

f. Per Member per Month Actuarial 

Equivalent (AE) Cost Sharing Limits for 

Basic Benefits (§ 422.100(j)(2)) 

Comment: A few commenters 

generally supported CMS’s proposals (in 

section VI.B.4. of the February 2020 

proposed rule) to require cost sharing 

for specific categories of basic benefits 

that does not exceed cost sharing in 

original Medicare on per member per 

month actuarially equivalent basis. 

These commenters also requested 

clarifications or modifications on these 

proposals as summarized in this section, 

which would be codified at 

§ 422.100(j)(2). A commenter questioned 

whether CMS adjusted the calculations 

and methodology used to compare per 

member per month plan cost sharing to 

the adjusted original Medicare 

actuarially equivalent cost sharing to 

account for the impact of beneficiaries 

with diagnoses of ESRD enrolling in the 

MA program beginning in contract year 

2021 as a result of the 21st Century 

Cures Act. In addition, the commenter 

requested that CMS clarify how the plan 

level inpatient calculations and limits 

for per member per month actuarially 

equivalent cost sharing are impacted by 

the projected increase to inpatient 

hospital acute and psychiatric services 

cost sharing limits based on CMS’s 

proposal to transition ESRD costs into 


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the methodology used to set limits for 

that service category. 

Response: We thank the commenters 

for their support and feedback on our 

proposals related to per member per 

month actuarially equivalent cost 

sharing limits for basic benefits. We are 

finalizing § 422.100(j)(2) generally as 

proposed, with modifications to ensure 

clarity in the regulations (as discussed 

in each response to comment in this 

section). We generally proposed to 

codify the longstanding policy that MA 

cost sharing for all basic benefits and 

certain categories of basic benefits must 

not exceed the cost sharing in original 

Medicare on a per member per month 

actuarially equivalent basis. This 

determination of per member per month 

actuarial equivalence is how the OACT 

currently evaluates the requirement in 

§ 422.254(b)(4) and section 1852(a)(1)(B) 

of the Act that MA plans must cover 

Part A and B benefits (subject to 

exclusions for hospice benefits and 

costs for kidney acquisitions for 

transplants) with cost sharing for those 

services at least as required under Part 

A and B or an actuarially equivalent 

level of cost sharing. We are modifying 

the heading of paragraph (j)(2) to clarify 

that (j)(2) is an evaluation of all basic 

benefits and specific categories of basic 

benefits in the aggregate. For example, 

paragraph (j)(1) addresses the cost 

sharing limit applicable to each service 

category of DME and paragraph (j)(2) 

addresses the overall evaluation of the 

DME benefit category (the aggregate of 

all DME service categories). As with all 

MA requirements, § 422.100(j)(2) 

applies as well to employer plans unless 

there is a waiver provided by CMS 

under section 1857(i) of the Act. 

(Generally, all MA plans must comply 

with the cost sharing and MOOP limits 

adopted by this FC except for MA MSA 

plans because MA MSA plans must not 

cover basic benefits under the plan’s 

deductible has been reached and after 

the deductible is reached, the plan must 

cover 100 percent of the costs of basic 

benefits. See section 1859(b)(3) of the 

Act and § 422.4(a)(2).) This includes 

both the aggregate and service-category 

specific PMPM actuarially equivalent 

requirements in paragraph (j)(2). As 

proposed and finalized in paragraph 

(j)(2), this requirement that cost sharing 

for basic benefits not exceed cost 

sharing in original Medicare does not 

apply to out-of-network benefits for a 

regional MA plan; this is consistent 

with section 1852(a)(1)(B)(ii). We 

proposed and are finalizing a 

longstanding bid evaluation of per 

member per month actuarial 

equivalence (rather than a specific cost 

sharing limit). 

As finalized, § 422.100(j)(2)(i)(A) 

includes a clarification in the definition 

and scope of inpatient hospital acute 

and psychiatric services to which the 

PMPM limit will apply. For this 

regulation, ‘‘inpatient hospital acute and 

psychiatric services’’ means services 

provided during a covered inpatient 

stay during the period for which cost 

sharing would apply under original 

Medicare. We are not finalizing the 

reference to an inpatient facility as we 

believe individuals could interpret the 

word facility in a stricter fashion than 

how this category is reviewed for the 

PMPM evaluation. As finalized, the 

regulation is consistent with how CMS 

has completed the PMPM evaluation in 

longstanding practice and with section 

1852(a)(1)(B)(ii) of the Act (85 FR 9087). 

As part of the annual release of 

subregulatory guidance under new 

§ 422.100(f)(7)(iii), CMS intends to issue 

instructions describing how excess cost 

sharing is evaluated using bid pricing 

tool (BPT) information to satisfy the per 

member per month actuarially 

equivalent requirement for the benefit 

categories subject to § 422.100(j)(2) 

(including inpatient). We include 

instructions for contract year 2023 in 

this section of this FC and will issue 

instructions for future contract years 

through annual subregulatory guidance. 

The approach evaluating compliance 

with the per member per month limits 

uses information specific to each MA 

plan bid and will happen during CMS 

review of bids consistent with 

longstanding practice. We are codifying 

this evaluation to protect beneficiaries 

against discriminatory cost sharing. The 

per member per month actuarial 

equivalence factors for the Inpatient and 

SNF benefit categories had historically 

included costs from beneficiaries with 

diagnoses of ESRD. A correction was 

made beginning for contract year 2021 

bids to exclude costs from beneficiaries 

with diagnoses of ESRD in order to be 

consistent with the treatment of ESRD 

in the BPT. ESRD costs are excluded 

since the bid development is for the 

non-ESRD population to correspond 

with payment policy. Although the 

limits on eligibility for MA plan 

enrollment by beneficiaries with ESRD 

diagnoses were removed beginning for 

contract year 2021, ESRD utilization and 

payment information is different, when 

compared to other enrollees, and CMS 

will continue to exclude these factors 

from the primary pricing sections of the 

MA BPT. Additionally, the Medicare 

FFS Actuarial Equivalent Cost Sharing 

Factors in the MA BPT are calculated 

excluding ESRD utilization and 

payment information because the 

pricing in the bid is for the non- ESRD 

population. Therefore, in response to 

the commenter’s question on whether 

the calculations and methodology used 

to compare per member per month plan 

cost sharing to the adjusted original 

Medicare actuarially equivalent cost 

sharing was modified to account for the 

impact of beneficiaries with diagnoses 

of ESRD enrolling in the MA program 

beginning in contract year 2021 as a 

result of section 17006 of the 21st 

Century Cures Act, we note that the 

evaluations and analyses to determine 

compliance with § 422.100(j)(2) will not 

include beneficiaries with diagnoses of 

ESRD in the development of the 

adjustment factors that account for 

physician allowed costs and cost 

sharing for the Inpatient and SNF 

benefit categories subject to 

§ 422.100(j)(2). This approach does not 

have a material impact on MA plans 

being able to meet the Inpatient hospital 

and SNF cost sharing PMPM actuarial 

equivalence evaluation and is consistent 

with how information is collected in the 

BPT. The actuarially equivalent cost 

sharing factors used in the MA BPT 

exclude enrollees in ESRD status, as 

does the projection of bid expenditures. 

That is, MA organizations are paid the 

full risk-adjusted benchmark rate for 

ESRD enrollees and ESRD enrollees are 

excluded from the BPT and benchmark 

projections. In order to account for the 

projected marginal costs (or savings) of 

enrollees in ESRD status (as referenced 

in BPT instructions) the BPT allows for 

an adjustment that is allocated across 

ESRD and non-ESRD members 

(including out-of-area members). 

In response to the request for clarity 

about the impact of the ESRD cost 

transition on the Inpatient hospital 

PMPM actuarial equivalence evaluation 

required by § 422.100(j)(2)(i)(A), we note 

that the PMPM actuarial equivalence 

evaluation is separate from and is 

conducted differently than evaluating 

the MA cost sharing standards. Both 

evaluations are used to protect against 

benefit designs that discriminate against 

and discourage enrollment by 

beneficiaries with a health status that 

requires those services. The per member 

per month actuarial equivalence 

evaluation uses BPT data in four service 

categories (Inpatient, SNF, DME, and 

Part B drugs) in a manner consistent 

with the BPT data collection that 

excludes ESRD costs. The BPT is used 

for establishing payments for non-ESRD 

enrollees, while payments for ESRD 

enrollees are based on the ESRD 

ratebook. The service category cost 

sharing standards adopted in this rule 


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59Except in the case of special supplemental 

benefit for the chronically ill (SSBCI) offered in 

accordance with § 422.102(f), in which CMS may 

waive uniformity requirements in connection with 

providing SSBCI to eligible chronically ill enrollees. 

(at § 422.100(f)(6)(iv)) for inpatient 

scenarios and (at § 422.100(f)(6)(i) and 

(iii) and (j)(1)) for other basic benefits 

are based on enrollee cost sharing 

entered in the PBP and includes cost 

sharing for all beneficiaries, including 

those with diagnoses of ESRD. Benefits 

and cost sharing must be uniform for all 

MA plan enrollees, or similarly situated 

enrollees 59 pursuant to existing 

regulations that are not being changed. 

As discussed in several other responses 

in this FC, payment by CMS to MA 

plans for coverage of enrollees with 

ESRD is, consistent with section 

1853(a)(1)(H) of the Act, not the same as 

payment to MA plans for other 

enrollees. 

Comment: As summarized in section 

II.B.5.e., a commenter opposed the 

proposal providing additional flexibility 

that could increase cost sharing limits 

for drugs and biologics covered under 

Part B. This commenter also supported 

CMS’s proposal (in § 422.100(j)(2)(i)(C)) 

to codify existing policy regarding the 

specific benefit categories for which MA 

plans must not exceed the cost sharing 

in original Medicare on a per member 

per month actuarially equivalent basis, 

including drugs and biologics covered 

under Part B of original Medicare 

(including both chemotherapy/radiation 

drugs and other drugs covered under 

Part B). Specifically, this commenter 

supported CMS maintaining the current 

upper limits for Part B drug cost sharing 

to help ensure that cost sharing is not 

discriminatory. This commenter did not 

want this category to be modified to 

provide any additional flexibility that 

could increase cost sharing limits for 

drugs and biologics covered under Part 

B. The commenter supported CMS 

continuing to set specific cost sharing 

limits for individual service categories 

(including Part B drug cost sharing) 

based on the belief that maintaining 

these upper limits protects beneficiaries 

who might be impacted by cost sharing 

in excess of the amounts established for 

the original Medicare program. 

Response: We thank the commenter 

for their feedback on our proposal to 

codify the current requirement that cost 

sharing for Part B drugs and biologics 

must not exceed cost sharing for that 

benefit category in original Medicare on 

a PMPM actuarially equivalent basis. 

We are finalizing this proposal with 

modification to clarify that cost sharing 

in MA plans must not exceed the cost 

sharing in original Medicare on a per 

member per month actuarially 

equivalent basis for all drugs and 

biologics covered under Part B of 

original Medicare. CMS is not finalizing 

the proposed language referencing both 

chemotherapy/radiation drugs integral 

to the treatment regimen and other 

drugs covered under Part B in 

§ 422.100(j)(2)(i)(C) because that text is 

unnecessary. This change simplifies the 

regulation and more accurately reflects 

the breadth of drugs that are applicable 

to paragraph (j)(2)(i)(C). These changes 

do not impact how CMS conducts the 

PMPM actuarial equivalence evaluation 

for any benefit category. In respect to 

the comments related to providing 

additional flexibility that could increase 

cost sharing limits for drugs and 

biologics covered under Part B, we 

address these concerns in section 

II.B.5.e. of this FC. 

Comment: A commenter 

recommended that CMS broaden the 

benefit categories listed in proposed 

§ 422.100(j)(2) to include home health 

and physical therapy services to protect 

beneficiaries from excessive cost sharing 

for those services. 

Response: We appreciate the 

commenter’s request to add physical 

therapy and home health to the list of 

service categories in § 422.100(j)(2) for 

which an MA plan may not exceed cost 

sharing required under original 

Medicare on a per member per month 

actuarially equivalent basis, but we are 

not adopting such a change. The BPT 

categories typically include multiple 

PBP service categories and may not 

collect details necessary to evaluate a 

specific specialty category on the basis 

of per member per month actuarial 

equivalence; this is the case for physical 

therapy, for example. We will consider 

future revisions to the PBP and/or BPT 

to gather more information and will 

pursue future rulemaking, if 

appropriate. 

CMS’s longstanding policy has been 

to allow MA plans to establish up to 50 

percent coinsurance or an actuarially 

equivalent copayment for in-network 

professional services except for those 

services for which cost sharing cannot 

exceed original Medicare, regardless of 

the MOOP type (including cost sharing 

for physical therapy). In this FC, we are 

limiting, subject to a transition period, 

this flexibility to MA plans that 

establish a lower MOOP amount. We 

also note a more complete discussion 

related to CMS’s considerations of 

changing our longstanding policy to 

limit certain cost sharing flexibilities to 

MA plans that establish a lower MOOP 

amount is provided in section II.B.5.b. 

of this FC. As discussed in section 

II.B.5.b. of this FC, in response to 

comments specifically about physical 

therapy, the provisions we proposed 

and are finalizing ensure that, beginning 

with contract year 2023, MA plans 

always pay at least 50 percent of the 

estimated total financial liability (for 

plans with a lower MOOP amount) and 

a higher percentage for those services in 

plans that establish an intermediate or 

mandatory MOOP amount than in prior 

contract years. 

We believe the cost sharing standards 

we are finalizing in § 422.100(f)(6)(iii) 

for physical therapy and in 

§ 422.100(j)(1)(i)(D) for home health will 

adequately protect beneficiaries from 

discriminatory cost sharing with regard 

to those services. Because original 

Medicare has no cost sharing for home 

health, it would be difficult to apply the 

PMPM actuarial equivalence evaluation 

in paragraph (j)(2) to this service 

category. The highest allowable MA 

plan cost sharing limit for home health 

is 20 percent or an actuarially 

equivalent copayment (including a 

copayment limit calculated by CMS as 

discussed in sections II.B.5.a., b., and e. 

of this FC) which is limited to MA plans 

with a lower MOOP amount. MA plans 

that establish a mandatory or 

intermediate MOOP amount must 

establish $0 cost sharing for home 

health services under the provision we 

are finalizing in § 422.100(j)(1)(i)(D) 

(proposed in paragraph (j)(1)(iv)). CMS 

will continue to evaluate MA plans 

during bid review in relation to these 

cost sharing categories and will pursue 

future rulemaking to address any 

concerns, if appropriate. 

We are finalizing § 422.100(j)(2)(ii) 

generally as proposed, but with 

modifications to: (1) Correct the 

reference to generally accepted actuarial 

principles and practices (rather than 

only principles) in the regulation; (2) 

clarify the requirements in paragraph 

(j)(2)(i) apply to the MA plan’s cost 

sharing for all for basic benefits and 

specific categories of basic benefits, 

rather than specific services; and (3) 

clarify that CMS may extend flexibility 

regarding compliance with the 

requirements in paragraph (j)(2)(i) to an 

MA plan that has excess cost sharing 

(meaning the PMPM actuarial value of 

the plan’s cost sharing is higher than the 

PMPM actuarial value of the cost 

sharing in original Medicare) to the 

extent that it is actuarially justifiable 

and provided that certain conditions are 

met. Specifically, the MA plan’s cost 

sharing must be based on generally 

accepted actuarial principles and 

practices (consistent with paragraph 

(f)(7)) and supporting documentation 

included in the bid, and the MA plan’s 

cost sharing must otherwise comply 

with applicable cost sharing standards. 


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22398 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

60For information on per member per month 

actuarial equivalent cost sharing bid review criteria 

in contract year 2021 and 2021, see the HPMS 

memorandum titled ‘‘Final Contract Year 2021 Part 

C Benefits Review and Evaluation,’’ issued April 8, 

2020 for contract year 2021 and the HPMS 

memorandum titled ‘‘Final Contract Year 2022 Part 

C Benefits Review and Evaluation,’’ issued May 20, 

2021 for contract year 2022. 

We anticipate this exception would 

apply in limited situations, such as 

when the MA plan uses capitated 

arrangements with provider groups, 

operates their own facilities, or other 

unique arrangements. This flexibility is 

consistent with long-standing policy 

and practice. 

We are finalizing in § 422.100(j)(2), 

with the modifications discussed 

previously in this section, our proposals 

to impose requirements related to the 

per member per month (PMPM) 

actuarial value of the cost sharing for 

basic benefits. As a result, for contract 

year 2023 and subsequent years, CMS 

will separately evaluate the PMPM 

actuarial value of the cost sharing used 

by each MA plan for the following 

service categories: Inpatient, Skilled 

Nursing Facility (SNF), Durable Medical 

Equipment (DME), and Part B drugs. 

Whether in aggregate, or on a servicespecific basis, this evaluation is done by 

comparing two values in the plan’s BPT. 

In essence, CMS compares the actuarial 

value of a plan’s PMPM cost sharing for 

the benefit category to the estimated 

actuarial value of original Medicare cost 

sharing for the same benefit category in 

order to determine plan compliance. 

Specifically, for contract year 2023, a 

plan’s PMPM cost sharing for Medicare 

covered services (BPT Worksheet 4, 

Section IIA, column l) will be compared 

to Medicare covered actuarially 

equivalent cost sharing (BPT Worksheet 

4, Section IIA, column n). For Inpatient 

hospital and SNF services, the Medicare 

actuarially equivalent cost sharing 

values, unlike plan cost sharing values, 

do not include Part B cost sharing. 

Therefore, an adjustment factor is 

applied to these Medicare actuarially 

equivalent values to incorporate Part B 

cost sharing and to make the 

comparison valid. CMS annually 

updates and communicates the Part B 

adjustment factors prior to bid 

submission. Please note that factors for 

Inpatient and Skilled Nursing Facility in 

column #4 of Table 27 (Part B 

Adjustment Factor to Incorporate Part B 

Cost Sharing) have been updated for 

contract year 2023. Once the 

comparison amounts have been 

determined, CMS can evaluate excess 

cost sharing. Excess cost sharing is the 

difference (if positive) between the plan 

cost sharing amount (column #1 in 

Table 27) and the comparison amount in 

column #5 of Table 27 (which reflects 

an estimated original Medicare cost 

sharing which is weighted based on the 

plan’s projected county enrollment). 

This evaluation process remains 

consistent with prior years.60 Table 27 

uses illustrative values to demonstrate 

the mechanics of this determination for 

contract year 2023. We also note that, 

beginning in contract year 2017, CMS 

waived the requirement, under section 

1857(i) of the Act, for MA employer 

plans (EGWPs) to submit a BPT, which 

affects our ability to evaluate EGWPs on 

the PMPM Actuarial Equivalent Cost 

Sharing standards discussed in this 

section. MA EGWPs continue to be 

subject to all MA regulatory 

requirements that have not explicitly 

been waived by CMS, including the cost 

sharing requirements we are finalizing 

in § 422.100(j)(2), regardless of whether 

they are affirmatively evaluated as part 

of bid review or in connection with 

other reviews. 


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TABLE 27: ILLUSTRATIVE COMPARISON OF SERVICE-LEVEL ACTUARIAL 

EQUIVALENT COSTS TO IDENTIFY EXCESSIVE COST SHARING FOR 

CONTRACT YEAR 2023 

□ #1 #2 #3 #4 #5 #6 #7 

Medicare PartB 

FFS Medicare Adjustment 

Allowed FFS Factor to Comparison Excess 

PMPMPlan Amount Actuarially Incorporate Amount2 Cost 

Cost Equivalent Part B Cost Sharing 

Sharing Cost Sharing Sharing 

(Based on 

BPT (Parts A&B) Medicare FFS 

Benefit (BPT Data (#1-#5, 

Category (BPTCol. l) Col. m) (BPTCol n) 1 Pro_jections) (#3 X #4) min of$0) Pass/Fail 

Inpatient $33.49 $331.06 $25.30 1.362 $34.46 $0.00 

SNF $10.83 $58.19 $9.89 1.083 $10.71 $0.12 

DME $3.00 $11.37 $2.65 1 $2.65 $0.35 

Part B-Rx $0.06 $1.42 $0.33 1 $0.33 $0.00 1 PMPM values in column #3 for Inpatient and SNF only reflect Part A FFS actuarial equivalent cost sharing for that service 

category. 

2 Estimated original Medicare cost sharing weighted based on the plan's projected county enrollment. 

Pass 

Fail 

Fail 

Pass 
Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22399 

61See Table 4: Illustrative Comparison of ServiceLevel Actuarial Equivalent Costs to Identify 

Excessive Cost Sharing in the HPMS memorandum 

titled ‘‘Final Contract Year 2021 Part C Benefits 

Review and Evaluation’’ issued April 8, 2020 for an 

example. 62 Individuals and organizations may request 

placement on a listserv at https://hpms.cms.gov/ 

app/ng/home/ to receive future HPMS memoranda. 

CMS will, as described in new 

§ 422.100(f)(7)(iii) (and previously 

discussed in section II.B.5.a. of this FC), 

issue subregulatory guidance for 

contract year 2024 and future years 

prior to bid submission to allow 

sufficient time for MA organizations to 

prepare and submit plan bids. This 

guidance will include how CMS will 

evaluate compliance with § 422.100(j)(2) 

and identify excessive cost sharing. The 

information will be consistent with 

prior years 61 and may be shared 

through publicly-available HPMS 

memoranda.62 Consistent with prior 

practice (for example, the HPMS 

memorandum addressing MOOP and 

cost sharing standards for contract year 

2022), CMS may avoid repeating 

guidance that is unchanged from the 

prior year. For example, if the per 

member per month evaluation will be 

conducted in the same manner as the 

prior contract year and was sufficiently 

explained in the prior year’s guidance or 

within this FC, we may only cite to the 

prior year’s communications, 

summarize, or highlight information 

that has changed to streamline annual 

guidance. 

g. In-Network Service Category Cost 

Sharing Requirements 

Comments received on section 

VI.B.3.d. from the February 2020 

proposed rule were summarized and 

responded to in sections II.B.5.a.–f. of 

this FC. Table 28 provides a summary 

of final contract year 2023 in-network 

service category cost sharing limits 

based on the finalized policies 

discussed in section II.B.5.a.–f. of this 

FC. This table is an updated version of 

Table 5 (Illustrative Contract Year 2022 

In-Network Service Category Cost 

Sharing Limits) from section VI.B. of the 

February 2020 proposed rule. Some of 

the changes, in comparison to Table 5 

from the February 2020 proposed rule, 

are a result of various factors: (1) Using 

the more recent Medicare FFS 

beneficiary data projections available at 

the time of this FC; (2) applying the 

updated ESRD cost transition schedule 

finalized at § 422.100(f)(4)(vii) for 

inpatient hospital cost sharing limits 

(and for MOOP limits where the MOOP 

limit amount restricts the available cost 

sharing); (3) applying the cost sharing 

limit transition provisions (finalized at 

§§ 422.100(f)(6), (f)(8), and 

422.113(b)(2)(v)) for professional 

services, benefits for which cost sharing 

must not exceed cost sharing under 

original Medicare, and emergency 

services; (4) calculating the actuarially 

equivalent copayment limits for the 

‘‘primary care physician’’ and 

‘‘physician specialist’’ service categories 

based on the revised group of provider 

specialties discussed in section II.B.5.b. 

in this FC; and (5) applying the 

requirement finalized at 

§ 422.100(j)(1)(i)(F) that MA plans must 

not use cost sharing that exceeds cost 

sharing in original Medicare for Part B 

drugs other than the specific drugs 

listed in paragraph (j)(1)(i)(A). In 

addition, we updated prior ‘‘N/A’’ 

designations for certain service 

categories as discussed in section 

II.B.5.a. and c. of this FC and the 

footnotes for clarity and to reflect the 

finalized policies. 

As discussed in the February 2020 

proposed rule, CMS will annually 

update the cost sharing limits, using the 

methodology adopted in this FC (at 

§§ 422.100(f)(4) through (f)(8), 

422.100(j), and 422.113(b)(2)) to 

calculate and issue the cost sharing 

limits each year. As this FC is being 

published in advance of the bidding 

deadline for contract year 2023 and with 

the availability of contract year 2023 

Medicare FFS data projections, the 

contract year 2023 cost sharing limits in 

Table 28 are final. In addition, CMS will 

calculate updated limits for contract 

year 2024 and future years based on 

more recent Medicare FFS data 

projections from the OACT and the 

methodology finalized through this FC. 

As a result, in-network service category 

cost sharing limits for contract year 

2024, as well as subsequent years, will 

be issued annually using a 

subregulatory guidance process that 

includes an opportunity for comment, 

as finalized in paragraph (f)(7)(iii). 

Except for the requirement in 

§ 422.100(f)(6)(i) that MA plans pay at 

least 50 percent of estimated total MA 

financial liability for basic benefits, 

even when furnished out of network, 

the standards in Table 28 only apply to 

in-network Parts A and B services. All 

standards and cost sharing are inclusive 

of applicable service category 

deductibles, copayments and 

coinsurance, but do not include plan 

level deductibles (for example, 

deductibles that include several service 

categories). Together, the per member 

per month actuarial equivalence 

evaluation and the Part C service 

category cost sharing standards make 

sure that benefit designs are not 

discriminatory to beneficiaries based on 

health status. 

BILLING CODE 4120–01–P 


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TABLE 28: FINAL CONTRACT YEAR 2023 IN-NETWORK SERVICE CATEGORY 

COST SHARING LIMITS USING PROJECTIONS OF 2017 - 2021 MEDICARE FFS 

DATA 

PBP Section B 

Data Entry Intermediate Mandatory 

Service Category Field LowerMOOP MOOP MOOP 

Inpatient Hospital -Acute - 60 days 1 la $3,650 $4,690 $5,729 

Inpatient Hospital -Acute - 10 days 1 la $3,124 $2,812 $2,499 

Inpatient Hospital -Acute - 6 days 1 la $2,801 $2,521 $2,241 

Inpatient Hospital -Acute - 3 days 1 la $2,562 $2,306 $2,050 

Inpatient Hospital Psychiatric - 60 days1 lb $3,650 $3,325 $3,000 

Inpatient Hospital Psychiatric - 15 days1 lb $2,530 $2,277 $2,024 

Inpatient Hospital Psychiatric - 8 days 1 lb $2,340 $2,106 $1,872 

Skilled Nursing Facility - First 20 Days2,3 2 $20/day $10/day $0/day 

Skilled Nursing Facility- Days 21 through 1002•

3 2 $196/day $196/day $196/day 

Cardiac Rehabilitation4•

5 3 50%/ $40 47%/ $40 45%/ $40 

Intensive Cardiac Rehabilitation4•

5 3 50%/ $65 47%/ $60 45%/ $60 

Pulmonary Rehabilitation4•

5 3 50%/ $20 47%/ $20 45%/ $20 

Supervised exercise therapy (SET) for Symptomatic peripheral artery disease (PAD)4 3 50%/ $30 47%/ $30 45%/$25 

Emergency Services4•

6 4a $125 $ll0 $95 

Urgently Needed Services4•

6 4b 50%/ $65 47%/ $60 45%/ $60 

Partial Hospitalization4 5 50%/ $75 47%/ $70 45%/ $60 

Home Health2 6a 20%/ $404 $0 $0 

Primary Care Physician4 7a 50%/ $40 47%/ $40 45%/ $35 

Chiropractic Care4 7b 50%/ $20 47%/ $20 45%/ $20 

Occupational Therapy4 7c 50%/ $45 47%/ $40 45%/ $40 

Physician Specialist' 7d 50%/ $60 47%/ $55 45%/ $50 

Mental Health Specialty Services4 7e 50%/ $50 47%/ $45 45%/ $40 

Psychiatric Services4 7h 50%/ $50 47%/ $45 45%/ $40 

Physical Therapy and Speech-language Pathology4 7i 50%/ $50 47%/ $50 45%/ $45 

Therapeutic Radiological Services2·

4 8b 20%/ $65 20%/ $65 20%/ $65 

DME-Equipment7 lla 50% 50% 20%2,4 

DME-Prosthetics7 llb 50% 50% 20%2,4 

DME-Medical Supplies7 llb 50% 50% 20%2,4 

DME-Diabetes Monitoring Supplies llc 50%/ $20 50%/ $20 20%/ $102·4 

DME-Diabetic Shoes or Inserts llc 50%/ $25 50%/ $25 20%/ $102·4 

Dialysis Services2•

4 12 20%/ $40 20%/ $40 20%/ $40 

Part B Drugs-Chemotherapy/Radiation2•

4 15 20%/ $125 20%/ $125 20%/ $125 

Part B Drugs-Other2,4 15 20%/ $120 20%/$120 20%/ $120 

1 All MA plans are required to establish cost sharing that does not exceed the plan's MOOP limit or overall cost sharing for inpatient benefits in 

original Medicare on a per member per month actuarially equivalent basis. 2MA plans (per§ 422. IO0G)(l)) and 1876 Cost Plans (per§ 417.454(e)) may not charge enrollees higher cost sharing than is charged under 

original Medicare for Part B chemotherapy administration services, including chemotherapy drugs and radiation therapy integral to the treatment 

regimen, skilled nursing care, and renal dialysis services. As finalized, MA plans(§ 422.IO0(j)(l)(i)(F)) may not charge enrollees higher cost 

sharing than is charged under Original Medicare for "Part B drugs - Other." MA plans that establish a lower MOOP limit may charge cost 

sharing for home health, while plans with an intermediate or mandatory MOOP must not charge higher cost sharing than in original Medicare(§ 

422.1 00(j)( 1 )( i)(D) ). MA plans that establish a mandatory MOOP limit may also not charge enrollees higher cost sharing than is charged under 

original Medicare for DME service categories (§422.I00(j)(l)(i)(E)). 3 MA plans that establish a lower or intermediate MOOP limit may have cost sharing for the first 20 days of a SNF stay (§ 422. IO0(j)(l )(i)(C)). 

The per-day cost sharing for days 21 through 100 must not be greater than one eighth of the projected (or actual) Part A deductible amount, per§ 

422. l00(j)(l)(i)(C)(J). The SNF copayment limit for days 21 through 100 is based on 118th of the projected Part A deductible for 2023. Total cost 

sharing for the overall SNF benefit must be not be greater than the actuarially equivalent cost sharing in original Medicare, pursuant to section 

1852(a)(l)(B) of the Act, and§ 422.IO0(j)(l)(i)(C). 

4 Cost sharing limits for these service categories (and the mandatory MOOP type for the DME service categories) are subject to the multiyear 

transition schedules finalized in §§ 422.100(f)(6)(iii), (f)(8), (j)(l ), and 422. l 13(b )(2)(v). In addition, the copayment limits for the primary care 

physician and physician specialist service categories reflect the change in applicable provider specialties used to calculate the actuarially 

equivalent copayment value, as described in section II.B.5.b. of this FC. 
Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22401 

BILLING CODE 4120–01–C 

MA plans may not charge enrollees 

higher costs sharing than is charged 

under Original Medicare for COVID–19 

testing and testing-related services 

identified in section 1833(cc)(1) for 

which payment would be payable under 

a specified outpatient payment 

provision described in section 

1833(cc)(2) during the period from 

March 18, 2020 through to the end of 

the emergency period described in 

section 1135(g)(1)(B), pursuant to 

amendments to section 1852 of the Act, 

as amended by the Families First 

Coronavirus Response Act. We have not 

incorporated that cost sharing limit into 

Table 28 because of the time-limited 

nature of the requirement. However, MA 

organizations must comply with it and 

other statutory cost sharing limits, such 

as the requirement that cost sharing 

must not exceed cost sharing in Original 

Medicare for a COVID–19 vaccine and 

its administration described in section 

1861(s)(10)(A) of the Act, regardless 

whether CMS specifically addresses 

such limits when issuing the cost 

sharing limits calculated annually under 

§§ 422.100(f) and (j) and 422.113(b)(2). 

h. Out-of-Scope Comments 

Comment: A few commenters also 

provided feedback that was outside the 

scope of the cost sharing limit changes 

proposed for §§ 422.100 and 422.113 in 

section VI.B of the February 2020 

proposed rule. These commenters 

requested CMS change ESRD payments 

for MA plans in addition to, or in place 

of, transitioning ESRD costs into the 

data used to set cost sharing limits and 

raising cost sharing limits. Commenters 

were concerned that payment changes 

were needed in order to ensure MA 

plans and ultimately providers have the 

resources needed to treat this 

chronically ill patient population, 

support MA plans that must cover the 

higher costs of beneficiaries with 

diagnoses of ESRD, and prevent 

detrimental changes to plan options, 

premiums, cost sharing, and 

supplemental benefits. 

Response: We direct commenters to 

the two most recent Rate 

Announcements (Calendar Year 2021 

and 2022) at https://www.cms.gov/ 

Medicare/Health-Plans/ 

MedicareAdvtgSpecRateStats/ 

Announcements-and-Documents for a 

discussion of MA program payment 

policies. 

6. Final Decision 

We received feedback from 17 

commenters pertaining to the proposal 

for setting cost sharing limits, with the 

majority providing general support, 

suggested clarifications, or concerns 

about certain elements of the proposed 

amendments to §§ 422.100(f)(6), 

422.100(j)(1) and (2), and 422.113(b)(2). 

We thank commenters for their input in 

helping to inform our final policy 

concerning cost sharing limits. We are 

soliciting comments to potentially 

inform future rulemaking on cost 

sharing limits as discussed in section III 

of this FC. 

After careful consideration of all the 

comments we received, and for the 

reasons set forth in the February 2020 

proposed rule and in our responses to 

the related comments discussed 

previously, we are finalizing the 

proposals to amend §§ 422.100(f)(6), 

422.100(j)(1) and (2), and 422.113(b)(2) 

with some modifications and additional 

provisions to: (1) Delay the beginning of 

implementation of the cost sharing 

policies by one year; (2) codify the longstanding policy that MA plans must not 

charge cost sharing that exceeds 50 

percent coinsurance or an actuarially 

equivalent copayment, regardless of the 

MOOP limit established, for basic 

benefits (identified within the PBP 

service category or a reasonable group of 

benefits or services) that are provided 

in-network and out-of-network that are 

not explicitly addressed in 

§ 422.100(f)(6), (j)(1), or § 422.113(b)(2); 

(3) codify, with some updates and 

changes, the current process for 

calculating non-discriminatory cost 

sharing limits, taking into account ESRD 

costs; (4) apply a multiyear transition to 

calculate cost sharing limits for 

professional services (furnished on an 

in-network basis based on the MOOP 

limit established by the MA plan), 

emergency services, and benefits for 

which cost sharing must not exceed cost 

sharing under original Medicare; (5) 

codify, with some updates and changes 

(including applying the revised 

multiyear transition of ESRD costs 

finalized in section II.A. of this FC), the 

methodology used to calculate the cost 

sharing standards for inpatient hospital 

acute and psychiatric services; (6) set 

specific cost sharing requirements for 

emergency services; (7) apply the range 

of cost sharing limits calculated for 

professional services to the urgently 

needed services category; (8) codify that 

MA plans must not impose cost sharing 

that exceeds original Medicare for 

certain specific benefits in addition to 

the current list in § 422.100(j); (9) codify 

the cost sharing under original Medicare 

(20 percent coinsurance) as a cost 

sharing limit for the ‘‘Part B drugs— 

Other’’ service category; (10) codify the 

requirement that total MA cost sharing 

for all basic benefits and for certain 

categories of benefits must not exceed 

cost sharing for those benefits in 

original Medicare on a per member per 

month actuarially equivalent basis; (11) 

provide that an MA plan must not 

charge an enrollee a copayment for a 

basic benefit that is greater than the cost 

of the covered service(s); (12) provide 

for an subregulatory comment period for 

how these regulations are applied for 

annual cost sharing limits beginning for 

contract year 2024; and (13) codify the 

use of generally accepted actuarially 

principles and practices in applying the 

MOOP and cost sharing limit 

regulations. These provisions are 

applicable for coverage beginning 

January 1, 2023 and later. We will 

therefore use these rules and the final 

contract year 2023 cost sharing limits in 

Table 28 to evaluate MA bids 

submissions due the first Monday in 

June (June 6, 2022) for the 2023 contract 

year. We will also use these rules to 

evaluate MA bid submissions for 

subsequent contract years going 

forward. In summary, the proposed 

changes to §§ 422.100(f)(6), 422.100(j)(1) 

and (2), and 422.113(b)(2) are being 

finalized substantially as proposed with 


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5 The copayment limit set for these service categories reflect application of the "lesser of' requirement in § 422.1 00(f)(8); the actuarially 

equivalent value to the coinsurance limit for contract year 2023 is less than the value resulting from the actuarially equivalent copayment 

transition ( after application of the rounding rules). 

6 The dollar amount for Emergency Services and Urgently Needed Services included in the table represents the maximum cost sharing permitted 

per visit ( copayment or coinsurance) and the cost sharing limit applies whether the services are received inside or outside the MA organization, 

per § 422.113(b )(2)(i), (v), and (vi). Emergency and Urgently Needed Services benefits are not subject to plan level deductible amount and/or 

out-of-network providers. In addition, the cost sharing limit for Urgently Needed Services is based on the limits specified for professional 

services in § 422.100(f)(6)(iii) (which includes being subject to the transition limits in § 422.100(£)(8)), as fmalized in § 422.l 13(b )(2)(vi). 7 For contract years where CMS has not calculated an actuarially equivalent copayment limit, MA plans may establish cost sharing at or less than 

either (i) the coinsurance limits or (ii) the dollar value that is actuarially equivalent to the coinsurance limit based on their estimated total MA 

plan financial liability for the benefit for that contract year or the average Medicare FFS allowable amount for the benefit in the plan's service 

area, as applicable, under§ 422.100(f)(6)(i), (iii), and (j)(l). 
22402 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

the following modifications from the 

proposal: 

• The methodology for calculating 

cost sharing limits in the amendments 

to §§ 422.100(f), (j), and 

422.113(b)(2)(vi) and the specific cost 

sharing limits in § 422.113(b)(2)(v) are 

applicable beginning on or after January 

1, 2023 instead of January 1, 2022. 

• Adding descriptive headings to 

paragraphs in § 422.100(f)(6) and (j)(1)– 

(2) to orient the reader to the content in 

each paragraph. 

• Revising § 422.100(f) and (j) to use 

consistent language in regulation text 

when referring to: (1) A cost sharing 

requirement that the MA plan ‘‘must’’, 

not ‘‘may’’, follow; (2) out-of-pocket 

costs ‘‘incurred by’’ beneficiaries with 

and without diagnoses of ESRD; (3) 

‘‘service categories’’ instead of 

‘‘services’’ or ‘‘items’’; (4) cost sharing 

limits ‘‘calculated’’ by CMS by applying 

these regulations; and (5) cost sharing 

‘‘established’’ by MA plans as part of 

their benefit designs. 

• Revising introductory language in 

§ 422.100(f)(6) to: (1) Clarify that the 

cost sharing limits (coinsurance or 

copayments) are calculated at the plan 

benefit package service category level or 

for a reasonable group of benefits 

covered under the plan; (2) add 

references to §§ 422.100(j) and 

422.113(b)(2), to encompass the cost 

sharing requirements that apply in those 

sections; (3) clarify that § 422.254(b)(4) 

requires that overall MA cost sharing for 

basic benefits be actuarially equivalent 

to, or less than, Medicare FFS cost 

sharing; (4) clarify that cost sharing 

evaluations will be completed at the 

plan (or segment) level; and (5) codify 

the requirement that an MA plan must 

not charge an enrollee a copayment for 

a basic benefit that is greater than the 

cost of the covered service(s). 

• Consolidating the requirements in 

§ 422.100(f)(6)(i)(A), (B), and (C) into 

one regulatory paragraph at (f)(6)(i) with 

revisions to: (1) Clarify the requirements 

MA plans must follow to establish a cost 

sharing amount for service categories 

subject to paragraph (f)(6)(i); (2) specify 

the data MA plans must use to 

determine that its copayment amount 

for a service category or for a reasonable 

group of benefits in the PBP does not 

exceed an actuarially equivalent value 

to 50 percent coinsurance; (3) clarify 

that the copayment limits calculated by 

CMS take precedence; (4) add references 

to other applicable regulations to clarify 

the scope of the requirements in 

paragraph (f)(6)(i); and (5) generally 

simplify and clarify regulation text. 

• Adding language to 

§ 422.100(f)(6)(ii) to: (1) Clarify that 

CMS will apply the same rounding 

methodology when calculating 

copayment limits and evaluating MA 

plan compliance with paragraphs (f)(6), 

(f)(7), (f)(8), and (j)(1); and (2) reorganize 

the regulation text to apply the rounding 

rules when MA organizations calculate 

actuarially equivalent values and to 

increase clarity. 

• Revising § 422.100(f)(6)(ii)(A) to 

add references to paragraphs (f)(6)(i), 

(f)(6)(iii), and (j)(1) to apply the $5 

rounding methodology consistently to 

cost sharing limits for professional 

services and benefits for which cost 

sharing must not exceed cost sharing 

under original Medicare. 

• Moving the rule for rounding 

inpatient hospital acute and psychiatric 

and skilled nursing facility cost sharing 

limits from § 422.100(f)(6)(ii)(A) to 

§ 422.100(f)(6)(ii)(B) and adding 

references to paragraphs (f)(6)(iv) and 

(j)(1)(i)(C) to clarify the regulations that 

govern the methodology to calculate 

cost sharing limits for those service 

categories. 

• Moving the rule for rounding 

copayments when a copayment limit is 

projected to be exactly between two 

increments from proposed paragraph 

(f)(6)(ii)(B) to new § 422.100(f)(6)(ii)(C). 

• Revising § 422.100(f)(6)(iii)(A) to 

refer to paragraph (f)(6)(iii) (instead of 

paragraph (f)(6)(ii)). 

• Moving the rule identifying the 

Medicare data that CMS may utilize to 

calculate copayment limits subject to 

paragraph (f)(6)(iii) from proposed 

paragraph (f)(6)(iii)(B) to new 

§ 422.100(f)(7)(i)(A). 

• Finalizing new language at 

§ 422.100(f)(6)(iii)(B) to: (1) Clarify how 

CMS will apply the regulations to 

calculate copayments that are 

actuarially equivalent to the 

coinsurance limits, subject to other cited 

regulations; (2) refer to new paragraphs 

(f)(7) and (f)(8) to apply generally 

accepted actuarial principles and 

practices and restrictions on increases to 

the copayment limits to CMS’s 

calculations of actuarially equivalent 

copayments; and (3) to provide if CMS 

does not calculate a copayment limit, 

the MA plan must not establish a 

copayment that exceeds the actuarially 

equivalent value to the coinsurance 

limits in paragraph (f)(6)(iii) based on 

the estimated total MA plan financial 

liability for that benefit for that contract 

year. 

• Revising and adding new 

paragraphs at § 422.100(f)(6)(iii)(C) 

through (F) to adopt a transition over 4 

years to the cost sharing limits for 

professional service categories based on 

use of the lower, intermediate, or 

mandatory MOOP type. 

• Revising § 422.100(f)(6)(iv)(A) to 

add a reference to new paragraph (f)(7). 

• Revising § 422.100(f)(6)(iv)(B) to: (1) 

Clarify the cost sharing limits calculated 

for the seven length of stay scenarios 

apply to inpatient hospital acute and 

psychiatric service categories; (2) 

remove the reference to an inpatient 

facility to match how CMS applies the 

inpatient hospital cost sharing limits; 

and (3) generally improve the flow of 

the regulation text. 

• Revising § 422.100(f)(6)(iv)(C) to: (1) 

Update the description of the Medicare 

FFS data used to calculate the inpatient 

hospital service category cost sharing 

limits for the applicable year and length 

of stay scenario to reflect the ESRD cost 

transition; and (2) update the reference 

to the ESRD cost transition schedule to 

paragraphs (f)(4)(vii)(A) through (B) to 

reflect the modified transition finalized 

in section II.A. of this FC. 

• Revising § 422.100(f)(6)(iv)(D) to: (1) 

Clarify that this paragraph is applicable 

to inpatient hospital acute and 

psychiatric service categories; and (2) 

apply the rule proposed in paragraph 

(f)(6)(iv)(D)(3) that the total cost sharing 

for the inpatient benefit must not exceed 

the MA plan’s MOOP limit or overall 

cost sharing for inpatient benefits in 

original Medicare on a per member per 

month actuarially equivalent basis 

(based on original Medicare cost sharing 

for a new benefit period) to all inpatient 

hospital cost sharing rather than only 

limited to MA plans that establish a 

lower MOOP amount. 

• Revising § 422.100(f)(6)(iv)(D)(1) to 

clarify that the cost sharing for MA 

plans with a mandatory MOOP amount 

must 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. 

• Revising § 422.100(f)(6)(iv)(D)(2) to 

clarify that the cost sharing for MA 

plans with an intermediate MOOP 

amount must not exceed the cost 

sharing limits established in paragraphs 

(f)(6)(iv)(D)(1) and (3) for the same 

inpatient hospital length of stay 

scenario, before application of the 

rounding rules in paragraph (f)(6)(ii). 

• Revising § 422.100(f)(6)(iv)(D)(3) to 

(1) clarify that CMS uses the projected 

Part A deductible to determine cost 

sharing limits for inpatient hospital 

acute and psychiatric services; (2) 

clarify that the flexibility to establish 

cost sharing above 125 percent of 

estimated Medicare FFS cost sharing is 

limited to the inpatient hospital acute 

60 day length of stay for MA plans that 

establish a lower MOOP limit; (3) use 

consistent language when referring to 

inpatient hospital cost sharing; and (4) 


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avoid repeating the rule moved to 

paragraph (f)(6)(iv)(D). 

• Also, as discussed in section II.A. of 

this FC, adding § 422.100(f)(7)(i) to 

clarify that generally accepted actuarial 

principles and practices must be 

applied in the process of developing the 

projections and calculations described 

in §§ 422.100(f)(4), (f)(5), (f)(6), (f)(7)(ii), 

(f)(8) and (j) and in 422.101(d)(2) and 

(3). 

• Adding § 422.100(f)(7)(i)(A) to 

clarify in applying generally accepted 

actuarial principles and practices, 

actuarial judgment and discretion may 

be used, including to take into account 

relevant information, select among 

different approaches, and select data or 

data samples used in the calculations. 

• Adding § 422.100(f)(7)(i)(B) to 

require MA organizations to also use 

generally accepted actuarial principles 

and practices in complying with the 

regulations in paragraphs (f)(6) and (j). 

• Adding § 422.100(f)(7)(i)(C) to 

clarify that CMS will apply generally 

accepted actuarial principles and 

practices in evaluating MA organization 

compliance with § 422.100(f)(6) and (j). 

• Adding § 422.100(f)(7)(ii) to adopt 

standards for whether and how CMS 

will calculate actuarially equivalent 

copayment limits for basic benefits 

subject to § 422.100(f)(6)(i), (f)(6)(iii), 

and (j)(1). 

• Adding § 422.100(f)(7)(ii)(A) to 

provide that CMS will use Medicare 

FFS data projections (defined in 

paragraph (f)(4)(i)) to calculate an 

actuarially equivalent copayment value 

for the applicable year and service 

category. 

• Adding § 422.100(f)(7)(ii)(B) to 

describe how CMS may use MA 

encounter data in addition to the 

Medicare FFS cost data projections. 

• Adding § 422.100(f)(7)(ii)(C) to 

clarify how CMS may select among 

particular approaches to calculate 

actuarially equivalent copayment values 

in order to carry out program purposes. 

• Adding § 422.100(f)(7)(ii)(D) to 

provide for applying the actuarially 

equivalent copayment transition in 

paragraph (f)(8) for calculating 

copayment limits. 

• Adding § 422.100(f)(7)(ii)(E) to 

clarify use of the rounding rules in 

paragraph (f)(6)(ii) when calculating 

copayment limits at an actuarially 

equivalent value to the applicable cost 

sharing standard. 

• Finalizing § 422.100(f)(7)(iii) to: (1) 

Clarify that CMS will issue 

subregulatory guidance (beginning with 

contract year 2024) that specifies the 

MOOP limits and cost sharing standards 

for the upcoming contract year that are 

set and calculated using the 

methodology and standards in 

§§ 422.100(f) and (j), 422.101(d), and 

422.113; (2) codify that this 

subregulatory guidance will be released 

prior to bid submission to allow 

sufficient time for MA organizations to 

prepare and submit plan bids; and (3) 

provide for a public notice and 

comment period on the projected MOOP 

limits and cost sharing standards for the 

upcoming contract year unless a public 

comment period is impracticable, 

unnecessary, or contrary to the public 

interest. 

• Adding § 422.100(f)(8) to adopt a 

definition of and methodology for using 

an actuarially equivalent copayment 

differential (defined in paragraph 

(f)(8)(i)) to cap increases to copayment 

limits (for service categories subject to 

paragraph (f)(6)(iii) or (j)(1)) during the 

transition to actuarially equivalent 

copayment limits that ends in 2026, as 

described in detail in section II.B.5.b. 

and e. of this FC. 

• Adding § 422.100(f)(9) to require 

MA organizations to bundle cost sharing 

amounts where separate cost sharing 

applies for that particular service(s) and 

setting(s) and be clearly reflected as a 

single, total cost sharing in appropriate 

materials distributed to beneficiaries for 

basic benefits. 

• Redesignating the text at 

§ 422.100(j)(1) to paragraph (j)(1)(i) and 

redesignating with modifications 

current paragraphs (j)(1), (j)(2) and (j)(3) 

as (j)(1)(i)(A), (j)(1)(i)(B), and (j)(1)(i)(C). 

• Reorganizing the regulation text in 

paragraph (j)(1) and clarifying the 

description of the benefit in paragraph 

(j)(1)(i)(A) (proposed in 

§ 422.100(j)(1)(i)). 

• Revising § 422.100(j)(1)(i) to: (1) 

Clarify the scope of the requirement that 

cost sharing for certain services must 

not exceed cost sharing under original 

Medicare; and (2) require MA plans 

establishing a copayment for a service 

category subject to paragraph (j)(1)(i) to 

establish an amount that is equal to or 

less than an actuarially equivalent value 

to cost sharing required under original 

Medicare using the rules in paragraph 

(j)(1)(ii). 

• Moving the regulatory text in 

proposed § 422.100(j)(1)(iii) to 

paragraph (j)(1)(i)(C) with the addition 

of specific per day cost sharing limits 

for the first 20 days of a SNF stay for 

each MOOP type. 

• Moving the regulatory text in 

proposed § 422.100(j)(1)(iii)(A) and (B) 

to paragraphs (j)(1)(i)(C)(1) and (2) with 

a clarification that the per-day cost 

sharing for days 21 through 100 in a 

SNF must not be greater than one eighth 

of the projected (or actual) Part A 

deductible amount and a clarification 

that total cost sharing for the overall 

SNF benefit is also evaluated based on 

the per member per month actuarial 

equivalent value. 

• Moving the regulatory text in 

proposed § 422.100(j)(1)(iv) to paragraph 

(j)(1)(i)(D) with modifications to change 

the requirement from cost sharing up to 

20 percent of the total MA plan 

financial liability to cost sharing not 

greater than 20 percent or an actuarially 

equivalent copayment (the data which 

would make this determination is now 

contained in paragraph (j)(1)(ii)). 

• Moving the regulatory text in 

proposed § 422.100(j)(1)(v) to paragraph 

(j)(1)(i)(E) with the following 

clarifications and additions: (1) The 

specific service categories applicable to 

paragraph (j)(1)(i)(E) for MA plans that 

establish a mandatory MOOP limit are: 

Equipment, prosthetics, medical 

supplies, diabetes monitoring supplies, 

diabetic shoes or inserts; and (2) the 

requirement that the total cost sharing 

for the overall DME benefit must be no 

greater than the per member per month 

actuarially equivalent cost sharing for 

the DME benefit in original Medicare is 

applicable for all MOOP limits. 

• Adding § 422.100(j)(1)(i)(F) to apply 

the requirement that cost sharing must 

not exceed cost sharing under original 

Medicare to the other drugs covered 

under Part B of original Medicare (that 

is, Part B drugs not included in 

paragraph (j)(1)(i)(A)). 

• Adding § 422.100(j)(1)(ii) to codify 

the rules for calculating copayment 

limits for the basic benefits listed in 

paragraph (j)(1)(i) which include: (1) 

How CMS calculates copayment limits 

following the requirements in paragraph 

(f)(7) and the restrictions on changes in 

copayment amounts in paragraph (f)(8); 

and (2) how an MA plan must establish 

a copayment that does not exceed an 

actuarially equivalent value to the 

coinsurance required under original 

Medicare when CMS does not calculate 

a copayment limit for a benefit listed in 

paragraph (j)(1)(i) using actuarially 

accepted principles and practices 

included in paragraph (f)(7)(i) and 

basing calculations of an actuarially 

equivalent value on the average 

Medicare FFS allowed amount in the 

plan’s service area or the estimated total 

MA plan financial liability for that 

benefit for that contract year. 

• Revising § 422.100(j)(2) to clarify 

that this paragraph addresses the 

evaluation of all basic benefits and 

specific categories of basic benefits in 

the aggregate for which an MA plan’s 

total cost sharing for all basic benefits 

(excluding out of network benefits 

covered by a regional MA plan) must 

not exceed cost sharing in original 


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22404 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

Medicare on a per member per month 

actuarially equivalent basis. 

• Revising § 422.100(j)(2)(i) to 

generally simplify and clarify regulation 

text. 

• Revising § 422.100(j)(2)(i)(A) to: (1) 

Clarify that services provided are during 

a covered inpatient stay; and (2) remove 

the language referencing an inpatient 

facility. 

• Revising § 422.100(j)(2)(i)(C) to 

apply the requirement under paragraph 

(j)(2) to all drugs and biologics covered 

under Part B of original Medicare. 

• Revising § 422.100(j)(2)(ii) to: (1) 

Clarify that CMS extends the proposed 

flexibility to the evaluation of 

compliance with the requirements in 

paragraph (j)(2)(i) regarding actuarial 

equivalent cost sharing for all basic 

benefits and specific categories of basic 

benefits; and (2) clarify that the 

flexibility is based on whether the MA 

plan’s cost sharing for specific service 

categories otherwise satisfies applicable 

cost sharing standards and is based on 

‘‘generally accepted actuarial principles 

and practices’’ (consistent with 

paragraph (f)(7)). 

• Removing references to poststabilization services costs in 

§ 422.113(b)(2)(v). 

• Revising § 422.113(b)(2)(v)(B)(1) to 

adopt the following emergency services 

cost sharing limits for 2023: $95 for a 

mandatory MOOP limit, $110 for an 

intermediate MOOP limit, and $125 for 

a lower MOOP limit. 

• Revising § 422.113(b)(2)(v)(B)(2) to 

adopt the following emergency services 

cost sharing limits for 2024: $100 for a 

mandatory MOOP limit, $120 for an 

intermediate MOOP limit, and $135 for 

a lower MOOP limit. 

• Revising § 422.113(b)(2)(v)(B)(3) to 

adopt the following emergency services 

cost sharing limits for 2025: $110 for a 

mandatory MOOP limit, $125 for an 

intermediate MOOP limit, and $140 for 

a lower MOOP limit. 

• Adding § 422.113(b)(2)(v)(B)(4) to 

adopt the following emergency services 

cost sharing limits for 2026 and 

subsequent years: $115 for a mandatory 

MOOP limit, $130 for an intermediate 

MOOP limit, and $150 for a lower 

MOOP limit. 

• Adding various minor technical and 

grammatical changes from the proposed 

regulation text at §§ 422.100(f)(6) and 

422.113(b)(2) to ensure clarity and avoid 

repetitive text in the regulations. 

Finally, in addition to the authority 

outlined in the February 2020 proposed 

rule for these cost sharing limits, section 

1854(a)(5) and (6) of the Act provides 

that CMS is not obligated to accept 

every bid submitted and may negotiate 

with MA organizations regarding the 

bid, including benefits. Under section 

1854(a)(5)(C)(ii) of the Act, CMS is 

authorized to deny a plan bid if the bid 

proposes too significant increases in 

enrollee costs or decrease in benefits 

from one plan year to the next. While 

the rules adopted here do not limit our 

negotiation authority (§ 422.256), they 

provide minimum standards for an 

acceptable benefit design for CMS to 

apply in reviewing and evaluating bids 

in addition to establishing important 

protections to ensure that enrollees with 

high health care costs are not 

discouraged from enrolling in MA 

plans. 

III. Request for Comment Regarding the 

Methodology for CMS To Update and 

Change Service Category Cost Sharing 

Limits (§ 422.100(f)(6)(i), (iii), and 

422.100(j)(1)) 

We are requesting comments and 

information on new or different ways to 

update and change cost sharing limits 

for all service categories subject to 

§§ 422.100(f)(6)(i), (iii), and 

422.100(j)(1), including mental health 

services, to inform future rulemaking. In 

brief, we are soliciting comments on: (1) 

Modifying the cost sharing limits for 

specific service categories to better 

protect against potentially 

discriminatory cost sharing; and (2) the 

necessity, appropriateness and 

feasibility of adding parameters to 

update copayment limits after the cost 

sharing limit transitions are completed 

(based on § 422.100(f)(8)). 

For the most part MA organizations 

typically offer benefits with lower cost 

sharing amounts than the cost sharing 

limits CMS has used in the past. 

However, we are concerned about 

benefit designs that have in-network 

cost sharing at the highest allowable 

level for a subset of benefits, including 

mental health services, even if the MA 

plans uses lower cost sharing for other 

benefits or categories of services. As a 

result, we are soliciting 

recommendations regarding the service 

categories for which CMS should 

consider modifying cost sharing limits 

(including specific cost sharing limits 

changes) to ensure beneficiaries are 

protected from potentially 

discriminatory cost sharing. For 

example, these recommendations could 

include adding new service categories, 

such as ‘‘mental health services’’ or 

categories that address substance use 

disorders, such as opioid treatment 

program services, to existing service 

categories at § 422.100(j)(1). The goal of 

these modifications would be to 

prohibit cost sharing amounts for those 

service categories that exceed cost 

sharing in original Medicare. By 

comparison, coinsurance limits for the 

‘‘mental health services’’ service 

category in contract year 2022 were 50 

percent regardless of the MOOP type 

established, and under this FC, by 

contract year 2026, the limit for the 

mental health services category will be, 

at the lowest, at the 30 percent 

coinsurance limit (or actuarially 

equivalent copayment limit) for MA 

plans that establish a mandatory MOOP 

amount. 

As established in this FC, CMS will 

annually update cost sharing limits 

based on more recent data and will use 

a 4-year transition period to move from 

the cost sharing limits set for contract 

year 2022 to a new set of coinsurance 

limits and actuarially equivalent 

copayment limits. For 2026 and 

subsequent years, this FC does not 

contain specific restrictions on increases 

in copayment limits and requires them 

to increase as the dollar value of the 

coinsurance percentage increases. We 

are soliciting comments on the 

necessity, appropriateness, and 

feasibility of preventing copayment 

limits from changing dramatically or 

fluctuating from year to year. 

Our goal is to allow MA organizations 

to design stable benefit structures from 

year to year and meet beneficiary needs 

while ensuring that cost sharing is not 

discriminatory or excessive. We expect 

that having cost sharing standards that 

are predictable and stable from year to 

year supports this goal. A process that 

allows standards to change dramatically 

or fluctuate by minimal amounts from 

year to year would not promote stable 

benefit packages over time. In addition, 

we believe copayment limits should 

closely reflect the coinsurance amounts 

that MA enrollees are expected to pay 

and that copayment limits should be 

calculated using the applicable 

coinsurance percentages and 

considering and applying sound 

actuarial methods to reach an 

approximate actuarially equivalent 

value. We are soliciting ideas for 

regulatory, subregulatory, policy, 

practice, and procedural changes to 

better accomplish these goals. Ideas 

could include recommendations of 

specific actuarial approaches or 

parameters to do the following: 

• Establish rules for when CMS 

should maintain or moderate the change 

from the prior year’s copayment limits 

when calculating copayment limits for 

the upcoming contract year, while 

keeping copayment limits 

approximately in line with the 

coinsurance limits established in 

§ 422.100(f)(6) and (j). 

• Apply specific minimum and 

maximum thresholds to the 


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63The CMS–R–262 PRA package may be accessed 

at: https://www.cms.gov/Regulations-andGuidance/Legislation/ 

PaperworkReductionActof1995/PRA-Listing-Items/ 

CMS-R-262. 

methodology CMS uses to update 

copayment limits (with or without 

exceptions, such as for exceptional 

circumstances) in accordance with the 

regulations adopted in this FC. 

• Ensure the methodology can be 

applied effectively to both service 

categories with higher and lower 

copayment limits. 

CMS’s overall goal in soliciting 

comments is to consider 

recommendations for how we can best 

mitigate disruption from changing 

copayment limits to ensure copayment 

limits do not become substantially 

different than the actuarially equivalent 

value to the coinsurance standard under 

this FC, while also striking a balance 

between protecting beneficiaries 

(especially vulnerable populations with 

higher-cost health care conditions) from 

excessive cost sharing and the costs 

experienced by MA organizations in 

providing the benefits. Commenters may 

also include recommendations 

regarding how CMS can simplify the 

rules and policies adopted here through 

future rulemaking to ensure 

beneficiaries have access to MA plans 

that meet the goals and objectives 

outlined in this FC as the basis for 

finalizing § 422.100(f)(6), (f)(7), (f)(8), 

and (j). Specific recommendations for 

how CMS can best evaluate MA 

compliance with the cost sharing 

standards adopted in this FC may also 

be provided in response to this 

solicitation. Comments regarding other 

cost sharing standards that CMS should 

consider for potential future rulemaking 

may also be submitted. 

In responding to this comment 

solicitation, we request that all 

respondents provide complete, clear, 

and concise comments that include, 

where practicable, data and specific 

examples of how we may maintain or 

calculate updated copayment limits for 

these benefits in future years. If the 

proposals involve novel legal questions, 

analysis regarding our authority is 

welcome for our consideration. 

Language illustrating the suggested 

approach is also welcome so that CMS 

may understand more precisely the 

parameters of the suggestions. We are 

soliciting comment on all of the 

considerations discussed in this section. 

This FC contains a request for 

comment. In accordance with the 

implementing regulations of the 

Paperwork Reduction Act of 1995 

(PRA), specifically 5 CFR 1320.3(h)(4), 

this general solicitation is exempt from 

the PRA. Facts or opinions submitted in 

response to general solicitations of 

comments from the public, published in 

the Federal Register or other 

publications, regardless of the form or 

format thereof, provided that no person 

is required to supply specific 

information pertaining to the 

commenter, other than that necessary 

for self-identification, as a condition of 

the agency’s full consideration, are not 

generally considered information 

collections and therefore not subject to 

the PRA. 

We note that this request for comment 

is issued solely for information and 

planning purposes; it does not 

constitute a Request for Proposal (RFP), 

application, proposal abstract, or 

quotation. This request for comment 

does not commit the U.S. Government 

to contract for any supplies or services 

or make a grant award. Further, we are 

not seeking proposals through this 

request for comment and will not accept 

unsolicited proposals. Respondents are 

advised that the U.S. Government will 

not pay for any information or 

administrative costs incurred in 

response to this request for comment; all 

costs associated with responding to this 

request for comment will be solely at 

the interested party’s expense. We note 

that not responding to this request for 

comment does not preclude 

participation in any future procurement 

or rulemaking, if conducted. It is the 

responsibility of the potential 

respondents to monitor this request for 

comment announcement for additional 

information pertaining to this request. 

In addition, we note that we will not 

respond to questions about the policy 

issues raised in this request for 

comment. 

We will actively consider all input as 

we develop future plans and policies. 

We may or may not choose to contact 

individual respondents. Such 

communications would be for the sole 

purpose of clarifying statements in the 

respondents’ written responses. 

Contractor support personnel may be 

used to review responses to this request 

for comment. Responses to this notice 

are not offers and cannot be accepted by 

the Government to form a binding 

contract or issue a grant. Information 

obtained as a result of this request for 

comment may be used by the 

Government for program planning on a 

non-attribution basis. Respondents 

should not include any information that 

might be considered proprietary or 

confidential. This request for comment 

should not be construed as a 

commitment or authorization to incur 

cost for which reimbursement would be 

required or sought. All submissions 

become U.S. Government property and 

will not be returned. In addition, we 

may publicly post the public comments 

received, or a summary of those public 

comments. 

IV. Collection of Information 

Requirements 

The February 2020 proposed rule 

solicited public comment on our 

proposed information collection 

requirements (ICRs), burden, and 

assumptions for 17 provisions. We also 

solicited public comment on the 

provisions without ICRs and stated that 

those provisions did not propose any 

new or revised collection of information 

requirements and/or burden and, 

therefore, are not subject to the 

requirements of the Paperwork 

Reduction Act (PRA). We received no 

disagreement from the public 

commenters on this approach for the 

two provisions being implemented in 

this FC: (1) Maximum Out-of-Pocket 

(MOOP) Limits for Medicare Parts A 

and B Services (§§ 422.100 and 

422.101); and (2) Service Category Cost 

Sharing Limits for Medicare Parts A and 

B Services and Per Member Per Month 

Actuarial Equivalence Cost Sharing 

(§§ 422.100 and 422.113). 

In this FC we make some 

modifications to the proposals, 

including the addition of a transition 

period to implement the range of cost 

sharing limits for professional service 

categories (as discussed in section 

II.B.5.b. of this FC) and adjusting the 

percentage of ESRD costs to incorporate 

into the MOOP and inpatient hospital 

cost sharing limits for 2023 (as 

discussed in sections II.A.4.c. and 

II.B.5.c. of this FC), however these 

changes do not impose new or revised 

information collection requirements for 

these two provisions. 

Consequently, we are finalizing that 

the two provisions do not impose any 

new or revised collection of information 

requirements and/or burden. In making 

this assertion we note that the finalized 

provisions codify and update current 

guidance governing MA organization 

bid requirements,63 which are currently 

approved by OMB under control 

number 0938–0763 (CMS–R–262). This 

FC codifies general subregulatory 

guidance that we issued in past years 

about how benefits must be provided by 

MA plans (including MOOP and cost 

sharing guidance); because CMS 

annually reviews all bids, we are certain 

that there has been plan compliance 

with our current practice. 

This FC also updates certain 

longstanding requirements and modifies 

the way that MOOP limits and cost 

sharing limits have been set by adopting 


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64See the HPMS memorandum titled ‘‘Final 

Contract Year 2021 Part C Benefits Review and 

Evaluation,’’ issued April 8, 2020, for information 

on MOOP and cost sharing limits for contract year 

2021. 

65See the HPMS memorandum titled ‘‘Final 

Contract Year 2022 Part C Benefits Review and 

Evaluation,’’ issued May 20, 2021, for information 

on MOOP and cost sharing limits for contract year 

2022. 

66These HPMS memoranda may be accessed 

through the HHS guidance repository at: HHS 

Guidance Submissions | Guidance Portal and 

individuals and organizations may request 

placement on the HPMS listserv at https://

hpms.cms.gov/app/ng/home/. 

specific methodologies but does not 

change how CMS evaluates compliance 

with MOOP and cost sharing limits as 

part of bid review. However, MA 

organizations are already submitting 

supporting documentation (for contract 

year 2022 and prior years) in order to 

demonstrate compliance. Similarly, 

CMS intends to continue providing 

annual instructions on bid 

documentation through subregulatory 

guidance. 

Additionally, we received no PRArelated public comments for the 

provisions implemented in this FC. 

Consequently, since there is no 

additional burden over and above the 

annual bid-review guidance and plan 

responses, we are finalizing our estimate 

of no impact without creating or 

modifying active ICR(s). 

We note that the two MOOP and cost 

sharing provisions mentioned in this 

section are the only proposed provisions 

that are being finalized in this FC. The 

remaining proposed provisions from the 

February 2020 proposed rule were 

finalized in the June 2020 and January 

2021 final rules. 

V. Regulatory Impact Analysis 

A. Statement of Need 

The provisions in this FC codify and 

update current subregulatory guidance 

governing MA organization bid 

requirements. This includes changes to 

MOOP limits and inpatient hospital cost 

sharing limits consistent with section 

17006 of the 21st Century Cures Act 

(Cures Act), which amended section 

1851(a)(3) of the Act to allow Medicare 

eligible beneficiaries with diagnoses of 

ESRD to choose an MA plan for 

Medicare coverage starting January 1, 

2021, without the limits on such 

enrollment that currently apply. Prior to 

contract year 2021, we excluded the 

projected out-of-pocket spending for 

beneficiaries with diagnoses of ESRD, 

which we are also referring to in this FC 

as ‘‘ESRD costs,’’ from the data used to 

set MOOP and cost sharing limits. After 

publication of the February 2020 

proposed rule, we announced that we 

would incorporate a portion of ESRD 

costs into the data used to set and 

calculate MOOP and inpatient hospital 

cost sharing limits for contract year 

2021.64 In addition, we maintained 

these MOOP and cost sharing limits for 

contract year 2022.65 66 This FC sets a 

specific schedule to incorporate the 

remaining ESRD costs into the MOOP 

and cost sharing limits. MOOP and 

inpatient hospital cost sharing limits 

will be calculated using the most recent 

Medicare FFS data based on the 

population with access to the MA 

program in order to be consistent with 

CMS’s historical approach of uniformly 

spreading the burden of medical costs 

across all potential MA enrollees. This 

spreading of costs across all enrollees 

serves to ensure access to affordable and 

sustainable benefit packages for all 

eligible beneficiaries and is also 

consistent with how benefits must be 

covered uniformly with uniform cost 

sharing and premiums by MA plans. 

This FC introduces a third MOOP 

limit as well as changes to cost sharing 

requirements, including how cost 

sharing limits will be set for 

professional services and updating the 

limits for emergency services. As noted 

in the February 2020 proposed rule, the 

percentage of eligible Medicare 

beneficiaries with access to an MA plan 

(excluding employer group waiver plans 

that limit enrollment to employer group 

members and D–SNPs) offering a 

voluntary MOOP amount and the 

proportion of total enrollees in a 

voluntary MOOP plan have decreased 

considerably from contract year 2011 to 

contract year 2019. Based on plan data 

from March 2021, this trend has 

continued through contract year 2021 

with approximately 18.5 percent of 

plans (21.5 percent of enrollees) having 

an in-network MOOP amount within the 

range of the prior voluntary MOOP limit 

(at or below $3,400), as shown in Table 

1. This percentage access increases to 

23.3 percent of plans (24.8 percent of 

enrollees) for contract year 2021 after 

taking into consideration the increase to 

the lower MOOP limit for that year (at 

or below $3,450). Consequently, we 

expect this trend to continue without 

intervention. A factor that may further 

spur this trend is that beneficiaries with 

diagnoses of ESRD are increasingly 

enrolling in the MA program because of 

their typical high health care costs, 

which the MA organization is 

financially responsible for after the 

ESRD enrollee reaches the MOOP 

amount. To abate this trend and 

incentivize MA organizations to offer 

lower MOOP amounts and/or lower or 

comparable cost sharing, this FC makes 

cost sharing limits for various service 

categories dependent on three distinct 

MOOP types. This FC reduces the cost 

sharing limits for professional services 

over a transition period from 50 percent 

to either 40 percent or 30 percent 

coinsurance (and actuarially equivalent 

copayments) for MA plans that use an 

intermediate or mandatory MOOP type 

and is a substantive change from 

longstanding practice. In proposing 

these changes, CMS also included a 

methodology to make updates to the 

cost sharing limits (for example, 

annually updating the copayment limits 

for professional services to actuarially 

equivalent values to align with the 

coinsurance standard based on the most 

recent Medicare FFS data projections) 

and a requirement for MA organizations 

to comply with cost sharing 

requirements in a particular manner (for 

example, using the MA plan total 

financial liability for a benefit to 

determine a copayment amount that 

reflects the coinsurance limit in cases 

where CMS has not calculated an 

actuarially equivalent copayment limit). 

This rule also codifies the 

longstanding policy by CMS to calculate 

MOOP and cost sharing limits for 

specific service categories by calculating 

limits based on the most recent 

Medicare FFS data projections. More 

specifically, CMS is codifying: (1) That 

CMS will use Medicare FFS data 

projections that, with modifications 

from past practice, incorporate data on 

the out of pocket costs of beneficiaries 

with diagnoses of ESRD over a specific 

schedule; (2) the percentiles used to 

calculate MOOP limits; (3) the 50 

percent cost sharing limit for basic 

benefits covered by MA plans (which 

are Part A and B benefits excluding 

hospice and the costs of kidney 

acquisition for transplants); (4) the 

methodology CMS uses to calculate 

inpatient hospital acute and psychiatric 

cost sharing limits; (5) applying the cost 

sharing under original Medicare as a 

cost sharing limit to several service 

categories in MA; and (6) codifying that 

an MA plan’s cost sharing for categories 

of basic benefits in the aggregate must 

not exceed cost sharing for those 

benefits in original Medicare on a per 

member per month actuarially 

equivalent basis. In codifying the 

general policies and approaches used in 

the past, CMS is also adopting some 

specific changes from its longstanding 

policy, including provisions regarding 

how updates to the MOOP and cost 

sharing limits are made each year and 

adopting the range of cost sharing 

flexibilities tied to using three MOOP 


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limits. This FC, including the 

requirement to base MOOP and cost 

sharing limits on the most recent 

Medicare FFS data projections, is a 

significant improvement over the 

approach used in prior years, which did 

not have a specific methodology to 

recalibrate limits. 

In response to comments on the 

February 2020 proposed rule, the timing 

of this FC, updated Medicare FFS data 

projections, and the potential impact of 

the COVID–19 pandemic since the 

February 2020 proposed rule, we are 

also finalizing several changes from the 

proposals, to smooth the transition to 

the new MOOP and cost sharing limit 

regulations. The major vehicle for 

smoothing this change is the use of 

multiyear transitions. With these 

multiyear transitions, we aim to avoid 

potentially disruptive cost sharing 

changes, such as sudden and 

substantive changes in cost sharing from 

the prior contract year and copayment 

limits that fluctuate up and down over 

short periods of time, for enrollees and 

plan designs. 

These new multiyear transitions are 

used in the following provisions that are 

finalized in this rule: (1) The 

coinsurance and copayment limits for 

professional service categories; (2) the 

cost sharing limits for emergency 

services; and (3) and copayment limits 

for service categories for which cost 

sharing must not exceed cost sharing 

under original Medicare. This rule also 

finalizes (with modifications) the 

proposed multiyear transition for ESRD 

costs for MOOP limits and inpatient 

hospital cost sharing limits. 

In the past, CMS set MOOP limits by 

striking a balance between limiting 

beneficiary out-of-pocket costs and 

potential impact to plan design and 

costs and set cost sharing limits for 

specific benefits at amounts that CMS 

believed exceeding would be 

discriminatory for beneficiaries with 

high health needs. MA plans were 

required to have MOOP amounts and 

cost sharing at or below these limits set 

by CMS. This FC finalizes regulations 

with more specific rules for how the 

limits will be set to achieve the same 

and other similar program goals. We 

expect the finalized methodology to 

update cost sharing limits will be an 

improvement from prior years. Some of 

the contract year 2022 copayment limit 

amounts for professional service 

categories and benefits for which cost 

sharing must not exceed cost sharing 

under original Medicare have been in 

place for a number of years. Our 

proposed methodology to calculate 

copayment limits at actuarially 

equivalent values to the coinsurance 

standards being adopted in this rule is, 

in effect, a recalibration of these 

copayment limits by using a 

methodology adjusted from 

longstanding policy and the most recent 

Medicare FFS data projections available. 

Similarly, our proposed methodology to 

update copayment limits for emergency 

services considered updated Medicare 

FFS cost projections that MA 

organizations are expected to incur in 

providing these benefits. We expect that 

updating these copayment limits over 

several years to reflect the updated 

Medicare FFS data projections will be a 

significant improvement in how 

professional cost sharing standards are 

applied to MA plans compared to prior 

years. For example, these updates will 

incorporate costs resulting from medical 

inflation and new treatments that 

became available after the current 

copayment limits were originally set. 

Without an actuarially acceptable and 

structured process to update copayment 

limits, the standards applied to MA 

plans could quickly become outdated 

and discourage MA organizations from 

establishing copayments over 

coinsurance structures in their plan 

designs. As noted in the February 2020 

proposed rule, this would not be an 

ideal outcome as enrollees generally 

find copayment amounts more 

predictable and less confusing than 

coinsurance. CMS expects that this 

methodology will ultimately result in 

stable benefit packages by ensuring cost 

sharing limits are calculated following 

established actuarial methods, using the 

most recent Medicare FFS data 

projections available, and by keeping 

copayment limits aligned with 

coinsurance limits. 

The regulatory impact statements for 

the provisions implemented in this FC 

are included in this section under the 

appropriate headings. 

B. Overall Impact 

We have examined the impacts of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (January 18, 

2011), the Regulatory Flexibility Act 

(RFA) (September 19, 1980, Pub. L. 96– 

354), 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). Section 3(f) of Executive Order 

12866 defines a ‘‘significant regulatory 

action’’ as an action that is likely to 

result in: (1) Having an annual effect on 

the economy of $100 million or more in 

any 1 year, or adversely and materially 

affecting a sector of the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

state, local or tribal governments or 

communities (also referred to as 

‘‘economically significant’’); (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 novel legal or policy issues 

arising out of legal mandates, the 

President’s priorities, or the principles 

set forth in the Executive Order. 

A regulatory impact analysis must be 

prepared for major rules with significant 

regulatory action/s and/or with 

economically significant effects ($100 

million or more in any 1 year). This rule 

is economically significant under 

Executive Order 12866. The Office of 

Information and Regulatory Affairs has 

designated this rule as a major rule 

pursuant to the Congressional Review 

Act, 5 U.S.C. 804(2). 

Section 202 of UMRA requires that 

agencies assess anticipated costs and 

benefits before issuing any rule whose 

mandates require spending in any 1 year 

of $100 million in 1995 dollars, updated 

annually for inflation. In 2022, that 

threshold is approximately $165 

million. This FC is not anticipated to 

have an unfunded effect on state, local, 

or tribal governments, in the aggregate, 

or on the private sector of $158 million 

or more. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a final 

rule that imposes substantial direct 

requirement costs on state and local 

governments, preempts state law, or 

otherwise has federalism implications. 

Since this FC does not impose any 

substantial costs on state or local 

governments, preempt state law or have 

federalism implications, the 

requirements of Executive Order 13132 

are not applicable. 

If regulations impose administrative 

costs on reviewers, such as the time 

needed to read and interpret this FC, 

then we should estimate the cost 

associated with regulatory review. As of 


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67This information is publicly available and 

updated at the following website: https://

www.cms.gov/research-statistics-data-andsystemsstatistics-trends-andreportsmcradvpartdenroldatamonthly/contractsummary-2021-04. 

April 2021, there are 700 MA 

contracting organizations with CMS 

(which includes MA and MA–PD 

plans).67 We also expect a variety of 

other organizations, such as advocacy 

groups, to review these regulations as 

well as MA organizations. We expect 

that each organization will designate 

two people to review the rule. A 

reasonable maximal number is 2,000 

total reviewers. We note that other 

assumptions are possible. 

Using the BLS wage information for 

medical and health service managers 

(code 11–9111), we estimate that the 

cost of reviewing this FC is $114.24 per 

hour, allowing 100 percent increase for 

fringe benefits and overhead costs 

(http://www.bls.gov/oes/current/oes_

nat.htm). Assuming an average reading 

speed, we estimate that it will take 

approximately 8 hours for each person 

to review this entire FC. For each entity 

that reviews this FC, the estimated cost 

is therefore $900 (8 hours × $114.24). 

Therefore, we estimate that the 

maximum total cost of reviewing this 

entire FC is $1.8 million ($900 × 2,000 

reviewers). 

We note that this analysis assumed 

two readers per contract. Some 

alternatives include assuming one 

reader per parent organization. Using 

parent organizations instead of contracts 

will reduce the number of reviewers. 

However, we expect it is more 

reasonable to estimate review time 

based on the number of contracting MA 

organizations because a parent 

organization might have local reviewers 

assessing potential region-specific 

effects from this FC. 

In accordance with the provisions of 

Executive Order 12866, this FC was 

reviewed by OMB. 

C. Impact on Small Businesses— 

Regulatory Flexibility Analysis (RFA) 

Executive Order 13272 requires that 

HHS thoroughly review rules to assess 

and take appropriate account of their 

potential impact on small business, 

small governmental jurisdictions, and 

small organizations (as mandated by the 

RFA). If a rule may have a significant 

economic impact on a substantial 

number of small entities, then that rule 

must discuss steps taken, including 

alternatives, to minimize burden on 

small entities. The RFA does not define 

the terms ‘‘significant economic impact’’ 

or ‘‘substantial number.’’ The Small 

Business Administration (SBA) advises 

that this absence of statutory specificity 

allows what is ‘‘significant’’ or 

‘‘substantial’’ to vary, depending on the 

problem that is to be addressed in the 

rulemaking, the rule’s requirements, and 

the preliminary assessment of the rule’s 

impact. Nevertheless, HHS typically 

considers a ‘‘significant’’ impact to be 3 

to 5 percent or more of the affected 

entities’ costs or revenues. 

For purposes of the RFA, we estimate 

that many affected payers are small 

entities as that term is used in the RFA, 

either by being nonprofit organizations 

or by meeting the SBA definition of a 

small business. For purposes of the 

RFA, small entities include small 

businesses, nonprofit organizations, and 

small governmental jurisdictions. The 

North American Industry Classification 

System (NAICS) is used to classify 

businesses by industry and is used by 

the United States, Canada, and Mexico. 

While there is no distinction between 

small and large businesses among the 

NAICS categories, the SBA develops 

size standards for each NAICS category. 

Note that the most recent update to the 

NAICS classifications went into effect 

for the 2017 reference year. The latest 

size standards are for 2019.The policies 

being implemented in this FC are: (1) 

Maximum Out-of-Pocket (MOOP) Limits 

for Medicare Parts A and B Services 

(§§ 422.100 and 422.101), and (2) 

Service Category Cost Sharing Limits for 

Medicare Parts A and B Services and 

Per Member Per Month Actuarial 

Equivalence Cost Sharing (§§ 422.100 

and 422.113). These policies codify, 

modify, and update current guidance 

governing MA organization bid 

requirements. 

This rule has several affected 

stakeholders. They include: (1) MA 

organizations offering MA plans such as 

HMOs, local and regional PPOs, MSAs, 

and PFFS plans; (2) providers, including 

institutional providers, outpatient 

providers, clinical laboratories, and 

pharmacies; and (3) enrollees. Note that 

cost plans are specifically excluded 

from the provisions of this rule and that 

the rule only affects Part A and B 

benefits (not Part D benefits) covered by 

MA plans. Some descriptive data on 

these stakeholders are as follows: 

• Pharmacies and Drug Stores, NAICS 

446110, have a $30 million threshold for 

‘‘small size’’ with 88 percent of 

pharmacies, those with under 20 

employees, considered small. 

• Direct Health and Medical 

Insurance Carriers, NAICS 524114, have 

a $41.5 million threshold for ‘‘small 

size,’’ with 75 percent of insurers having 

under 500 employees meeting the 

definition of small business. Several 

Medicare Advantage plans (about 30–40 

percent) are not-for-profit resulting in a 

‘‘small entity’’ status. 

• Ambulatory Health Care Services, 

NAICS 621, including about 2 dozen 

sub-specialties, including Physician 

Offices, Dentists, Optometrists, Dialysis 

Centers, Medical Laboratories, 

Diagnostic Imaging Centers, have a 

threshold ranging from $8 to $35 

million (Dialysis Centers, NAICD 

621492, have a $41.5 million threshold). 

Almost all firms are big, and this also 

applies to sub-specialties. For example, 

for Physician Offices, NAICS 621111, 

receipts for offices with under 9 

employees exceed $34 million. 

• Hospitals, NAICS 622, including 

General Medical and Surgical Hospitals, 

Psychiatric and Substance Abuse 

Hospitals, Specialty Hospitals have a 

$41.5 million threshold for small size, 

with half of the hospitals (those with 

between 20–500 employees) considered 

small. 

• Skilled Nursing Facilities (SNFs), 

NAICS 623110, have a $30 million 

threshold for small size, with half of the 

SNFs (those with under 100 employees) 

considered small. 

The costs to MA organizations to 

cover Part A and B benefits for their 

enrollees are funded by the Federal 

government through the bidding process 

and the resulting capitated payments. 

Therefore, there is no significant burden 

on MA organizations to fund these 

benefits. We discuss the details of this 

immediately below in this section. This 

discussion will establish that there is no 

significant burden to a significant 

number of entities from this proposed 

rule for these provisions. Each year, MA 

plans submit a bid for furnishing 

Medicare Part A and B benefits 

(excluding hospice and the costs of 

acquisition of kidneys for transplant) as 

provided in section 1852 of the Act. 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 enrolled 

in the plan pays the difference in the 

form of a basic premium (note that a 

small percentage of plans bid above the 

benchmark and the enrollees in those 

MA plans must also pay an MA basic 

premium to the MA plan in addition to 

their Medicare Part B premium; 

however, this percentage of plans is not 

‘‘significant’’ as defined by the RFA and 

as justified below). 

Under 42 CFR 422.100(c)(2) and 

422.102, MA plans can also offer 

supplemental benefits that are not 

covered under Medicare Parts A, B and 

D. These supplemental benefits are paid 

for through enrollee premiums, extra 

government payments, or a combination 


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of these. Under the statutory payment 

formula, if the bid submitted by a MA 

plan for furnishing covered Part 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 

beneficiary rebate. The beneficiary 

rebate must be used by the MA plan to 

provide supplemental benefits 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 

total payments to plans, for the bid, risk 

adjustment, and the rebate, exceeds 

costs in Original Medicare, those 

additional payments put upward 

pressure on the Part B premium which 

is paid by all Medicare beneficiaries, 

including those in Original Medicare 

who do not have the enhanced coverage 

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 lowincome beneficiaries Part D plans 

receive special government payments to 

cover most of 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 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 regulations, such as those in this 

FC, 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 original Medicare data; or (2) the 

benchmark, if the bid amount is greater 

than the benchmark. 

Thus, there is a cost to plans bidding 

above the benchmark that is not funded 

by government payments. Additionally, 

if an MA plan bids above the 

benchmark, section 1854 of the Act 

requires the MA plan to charge enrollees 

a premium for that amount. Table 29 

reports the percent of the plans bidding 

above the benchmark along with the 

percent of affected enrollees in recent 

years. The table reports aggregates of 

proprietary bid data collected by the 

Office of the Actuary. The CMS 

threshold for what constitutes a 

substantial number of small entities for 

purposes of the RFA is 3 to 5 percent. 

As shown in Table 29, both the 

percentage of plans and the percentage 

of affected enrollees is decreasing and 

below this 3–5 percent threshold. 

Consequently, we may conclude that the 

number of plans bidding above the 

benchmark is not considered substantial 

for purposes of the RFA. 

The preceding analysis shows that 

meeting the direct cost of this FC does 

not have a significant economic impact 

on a substantial number of small 

entities, as required by the RFA. 

Additionally, this FC is not expected 

to have impacts because: (1) Several of 

its provisions are codifications of longstanding practices which CMS knows 

plans have complied with because of 

annual bid reviews; and (2) section 

1852(a)(1)(B) of the Act requires MA 

plans to cover Part A and B benefits 

with cost sharing that is, in the 

aggregate, actuarially equivalent to cost 

sharing in the Original Medicare 

program. 

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 a 

‘‘beneficiary rebate’’ amount that is an 

amount equal to a percentage (between 

50 and 70 percent depending on a plan’s 

quality rating) multiplied by the amount 

by which the benchmark exceeds the 

bid. The rebate is used to provide 

additional benefits to enrollees in the 

form of reduced cost-sharing or other 

supplemental benefits, or to lower the 

Part B or Part D premiums for enrollees. 

(Supplemental benefits may also 

partially be paid by enrollee premiums.) 

However, as previously noted, the 

number of plans bidding above the 

benchmark to whom this burden applies 

do not meet the RFA criteria of a 

significant number of plans. 

It is possible that if the provisions of 

this FC would otherwise cause 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 even for 

1 year may lose its enrollees to 

competing plans that offer these 

supplemental benefits. Thus, it can be 

advantageous to the plan to temporarily 

reduce profit margins, rather than 

reduce supplemental benefits. 


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TABLE 29: PERCENTAGE OF PLANS BIDDING ABOVE BENCHMARK BY 

YEAR 

Number Projected Number Projected 

Year of Enrollment of Enrollment Bid ID Enrollment 

Unique (Member Unique (Member Percentage Percentage 

Bid IDs Months) Bid IDs Months) 

2020 100 2,108,026 4,270 231,754,722 2.3% 0.9% 

2021 66 1,167,779 4,837 259,609,169 1.4% 0.4% 

2022 30 328,621 5,298 288,151,395 0.6% 0.1% 
22410 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

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: (1) 

Pharmacies and Drug Stores, NAICS 

446110; (2) Ambulatory Health Care 

Services, NAICS 621, including about 

two dozen sub-specialties, including 

Physician Offices, Dentists, 

Optometrists, Dialysis Centers, Medical 

Laboratories, Diagnostic Imaging 

Centers, and Dialysis Centers, NAICD 

621492; (3) Hospitals, NAICS 622, 

including General Medical and Surgical 

Hospitals, Psychiatric and Substance 

Abuse Hospitals, and Specialty 

Hospitals; and (4) SNFs, NAICS 623110. 

Whether these providers are contracted 

or, in the case of PPOs and PFFS, not 

contracted with the MA plan, their 

aggregate payment for services is the 

sum of the enrollee cost sharing and 

plan payments. For non-contracted 

providers, § 422.214 and sections 

1852(k)(1) and 1866(a)(1)(O) of the Act 

require that a non-contracted provider 

accept payment that is at least what they 

would have been paid had the services 

been furnished in a fee-for-service 

setting. For contracted providers, 

§ 422.520 requires that the payment is 

governed by a mutually agreed upon 

contract between the provider and the 

plan. CMS is prohibited from requiring 

MA plans to contract with a particular 

healthcare provider or to use a 

particular price structure for payment 

under the plan by section 

1854(a)(6)(B)(iii) of the Act. 

Consequently, for these providers, there 

is no additional cost burden above the 

already existing burden in original 

Medicare. 

Based on the above considerations, 

the Secretary has certified that this FC 

will not have a significant impact on a 

substantial number of small entities. 

In addition, Section 1102(b) of the 

Social Security Act requires us to 

prepare a regulatory impact analysis if 

a rule may have a significant impact on 

the operations of a substantial number 

of small rural hospitals. This analysis 

must conform to the provisions of 

section 604 of the RFA. For purposes of 

section 1102(b) of the Act, we define a 

small rural hospital as a hospital that is 

located outside of a metropolitan 

statistical area and has fewer than 100 

beds. With regard to the section 1102(b) 

requirements for hospitals, while this 

rule does have a provision relating to 

inpatient hospital cost sharing limits, 

this rule imposes a burden neither on 

rural or non-rural hospitals because this 

FC applies only to enrollee cost sharing 

and does not require any changes in the 

amounts paid to hospitals. For example, 

after the MOOP amount is reached, 

hospitals are paid in full (by the plan or 

secondary insurance) with the enrollee 

paying nothing out of pocket. 

Consequently, the Secretary has 

certified that this FC does not impost a 

burden on hospitals. 

D. Executive Order 13132 (Federalism) 

Executive Order 13132, ‘‘Federalism,’’ 

establishes certain requirements that an 

agency must meet when it promulgates 

a final rule that imposes substantial 

direct requirement costs on State and 

local governments, preempts state law, 

or otherwise has Federalism 

implications. The Department has 

determined that this FC will not impose 

such costs or have any Federalism 

implications. 

E. Consultation and Coordination With 

Indian Tribal Governments 

We have analyzed this FC in 

accordance with the principles set forth 

in Executive Order 13175. We have 

determined that this FC does not 

contain policies that would have a 

substantial direct effect on one or more 

Indian Tribes, on the relationship 

between the Federal Government and 

Indian Tribes, or on the distribution of 

power and responsibilities between the 

Federal Government and Indian Tribes. 

F. National Environmental Policy Act 

(NEPA) 

We have determined that this FC will 

not have a significant impact on the 

environment. 

G. Anticipated Effects of Maximum Outof-Pocket (MOOP) Limits for Medicare 

Parts A and B Services (§§ 422.100 and 

422.101) and Service Category Cost 

Sharing Limits for Medicare Parts A and 

B Services and per Member per Month 

Actuarial Equivalence Cost Sharing 

(§§ 422.100 and 422.113) 

This FC is identified as economically 

significant which corresponds to the 

observation that certain groups of 

beneficiaries may have significant 

savings or losses. Nevertheless, for three 

reasons, we expect no aggregate impact 

to enrollees from the MOOP limit and 

Cost Sharing provisions adopted in this 

FC. First, there is a statutory 

requirement for submitted bids to be 

actuarially equivalent to coverage in 

original Medicare, implying that plans 

can shift costs, but not create additional 

out of pocket costs for enrollees 

compared to the original Medicare 

program. Even if there are shifts in 

enrollee out of pocket costs, in aggregate 

there will be no dollar impact. This is 

operationalized through an actuarial 

equivalence test that is a projection that 

MA cost sharing under each MA plan 

equals Medicare FFS cost sharing. At 

the time that the actuarially equivalent 

cost sharing amounts are calculated, the 

expectation is that there will be no costs 

or savings for the policy year in 

question. 

Second, many provisions in this FC 

are codifications of long-standing 

policies. CMS is confident that this 

codification will not result in dollar 

impact, because CMS annually reviews 

bids, and has observed compliance with 

the bid requirements. 

Third, an analysis of plan bid changes 

from contract year 2020 to 2021 

provides supportive quantitative 

evidence that plans, for marketing 

reasons and because of the principles 

and incentives inherent in managed 

care, are not (in most cases) establishing 

the highest allowable MOOP amount. 

We note the $6,700 in-network 

mandatory MOOP limit calculated for 

contract year 2020 has been 

longstanding and we used this as a 

baseline to determine if MOOP amounts 

were being substantially increased 

under the new, higher MOOP limits. For 

example, based on March 2021 MA and 

MA–PD plan data, after CMS increased 

MOOP limits for contract year 2021 

(using Medicare FFS data with 40 

percent of ESRD costs), approximately 

63 percent of plans established a MOOP 

amount below $6,700 (compared to 

approximately 65 percent with a MOOP 

amount below $6,700 for contract year 

2020). This example highlights how MA 

organizations typically offer benefits 

with lower enrollee cost sharing 

responsibility than the annual limits 

published by CMS. 

MOOP and cost sharing limits are 

important beneficiary protections and 

integral to ensuring that MA enrollees 

who need extensive or expensive health 

care services because of their health 

status do not face discrimination. While 

the overall statutory requirement that 

cost sharing in an MA plan must be at 

least actuarially equivalent to cost 

sharing in original Medicare limits the 

overall costs that MA plans must cover 

in their bids and overall out-of-pocket 

costs for enrollees, the ability to change 

or set cost sharing for different benefits 

at different levels could potentially be 

used by MA plans to discourage 

enrollment by beneficiaries with high 

health needs or specific types of health 

needs (for example, specific specialist 

services). Requiring MOOP and cost 

sharing limits in MA plan design in 

addition to the statutorily required 

MOOP limits for regional MA plans is 

necessary in order not to discourage 

enrollment by individuals who utilize 


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higher than average levels of health care 

services (that is, in order for a plan not 

to be discriminatory in violation of 

section 1852(b)(1) of the Act). Such 

considerations have been the basis for 

CMS to set specific MOOP limits and 

cost sharing limits under existing 

regulations over the past several years. 

We proposed adopting transparent rules 

to govern how those MOOP and cost 

sharing limits for local and regional 

plans are set each year, including rules 

for incorporating out-of-pocket costs 

incurred by beneficiaries with diagnoses 

of ESRD (‘‘ESRD costs’’ in this 

discussion) into the methodology for 

calculating MOOP limits and cost 

sharing standards, to provide stability 

for MA organizations and plan 

enrollees. Prior to this FC, we calculate 

MOOP and cost sharing limits annually 

and this process will continue as 

codified. 

In preparing plan bids for contract 

year 2023 and future years to which this 

FC is applicable, we expect MA 

organizations may, as a result of the 

provisions of this FC, make adjustments 

to their benefit design, for example, 

increasing the MOOP amount and/or 

specific service category cost sharing. 

However, as indicated at the beginning 

of this section, which presents three 

arguments, we do not expect these 

changes will have a significant aggregate 

impact. 

A substantive change of this FC from 

the February 2020 proposed rule is 

inclusion of multiyear transitions to 

adjust cost sharing limits for: (1) 

Professional service categories; (2) 

emergency services; and (3) benefits for 

which cost sharing must not exceed cost 

sharing under original Medicare. For 

example, we finalized a multiyear 

transition from the 50 percent 

professional cost sharing limit to a range 

of cost sharing limits (30, 40, and 50 

percent) based on the MOOP type. We 

expect that a multiyear implementation 

schedule will be helpful to: (1) Mitigate 

potentially disruptive changes based on 

the projected increases to certain service 

category copayment limits resulting 

from using the Medicare FFS data 

projections; and (2) be responsive to 

commenter requests to provide time for 

MA organizations and enrollees to 

adjust to updated cost sharing limits. 

We also proposed a multiyear 

transition schedule of incorporating 

costs related to Medicare-eligible 

enrollees with diagnoses of ESRD into 

the methodology we use to calculate 

MOOP and inpatient hospital acute and 

psychiatric cost sharing limits. We 

proposed to complete this transition by 

factoring in the ESRD costs into the 

methodology through an ESRD cost 

differential (which was generally 

finalized as proposed as a specific way 

to measure ESRD costs and factor them 

into the data used for calculating the 

MOOP and cost sharing limits). We 

proposed to transition the ESRD cost 

differential for both MOOP and 

inpatient hospital acute and psychiatric 

cost sharing limits as follows: 60 

percent in 2022; 80 percent in 2023; and 

100 percent in 2024. As discussed in 

sections II.A. and B. of this FC, we are 

finalizing the multiyear transition of 

ESRD costs into MOOP and cost sharing 

limits to complete in contract year 2024 

as proposed, but given the delay in 

releasing a final rule for these 

provisions we are adjusting the ESRD 

cost differential percentage for contract 

year 2023 from 80 to 70 percent. The 

MOOP and cost sharing limits were 

maintained for contract year 2022 in the 

absence of a final rule for these 

provisions; we did not incorporate 60 

percent of the ESRD cost differential in 

contract year 2022 as proposed. We 

expect judiciously adjusting the percent 

of ESRD cost differential in contract 

year 2023, while maintaining the final 

date by which the multiyear transition 

is completed (2024), will mitigate the 

risk of potential increased premiums or 

decreased benefits that may be 

associated with the migration of ESRD 

beneficiaries from Medicare FFS to the 

MA program and minimize disruption 

to beneficiaries. Under the finalized 

methodology, the ESRD cost differential 

is incorporated as follows: For 2023, 70 

percent and for 2024, 100 percent. As 

discussed in the February 2020 

proposed rule, we recognize 

incorporating ESRD costs would 

increase all in-network and combined 

MOOP limits for local and regional MA 

plan types, but including ESRD costs is 

an important and necessary step to 

ensure that plan designs are not 

discriminatory and protect beneficiaries 

from high and unreasonable financial 

costs regardless of the MA plan. We 

coordinated the MOOP and cost sharing 

proposals in sections VI.A. and B. of the 

February 2020 proposed rule in an effort 

to prevent substantial increases in 

MOOP limits, cost sharing limits, and 

premiums to protect beneficiaries, and 

proposed reasonable updates and 

flexibilities for MA organizations to 

offer sustainable MA plans with stable 

benefit designs. 

As discussed in the February 2020 

proposed rule, CMS expects 

transitioning ESRD costs into the data 

used to calculate MOOP and cost 

sharing limits may result in a 

combination of savings and costs for 

MA organizations. Depending upon an 

individual’s health status and health 

care coverage selections, some enrollees 

may experience increased costs while 

others may experience decreased costs. 

CMS is not able to quantify these 

potential impacts precisely. 

Accordingly, we provide background 

and a qualitative discussion to share our 

rationale. The cost to the MA 

organization of having a MOOP amount 

and reduced cost sharing is captured as 

a supplemental benefit in the bid 

pricing tool if the MA organization’s 

decision about how to establish MOOP 

and cost sharing amounts for its plan 

design results in overall aggregate cost 

sharing for Medicare-covered benefits 

for that MA plan to be less than 

actuarially equivalent to cost sharing in 

original Medicare. With a higher MOOP 

limit or cost sharing (as a result of 

incorporating ESRD costs and/or using 

the most recent Medicare FFS data to 

calculate copayment limits), the cost of 

the MOOP limit and benefits are lower 

to the MA organization which allows 

additional rebate dollars to be spent 

elsewhere (for example, for cost sharing 

reductions or additional benefits). From 

an actuarial perspective, on average, the 

MA enrollee is receiving the same level 

of benefits in total (of course, individual 

impacts will vary). MA organizations 

can continue to structure their PBP to be 

actuarially equivalent to FFS (without 

supplemental benefits) through the cost 

sharing flexibilities that this FC 

includes. As a result, we expect the 

MOOP and Cost Sharing provisions will 

have no material aggregate impact. 

Enrollment impacts from section 

17006 of the 21st Century Cures Act are 

addressed in sections III.A., VII.B.3., 

and VIII.D.1. of the June 2020 final rule 

(85 FR 33796). Before the amendments 

made by the 21st Century Cures Act 

were effective for contract year 2021, 

individuals diagnosed with ESRD could 

not enroll in an MA plan, subject to 

limited exceptions. Generally, those 

exceptions included the following 

circumstances: An individual that 

developed ESRD while enrolled in an 

MA plan could remain in that plan; an 

ESRD individual enrolled in a plan 

which terminated or discontinued had a 

one-time opportunity to join another 

plan; or, an individual could enroll in 

a special needs plan that had obtained 

a waiver to be open for enrollment to 

individuals with ESRD. CMS calculated 

separate payment rates to address the 

higher costs MA plans may experience 

when managing care for enrollees with 

ESRD, and has been continuing to do so 

after Medicare beneficiaries with 

diagnoses of ESRD were allowed to 

enroll in MA plans in greater numbers. 


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22412 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

68The Fiscal Year President’s Budgets may be 

accessed at https://www.govinfo.gov/app/ 

collection/BUDGET/ and the annual Advance 

Notice and Rate Announcements may be accessed 

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

MedicareAdvtgSpecRateStats/Announcements-andDocuments. 

69The estimated cost per year to the Medicare 

Trust Fund based on this enrollment projection of 

beneficiaries with diagnoses of ESRD is available in 

Table 7 on page 33887 in section VIII.D.1. of the 

June 2020 final rule (85 FR 33796) https://

www.federalregister.gov/documents/2020/06/02/ 

2020-11342/medicare-program-contract-year-2021- 

policy-and-technical-changes-to-the-medicareadvantage-program. 

MA organizations have been aware of 

the program change to allow Medicare 

beneficiaries with diagnoses of ESRD to 

enroll in MA since section 17006 of the 

Cures Act was enacted in December 

2016. Accordingly, CMS expects MA 

organizations have planned and 

prepared for this program change by 

conducting business activities, such as 

evaluating plan benefits, provider 

contracting with network providers, 

developing case management programs, 

and addressing reinsurance 

arrangements as applicable. Following 

the 21st Century Cures Act, the OACT 

projected the number of individuals 

with diagnoses of ESRD that may enroll 

in MA.68 In the February 2020 proposed 

rule we referenced this projection; 

OACT expected ESRD enrollment in 

MA plans to increase by 83,000 as a 

result of the Cures Act provision.69 The 

OACT assumed the increase would be 

phased in over 6 years, with half of 

those beneficiaries (41,500) enrolling 

during 2021. Based on actual 2021 

enrollment data, the OACT continues to 

project that 83,000 beneficiaries with 

diagnoses of ESRD will enroll in the MA 

program over 6 years. 

CMS notes that MA organizations are 

in a competitive market and design their 

plan bids to manage risk, encourage 

enrollment, and satisfy Medicare 

coverage requirements. CMS does not 

require MA organizations to disclose 

these strategies, and as such, cannot 

quantitatively project what savings or 

costs MA organizations may incur from 

the changes in MOOP and cost sharing 

limits. CMS’s goal is to provide 

predictable and transparent MOOP 

limits and cost sharing standards and to 

calculate limits at a level that should 

not result in significant new costs for 

MA organizations or enrollees. By 

taking the program changes from section 

17006 of the 21st Century Cures Act into 

account within our existing process to 

calculate and update MOOP limits and 

cost sharing standards, we are 

protecting MA enrollees against high 

out-of-pocket costs and sudden changes 

in those costs. 

As discussed in the February 2020 

proposed rule, CMS believes the MOOP 

limit in the MA program provides a 

protection to MA enrollees from high 

out-of-pocket costs. CMS notes 

beneficiaries with diagnoses of ESRD 

previously enrolled in Medicare FFS 

with or without Medigap coverage may 

experience different cost sharing and 

out-of-pocket costs if they switch to an 

MA plan. For example, a Medicare 

beneficiary with a diagnosis of ESRD 

enrolled in Medicare FFS (without 

Medigap or employer coverage) may 

experience higher out-of-pocket costs 

annually if their annual health care 

treatment out-of-pocket costs go above 

the MOOP limit required for MA plans. 

CMS cannot precisely project the 

individual cost impacts for enrollees 

and MA organizations in its proposed 

MOOP and cost sharing limit changes 

because potential savings and costs are 

largely influenced by— 

• The rate of transition for Medicare 

beneficiaries with diagnoses of ESRD 

into the MA program; 

• Enrollee cost sharing information 

including how many individuals (with 

and without ESRD) reach the MOOP, 

variability in reaching the MOOP by 

year, and frequency of utilization of 

services both below the MOOP and 

above the MOOP; and 

• The mechanisms MA organizations 

choose to address this programmatic 

change, such as provider contracting, 

case management, plan benefit designs, 

and benefit flexibilities including 

Special Supplemental Benefits for the 

Chronically Ill, MA uniformity 

flexibility, and the proposed MOOP 

limits and cost sharing flexibilities, 

while additionally making sure the plan 

bid remains actuarially equivalent to 

original Medicare. 

By implementing more than two 

levels of MOOP limits and providing 

increased flexibility in calculating cost 

sharing amounts for MA organizations 

with lower MOOP limits, we expect to 

encourage plan offerings with favorable 

benefit designs for Medicare 

beneficiaries to choose from. We note 

that beneficiaries consider the MOOP 

limit and cost sharing structure when 

choosing an MA plan, however we do 

not expect them to face more complex 

plan options due to our regulatory 

changes. From a beneficiary’s 

perspective, the individual will have the 

ability to review the same volume of 

information about MOOP limits and 

cost sharing structures as currently 

available. We also do not expect MA 

organizations to necessarily offer more 

plan options than they currently do as 

a result of this change. MA 

organizations can already create 

different MOOP amount and cost 

sharing structures based on a number of 

market factors that may, or may not, be 

related to beneficiaries with ESRD 

diagnoses being able to enroll in MA 

plans. Additionally, CMS will continue 

evaluations and enforcement of its 

current authority prohibiting plans from 

misleading beneficiaries in their 

marketing and communication materials 

and continue efforts to improve plan 

offerings and plan comparison tools and 

resources (for example, Medicare & You 

and 1–800–MEDICARE). Consistent 

with statutory requirements, CMS will 

not approve a plan bid if its proposed 

benefit design substantially discourages 

enrollment in that plan for certain 

Medicare-eligible individuals. 

We did not receive any comments that 

specifically referenced the cost impact 

of the MOOP and cost sharing 

proposals. 

H. Alternatives Considered 

In this section, CMS includes 

discussions of Alternatives Considered 

to implement the provisions to which 

they are applicable. We note a more 

detailed discussion of the finalized 

implementation approach and the 

mechanics of operationalizing it for the 

policies discussed in this section is 

available in sections II.A. and B. of this 

FC. When considering the alternative 

transition scenarios presented in this 

section, the actuarial equivalence tests 

are still upheld, implying that in 

aggregate the expected enrollee cost 

sharing expenses will remain the same 

for those enrollees in MA and for those 

enrollees in FFS. Consequently, there 

are no expected changes to the Medicare 

Trust Fund expenditures since aggregate 

enrollee cost sharing remains 

unchanged under the alternative 

scenario(s). Additionally, several 

provisions of this FC codify longstanding existing polices used by CMS 

in annual bid reviews, implying that no 

additional dollar impact across the 

program as a whole will occur. 

Throughout section V.H.1. and 2. of 

this FC we list alternatives, including 

multiyear transitions, for each or for 

combinations of the provisions. The 

multiyear transitions considered are 

generally consistent with the transition 

methodology proposed to incorporate 

ESRD costs into MOOP and inpatient 

hospital cost sharing limits. At a high 

level, all alternatives considered sought 

to strike a balance between: (1) 

Finalizing policies that would 

incentivize MA organizations to 

establish lower MOOP amounts; and (2) 

protecting enrollees from potential 

disruption that may result from 


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substantially shifting MOOP and 

copayment limits within 1 year. 

Throughout this section, each 

alternative would result in a terminal 

year in which MOOP limits and cost 

sharing standards are at 100 percent of 

what we proposed, with one exception 

for the ‘‘Part B drugs—other’’ service 

category (as explained in detail in 

sections II.B.5.e. and V.H.2. of this FC). 

The main difference between the 

alternatives is the length of time in 

which the finalized provisions are not 

fully in effect. In the February 2020 

proposed rule, CMS developed the 

proposals to apply to contract year 2022 

and future years. However, we did not 

finalize these provisions in advance of 

the contract year 2022 bid deadline. 

Consequently, we needed to delay 

implementation of the provisions in this 

FC to contract year 2023 and future 

years. This led us to use the MOOP 

limits and cost sharing standards that 

were set for contract year 2022 as the 

baseline (as shown in Tables 30, 31, and 

33 through 37) for comparing the 

proposed and finalized policies. The 

level to which the provisions are in 

effect during the transitional period 

described in each alternative is 

described as a percentage in most cases. 

For example, 100 percent signifies that 

the transitional period has concluded 

and the provisions are fully 

implemented as finalized in this FC. 

These transitions are examined 

through tables and narratives indicating 

consequences. While we project that 

there is no dollar impact to the 

Medicare Trust Fund from any of these 

alternatives, certain transitions may 

have unintended adverse beneficiary 

and marketing impacts. More 

specifically, a transition that is 

implemented too quickly may have an 

unintended effect of increasing cost 

sharing for certain services too quickly 

(based on the most recent Medicare FFS 

data projections available at the time of 

this FC). Such sudden increases would 

be expected to— 

• Result in beneficiary concern; 

• Potentially affect the ‘‘total 

beneficiary cost’’; and 

• Potentially steer certain sets of 

beneficiaries away from enrolling in the 

MA program or to different plans (this 

might have quantitative adverse impact, 

but we have no way of knowing how 

each group of beneficiaries would react 

nor how many are involved). 

Similarly, a transition that is too slow 

is not useful or protective to enrollees. 

This delay would contradict the very 

purpose of using updated Medicare FFS 

data projections to calculate MOOP 

limits and cost sharing limits for 

inpatient services; this might result in 

MA organizations making other changes 

to their bid design, such as increasing 

premiums or reducing benefits. 

However, we have no way to quantify 

the potential adverse effects this may 

cause. 

To avoid repetitive text, throughout 

this section we reference potential 

disruption generally instead of repeating 

the preceding paragraphs. Specifically, 

references to potential disruption 

include one or more of the adverse 

consequences listed previously in this 

section. Our goal in considering these 

alternatives in implementation is to 

achieve a balance in the transition, not 

too fast and not too slow for the 

stakeholders involved (namely, 

enrollees and MA organizations). Details 

of the projected MOOP and cost sharing 

limits that would result from the various 

alternatives (which motivated CMS in 

choosing a final implementation 

approach) are available in the tables and 

discussions in sections V.H.1. and 2. of 

this FC. 

1. Maximum Out-of-Pocket (MOOP) 

Limits for Medicare Parts A and B 

Services (§§ 422.100 and 422.101) 

CMS considered two alternatives to 

finalize the ESRD cost transition into 

the methodology CMS uses to calculate 

MOOP limits at specific percentiles of 

beneficiary out of pocket costs in the 

Medicare FFS program. We note this 

part of the MOOP provision makes 

substantive changes to existing policy. 

Specifically, we considered alternatives 

in the rate and length of the ESRD cost 

transition due to all the following: 

• Timing of this FC. 

• Potential for enrollee disruption 

and impacts of further delays in 

integrating ESRD costs. 

• Public comments on the MOOP 

limit proposals (as summarized in 

section II.A.4. of this FC). 

The transition schedule we proposed 

incorporated the ESRD cost differential 

as follows: 60 percent in 2022; 80 

percent in 2023 or the next year; and 

100 percent in 2024 or the final year of 

transition. In addition, our proposal 

included guardrails to pause the 

incorporation of the ESRD cost 

differential if the dollar figure at the 

85th or 95th percentile of projected 

Medicare FFS costs increased or 

decreased too much (as defined in the 

February 2020 proposed rule as a 

difference of more than 2 percentiles 

above or below the 85th and 95th 

percentile) from the prior year. We note 

other schedules to phase in ESRD costs 

are possible and we expect each unique 

transition would have different 

beneficiary and marketing impacts 

through its completion. Our goal, as 

indicated in the introduction of this 

section, is to minimize disruption. 

The projections from the OACT in the 

February 2020 proposed rule on 

expected enrollment of 83,000 Medicare 

beneficiaries with diagnoses of ESRD 

into the MA program appear to align 

with actual enrollment based on 2021 

enrollment data. As such, the delay of 

this FC resulted in the proposed 60 

percent of the ESRD cost differential not 

being incorporated into contract year 

2022 MOOP limits while enrollment of 

beneficiaries with diagnoses of ESRD in 

MA is projected to increase. Finally, as 

summarized in section II.A. of this FC, 

we received some public comments 

requesting changes to the proposed 

transition, including an accelerated 

transition of ESRD costs into the 

methodology CMS uses to calculate 

MOOP limits. As a result, CMS 

considered the following alternatives: 

Alternative 1: We considered 

finalizing the ESRD transition as 

proposed for contract years 2023 and 

2024 (that is, incorporating 80 percent 

of the ESRD cost differential for contract 

year 2023 and 100 percent for contract 

year 2024 if the dollar figure at the 85th 

or 95th percentile of projected Medicare 

FFS costs did not increase or decrease 

more than 2 percentiles above or below 

the 85th and 95th percentile from the 

prior year) to minimize the changes 

from the proposal to only address the 

delay of the final rule release. Table 30 

illustrates the impact of this alternative 

on contract year 2023 in-network MOOP 

limits in comparison to the other 

alternatives and baseline limits 

described in this section. Table 31 

demonstrates the same comparison for 

contract year 2023 total catastrophic 

(combined) MOOP limits. 

As shown in Tables 30 and 31, 

finalizing 80 percent of the ESRD cost 

differential for contract year 2023 would 

increase the MOOP limits at a greater 

rate than illustrated in the February 

2020 proposed rule (using updated 

projections based on Medicare FFS data 

from 2017–2021). For example, in the 

February 2020 proposed rule the highest 

allowable in-network mandatory MOOP 

limit for contract year 2023 was 

projected to be $7,950 and this 

alternative implemented with updated 

projections based on 2017–2021 

Medicare FFS data increased this 

amount to $8,700 (a $750 increase) as 

shown in Table 30. We also note this 

would reflect a $1,150 increase from the 

highest allowable in-network mandatory 

MOOP limit of $7,550 in contract year 

2022. The increases to the MOOP limits 

resulting from this alternative shown in 

Table 30 (and by extension based on 

how the total catastrophic MOOP limits 


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22414 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

are calculated, Table 31) also reflect 

implementing the proposed guardrails 

to pause the incorporation of the ESRD 

cost differential if the dollar figure at the 

85th or 95th percentile of projected 

Medicare FFS costs increased or 

decreased too much (as defined in the 

February 2020 proposed rule). For 

example, the projected 95th percentile 

of projected Medicare FFS costs 

increased from $8,468 to $9,111 

between contract year 2022 and 2023, in 

comparison the 97th percentile of 

projected Medicare FFS costs (for 

contract year 2022) was $11,837. As the 

projected contract year 2023 95th and 

85th percentiles did not increase or 

decrease more than 2 percentiles above 

or below the contract year 2022 95th 

and 85th percentiles, the cap of a 10 

percent change from the prior year’s 

MOOP limit was not applied (as 

proposed) in Tables 30 and 31. 

We considered these higher projected 

increases in relation to actual contract 

year 2021 plan MOOP changes, 

potential impacts of further delays in 

integrating ESRD costs, and feedback 

from public commenters in determining 

the final ESRD cost transition as further 

described in this section. Ultimately, we 

expect that transitioning from 40 

percent of the ESRD cost differential 

(initially incorporated for contract year 

2021 and maintained for 2022) to 80 

percent for contract year 2023 would 

have a greater potential to produce 

disruptive consequences (such as, 

greater disenrollment from the MA 

program as a result of potential plan 

benefit design changes) than reducing 

the percentage of ESRD costs that are 

incorporated for contract year 2023. As 

a result, we declined to adopt the ESRD 

cost transition exactly as proposed for 

contract year 2023 as we believe that 

another approach would better protect 

against potential enrollee disruption 

and be responsive to public 

commenters. 

Alternative 2: Second, we considered 

extending the proposed ESRD cost 

transition schedule by 1 year (that is, 

incorporating 60 percent of the ESRD 

cost differential for contract year 2023, 

80 percent for contract year 2024, and 

100 percent for contract year 2025) and 

implementing the guardrails to pause 

the incorporation of the ESRD cost 

differential if the dollar figure at the 

85th or 95th percentile of projected 

Medicare FFS costs increased or 

decreased too much (as defined in the 

February 2020 proposed rule) as 

generally proposed (applied to each year 

of the transition). We believe this is 

another approach to minimize the 

changes from the February 2020 

proposed rule, provide MA 

organizations with adequate time to 

prepare for these changes, and to avoid 

potentially disruptive changes for 

enrollees. Table 30 provides the 

projected impact of finalizing this 

alternative on contract year 2023 innetwork MOOP limits in comparison to 

the other alternatives and baseline 

limits described in this section. Table 31 

demonstrates the same comparison for 

the total catastrophic MOOP limits. 

As shown in Table 30, finalizing 60 

percent of the ESRD cost differential for 

contract year 2023 would increase the 

highest allowable in-network mandatory 

MOOP limit to $8,350, an increase of 

$400 from the illustrative $7,950 

amount in the February 2020 proposed 

rule using contract year 2023 Medicare 

FFS data projections (based on 2017– 

2021 Medicare FFS data). This $8,350 

amount also reflects a $800 increase 

from the highest allowable in-network 

mandatory MOOP limit of $7,550 in 

contract year 2022. In comparison, the 

highest allowable in-network mandatory 

MOOP limit increased from $6,700 to 

$7,550 ($850) from contract year 2020 to 

2021 as a result of the Medicare FFS 

data percentile projections (based on 

2015–2019 Medicare FFS data) and 40 

percent of the ESRD cost differential 

being incorporated. 

For the same reasons as discussed in 

the first alternative of this section, the 

increases to the MOOP limits resulting 

from this alternative do not reflect the 

application of a 10 percent change cap 

from the prior year’s MOOP limit 

because the updated 95th and 85th 

percentiles did not increase or decrease 

more than 2 percentiles above or below 

the 95th and 85th percentiles from the 

prior year. Given this potential increase, 

we reviewed the changes MA plans 

made in establishing their contract year 

2021 MOOP amounts and determined 

that most MA organizations were not 

utilizing the full flexibility from the 

increased MOOP limits. Comparing 

contract year 2020 and 2021, we found 

that approximately 35 percent of all MA 

and MA–PD plans established the 

highest allowable MOOP amount 

($6,700) for contract year 2020 and 

approximately 37 percent of all MA and 

MA–PD plans chose to establish a 

MOOP amount at or above $6,700 for 

contract year 2021. This indicates a 

modest increase in the percent of plans 

with the highest allowable MOOP 

amount from the prior contract year on 

an aggregate basis. This data does not 

suggest that incorporating a greater 

percentage of the ESRD cost differential 

is likely to result in most MA 

organizations substantially increasing 

their MOOP amounts for contract year 

2023 (as they already could increase 

their MOOP amounts further and chose 

not to for contract year 2021). However, 

we acknowledge that our data are 

limited to comparing the change 

between contract year 2020 and 2021. 

As a result, we cannot make a definitive 

prediction on how MA organizations 

may utilize the available flexibility in 

establishing their plan MOOP amounts 

for future years. 

Feedback from public commenters (as 

summarized and responded to in 

section II.A. of this FC) included 

requests for an accelerated transition of 

ESRD costs into the methodology CMS 

uses to calculate MOOP limits given the 

potential for faster growth of ESRD 

enrollment in the MA program and 

geographic variations. In addition, the 

delay of this FC resulted in no increased 

ESRD cost adjustments in calculating 

contract year 2022 MOOP limits while 

enrollment of beneficiaries with 

diagnoses of ESRD in MA is projected 

to increase. Extending the ESRD cost 

transition would effectively produce 

changes that are contrary to commenter 

feedback, are not consistent with the 

increased costs MA organizations may 

experience based on enrollment 

projections, and are not sufficiently 

supported by the number of plans using 

the existing level of flexibility in MOOP 

limits. As a result, we rejected this 

alternative ESRD cost transition 

schedule because the data and public 

commenter feedback summarized 

previously did not suggest that an 

extended transition of ESRD costs in the 

methodology to calculate MOOP limits 

was justified or necessary to protect 

against potential enrollee disruption. 

Alternative 3 (Finalized): We are 

finalizing most of our proposals to 

codify and update the methodology 

CMS uses to calculate MOOP limits, 

except we are modifying the multiyear 

transition of ESRD costs and not 

finalizing the provision that would 

delay (or toll) the incorporation of ESRD 

costs into the data used to calculate the 

MOOP limits. The finalized schedule 

judiciously modifies the transition of 

ESRD costs into the methodology to 

calculate MOOP limits by incorporating 

70 percent of the ESRD cost differential 

for contract year 2023 (instead of the 

proposed 80 percent). In addition, we 

are finalizing the timing of the 

conclusion of the ESRD cost transition 

as proposed with 100 percent of the 

ESRD cost differential incorporated for 

contract year 2024. In addition, 

beginning for contract year 2023 we are 

finalizing a modified version of the 

proposed 10 percent change cap from 

the prior year’s MOOP limit to prevent 

increases greater than 10 percent, 

without the additional requirements of 


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Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22415 

meeting the two percentiles change 

threshold. In finalizing this ESRD cost 

transition schedule we are especially 

considerate of the potential impact of 

further delays in integrating ESRD costs, 

comments on the proposed transition 

schedule, and the possibility of enrollee 

disruption. Table 5 contains the final 

contract year 2023 MOOP limits and 

Table 9 contains illustrative contract 

year 2024 MOOP limits, which were 

developed using the methodology 

finalized in this FC. The calculations of 

the MOOP limits in Tables 5 and 9 

using the methodology finalized in this 

FC and projections of 2017–2021 

Medicare FFS data are in Tables 2–4 

and 6–8. 

The proportion of ESRD cost 

differential incorporated into the MOOP 

limits for contract year 2023 was 

finalized at 70 percent instead of 80 

percent as proposed. The impact of 

incorporating 80 percent (with the 

requirement that to apply the 10 percent 

cap on changes to the MOOP limit the 

respective percentiles of Medicare FFS 

costs would need to exceed two 

percentiles from the prior contract year) 

using contract year 2023 Medicare FFS 

data projections (based on 2017–2021 

Medicare FFS data) is addressed in our 

discussion of the first alternative in this 

section and illustrated in Tables 29 and 

30. In comparison, as shown in Table 

30, this finalized approach increased the 

highest allowable in-network mandatory 

MOOP limit for contract year 2023 from 

the $7,950 illustrative amount in the 

February 2020 proposed rule to $8,300 

(a $350 increase) using projections of 

Medicare FFS costs based on 2017–2021 

Medicare FFS data. The $8,300 amount 

also reflects a $750 increase from the 

highest allowable in-network mandatory 

MOOP limit of $7,550 in contract year 

2022. This increase to the mandatory 

MOOP limit was calculated using the 

contract year 2022 mandatory MOOP 

limit plus 10 percent of that amount and 

applying the rounding rules at 

§ 422.100(f)(4)(iii) as the 10 percent cap 

on increases was met (without the 

requirement to exceed two percentiles 

from the prior contract year as described 

in section II.A.4. of this FC). The delay 

of this FC resulted in no increased ESRD 

cost adjustments in calculating contract 

year 2022 MOOP limits (versus the 20 

percent increase proposed) while ESRD 

enrollment in MA is projected to 

increase in 2022. As a result, we 

considered changes to the ESRD cost 

transition to reduce the potential 

disruption from transitioning to 80 

percent of the ESRD cost differential in 

1 year (from 40 percent that was 

incorporated in contract year 2021 and 

maintained for contract year 2022). 

While the proportion of MA plans with 

mandatory MOOP amounts did not 

significantly change between contract 

year 2020 and 2021 (approximately 2 

percent as discussed previously in this 

section) this trend may not continue if 

MOOP limits do not fully reflect ESRD 

costs as ESRD enrollment in the MA 

program continues to increase. For 

example, as indicated in our discussion 

of disruption in section V.H. of this FC, 

delaying the ESRD cost transition may 

result in MA organizations choosing to 

use the maximum level of flexibility 

that is available (increasing the MOOP 

amount to the maximum MOOP limit to 

a greater extent than prior years) or 

making other changes to their plan 

benefit designs (increasing premiums or 

cost sharing amounts) in order to 

compensate for the additional costs they 

would be covering. 

In addition, feedback from public 

commenters (as summarized and 

responded to in section II.A. of this FC) 

included requests for an accelerated 

transition of ESRD costs into the 

methodology CMS uses to calculate 

MOOP limits given the potential for 

faster growth of ESRD enrollment in the 

MA program and geographic variations. 

While the finalized approach does not 

accelerate the timeframe to fully 

integrate ESRD costs into MOOP limits, 

as some commenters requested, the 

transition schedule as finalized strikes a 

balance between curbing more 

significant increases to MOOP limits 

from contract year 2022 and helping 

ensure that MA organizations are able to 

continue offering all plan enrollees, 

regardless of their ESRD status, highquality care and service while keeping 

premiums and out-of-pocket costs at 

non-discriminatory levels. By striking 

this balance and continuing our 

longstanding practice of calculating 

MOOP limits based on Medicare FFS 

data projections, CMS expects the 

finalized transition schedule will also 

mitigate the risk of increased premiums 

or decreased benefits that may be 

associated with the migration of 

beneficiaries with diagnoses of ESRD 

from Medicare FFS to the MA program. 

As noted in section V.G. of this FC, 

because of multiple factors affecting 

bids and our longstanding actuarially 

equivalent plan bid requirements, we 

have not estimated a cost to this 

provision and acknowledged a possible 

combination of savings and costs for 

individual MA organizations and 

enrollees. Similarly, we would not be 

able to quantify potential impacts from 

these alternatives. However, potential 

impacts from the alternatives are noted 

previously in this section. 


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TABLE 30: ILLUSTRATIVE COMPARISON OF ALTERNATIVES AND FINALIZED 

MOOP LIMIT METHODOLOGY ON HIGHEST ALLOW ABLE CONTRACT YEAR 

2023 IN-NETWORK MOOP LIMITS BASED ON PROJECTIONS OF 2017 - 2021 

MEDICARE FFS DATA 

Baseline: Contract Year 2022 Limits $3,450 NIA $7,550 

Alternative 1: Inco orate 80% of the ESRD Cost Differential $3,700 $6,200 $8,700 

$3,600 $5,950 $8,350 

$3,650 $6,000 $8,300 
22416 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

2. Service Category Cost Sharing Limits 

for Medicare Parts A and B Services and 

Per Member Per Month Actuarial 

Equivalence Cost Sharing (§§ 422.100 

and 422.113) 

Similar to our approach for the MOOP 

limit provision, CMS developed several 

alternatives to finalizing the specific 

proposals on Cost Sharing that make 

substantive updates to existing policy. 

These proposals include the following: 

• Range of Cost Sharing Limits for 

Certain Outpatient and Professional 

Services (§ 422.100(f)(6)(iii)). 

• Emergency/Post-Stabilization 

Services and Urgently Needed Services 

(§ 422.113(b)(2)(v) and (vi)). 

• Services No Greater Than Original 

Medicare (§ 422.100(j)(1)) 

We considered alternatives due to all 

of the following: 

• Timing of this FC. 

• Potential for enrollee disruption. 

• Public comments on the Cost 

Sharing proposals (as summarized in 

section II.B.5. of this FC). 

After the February 2020 proposed rule 

was released, we received updated 

Medicare FFS projections for service 

category cost sharing amounts from the 

OACT that were not available at the 

time of drafting the February 2020 

proposed rule (for example, updated 

average and median allowed amount 

Medicare FFS data projections based on 

2017 through 2021 Medicare FFS data). 

We evaluated the potential enrollee 

disruption resulting from the use of 

these updated amounts to calculate 

actuarially equivalent copayment limits. 

Finally, as summarized in section II.B. 

of this FC, we received public 

comments requesting changes to our 

proposals, including applying a 

transition to the range of cost sharing 

limits for professional services and 

delays to increases to cost sharing for 

emergency services. 

In this section we address the 

consequences of alternatives that were 

considered in response to the factors 

and feedback discussed previously. 

While each cost sharing proposal, such 

as the ones for emergency services or 

the ones for the copayment limits for 

professional services, had unique 

aspects, we present the narrative 

discussing the alternatives for all of 

these proposals in one section (as the 

approach is generally the same for each 

provision). However, the tables in this 

section show how each alternative 

would uniquely impact the copayment 

limits that are subject to a particular 

policy (either §§ 422.100(f)(6)(iii), (j)(1), 

or 422.113(b)(2)(v)). 

The following tables contain the 

projected impact of finalizing each of 

the alternatives discussed in this section 

on contract year 2023 cost sharing limits 

for particular service categories: 

• Table 33: Physical therapy and 

speech-language pathology. 

• Table 34: Partial hospitalization. 

• Table 35: Emergency services. 

• Table 36: Part B drugs— 

chemotherapy/radiation drugs. 

• Table 37: Part B drugs—other. 

A more complete discussion of the 

data analyses completed to reach the 

actuarially equivalent values of the 

copayment limits in Tables 33 through 

37 is available in the February 2020 

proposed rule and section II.B.5 of this 

FC. In addition, the cost sharing limits 

in Tables 33 through 37 for Alternative 

3 are final amounts resulting from CMS 

applying the regulations using contract 

year 2023 Medicare FFS data 

projections (based on 2017–2021 

Medicare FFS data). In addition, the 

specific emergency services cost sharing 

limits in Table 35 for Alternative 3 in 

section V.H.2.c. of this FC are codified 

in § 422.113(b)(2)(v) for contract year 

2023. We note that no additional 

Medicare FFS data projections were 

used to calculate the cost sharing limits 

for emergency services during the 

transition in Table 35 (all amounts were 

based on the specified dollars limits 

from the February 2020 proposed rule). 

A complete list of final contract year 

2023 in-network cost sharing limits 

calculated following the methodology in 

this FC is available in Table 28. 

Alternative 1: We considered 

finalizing the three cost sharing 

proposals (in §§ 422.100(f)(6)(iii), (j)(1), 

and 422.113(b)(2)(v)) for use of the 

proposed coinsurance percentages and 

use of actuarially equivalent copayment 

limits to begin immediately for contract 

year 2023 as an approach to minimize 

the changes from the February 2020 

proposed rule and to incentivize MA 

organizations to establish lower MOOP 

amounts. This alternative would result 

in the most substantial increases to the 

contract year 2023 cost sharing limits, as 

shown in Tables 33 through 37 in 

comparison to the other alternatives 

discussed in this section. We ultimately 

rejected this alternative to be responsive 

to public comments and apply another 

approach that would better protect 

enrollees from potential disruption that 

may result from substantially shifting 

copayment limits within 1 year. 

As shown in Table 33, finalizing the 

range of cost sharing limits for contract 

year 2023 would increase the physical 

therapy and speech-language pathology 

copayment limit for a plan that 

establishes a lower MOOP amount to 

$90, a $5 increase from the illustrative 

amount in the February 2020 proposed 

rule (using contract year 2023 Medicare 

FFS data projections based on 2017– 

2021 Medicare FFS data). This $90 

amount also reflects a $50 increase from 

the contract year 2022 copayment limit 

for this service category. Similarly, as 

shown in Table 34, this alternative 

would increase the partial 

hospitalization copayment limit for a 

plan that establishes a lower MOOP 

amount to $135. This $135 amount 

reflects a $80 increase from the contract 

year 2022 copayment limit for this 

service category. 

As shown in Table 35, finalizing the 

proposed emergency services cost 

sharing limits for contract year 2023 

would increase the cost sharing limit for 

a plan that establishes a lower MOOP 

amount from $120 in contract year 2022 

to $150 for contract year 2023 and 

future years (an increase of $30) as 

generally illustrated in the February 

2020 proposed rule. These specific cost 

sharing limits would apply unless cost 


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TABLE 31: ILLUSTRATIVE COMPARISON OF ALTERNATIVES AND FINALIZED 

MOOP LIMIT METHODOLOGY ON HIGHEST ALLOW ABLE CONTRACT YEAR 

2023 (COMBINED) TOTAL CATASTROPHIC MOOP LIMITS BASED ON 

PROJECTIONS OF 2017 - 2021 MEDICARE FFS DATA 

Baseline: Contract Year 2022 Limits $5,150 NIA $11,300 

Alternative 1: Inco orate 80% of the ESRD Cost Differential $5,550 $9,300 $13,100 

$5,400 $8,950 $12,500 

$5,450 $8,950 $12,450 
Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22417 

sharing established by the MA plan if 

the emergency services were provided 

through the MA organization is lower. 

As shown in Table 36, the 20 percent 

coinsurance limit (cost sharing under 

original Medicare) for the Part B drugs— 

chemotherapy/radiation drugs service 

category remains consistent with the 

cost sharing standards CMS has used 

since 2012. In addition, using contract 

year 2023 Medicare FFS data 

projections (based on 2017–2021 

Medicare FFS data) for the Part B 

drugs—chemotherapy/radiation drugs 

service category, an actuarially 

equivalent copayment value based on 20 

percent coinsurance would be $280. As 

a result, if this first alternative were 

finalized, beginning in contract year 

2023 MA organizations could establish 

a $280 copayment (a $205 increase from 

the $75 copayment limit for Part B 

drugs—chemotherapy/radiation drugs 

for contract year 2022) which would be 

potentially disruptive to enrollees. 

As shown in Table 37, to be 

consistent with the February 2020 

proposed rule for this alternative, we 

considered the alternative under which 

we would apply the range of cost 

sharing limits (30, 40, and 50 percent) 

for the ‘‘Part B drugs—other’’ service 

category rather than our longstanding 20 

percent coinsurance requirement. This 

alternative would increase the cost 

sharing limit for a plan that establishes 

a lower MOOP amount from $50 or 20 

percent coinsurance in contract year 

2022 to $800, or 50 percent coinsurance 

for contract year 2023 (an increase of 

$750). Specifically, $800 reflects an 

actuarially equivalent value to 50 

percent coinsurance for the ‘‘Part B 

drugs—other’’ service category using 

contract year 2023 Medicare FFS data 

projections (based on 2017–2021 

Medicare FFS data). 

We note that if we instead codified 

the 20 percent coinsurance limit 

without a transition, based on the same 

contract year 2023 Medicare FFS data 

projections, the actuarially equivalent 

copayment limit would be $320 for the 

‘‘Part B drugs—other’’ service category 

in contract year 2023. Based on these 

significant projected increases to the 

‘‘Part B drugs—other’’ copayment limit 

in comparison to the contract year 2022 

limit (as shown in Table 37), we 

decided to address this service category 

differently from the other service 

categories we proposed to be subject to 

§ 422.100(f)(6)(iii) for the rest of this 

section. Specifically, instead of 

finalizing a range of cost sharing for this 

service category, we considered both 

codifying our longstanding 20 percent 

coinsurance requirement and applying a 

multiyear transition to an actuarially 

equivalent copayment value based on 20 

percent coinsurance in the other 

alternatives discussed in this section. 

In relation to the cost sharing limits 

in Tables 33, 34, 36, and 37, as 

discussed in section II.B.5. of this FC, if 

CMS does not calculate a copayment 

limit for a service category subject to 

§ 422.100(f)(6)(iii) or (j)(1) (which would 

also be consistent with the February 

2020 proposed rule), an MA plan must 

not establish a copayment that exceeds 

an actuarially equivalent value to the 

cost sharing standard. This means the 

potential outcomes shown in Tables 33, 

34, 36, and 37 for this alternative remain 

essentially the same in the absence of a 

copayment limit calculated by CMS. For 

example, if CMS did not set a contract 

year 2023 partial hospitalization service 

category copayment limit for MA plans 

with a lower MOOP amount those plans 

may still be able to establish up to an 

$135 copayment under this alternative 

for contract year 2023 (the same amount 

shown in Table 34 for this alternative). 

As discussed in section II.B. of this 

FC, calculating copayment limits based 

on updated Medicare FFS data 

projections reflects plan costs associated 

with the variety and expense of services 

included in the cost sharing limit. In 

addition, calculating a maximum cost 

sharing limit of up to 50 percent 

coinsurance or an actuarially equivalent 

copayment value for a lower MOOP 

type is consistent with CMS’s 

longstanding interpretation and 

application of the anti-discriminatory 

requirements, which is that cost sharing 

over 50 percent for services—where 

there are no other applicable cost 

sharing limits—is discriminatory to 

enrollees who need those services. 

However, our proposed methodology to 

calculate copayment limits based on 

specified percentages is, in effect, a 

recalibration of the copayment limits in 

one year by using a methodology 

adjusted from longstanding policy and 

updated Medicare FFS data projections. 

As a result, implementing this 

alternative means that some of the 

projected copayment limits in Tables 33 

through 37 represent substantial 

disruptive shifts from the prior contract 

year since enrollees could experience 

changes in copayments up to those 

amounts. As discussed in the 

introduction to section V.H. of this FC, 

we understand such increases (in 

conjunction with the other projected 

increases to MOOP limits as discussed 

in more detail in section II.A. and V.H.1. 

of this FC) could have significant 

disruptive consequences for enrollees, 

especially if they have limited financial 

means. 

Public comments (as summarized and 

responded to in section II.B.5. of this 

FC) were mixed on these three cost 

sharing proposals (in 

§§ 422.100(f)(6)(iii), (j)(1), and 

422.113(b)(2)(v) and (vi)). In brief, some 

commenters generally opposed the 

proposed increases to the cost sharing 

limits for certain service categories 

(such as physical therapy and speechlanguage pathology, emergency services, 

and dialysis services) as they stated it 

may prevent MA enrollees from having 

meaningful access to services and 

substantial changes to copayment limits 

from one year to the next should be 

avoided to reduce disruption in the 

market and for beneficiaries. Other 

commenters were supportive as they 

stated it would provide an incentive for 

MA organizations to offer plans with 

lower MOOP amounts. In addition, a 

commenter requested CMS conduct a 

multiyear transition from the current 

cost sharing limits to the range of cost 

sharing limits proposed given the 

potential for enrollee disruption (based 

on the projected changes to cost sharing 

limits in the February 2020 proposed 

rule). While we respond to these (and 

other) comments in section II.B.5. of this 

FC, we agree that it is important that 

enrollees do not face unexpected 

financial hardships in accessing needed 

health care services. Further, finalizing 

these proposals for contract year 2023, 

when the actuarially equivalent 

copayment limits for some professional 

service categories have increased to a 

greater extent than illustrated in the 

February 2020 proposed rule (using 

contract year 2023 Medicare FFS data 

projections based on 2017–2021 

Medicare FFS data) would not have 

fully addressed the concerns raised in 

those public comments that CMS 

shared. 

In summary, implementing this 

alternative to finalize as proposed (with 

the delay of implementation of the three 

cost sharing proposals from contract 

year 2022 to 2023) would mean that 

many of the copayment limits for 

services categories subject to 

§§ 422.100(f)(6)(iii), (j)(1), and 

422.113(b)(2)(v) and (vi) would 

substantially increase from the prior 

contract year. Based on the enrollee’s 

situation, these changes would be 

disruptive; they could, for example, 

potentially discourage them from 

seeking those services with increased 

cost sharing and/or result in enrollees 

choosing to disenroll from the plan or 

the MA program. We rejected this 

alternative because the data and public 

commenter feedback summarized 

previously did not suggest that 


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22418 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

implementing these proposals without a 

transition would sufficiently protect 

enrollees from potentially significant 

year over year changes. 

Further, CMS has a practice of 

phasing in changes in the MA program 

in order to avoid unnecessary 

disruption and to ensure a smooth 

transition. For example, CMS began 

incorporating encounter data into risk 

score calculations in 2015 as an 

additional source of diagnoses. Between 

2016 and 2022, CMS calculated risk 

scores for MA organizations using a 

weighted average of RAPS-based and 

encounter data-based risk scores, 

gradually phasing in encounter data in 

risk score calculation. In 2022, CMS 

completed the transition to calculating 

risk scores for payment to MA 

organizations using only encounter data. 

Similarly, the 21st Century Cures Act 

mandated that several changes be made 

to the Part C risk adjustment model for 

MA organizations, and that these 

changes be phased in over a 3-year 

period, beginning with 2019, with the 

changes being fully implemented for 

2022. CMS began implementing the risk 

adjustment requirements in the Cures 

Act in 2019, with a portion of the risk 

score applied in payments to MA 

organizations calculated with a risk 

adjustment model that included new 

condition categories. CMS continued 

implementation by calculating an 

increasing portion of the risk score used 

for payments for 2020 and 2021 using a 

model that included additional 

condition categories and factors that 

take into account the total number of 

diseases or conditions of a beneficiary. 

For 2022 payment to MA organizations, 

the risk adjustment model that meets 

Cures Act requirements was fully 

phased in. This history has 

demonstrated the value of using 

transition schedules when incorporating 

changes into the MA program. 

Alternative 2: We considered: (1) 

Finalizing a 5-year transition to 

implement the three cost sharing 

proposals (with one exception for the 

‘‘Part B drugs—other’’ service category) 

beginning for contract year 2023; (2) 

codifying our longstanding requirement 

of 20 percent coinsurance (the cost 

sharing under original Medicare) for the 

‘‘Part B drugs—other’’ service category; 

(3) calculating copayment limits for the 

‘‘Part B drugs—other’’ service category 

consistent with the 5-year transition 

(rather than immediately using a 

copayment limit that is actuarially 

equivalent to the coinsurance limit); and 

(4) requiring that CMS set copayment 

limits at an amount that is the lesser of: 

An actuarially equivalent value to the 

applicable cost sharing standard or the 

value resulting from the 5-year 

actuarially equivalent copayment 

transition for that service category. In 

considering these changes our goal is to 

protect against potential enrollee 

disruption, provide MA organizations 

with adequate time to prepare for these 

changes, and to incentivize MA 

organizations to establish lower MOOP 

amounts. This alternative would result 

in the least substantial increases to the 

contract year 2023 cost sharing limits as 

shown in Tables 33 through 37 in 

comparison to the other alternatives 

discussed in this section. However, we 

ultimately rejected this alternative 

because of potential disruptive 

consequences resulting from an 

extended transition as discussed at the 

beginning of this section and in section 

V.H. of this FC (for example, MA 

organizations increasing premiums or 

reducing benefits). 

The detailed aspects of 

operationalizing a multiyear transition 

for these proposals is provided in 

section II.B.5 of this FC. Our goal in this 

Alternative Considered section is to 

analyze the individual cost sharing and 

difficult-to-quantify impacts of various 

alternatives. However, in order to 

understand the long-term implications 

of this alternative, we summarize the 

coinsurance limits that would be 

applied for service categories subject to 

§ 422.100(f)(6)(iii) in Table 32. Table 32 

is not included in section II.B. of this FC 

as that section focuses on the finalized 

methodology (the third alternative in 

this section). In addition, Table 32 is 

only relevant to service categories 

subject to paragraph (f)(6)(iii) as the 

coinsurance limit for benefits subject to 

§ 422.100(j)(1) would not need to be 

transitioned (20 percent coinsurance 

remains consistent with contract year 

2022) and the cost sharing limits for 

emergency services in § 422.113(b)(2)(v) 

do not include coinsurance limits 

(before our proposal and as proposed). 

As shown in Table 32, CMS would 

maintain the 50 percent coinsurance 

limit for the lower (previously 

‘‘voluntary’’) MOOP type and transition 

the contract year 2022 coinsurance limit 

of 50 percent for the mandatory MOOP 

type to the proposed 30 percent 

coinsurance limit by decreasing the 

limit 4 percent each year. In addition, as 

finalized in section II.A. of this FC, the 

intermediate MOOP limit is a new type 

of MOOP beginning in contract year 

2023. In order to provide consistently 

differentiated coinsurance limits 

between the MOOP limits through the 5- 

year transition, we would set a 48 

percent coinsurance limit for contract 

year 2023 for the intermediate MOOP 

limit and decrease it by 2 percent each 

year to reach the proposed 40 percent 

coinsurance by contract year 2027. 

In implementing the requirement that 

CMS set copayment limits at an amount 

that is the lesser of: (1) An actuarially 

equivalent value to the applicable cost 

sharing standard; or (2) the value 

resulting from the 5-year actuarially 

equivalent copayment transition for that 

service category, we note the first value 

would be the actuarially equivalent 

copayment to the coinsurance limit 

shown in Table 32. The second value 

would result from CMS factoring in an 

increasing percentage of the difference 

(or differential) between two values: (1) 

The contract year 2022 copayment limit 

for the service category; and (2) the 

actuarially equivalent value for that 

service category based on the proposed 


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TABLE 32: ALTERNATIVE 2 -A 5-YEAR TRANSITION TO REACH THE RANGE 

OF COINSURANCE LIMITS BASED ON THE MOOP TYPE FOR SERVICE 

CATEGORIES SUBJECT TO§ 422.100(f)(6)(iii) 

2027 and 

MOOPType 2023 2024 2025 2026 Future Years 

Lower 50% 50% 50% 50% 50% 

Intermediate 48% 46% 44% 42% 40% 

Mandatory 46% 42% 38% 34% 30% 
Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22419 

cost sharing standards. (This is similar 

to the approach we finalized in 

§ 422.100(f)(8) but using a different 

schedule.) We note this definition is 

explained in greater detail in section 

II.B.5. of this FC (for instance, how CMS 

would apply it to the copayment limits 

applicable for MA plans that have an 

intermediate MOOP limit). Unique to 

this alternative, this differential would 

be factored in over 5 years for service 

categories subject to §§ 422.100(f)(6)(iii), 

(j)(1), and 422.113(b)(2)(v) by factoring 

in the differential as follows: 

• Contract Year 2023: 20 percent 

• Contract Year 2024: 40 percent 

• Contract Year 2025: 60 percent 

• Contract Year 2026: 80 percent 

• Contract Year 2027: 100 percent 

By factoring in 100 percent in contract 

year 2027 CMS would complete the 

transition to actuarially equivalent 

copayment values at the same time the 

range of coinsurance limits are 

completed in Table 32 (that is, the 

copayment limits calculated for contract 

year 2027 would be actuarially 

equivalent to the coinsurance limits that 

apply for that year as we proposed for 

contract year 2022). 

As shown in Table 33, finalizing a 5- 

year transition to the range of cost 

sharing limits reduces the increase to 

the physical therapy and speechlanguage pathology copayment limit for 

a plan that establishes a lower MOOP 

amount compared to the first alternative 

discussed in this section (using 

Medicare FFS data projections based on 

2017–2021 Medicare FFS data). For 

example, the contract year 2023 

copayment limit for the physical 

therapy and speech-language pathology 

service category if a plan establishes a 

lower MOOP amount would be $50 

under this alternative. This $50 amount 

reflects a $35 decrease compared to the 

$85 illustrative copayment limit in the 

February 2020 proposed rule. In 

addition, this $50 amount is a $10 

increase from the contract year 2022 

copayment limit of $40 for this service 

category (compared to a $50 increase for 

the lower MOOP limit if the first 

alternative discussed in this section was 

implemented). Similarly, as shown in 

Table 34, this alternative would result 

in a $70 contract year 2023 copayment 

limit for the partial hospitalization 

service category for a plan that 

establishes a lower MOOP amount. This 

$70 amount reflects a $15 increase 

compared to the contract year 2022 

copayment limit of $55 for this service 

category. The copayment limits in Table 

33 and 34 also reflect implementing the 

‘‘lesser of’’ requirement (for both 

alternative two and three in this 

section); each copayment limit 

calculated from factoring in an 

increasing percentage of the actuarially 

equivalent copayment differential over 

the transition period was less than the 

amount that would be actuarially 

equivalent to the coinsurance limit that 

would apply in contract year 2023 (as 

listed in Table 32 and described in the 

third alternative in this section). 

As shown in Table 35, applying a 5- 

year transition would reduce the impact 

of the increase to the emergency 

services cost sharing limit for a plan that 

establishes a lower MOOP amount from 

$120 in contract year 2022 to $125 for 

contract year 2023, an increase of $5 

from the prior contract year instead of 

the $30 increase, as illustrated in the 

February 2020 proposed rule. As no 

coinsurance limits for emergency 

services were proposed, the requirement 

that CMS set copayment limits at an 

amount that is the lesser of: (1) An 

actuarially equivalent value to the 

applicable cost sharing standard; or (2) 

the value resulting from the actuarially 

equivalent copayment transition for that 

service category does not apply to 

emergency services. 

Table 36 illustrates that applying a 5- 

year transition would reduce the 

increase to the Part B drugs— 

chemotherapy/radiation drugs service 

category copayment limit; the 

copayment limit would increase from 

$75 in contract year 2022 to $115 for 

contract year 2023. This $115 amount 

reflects an increase of $40 from the prior 

contract year and a decrease of $165 in 

comparison to the first alternative in 

this section (using contract year 2023 

Medicare FFS data projections based on 

2017–2021 Medicare FFS data). The 

copayment limits in Table 36 also 

reflect implementing the ‘‘lesser of’’ 

requirement (for both alternative two 

and three in this section); each 

copayment limit calculated from 

factoring in an increasing percentage of 

the actuarially equivalent copayment 

differential over the transition period 

was less than the amount that would be 

actuarially equivalent to the 

coinsurance limit that would apply in 

contract year 2023 (20 percent, 

reflecting the cost sharing in original 

Medicare). 

Table 37 shows applying this 

alternative for the ‘‘Part B drugs—other’’ 

service category produces substantially 

lower copayment limits than the first 

alternative discussed in this section 

(using the same contract year 2023 

Medicare FFS data projections). This is 

because the differential between the 

contract year 2022 limit and the final 

cost sharing limits that would be 

applied in contract year 2027 is reduced 

from a maximum of $800 (for the lower 

MOOP limit under the first alternative) 

to $105 (for all MOOP types under this 

alternative). Specifically, Table 37 

applies a 5-year transition to reach an 

actuarially equivalent copayment limit 

to our longstanding 20 percent 

coinsurance requirement for the ‘‘Part B 

drugs—other’’ service category. For 

example, under this alternative the 

contract year 2023 ‘‘Part B drugs— 

other’’ service category copayment limit 

for a plan that establishes a lower 

MOOP amount would be $105, an 

increase of $55 from the $50 contract 

year 2022 copayment limit. In 

comparison, the increase from contract 

year 2022 would be $750 from the first 

alternative in this section (which would 

have used a 50 percent coinsurance 

limit for the lower MOOP type). Finally, 

the copayment limits shown in Table 37 

for both the second and third alternative 

discussed in this section also reflect 

implementing the ‘‘lesser of’’ 

requirement; each copayment limit 

calculated from factoring in an 

increasing percentage of the actuarially 

equivalent copayment differential over 

the transition period was less than the 

amount that would be actuarially 

equivalent to the coinsurance limit that 

would apply in contract year 2023 (20 

percent). 

If CMS does not set a copayment limit 

for a service category subject to 

§ 422.100(f)(6)(iii) or (j)(1) (which would 

also be consistent with the February 

2020 proposed rule), an MA plan must 

not establish a copayment that exceeds 

an actuarially equivalent value based on 

the coinsurance limit. In comparison, 

the contract year 2023 copayment limits 

that would result from this alternative 

(and the third alternative in this section) 

in Tables 33, 34, 36, and 37 are not 

solely based on being actuarially 

equivalent to the coinsurance limit, 

using contract year 2023 Medicare FFS 

data projections (based on 2017–2021 

Medicare FFS data). Rather, they are 

influenced by the contract year 2022 

copayment limits through the increasing 

incorporation of the differential (and the 

requirement to set the copayment limit 

using the lesser value) as discussed 

previously in this section. As a result, 

if CMS does not set a copayment limit 

during a multiyear transition period 

(following this alternative or the third 

alternative discussed in this section) for 

a service category subject to paragraph 

(f)(6)(iii) or (j)(1), the copayments MA 

organizations may establish for that 

service category may be higher or lower 

than the values in Tables 33, 34, 36, and 

37. The potential administration burden 

for each service category for which CMS 

does not calculate a copayment limit 


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would remain the same as discussed 

previously in this section. Further 

information about how MA 

organizations may approach preparing 

supporting documentation for their cost 

sharing amounts is available in section 

II.B.5.a. of this FC. 

As discussed in section II.B. of this 

FC, the copayment limits set for some 

service categories (subject to 

§ 422.100(f)(6)(iii) and (j)(1) in this FC) 

in past years do not reflect current 

actuarially equivalent values using 

contract year 2023 Medicare FFS data 

projections (based on 2017–2021 

Medicare FFS data). In applying a 

multiyear transition to recalibrate 

copayment limits and a requirement to 

set copayment limits at the lower value, 

enrollees will be better protected from 

potential disruption and MA 

organizations will have more time to 

consider different cost sharing 

structures and approaches, such as 

using copayment structures (which may 

be more transparent for beneficiaries) 

instead of coinsurance, or using lower 

cost sharing than the maximum 

permitted. 

However, as indicated in the 

introduction to this Alternative Section, 

applying a lengthy multiyear transition 

to reach the proposed range of cost 

sharing limits may not provide an 

incentive for MA organizations to adopt 

a lower MOOP amount as quickly. In 

addition, an earlier completion of the 

transition will: (1) Improve the 

alignment of copayment limits with the 

coinsurance limits; (2) increase the 

flexibility MA organizations have in 

establishing copayments; (3) may 

encourage the use of copayments and 

lower MOOP amounts among MA plans; 

and (4) mitigate potential premium 

increases or benefit reductions. Further, 

MA organizations were able to, and may 

continue to, establish cost sharing equal 

to original Medicare for all benefits 

subject to paragraph (j)(1) and cost 

sharing up to 50 percent coinsurance for 

professional service categories subject to 

§ 422.100(f)(6)(iii) in contract year 2022 

and prior years through coinsurance 

structures. Some MA organizations may 

have chosen to use coinsurance 

structures in their benefit designs 

because of geographic variation in 

health care costs. While CMS is 

finalizing the policies in this FC in a 

manner to avoid potentially disruptive 

changes for enrollees wherever possible, 

a longer transition schedule for service 

categories subject to paragraph (j)(1) 

means that the copayment limits remain 

out of proportion to the consistent 20 

percent coinsurance limit for a longer 

period of time. If CMS maintained 

copayment limits at lower than actuarial 

equivalent amounts for a long period of 

time, MA organizations may still modify 

their plan benefit designs in other ways 

to cover these additional costs. 

We rejected this alternative to apply 

a 5-year transition schedule because we 

expect a shorter transition schedule is a 

more reasonable way for MA 

organizations to absorb the costs of 

providing these services and in 

designing plan benefits. In addition, as 

discussed in section II.B. of this FC, 

updated Medicare FFS projections since 

the February 2020 proposed rule show 

further increases (for service categories 

applicable to each of the three cost 

sharing proposals discussed in this 

section). However, we clarify that the 

projected increased costs for emergency 

services (based on contract year 2023 

Medicare FFS data projections) are not 

factored into the transition of cost 

sharing limits in Table 35 as the 

proposal for that service category was 

based on specific amounts. 

Alternative 3 (Finalized): This 

alternative: (1) Shortens the multiyear 

transition by 1 year (compared to the 

second alternative discussed in this 

section); (2) continues to codify the 

longstanding 20 percent coinsurance 

limit for the ‘‘Part B drugs—other’’ 

service category (with the same 4-year 

transition); and (3) requires that CMS set 

copayment limits at an amount that is 

the lesser of: An actuarially equivalent 

value to the applicable cost sharing 

standard or the value resulting from the 

4-year actuarially equivalent copayment 

transition for that service category. The 

shorter transition schedule results in 

increases to the copayment limits for 

contract year 2023 for the service 

categories shown in Tables 33 through 

37 that are generally greater than the 

second alternative but less than the first 

alternative. In addition, applying either 

this alternative or the second alternative 

discussed in this section also results in 

the same cost sharing limits for contract 

year 2023 for certain service categories 

and MOOP limits (as shown in Tables 

33 through 35). However, the 

differences in applying this alternative 

or the second alternative discussed in 

this section, would result in greater 

differences in the cost sharing limits in 

the later years of the multiyear 

transition schedules in most cases. 

Our rational for selecting this 

finalized approach is multifaceted. It— 

(1) improves the methodology CMS uses 

to calculate copayment limits to 

ultimately reflect actuarially equivalent 

values based on updated Medicare FFS 

data projections; (2) helps to mitigate 

potentially substantial increases to cost 

sharing or premium, and/or benefit 

reductions if copayment limits are not 

adjusted to reflect updated Medicare 

FFS data projections; (3) incentivizes 

MA organizations to adopt lower MOOP 

amounts; and (4) implements changes in 

a transparent, incremental approach to 

provide more stability and predictability 

to the MA program. This rationale and 

the aspects of operationalizing this 

transition are discussed in greater detail 

in section II.B. of this FC (for example, 

see Table 13 for the annual change in 

coinsurance limits for service categories 

subject to § 422.100(f)(6)(iii) for contract 

years 2023 to 2026 and future years). As 

shown in Table 33, finalizing a 4-year 

transition to the range of cost sharing 

limits results in nominal changes for the 

physical therapy and speech-language 

pathology service category compared to 

the second alternative discussed in this 

section (using the same contract year 

2023 Medicare FFS data projections). 

Specifically, the coinsurance limit for 

the intermediate and mandatory MOOP 

limit is 1 percent less than what would 

be applied if the second alternative was 

implemented. This outcome holds true 

in contract year 2023 for all professional 

services subject to paragraph (f)(6)(iii) as 

coinsurance limits are applied 

consistently across these service 

categories. As a result of applying a 

requirement to set copayment limits at 

the lower value and the rounding rules 

in paragraph (f)(6)(ii), Table 34 shows 

that the contract year 2023 partial 

hospitalization copayment limit for the 

lower and intermediate MOOP limits 

changes by $5 between the second and 

third alternatives. 

Finalizing a 4-year transition does not 

change the emergency services cost 

sharing limits in comparison to 

implementing the second alternative 

discussed in this section for contract 

year 2023 (as shown in Table 35). This 

is due to the rounding rules, which are 

being applied consistent with the 

February 2020 proposed rule. CMS 

calculated the proposed and final 

emergency services cost sharing limits 

using those same rounding rules. As 

discussed in relation to the second 

alternative in this section, the 

requirement that CMS set copayment 

limits at an amount that is the lesser of: 

(1) An actuarially equivalent value to 

the applicable cost sharing standard; or 

(2) the value resulting from the 

actuarially equivalent copayment 

transition for that service category does 

not apply to emergency services. 

Table 36 shows how finalizing a 4- 

year transition also reduces the contract 

year 2023 Part B drugs—chemotherapy/ 

radiation drugs service category 

copayment limit compared to the first 

alternative in this section. Specifically, 

the increase from the $75 copayment 


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limit for contract year 2022 changes 

from a $205 increase (resulting from the 

first alternative) to a $50 increase (this 

alternative). In addition, the $125 

copayment limit resulting from this 

alternative only reflects an additional 

increase of $10 in comparison to the 

second alternative discussed in this 

section (based on the same contract year 

2023 Medicare FFS data projections) as 

a result of applying a requirement to set 

copayment limits at the lower value and 

the rounding rules in paragraph 

(f)(6)(ii). 

Table 37 shows how finalizing a 4- 

year transition from current copayment 

limits to copayments that are aligned to 

the longstanding 20 percent coinsurance 

limit for the ‘‘Part B drugs—other’’ 

service category significantly reduces 

the contract year 2023 copayment limit 

for this service category compared to the 

first alternative in this section (based on 

the same contract year 2023 Medicare 

FFS data projections). Specifically, the 

increase to the ‘‘Part B drugs—other’’ 

service category copayment limit from 

the prior year ($50 for contract year 

2022) for this alternative is $70 (for all 

MOOP types) which is significantly 

lower than an increase of $750 in the 

first alternative for a plan that 

establishes a lower MOOP amount). In 

addition, the $120 copayment limit 

resulting from this alternative reflects an 

increase of only $15 in comparison to 

the second alternative discussed in this 

section as a result of applying a 

requirement to set copayment limits at 

the lower value and the rounding rules 

in paragraph (f)(6)(ii). 

As discussed previously, the potential 

administration burden for each service 

category for which CMS does not set a 

copayment limit would remain the 

same. As discussed in the second 

alternative in this section, if CMS does 

not apply the methodology and rules in 

§ 422.100(f)(6), (f)(7), (f)(8) and (j) to set 

a copayment limit during the multiyear 

transition period for a service category 

subject to paragraph (f)(6)(iii) or (j)(1), 

MA organizations may establish 

copayment amounts for that service 

category that may be higher or lower 

than the projected values in Tables 33, 

34, 36, and 37, depending on the MA 

organization’s calculation of a value that 

is an actuarially equivalent to the 

applicable coinsurance limit. 

As a result, CMS calculated and set 

contract year 2023 copayment limits for 

the majority of service categories that 

had copayment limits in contract year 

2022 (as shown in Tables 25A, 25B, and 

28). Specifically, for benefits subject to 

§ 422.100(j)(1), calculating actuarially 

equivalent copayment limits based the 

most recent Medicare FFS data 

projections available to CMS for these 

service categories ensures that MA cost 

sharing does not exceed cost sharing in 

original Medicare for those benefits. 

This allows CMS to ensure MA 

organizations comply with these limits 

and that the plan cost sharing does not 

discriminate against or discourage 

enrollment in an MA plan by 

beneficiaries who have high health care 

needs. 

We acknowledge that a multiyear 

transition that is shorter than 4 years, 

but longer than 1 year as described in 

the first alternative, would result in 

more substantial increases to the 

copayment limits for the service 

categories subject to §§ 422.100(f)(6)(iii), 

(j)(1), and 422.113(b)(2)(v) compared to 

the contract year 2022 limits. For 

example, a $5 increase to the partial 

hospitalization service category 

copayment limit for the mandatory 

MOOP limit in comparison to contract 

year 2022 (as shown in Table 34 for this 

alternative) is not necessarily 

substantial by itself. However, CMS 

considered the combined potential 

effect of the increases to MOOP limits 

and copayment limits across service 

categories. For example, we were 

especially aware of the substantial 

increases to the copayment limits for 

benefits subject to paragraph (j)(1) from 

contract year 2022 as a result of 

calculating actuarially equivalent values 

to the cost sharing in original Medicare 

using contract year 2023 Medicare FFS 

data projections based on 2017–2021 

Medicare FFS data (as shown in Tables 

36 and 37) could negatively impact 

enrollees as described in the 

introduction to section V.H. of this FC. 

In addition, prior to this FC, CMS has 

only updated MOOP limits, inpatient 

hospital, skilled nursing facility, and 

emergency services cost sharing limits 

in recent years. Under this FC, we will 

be updating MOOP limits and cost 

sharing limits for most service 

categories each year during the 

transition period, which reflects more 

significant changes to our standards 

compared to recent years, in order to 

reach the proposed MOOP and cost 

sharing limits in a reasonable 

timeframe. 

Based on the considerations discussed 

in this section, we are implementing 

this alternative to: (1) Codify our 

longstanding 20 percent coinsurance 

limit for the ‘‘Part B drugs—other’’ 

service category; (2) apply a 4-year 

transition to reach the proposed cost 

sharing standards (for professional 

services, emergency services, and 

benefits for which cost sharing must not 

exceed cost sharing in original 

Medicare); and (3) require that CMS set 

copayment limits at an amount that is 

the lesser of: an actuarially equivalent 

value to the applicable cost sharing 

standard or the value resulting from the 

4-year actuarially equivalent copayment 

transition for that service category. We 

expect implementing the policies based 

on this alternative will (for the reasons 

discussed in this section and in section 

II.B. of this FC: (1) Ensure beneficiary 

access to affordable and sustainable 

benefit packages; (2) protect enrollees 

from discriminatory levels of cost 

sharing; (3) limit potential rapid cost 

and benefit changes; (4) encourage MA 

organizations to establish lower MOOP 

amounts; and (5) streamline the updates 

to MOOP limit and cost sharing 

requirements, which will also provide 

stability for MA organizations. We 

reiterate that the copayment limits set 

for contract year 2022 have been in 

place for a number of years and that 

CMS expects that this 4-year transition 

to the proposed cost sharing limits will 

ultimately result in stable benefit 

packages by ensuring limits are 

calculated following established 

actuarial methods, using the most recent 

Medicare FFS data projections available, 

and by aligning copayment limits with 

coinsurance limits. In other words, CMS 

is making the changes necessary to 

reach actuarially equivalent copayments 

that reflect plan costs associated with 

the variety and expense of services 

included in the cost sharing limit while 

protecting beneficiaries from 

discriminatory levels of cost sharing. 

BILLING CODE 4120–01–P 


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TABLE 33: CONTRACT YEAR 2023 IN-NETWORK PHYSICAL THERAPY AND 

SPEECH-LANGUAGE PATHOLOGY SERVICE CATEGORY COST SHARING 

LIMITS AS AN ILLUSTRATIVE COMPARISON OF ALTERNATIVES AND 

FINALIZED METHODOLOGY TO TRANSITION CONTRACT YEAR 2022 COST 

SHARING LIMITS FOR SERVICE CATEGORIES SUBJECT TO A RANGE OF COST 

SHARING LIMITS BASED ON MOOP TYPE USING CONTRACT YEAR 2023 

MEDICARE FFS DATA PROJECTIONS (BASED ON 2017-2021 MEDICARE FFS 

DATA) 

Baseline: Contract Year 2022 Limits 50%1 $40 NIA 

Alternative I: Apply range of cost sharing as proposed beginning in contract year 2023 50%1 $90 40%1 $70 

Alternative 2: Apply a 5-year transition to the range of cost sharing limits proposed 50%1 $50 48%1 $45 

Alternative 3 (Finalized): App]v a 4-vear transition to the range of cost sharing limits proposed 50%1 $50 47%1 $50 

TABLE 34: CONTRACT YEAR 2023 IN-NETWORK PARTIAL HOSPITALIZATION 

SERVICE CATEGORY COST SHARING LIMITS AS AN ILLUSTRATIVE 

COMPARISON OF ALTERNATIVES AND FINALIZED METHODOLOGY TO 

TRANSITION CONTRACT YEAR 2022 COST SHARING LIMITS FOR SERVICE 

CATEGORIES SUBJECT TO A RANGE OF COST SHARING LIMITS BASED ON 

MOOP TYPE USING CONTRACT YEAR 2023 MEDICARE FFS DATA 

PROJECTIONS (BASED ON 2017 - 2021 MEDICARE FFS DATA) 

Baseline: Contract Year 2022 Limits 50%1$55 NIA 

Alternative I: Apply range of cost sharing as proposed beginning in contract year 2023 50%1 $135 40%1 $110 

Alternative 2: Apply a 5-year transition to the range of cost sharing limits proposed 50%1 $70 48%1 $65 

Alternative 3 (Finalized): Applv a 4-vear transition to the range of cost sharing limits proposed 50%1 $75 47%1 $70 

50%1 $40 

30%1 $55 

46%1 $45 

45%1 $45 

50%1 $55 

30%1 $80 

46%1 $60 

45%1 $60 

TABLE 35: CONTRACT YEAR 2023 EMERGERCY SERVICES COST SHARING 

LIMITS AS AN ILLUSTRATIVE COMPARISON OF ALTERNATIVES AND 

FINALIZED METHODOLOGY TO TRANSITION CONTRACT YEAR 2022 

COPAYMENT LIMITS TO PROPOSED COST SHARING LIMITS 

$120 NIA 

$150 $130 

$125 $110 

$125 $110 

TABLE 36: CONTRACT YEAR 2023 IN-NETWORK PART B DRUGS: 

CHEMOTHERAPY/RADIATION DRUGS SERVICE CATEGORY COST SHARING 

LIMITS AS AN ILLUSTRATIVE COMPARISON OF ALTERNATIVES AND 

FINALIZED METHODOLOGY TO TRANSITION CONTRACT YEAR 2022 

COPAYMENT LIMITS FOR SERVICE CATEGORIES SUBJECT TO§ 422.lO0(j)(l) 

TO ACTUARIALLY EQUIVALENT VALUES TO COST SHARING IN ORIGINAL 

MEDICARE USING CONTRACT YEAR 2023 MEDICARE FFS DATA PROJECTIONS 

(BASED ON 2017-2021 MEDICARE FFS DATA) 

$90 

$115 

$95 

$95 

Baseline: Contract Year 2022 Limits 20%1 $75 

Alternative 1: No co a ment limits, MA or anizations have the burden to determine actuarial! 20% I $280 

20%1$115 

20% I $125 
Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22423 

BILLING CODE 4120–01–C 

I. Accounting Statement 

This FC rule finalizes provisions on 

the coinsurance and copayment limits 

for professional service categories, the 

cost sharing limits for emergency 

services, copayment limits for service 

categories for which cost sharing must 

not exceed cost sharing under original 

Medicare, and presents a multiyear 

transition for ESRD costs for MOOP 

limits and inpatient hospital cost 

sharing limits. As discussed in this RIA 

section, a combination of three reasons 

drives the conclusion that in aggregate 

this FC has no cost: (1) The MA 

requirement of actuarial equivalence to 

coverage in original Medicare, implying 

that plans can shift costs, but not create 

additional out of pocket costs for 

enrollees compared to the original 

Medicare program; (2) many of the 

provisions of this FC are codifications of 

existing practice, which because of the 

annual bid cycle and review, we are 

confident plans are complying with; and 

(3) with regard to the MOOP provisions, 

analysis of bid changes shows that plans 

in general have not been charging the 

highest MOOP amount. 

As a result, although in aggregate 

there is no estimated impact, Medicare 

Advantage plans may shift cost sharing 

costs provided they do not create 

additional costs. This is because 

actuarial equivalence refers to an 

equivalence with all original Medicare 

beneficiaries and all services provided 

by original Medicare. It follows, that a 

more detailed analysis on particular 

cohorts of enrollees and particular 

collections of services may reveal gains 

or losses to these groups. Because of the 

challenges with making such an 

analysis, including the proprietary 

nature of bids, we are unable to provide 

quantification in this FC; however, 

because of the possibility that some of 

these cohorts might have a gain or loss 

exceeding the threshold, we have 

classified this rule as major. 

This summary serves as the 

accounting statement required by 

Circular A–4. 

J. Conclusion 

This FC makes policy changes in 

alignment with federal laws related to 

the Medicare Advantage (MA or Part C) 

program from the 21st Century Cures 

Act (Pub. L. 114–255). The rule also 

includes regulatory changes to 

strengthen and improve the Part C 

program by codifying in regulation 

several CMS policies previously 

adopted through the annual Call Letter 

and other guidance documents to 

interpret and implement rules regarding 

benefits in MA plans. The provisions in 

this FC do not have an aggregate cost 

impact. 

Chiquita Brooks-LaSure, 

Administrator of the Centers for 

Medicare & Medicaid Services, 

approved this document on February 8, 

2022. 

List of Subjects in 42 CFR Part 422 

Administrative practice and 

procedure, Health facilities, Health 

maintenance organizations (HMO), 

Medicare, Penalties, Privacy, Reporting 

and recordkeeping requirements. 

PART 422—MEDICARE ADVANTAGE 

PROGRAM 

■ 1. The authority citation for part 422 

continues to read as follows: 

Authority: 42 U.S.C. 1302 and 1395hh. 

* * * * * 

■ 2. Section 422.100 is amended by— 

■ a. Adding paragraph headings for 

paragraphs (f)(1) through (3); 

■ b. Revising paragraphs (f)(4) through 

(6); 

■ c. Adding paragraphs (f)(7), (8), and 

(9); and 

■ d. Revising paragraph (j). 

The revisions and additions read as 

follows: 

§ 422.100 General requirements. 

* * * * * 

(f) * * * 

(1) Guidelines. * * * 

(2) Discrimination. * * * 

(3) Other requirements. * * * 

(4) In-network MOOP limit. Except as 

provided in paragraph (f)(5) of this 

section, MA local plans (as defined in 

§ 422.2) must have an enrollee innetwork maximum out-of-pocket 

(MOOP) amount for basic benefits that 

is no greater than the annual limit 

calculated by CMS using Medicare Feefor-Service (FFS) data projections. With 

respect to a private fee-for-service 

(PFFS) plan, the in-network MOOP 

limits specified in this paragraph (f)(4) 

apply. MA organizations are responsible 

for tracking out-of-pocket spending 

incurred by the enrollee, and must alert 

enrollees and contracted providers 

when the plan’s in-network MOOP 

amount is reached. 

(i) Medicare FFS data projections in 

CMS MOOP limit calculations. For each 

year beginning on or after January 1, 

2023, CMS calculates three MOOP 

limits using Medicare FFS data 

projections. For purposes of this 

paragraph (f)(4) and calculating 

actuarially equivalent copayments as 

described in paragraph (f)(7) of this 

section, the term Medicare FFS data 

projections means the projections of 

beneficiary out-of-pocket costs for the 

applicable contract year, based on 

recent Medicare FFS data, including 

data for beneficiaries with and without 

diagnoses of ESRD, that are consistent 

with generally accepted actuarial 

principles and practices as outlined in 

paragraph (f)(7)(i) of this section. The 

dollar ranges for the three MOOP limits 

are as follows: 

(A) Mandatory MOOP limit. One 

dollar above the intermediate MOOP 

limit and up to and including the 

mandatory MOOP limit. 


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TABLE 37: CONTRACT YEAR 2023 IN-NETWORK PART B DRUGS: OTHER 

SERVICE CATEGORY COST SHARING LIMITS AS AN ILLUSTRATIVE 

COMPARISON OF ALTERNATIVES AND FINALIZED METHODOLOGY TO 

TRANSITION CONTRACT YEAR 2022 COPAYMENT LIMITS FOR SERVICE 

CATEGORIES SUBJECT TO§ 422.lO0G)(l) TO ACTUARIALLY EQUIVALENT 

VALUES TO COST SHARING IN ORIGINAL MEDICARE USING CONTRACT YEAR 

2023 MEDICARE FFS DATA PROJECTIONS (BASED ON 2017 -2021 MEDICARE 

FFS DATA) 

Baseline: Contract Year 2022 Limits 20%/ $50 NIA 

Alternative 1: Apply range of cost sharing as proposed beginning in contract year 2023 50%/ $800 40%/$640 

Alternative 2: Apply a 5-year transition to copayment limits that are actuarially equivalent to original Medicare 20%/ $105 20%/ $105 

Alternative 3 (Finalized): Apply a 4-year transition to copayment limits that are actuarially equivalent to original Medicare 20% I $120 20%/$120 

20%/$50 

30% I $480 

20%/ $105 

20%/ $120 
22424 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

(B) Intermediate MOOP limit. One 

dollar above the lower MOOP limit and 

up to and including the intermediate 

MOOP limit. 

(C) Lower MOOP limit. Between $0.00 

and up to and including the lower 

MOOP limit. 

(ii) MOOP type. An MA organization 

that establishes a plan’s MOOP amount 

within the dollar range specified in 

paragraphs (f)(4)(i)(A) through (C) of this 

section has the corresponding 

mandatory, intermediate, or lower 

MOOP type for purposes of paragraphs 

(f) and (j) of this section and 

§§ 422.101(d) and 422.113(b)(2)(v). 

(iii) CMS rounding of MOOP limits. 

Each MOOP limit CMS calculates is 

rounded to the nearest $50 increment 

and in cases where the MOOP limit is 

projected to be exactly in between two 

$50 increments, CMS rounds to the 

lower $50 increment. 

(iv) MOOP limits for 2023. For 2023, 

CMS calculates the MOOP limits as 

follows, applying paragraph (f)(4)(vi)(A) 

of this section: 

(A) Mandatory MOOP limit. $7,175 

(the 95th percentile of projected 

contract year 2021 Medicare FFS 

beneficiary out-of-pocket spending for 

beneficiaries without diagnoses of 

ESRD) plus 70 percent of the ESRD cost 

differential unless: The resulting MOOP 

limit (after application of the rounding 

rules in paragraph (f)(4)(iii) of this 

section) reflects an increase greater than 

10 percent compared to the mandatory 

MOOP limit from the prior year, in 

which case CMS caps the increase to the 

mandatory MOOP limit by 10 percent of 

the prior year’s MOOP limit. 

(B) Intermediate MOOP limit. The 

numeric midpoint between the 

mandatory and lower MOOP limits 

(calculated before application of the 

rounding rules in paragraph (f)(4)(iii) of 

this section and after application of the 

10 percent cap on increases to the 

mandatory and lower MOOP limits from 

the prior year in paragraphs (f)(4)(iv)(A) 

and (C) of this section). 

(C) Lower MOOP limit. $3,360 (the 

85th percentile of projected contract 

year 2021 Medicare FFS beneficiary outof-pocket spending for beneficiaries 

without diagnoses of ESRD) plus 70 

percent of the ESRD cost differential 

unless: The resulting MOOP limit (after 

application of the rounding rules in 

paragraph (f)(4)(iii) of this section) 

reflects an increase greater than 10 

percent compared to the voluntary 

MOOP limit from the prior year, in 

which case CMS caps the increase to the 

lower MOOP limit by 10 percent of the 

prior year’s MOOP limit. 

(v) MOOP limits for 2024 and 

subsequent years. For 2024 and 

subsequent years, CMS annually 

calculates the MOOP limits as follows, 

applying paragraph (f)(4)(vi)(B) of this 

section: 

(A) Mandatory and lower MOOP 

limits. The prior year’s MOOP limits are 

increased or decreased for the upcoming 

contract year to reflect the applicable 

percentiles (95th for the mandatory 

MOOP and 85th for the lower MOOP) of 

the Medicare FFS data projections 

unless: Either of the resulting MOOP 

limits reflect an increase greater than 10 

percent compared to the same type of 

MOOP limit from the prior year, in 

which case CMS caps the increase to the 

applicable MOOP limit(s) by 10 percent 

of the prior year’s MOOP limit annually 

until the MOOP limit(s) reflects the 

applicable percentile(s). 

(B) Intermediate MOOP limit. Is either 

maintained at the prior year’s limit or if 

either the mandatory or lower MOOP 

limit changes from the prior year, 

updated to the new numeric midpoint 

between the mandatory and lower 

MOOP limits (calculated before 

application of the rounding rules in 

paragraph (f)(4)(iii) of this section and 

after application of the 10-percent cap 

on increases to the mandatory and lower 

MOOP limits from the prior year in 

paragraph (f)(4)(v)(A) of this section). 

(vi) CMS calculation of the ESRD cost 

differential. For purposes of the ESRD 

cost transition methodology to calculate 

annual MOOP limits contained in this 

section, the ESRD cost differential is the 

difference between, first, for the 

mandatory MOOP limit, $7,175 and for 

the lower MOOP limit, $3,360 and 

second, for the mandatory MOOP limit, 

the 95th percentile and, for the lower 

MOOP limit, the 85th percentile of the 

Medicare FFS data projections for each 

year between 2023 and 2024. CMS 

transitions to using the Medicare FFS 

data projections by factoring in a 

percentage of the ESRD cost differential 

on the following schedule: 

(A) For 2023, CMS uses projected 

Medicare FFS beneficiary out-of-pocket 

spending for beneficiaries without 

diagnoses of ESRD plus 70 percent of 

the ESRD cost differential. 

(B) For 2024 and subsequent years, 

CMS uses the Medicare FFS data 

projections. 

(5) Combined MOOP limit. With 

respect to a local PPO plan, the MOOP 

limits specified under paragraph (f)(4) of 

this section apply only to use of innetwork providers. 

(i) Combined and total catastrophic 

MOOP limits. MA local PPO plans must 

establish a combined enrollee MOOP 

amount for basic benefits that are 

provided in-network and out-of-network 

that is no greater than the total 

catastrophic limit applicable to regional 

plans in § 422.101(d)(3). 

(ii) In-network and combined MOOP 

type. The type of in-network MOOP 

limit dictates the type of combined 

MOOP limit the MA plan may use. MA 

PPO plans must have the same MOOP 

type (lower, intermediate, or mandatory) 

for the in-network MOOP limit and 

combined limit on in-network and outof-network out-of-pocket expenditures. 

(iii) MOOP limit attainment. MA 

organizations are responsible for 

tracking out-of-pocket spending 

incurred by the enrollee and must alert 

enrollees and contracted providers 

when the combined MOOP amount is 

reached. 

(6) General cost sharing limits. Cost 

sharing for basic benefits specified by 

CMS does not exceed levels annually 

determined by CMS to be 

discriminatory for such services. For 

each year beginning on or after January 

1, 2023, a MA organization must 

establish cost sharing for basic benefits 

that complies with the cost sharing 

limits in this paragraph (f)(6), paragraph 

(j) of this section, and § 422.113(b)(2), 

which are in addition to any other limits 

and rules applicable to MA cost sharing, 

including the requirement in 

§ 422.254(b)(4) that overall MA cost 

sharing for basic benefits be actuarially 

equivalent to Medicare FFS cost 

sharing. Cost sharing may be a 

coinsurance or copayment; a cost 

sharing limit is calculated for a plan 

benefit package service category or for a 

reasonable group of benefits covered 

under the plan. For purposes of cost 

sharing evaluation, the analysis is 

completed at the plan (or segment) 

level. An MA plan must not charge an 

enrollee a copayment for a basic benefit 

that is greater than the cost of the 

covered service(s). 

(i) The 50 percent cap on original 

Medicare benefits. For in-network basic 

benefits that are not specifically 

addressed in this paragraph (f)(6), 

paragraph (j)(1) of this section, or 

§ 422.113(b)(2), and for out-of-network 

basic benefits, MA plans must not 

establish a cost sharing amount that 

exceeds 50 percent coinsurance or an 

actuarially equivalent copayment value 

(calculated by CMS following the 

requirements in paragraph (f)(7) of this 

section or, if CMS does not calculate a 

copayment limit, based on the average 

Medicare FFS allowable amount for the 

plan service area or the estimated total 

MA plan financial liability for the 

service category or for a reasonable 

group of benefits in the PBP for that 

contract year). The rules in this 

paragraph (f)(6)(i) apply regardless of 


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Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 22425 

the type of MOOP limit established by 

the plan. 

(ii) Copayment rounding rules. The 

following rounding rules apply in 

calculating copayment limits and in 

evaluating compliance with this 

paragraph (f)(6) and paragraphs (f)(7), 

(f)(8), and (j)(1) of this section: 

(A) For service categories subject to 

paragraph (f)(6)(i) of this section, 

professional services subject to 

paragraph (f)(6)(iii) of this section, and 

benefits listed in paragraph (j)(1)(i) of 

this section, the final actuarially 

equivalent copayment value is rounded 

to the nearest whole $5. 

(B) For inpatient hospital acute and 

psychiatric and skilled nursing facility 

cost sharing limits subject to paragraphs 

(f)(6)(iv) and (j)(1)(i)(C) of this section, 

the final actuarially equivalent 

copayment value is rounded to the 

nearest whole $1. 

(C) When the actuarially equivalent 

copayment value is projected to be 

exactly between two increments, the 

final figure is rounded to the lower 

dollar amount. 

(iii) Cost sharing limits for 

professional services. (A) For in-network 

basic benefits that are professional 

services, including primary care 

services, physician specialist services, 

partial hospitalization, and 

rehabilitation services, an MA plan 

must not establish cost sharing that 

exceeds the limits in this paragraph 

(f)(6)(iii) for the MOOP limit established 

by the MA plan. 

(B) When calculating copayment 

limits for purposes of this paragraph, 

CMS calculates an actuarially 

equivalent value to the coinsurance 

limits in this paragraph (f)(6)(iii), 

subject to the requirements in paragraph 

(f)(7) of this section and the restrictions 

on increases to copayment limits in 

paragraph (f)(8) of this section. If CMS 

does not calculate a copayment limit for 

a professional service category, the MA 

plan must not establish a copayment 

that exceeds the actuarially equivalent 

value to the coinsurance limits in this 

paragraph (f)(6)(iii) based on the 

estimated total MA plan financial 

liability for that benefit for that contract 

year. 

(C) For 2023, MA plans must not 

exceed the cost sharing limits for 

professional service categories, as 

follows: 

(1) Mandatory MOOP limit. 45 percent 

coinsurance or an actuarially equivalent 

copayment value and the MA plan must 

not pay less than 55 percent of the 

estimated total MA plan financial 

liability for the benefit. 

(2) Intermediate MOOP limit. 47 

percent coinsurance or an actuarially 

equivalent copayment value and the MA 

plan must not pay less than 53 percent 

of the estimated total MA plan financial 

liability for the benefit. 

(3) Lower MOOP limit. 50 percent 

coinsurance or an actuarially equivalent 

copayment value and the MA plan must 

not pay less than 50 percent of the 

estimated total MA plan financial 

liability. 

(D) For 2024, MA plans must not 

exceed the cost sharing limits for 

professional service categories, as 

follows: 

(1) Mandatory MOOP limit. 40 percent 

coinsurance or an actuarially equivalent 

copayment value and the MA plan must 

not pay less than 60 percent of the 

estimated total MA plan financial 

liability for the benefit. 

(2) Intermediate MOOP limit. 45 

percent coinsurance or an actuarially 

equivalent copayment value and the MA 

plan must not pay less than 55 percent 

of the estimated total MA plan financial 

liability for the benefit. 

(3) Lower MOOP limit. 50 percent 

coinsurance or an actuarially equivalent 

copayment value and the MA plan must 

not pay less than 50 percent of the 

estimated total MA plan financial 

liability. 

(E) For 2025, MA plans must not 

exceed the cost sharing limits for 

professional service categories, as 

follows: 

(1) Mandatory MOOP limit. 35 percent 

coinsurance or an actuarially equivalent 

copayment value and the MA plan must 

not pay less than 65 percent of the 

estimated total MA plan financial 

liability for the benefit. 

(2) Intermediate MOOP limit. 42 

percent coinsurance or an actuarially 

equivalent copayment value and the MA 

plan must not pay less than 58 percent 

of the estimated total MA plan financial 

liability for the benefit. 

(3) Lower MOOP limit. 50 percent 

coinsurance or an actuarially equivalent 

copayment value and the MA plan must 

not pay less than 50 percent of the 

estimated total MA plan financial 

liability. 

(F) For 2026 and subsequent years, 

MA plans must not exceed the cost 

sharing limits for professional service 

categories, as follows: 

(1) Mandatory MOOP limit. 30 percent 

coinsurance or an actuarially equivalent 

copayment value and the MA plan must 

not pay less than 70 percent of the 

estimated total MA plan financial 

liability for the benefit. 

(2) Intermediate MOOP limit. 40 

percent coinsurance or an actuarially 

equivalent copayment value and the MA 

plan must not pay less than 60 percent 

of the estimated total MA plan financial 

liability for the benefit. 

(3) Lower MOOP limit. 50 percent 

coinsurance or an actuarially equivalent 

copayment value and the MA plan must 

not pay less than 50 percent of the 

estimated total MA plan financial 

liability. 

(iv) Inpatient hospital acute and 

psychiatric service category cost sharing 

limits. (A) For in-network basic benefits 

that are inpatient hospital acute and 

psychiatric service categories, an MA 

plan must not establish cost sharing that 

exceeds the limits calculated by CMS 

under paragraph (f)(6)(iv) of this section 

and subject to paragraph (f)(7) of this 

section for the MOOP limit established 

by the MA plan. 

(B) Cost sharing limits for inpatient 

hospital acute and psychiatric service 

categories are calculated for the 

following seven length-of-stay scenarios 

for a period for which cost sharing 

would apply under original Medicare: 

Inpatient hospital acute stay scenarios 

of 3 days, 6 days, 10 days, and 60 days 

and inpatient hospital psychiatric stay 

scenarios of 8 days, 15 days, and 60 

days. 

(C) CMS calculates the inpatient 

hospital acute and psychiatric service 

category cost sharing limits annually 

using projections of Medicare FFS outof-pocket costs and utilization for the 

applicable year and length of stay 

scenario and factors in out-of-pocket 

costs incurred by beneficiaries with 

diagnoses of ESRD on the transition 

schedule described in paragraphs 

(f)(4)(vi)(A) through (B) of this section 

and may also use patient utilization 

information from MA encounter data. 

(D) Provided that the total cost 

sharing for the inpatient benefit does 

not exceed the MA plan’s MOOP limit 

or overall cost sharing for inpatient 

benefits in original Medicare on a per 

member per month actuarially 

equivalent basis, cost sharing applicable 

to inpatient hospital acute and 

psychiatric service categories is 

permitted up to the following limits 

(based on original Medicare cost sharing 

for a new benefit period): 

(1) Mandatory MOOP limit. Cost 

sharing must 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. 

(2) Intermediate MOOP limit. Cost 

sharing must not exceed the numeric 

midpoint between the cost sharing 

limits established in paragraphs 

(f)(6)(iv)(D)(1) and (3) of this section for 

the same inpatient hospital length of 

stay scenario, before application of the 


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22426 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

rounding rules in paragraph (f)(6)(ii) of 

this section. 

(3) Lower MOOP limit. Cost sharing 

must not exceed 125 percent of 

estimated Medicare FFS cost sharing, 

including the projected Part A 

deductible and related Part B costs, for 

each length of stay scenario other than 

the inpatient hospital acute 60-day 

length-of-stay for MA plans that 

establish a lower MOOP limit. For 

inpatient hospital acute 60-day length of 

stays, MA plans that establish a lower 

MOOP limit have the flexibility to 

establish cost sharing above 125 percent 

of estimated Medicare FFS cost sharing. 

(7) Using generally accepted actuarial 

principles and practices. (i) Application 

of generally accepted actuarial 

principles and practices. The 

projections and calculations used in the 

methodologies described in paragraphs 

(f)(4), (f)(5), (f)(6), (f)(7)(ii), (f)(8), and (j) 

of this section and in § 422.101(d)(2) 

and (3) must be made using generally 

accepted actuarial principles and 

practices. 

(A) In applying generally accepted 

actuarial principles and practices, 

actuarial judgment and discretion may 

be used, including taking into account 

information such as changes in 

legislation (such as changes in Medicare 

benefits), Medicare payment policy, 

trends over several years of data, and 

external variables (such as public health 

emergencies); selecting among different 

approaches (such as weighting for 

utilization and using average or median 

values); and in selecting data or data 

samples. 

(B) MA organizations must use 

generally accepted actuarial principles 

and practices in complying with the 

regulations in paragraphs (f)(6) and (j) of 

this section. 

(C) CMS applies generally accepted 

actuarial principles and practices in 

evaluating MA plan compliance with 

paragraphs (f)(6) and (j) of this section. 

(ii) CMS calculation of actuarially 

equivalent copayment limits. As feasible 

and appropriate to carry out program 

purposes, CMS calculates copayment 

limits for basic benefits in accordance 

with paragraphs (f)(6)(i) and (iii) and 

(j)(1) of this section. Beginning January 

1, 2023, unless specified otherwise in 

paragraphs (f)(6) and (j)(1) of this 

section, CMS calculates these 

copayment limits at an actuarially 

equivalent value to the cost sharing 

standard as follows: 

(A) Using Medicare FFS data 

projections, as defined in paragraph 

(f)(4)(i) of this section, for the applicable 

year and service category. 

(B) Using patient utilization 

information from MA encounter data, in 

addition to the Medicare FFS data 

projections (including cost and 

utilization data), if available and where 

appropriate to consider utilization 

differences between Medicare FFS 

beneficiaries and MA enrollees to reach 

a value that most closely reflects an 

actuarially equivalent copayment for the 

benefit and beneficiary population. 

(C) Selecting a particular approach to 

calculate an actuarially equivalent 

copayment value in situations where 

there may be multiple or a range of 

actuarially equivalent copayment values 

for a service category in order to carry 

out program purposes, including: 

Setting copayment limits that most 

closely reflect an actuarially equivalent 

copayment for the benefit and 

beneficiary population, protecting 

against discriminatory cost sharing, and 

avoiding unnecessary fluctuations in 

cost sharing that may confuse 

beneficiaries. 

(D) Applying the actuarially 

equivalent copayment transition in 

paragraph (f)(8) of this section. 

(E) Applying rounding rules in 

paragraph (f)(6)(ii) of this section. 

(iii) CMS issuance of annual 

guidance. CMS issues guidance that 

specifies the MOOP limits and cost 

sharing standards for the upcoming 

contract year (beginning with contract 

year 2024) that are set and calculated 

using the methodology and standards in 

paragraphs (f) and (j) of this section and 

§§ 422.101(d) and 422.113. This 

guidance is released prior to bid 

submission to allow sufficient time for 

MA organizations to prepare and submit 

plan bids. Unless a public comment 

period is impracticable, unnecessary, or 

contrary to the public interest, CMS 

provides a public notice and comment 

period on the projected MOOP limits 

and cost sharing standards for the 

upcoming contract year. 

(8) Annual cap on CMS increasing 

copayment limits during the actuarially 

equivalent copayment transition. For 

2023 through 2025, CMS sets a 

copayment limit for a service category 

subject to paragraph (f)(6)(iii) or (j)(1) of 

this section at an amount that is the 

lesser of an actuarially equivalent value 

to the applicable cost sharing standard 

(from paragraph (f)(6)(iii) or (j)(1) of this 

section) or the value resulting from the 

actuarially equivalent copayment 

transition in paragraph (f)(8)(ii) of this 

section for that service category. 

(i) CMS calculation of the actuarially 

equivalent copayment differential. For 

purposes of this section, the actuarially 

equivalent copayment differential is as 

follows: 

(A) For cost sharing at the mandatory 

and lower MOOP limits, the difference 

between, first, the copayment limit set 

for a plan benefit package service 

category based on the MOOP type for 

2022 and second, the copayment value 

for the same service category that is 

actuarially equivalent to the 

coinsurance limits in paragraphs 

(f)(6)(iii) and (j)(1) of this section that 

apply in 2026 based on the MOOP type, 

using the Medicare FFS data projections 

that are updated each year to reflect the 

costs of the contract year for which the 

copayment limit will apply. 

(B) For cost sharing at the 

intermediate MOOP limit, the difference 

between, first, the copayment limit set 

for a plan benefit package service 

category based on the mandatory MOOP 

type for 2022 and second, the 

copayment value for the same service 

category that is actuarially equivalent to 

the coinsurance limits in paragraphs 

(f)(6)(iii) and (j)(1) of this section that 

apply in 2026 for the intermediate 

MOOP type, using the Medicare FFS 

data projections that are updated each 

year to reflect the costs of the contract 

year for which the copayment limit will 

apply. 

(ii) CMS’s actuarially equivalent 

copayment transition. For service 

categories subject to the cost sharing 

standards in paragraphs (f)(6)(iii) and 

(j)(1) of this section, copayment limits 

calculated by CMS for 2023 through 

2025 are capped at the amounts 

calculated under this paragraph, unless 

specified otherwise in paragraph (f)(8) 

of this section, rounded as provided in 

paragraph (f)(6)(ii) of this section: 

(A) For 2023, CMS uses the 

copayment limits set for 2022 plus 25 

percent of the actuarially equivalent 

copayment differential. 

(B) For 2024, CMS uses the 

copayment limits set for 2022 plus 50 

percent of the actuarially equivalent 

copayment differential. 

(C) For 2025, CMS uses the 

copayment limits set for 2022 plus 75 

percent of the actuarially equivalent 

copayment differential. 

(D) For 2026 and subsequent years, 

CMS calculates service category 

copayment limits at the projected 

actuarially equivalent value to the cost 

sharing standards in paragraphs 

(f)(6)(iii)(F) and (j)(1) of this section and 

subject to paragraph (f)(7) of this 

section. 

(9) Bundled cost sharing. Cost sharing 

(copayments and coinsurance) for basic 

benefits must reflect the enrollee’s 

entire cost sharing responsibility, 

inclusive of professional, facility, or 

provider setting charges, by combining 

(or bundling) all applicable fees into the 

cost sharing amount for that particular 

service(s) and setting(s) and be clearly 


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reflected as a single, total cost sharing 

in appropriate materials distributed to 

beneficiaries for basic benefits. 

* * * * * 

(j) Cost sharing and actuarial 

equivalence standards for basic 

benefits—(1) Specific benefits for which 

cost sharing may not exceed cost 

sharing under original Medicare. (i) 

General rule. For each year beginning on 

or after January 1, 2023, in-network cost 

sharing established by an MA plan for 

the basic benefits listed in this 

paragraph may not exceed the cost 

sharing required under original 

Medicare. When an MA plan uses 

coinsurance, the coinsurance must not 

exceed the coinsurance charged in 

original Medicare. When an MA plan 

uses copayments, the copayment must 

not exceed the actuarially equivalent 

value calculated using the rules in 

paragraph (j)(1)(ii) of this section. The 

benefits listed in this paragraph are as 

follows: 

(A) Chemotherapy administration 

services to include chemotherapy/ 

radiation drugs and radiation therapy 

integral to the treatment regimen. 

(B) Renal dialysis services as defined 

at section 1881(b)(14)(B) of the Act. 

(C) Skilled nursing care, defined as 

services provided during a covered stay 

in a skilled nursing facility during the 

period for which cost sharing would 

apply under original Medicare, when 

the MA plan establishes the mandatory 

MOOP type; when the MA plan 

establishes the lower MOOP type, the 

cost sharing must not be greater than 

$20 per day for the first 20 days of a 

SNF stay; when the MA plan establishes 

the intermediate MOOP type, the cost 

sharing must not be greater than $10 per 

day for the first 20 days of a SNF stay. 

(1) Regardless of the MOOP amount 

established by the MA plan, the per-day 

cost sharing for days 21 through 100 

must not be greater than one eighth of 

the projected (or actual) Part A 

deductible amount. 

(2) Total cost sharing for the overall 

SNF benefit must not be greater than the 

per member per month actuarially 

equivalent cost sharing for the SNF 

benefit in original Medicare. 

(D) Home health services (as defined 

in section 1861(m) of the Act), when the 

MA plan establishes a mandatory or 

intermediate MOOP type; when the MA 

plan establishes the lower MOOP type, 

the cost sharing must not be greater than 

20 percent coinsurance or an actuarially 

equivalent copayment. 

(E) The following specific service 

categories of durable medical equipment 

(DME): Equipment, prosthetics, medical 

supplies, diabetes monitoring supplies, 

diabetic shoes or inserts when the MA 

plan establishes the mandatory MOOP 

limit. For all MOOP limits, total cost 

sharing for the overall DME benefit must 

not be greater than the per member per 

month actuarially equivalent cost 

sharing for the DME benefit in original 

Medicare. 

(F) Other drugs covered under Part B 

of original Medicare (that is, Part B 

drugs not included in paragraph 

(j)(1)(i)(A) of this section). 

(ii) Rules for calculating copayment 

limits. For 2023 and subsequent years, 

CMS calculates copayment limits for the 

basic benefits listed in paragraph (j)(1)(i) 

of this section subject to the 

requirements in paragraph (f)(7) of this 

section and the restrictions on increases 

to copayment limits in paragraph (f)(8) 

of this section. If CMS does not 

calculate a copayment limit for a benefit 

listed in paragraph (j)(1)(i) of this 

section, an MA plan must establish a 

copayment that does not exceed an 

actuarially equivalent value to the 

coinsurance required under original 

Medicare; such actuarially equivalent 

value must be established in accordance 

with paragraph (f)(7)(i) of this section 

and based on the average Medicare FFS 

allowed amount in the plan’s service 

area or the estimated total MA plan 

financial liability for that benefit for that 

contract year. 

(2) Actuarially equivalent cost sharing 

evaluation for all basic benefits and 

specific categories of basic benefits in 

the aggregate. For each year beginning 

on or after January 1, 2023, an MA 

plan’s total cost sharing for all basic 

benefits, excluding out of network 

benefits covered by a regional MA plan, 

must not exceed cost sharing for those 

benefits in original Medicare on a per 

member per month actuarially 

equivalent basis. 

(i) MA plans must have cost sharing 

for the following specific benefit 

categories that does not exceed the cost 

sharing for those benefit categories in 

original Medicare on a per member per 

month actuarially equivalent basis: 

(A) Inpatient hospital acute and 

psychiatric services, defined as services 

provided during a covered inpatient 

stay during the period for which cost 

sharing would apply under original 

Medicare. 

(B) Durable medical equipment 

(DME). 

(C) Drugs and biologics covered under 

Part B of original Medicare. 

(D) Skilled nursing care, defined as 

services provided during a covered stay 

in a skilled nursing facility during the 

period for which cost sharing would 

apply under original Medicare. 

(ii) CMS may extend flexibility for 

MA plans when evaluating compliance 

with the requirements in paragraph 

(j)(2)(i) of this section regarding 

actuarial equivalent cost sharing for all 

basic benefits and specific categories of 

basic benefits to the extent that it is 

actuarially justifiable provided that the 

MA plan’s cost sharing is based on 

generally accepted actuarial principles 

and practices (consistent with paragraph 

(f)(7) of this section), supporting 

documentation included in the bid, and 

the MA plan’s cost sharing for specific 

service categories otherwise satisfies 

applicable cost sharing standards. 

* * * * * 

■ 3. Amend § 422.101 by revising 

paragraphs (d)(2) and (3) to read as 

follows: 

§ 422.101 Requirements relating to basic 

benefits. 

* * * * * 

(d) * * * 

(2) Catastrophic limit. For each year 

beginning on or after January 1, 2023, 

MA regional plans must do the 

following: 

(i) Establish a catastrophic enrollee 

MOOP amount for basic benefits that are 

furnished by in-network providers that 

is consistent with § 422.100(f)(4). 

(ii) Have the same MOOP type (lower, 

intermediate, or mandatory) for the 

catastrophic (in-network MOOP) limit 

and total catastrophic (combined innetwork and out-of-network 

expenditures) limit under paragraph 

(d)(3) of this section. 

(3) Total catastrophic limit. For each 

year beginning on or after January 1, 

2023, MA regional plans must establish 

a total catastrophic (combined innetwork and out-of-network 

expenditures) enrollee MOOP amount 

for basic benefits that is consistent with 

this paragraph (d)(3). 

(i) The total catastrophic limit may 

not be used to increase the catastrophic 

limit described in paragraph (d)(2) of 

this section. 

(ii) CMS calculates the total 

catastrophic limits by multiplying the 

respective in-network MOOP limits 

(before the rounding rules in 

§ 422.100(f)(4)(iii) are applied and after 

application of the 10 percent cap on 

increases to the mandatory and lower 

MOOP limits from the prior year in 

§ 422.100(f)(4)(iv) and (v)) by 1.5 for the 

relevant year, then applying the 

rounding rules in § 422.100(f)(4)(iii). 

The dollar ranges for the three total 

catastrophic MOOP limits are as 

follows: 

(A) Mandatory MOOP limit. One 

dollar above the in-network 

intermediate MOOP limit and up to and 


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22428 Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 / Rules and Regulations 

including the total catastrophic 

mandatory MOOP limit. 

(B) Intermediate MOOP limit. One 

dollar above the in-network lower 

MOOP limit and up to and including 

the total catastrophic intermediate 

MOOP limit. 

(C) Lower MOOP limit. Between $0.00 

and up to and including the total 

catastrophic lower MOOP limit. 

(iii) An MA organization must 

establish the total catastrophic MOOP 

amount (mandatory, intermediate, or 

lower) within the dollar range specified 

in paragraphs (d)(3)(ii)(A) through (C) of 

this section for purposes of paragraph 

(d) of this section and §§ 422.100(f)(6), 

(j)(1), and 422.113(b)(2)(v). 

* * * * * 

■ 4. Section 422.113 is amended by— 

■ a. Revising paragraph (b)(2)(v); and 

■ b. Adding paragraph (b)(2)(vi). 

The revision and addition read as 

follows: 

§ 422.113 Special rules for ambulance 

services, emergency and urgently needed 

services, and maintenance and poststabilization care services. 

* * * * * 

(b) * * * 

(2) * * * 

(v) With a dollar limit on emergency 

services costs for enrollees that is the 

lower of— 

(A) The cost sharing established by 

the MA plan if the emergency services 

were provided through the MA 

organization; or 

(B) A maximum cost sharing limit 

permitted per visit that corresponds to 

the MA plan MOOP limit as follows: 

(1) For 2023, $95 for a mandatory 

MOOP limit, $110 for an intermediate 

MOOP limit, and $125 for a lower 

MOOP limit. 

(2) For 2024, $100 for a mandatory 

MOOP limit, $120 for an intermediate 

MOOP limit, and $135 for a lower 

MOOP limit. 

(3) For 2025, $110 for a mandatory 

MOOP limit, $125 for an intermediate 

MOOP limit, and $140 for a lower 

MOOP limit. 

(4) For 2026 and subsequent years, 

$115 for a mandatory MOOP limit, $130 

for an intermediate MOOP limit, and 

$150 for a lower MOOP limit. 

(vi) For each year beginning on or 

after January 1, 2023, with a cost sharing 

limit on urgently needed services that 

does not exceed the limits specified for 

professional services in 

§ 422.100(f)(6)(iii). 

* * * * * 

Dated: April 5, 2022. 

Xavier Becerra, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2022–07642 Filed 4–7–22; 4:15 pm] 

BILLING CODE 4120–01–P 


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