[Federal Register Volume 87, Number 72 (Thursday, April 14, 2022)]
[Rules and Regulations]
[Pages 22290-22428]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-07642]



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Vol. 87

Thursday,

No. 72

April 14, 2022

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Part 422





Medicare Program; Maximum Out-of-Pocket (MOOP) Limits and Service 
Category Cost Sharing Standards; Final Rule

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

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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-of-Pocket (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.

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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 
<a href="/cdn-cgi/l/email-protection#1152707d783f557874797d51727c623f7979623f767e67"><span class="__cf_email__" data-cfemail="dc9fbdb0b5f298b5b9b4b09cbfb1aff2b4b4aff2bbb3aa">[email protected]</span></a>.

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 (Sec. Sec.  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 (Sec. Sec.  422.100 and 422.113)
III. Request for Comment Regarding the Methodology for CMS To Update 
and Change Service Category Cost Sharing Limits (Sec.  
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-of-Pocket (MOOP) Limits 
for Medicare Parts A and B Services (Sec. Sec.  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 
(Sec. Sec.  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-of-Pocket (MOOP) Limits for Medicare Parts A and B 
Services (Sec. Sec.  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 (Sec. Sec.  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:
    <bullet> 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.
    <bullet> 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 (Sec. Sec.  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 Sec. Sec.  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 out-of-pocket expenses for enrollees in Regional Preferred Provider 
Organization (RPPO) MA plans. MA Local PPO (LPPO) plans, under Sec.  
422.100(f)(5), and RPPO plans, under section 1858(b)(2) of the Act and 
Sec.  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 out-of-
network items and services covered under Parts A and B. Relying on the 
same statutory authority, we proposed amendments to the regulations at 
Sec.  422.100(f)(4) and (5) and Sec.  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 
(Sec. Sec.  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 Sec. Sec.  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 Sec.  
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 Sec. Sec.  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 Sec.  422.100(f)(4) and (5) that impose MOOP limits 
on MA plans are based on this anti-discrimination 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 Sec.  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 
long-standing 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:
    <bullet> 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;
    <bullet> 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;
    <bullet> 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;
    <bullet> Updating the cost sharing limits for emergency and post-
stabilization services and codifying a new rule for cost sharing limits 
for urgently needed services;
    <bullet> Codifying and adding specific benefits for which MA plans 
may not charge enrollees higher cost sharing than is charged under 
original Medicare; and
    <bullet> 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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[GRAPHIC] [TIFF OMITTED] TR14AP22.000


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[GRAPHIC] [TIFF OMITTED] TR14AP22.001

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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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 (Sec. Sec.  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 Sec. Sec.  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 out-
of-pocket expenses for enrollees in Regional Preferred Provider 
Organization (RPPO) MA plans. In addition, MA Local PPO (LPPO) plans, 
under Sec.  422.100(f)(5), and RPPO plans, under section 1858(b)(2) of 
the Act and Sec.  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-of-
network items and services covered under Parts A and B. Relying on the 
same authority, we proposed amendments to the regulations at Sec. Sec.  
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 
Sec.  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-of-network 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 beneficiary-level 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 Sec. Sec.  
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 out-of-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 year-to-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

[[Page 22296]]

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 CMS-
established 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 Sec.  422.100(f)(4)(iii).\2\ For example, the voluntary 
combined MOOP limit for PPOs in contract year 2020 was calculated as 
$3,400 x 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 x 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.
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    \1\ 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 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.
    \2\ CMS. ``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.
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    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).
[GRAPHIC] [TIFF OMITTED] TR14AP22.002


[[Page 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 Sec. Sec.  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:
    <bullet> 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 
Sec.  422.100(f)(6) and (j) and Sec. Sec.  422.101(d) and 
422.113(b)(2)(v).
    <bullet> 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.
    <bullet> 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.
    <bullet> 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).
    <bullet> 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).
    <bullet> 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 Sec. Sec.  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 
(Sec. Sec.  422.100(f)(4) and (5) and Sec.  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:
    <bullet> Use the term ``basic benefits'' instead of referring to 
Medicare Part A and B benefits in our proposed revisions to the 
regulations at Sec. Sec.  422.100(f)(4) and (5) and Sec.  422.101(d)(2) 
and (3) because the term ``basic benefits'' is now defined in Sec.  
422.100(c).
    <bullet> Amend Sec.  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 out-of-
network coverage provided by local PPO plans.
    <bullet> Codify the rules for PPOs in establishing in-network and 
combined (or catastrophic) MOOP limits for basic benefits furnished in-
network and out-of-network in Sec. Sec.  422.100(f)(5) and 
422.101(d)(2) and (d)(3).
    <bullet> Add cross-references to codify the same limits under both 
Sec.  422.100(f)(5) (for MA local PPOs) and Sec.  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 
Sec.  422.100 (f)(4) (for MA local plans) and Sec.  422.101(d)(2) (for 
in-network MA regional plans) to avoid repetitive regulation text.
    <bullet> Codify in Sec. Sec.  422.100(f)(4) and (5) and 
422.101(d)(2) and (3) the responsibility MA organizations have to track 
enrolled beneficiaries' out-of-pocket 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.
    <bullet> Amend Sec.  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.
    <bullet> 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 Sec.  
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.
    <bullet> Codify specific cost sharing limits and flexibilities tied 
to using the intermediate and lower (previously

[[Page 22298]]

``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 (Sec.  422.100(f)(4))
    CMS proposed to codify generally our current methodology for how we 
set MOOP limits with several revisions at Sec.  422.100(f)(4) and to 
use cross-references in Sec. Sec.  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:
    <bullet> Amend Sec.  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.
    <bullet> 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 Sec.  
422.100(f)(4)(iii).
    <bullet> 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 Sec.  422.101(d)(3) and using a cross-reference to 
that rule for MA local PPOs in Sec.  422.100(f)(5)(i).
    <bullet> Establish the rules for setting the MOOP limits for 
contract years 2022, 2023, 2024, 2025, and subsequent years in Sec.  
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:
    <bullet> The mandatory MOOP limit is set at the 95th percentile of 
projected Medicare FFS beneficiary out-of-pocket spending.
    <bullet> The intermediate MOOP is set at the numeric midpoint of 
mandatory and lower MOOP limits.
    <bullet> 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 
Sec.  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 Sec.  
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--
    <bullet> Review OACT projections of out-of-pocket spending for the 
applicable year that is based on updated Medicare FFS data, including 
all spending regardless of ESRD diagnoses;
    <bullet> Compare the applicable year's projection of the 95th 
percentile and 85th percentile to the prior year's projections;
    <bullet> 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;
    <bullet> 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 Sec.  
422.100(f)(4)(vii) for one or both of the MOOP limits;
    <bullet> 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 Sec.  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
    <bullet> The intermediate MOOP limit would be set by either 
maintaining it as the prior year's intermediate MOOP

[[Page 22299]]

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 Sec.  422.100(f)(4)(iii).
    We proposed regulation text to implement this process for setting 
the mandatory, intermediate, and lower MOOP limits at Sec.  
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 Sec.  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 (Sec.  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 Sec. Sec.  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\
---------------------------------------------------------------------------

    \3\ The 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-and-Documents. 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.
    \4\ 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. 
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.
---------------------------------------------------------------------------

    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

[[Page 22300]]

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:
    <bullet> Codify at Sec.  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.
    <bullet> Add Sec.  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.
    <bullet> Identify the specific dollar amounts in the regulation 
text defining the ESRD cost differential at Sec.  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.
    <bullet> Add Sec.  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.
    <bullet> 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 Sec. Sec.  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 Sec. Sec.  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

[[Page 22301]]

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 Sec.  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 
Sec. Sec.  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 multi-year 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 Sec.  
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 in-network (catastrophic) 
and combined (total catastrophic) MOOP limits consider only the 
enrollee's actual out-of-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 Sec.  422.100(f)(4) 
and (f)(5) using the phrase ``incurred by the enrollee'' to be 
consistent with current Sec.  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 cost-sharing 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-of-pocket 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-
of-pocket 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

[[Page 22302]]

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 Sec.  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 Sec.  422.101(d)(2)(ii) and (d)(3)(iii) as proposed (which 
substantively addressed the same requirement for the catastrophic (in-
network) MOOP and the total catastrophic (combined) MOOP) to avoid 
repeating text that is in paragraph (d)(4). Existing Sec.  
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 Sec.  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 
Sec.  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 Sec.  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 Sec.  422.110. 
CMS relies on the MA anti-discrimination provision, the agency's 
authority under

[[Page 22303]]

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 Sec.  
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 
anti-discrimination 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 anti-discrimination requirements applicable in the 
Medicare Advantage program by contacting 1-800-MEDICARE or by 
submitting a Medicare Complaint Form online.\6\
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    \5\ Available at: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.
    \6\ The online Medicare Compliant Form may be accessed and 
submitted at: https://www.medicare.gov/medicarecomplaintform/home.aspx.
---------------------------------------------------------------------------

a. Authorize Setting Three MOOP Limits on Basic Benefits (Sec. Sec.  
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 high-value 
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.
---------------------------------------------------------------------------

    \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-advantage-industry-as-strong-as-ever.
---------------------------------------------------------------------------

    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:
    <bullet> 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);
    <bullet> 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
    <bullet> 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

[[Page 22304]]

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 in-
network 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 Sec.  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 
Sec.  422.102(f) and how optional supplemental benefits are only 
provided for enrollees who elect to pay the extra premium for that 
coverage under Sec.  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 anti-discrimination requirements 
applicable in the MA program, by contacting 1-800-MEDICARE or by 
submitting a Medicare Complaint Form online.\8\
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    \8\ The online Medicare Compliant Form may be accessed and 
submitted at: https://www.medicare.gov/medicarecomplaintform/home.aspx.
---------------------------------------------------------------------------

    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

[[Page 22305]]

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 out-of-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

[[Page 22306]]

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 Sec. Sec.  422.100(f)(4) and (5) and 
422.101(d)(2) and (3). We are also finalizing the regulations at 
Sec. Sec.  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) 
Sec.  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) 
Sec.  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) Sec.  422.101(d)(2) applies to a catastrophic limit (in-
network MOOP limit) for regional MA plans; and (4) Sec.  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 Sec.  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 Sec.  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 out-
of-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 in-network 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 
Sec. Sec.  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 
Sec.  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 (Sec.  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 Sec.  
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 Sec.  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 Sec. Sec.  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

[[Page 22307]]

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 Sec.  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 Sec.  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.
---------------------------------------------------------------------------

    \9\ Individuals and organizations may request placement on the 
HPMS listserv at https://hpms.cms.gov/app/ng/home/.
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    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 out-of-pocket spending and the mid-point between those 
with the specific provisions as provided in Sec.  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 Sec.  
422.100(f)(4)(iv) and for 2024 and subsequent years in Sec.  
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 Sec. Sec.  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 out-of-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

[[Page 22308]]

data projections reflect full incorporation of the ESRD cost 
differential.
    Third, we are finalizing the substance of proposed Sec.  
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:
    <bullet> Mandatory MOOP limit: One dollar above the intermediate 
MOOP limit and up to and including the mandatory MOOP limit.
    <bullet> 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 Sec.  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 Sec.  
422.100(f)(4)(i)(A) through (C). We proposed to refer to paragraphs 
(f)(6) and (j) of Sec.  422.100, but are finalizing references to 
paragraphs (f) and (j) of Sec.  422.100, Sec.  422.101(d), and Sec.  
422.113(b)(2)(v). This change better reflects the cost sharing 
requirements finalized in section II.B. of this FC. Referring to Sec.  
422.101(d) is consistent with how the types of in-network MOOP limits 
referenced in Sec.  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 Sec.  422.101(d)(2) and (3).
    To better reflect how finalized Sec.  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 Sec.  422.101(d)(2) and (3). We are 
consolidating proposed Sec.  422.101(d)(2) to clearly require MA 
regional plans to: (1) Establish a catastrophic enrollee MOOP for basic 
benefits that are furnished by in-network providers that is consistent 
with Sec.  422.100(f)(4); and (2) have the same MOOP type (lower, 
intermediate, or mandatory) for the catastrophic (in-network MOOP) 
limit and total catastrophic (combined in-network and out-of-network 
expenditures) limit under Sec.  422.101(d)(3).
    In addition, we are adding new paragraphs (d)(3)(ii)(A), (B), and 
(C) in Sec.  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 Sec. Sec.  422.100 and 422.101. These 
correspond to the ranges in Sec.  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 Sec.  
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:
    <bullet> Mandatory MOOP limit: One dollar above the in-network 
intermediate MOOP limit and up to and including the total catastrophic 
mandatory MOOP limit.
    <bullet> Intermediate MOOP limit: One dollar above the in-network 
lower MOOP limit and up to and including the total catastrophic 
intermediate MOOP limit.
    <bullet> 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 Sec.  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 Sec.  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 in-network 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 Sec.  
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 Sec. Sec.  
422.100(f)(4)(i) and 422.101(d)(3)(ii) to determine if an MA 
organization is compliant with the finalized requirement in Sec.  
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 Sec.  422.100(f)(4)(iii) the rounding rules 
CMS uses for the MOOP limits generally as proposed but

[[Page 22309]]

we are also finalizing new text to clarify and correct how the rounding 
rules at Sec.  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 Sec.  422.101(d)(2) because this 
modification to the provisions in Sec.  422.100(f)(4) will apply to the 
catastrophic MOOP limits for in-network basic benefits for regional MA 
plans calculated under Sec.  422.101(d)(2) because of how Sec.  
422.101(d)(2) cross-references Sec.  422.100(f)(4). In addition, we are 
finalizing Sec.  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 Sec.  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-of-network expenditures for basic benefits.
    We believe these modifications to Sec.  422.100(f)(4)(iv)(B) and 
(v)(B), and to Sec.  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 in-
network 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 in-network 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 Sec.  
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 in-network 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 Sec. Sec.  
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 Sec.  
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

[[Page 22310]]

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 Sec. Sec.  
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.
---------------------------------------------------------------------------

    \10\ http://www.actuarialstandardsboard.org/profcounts/asop-no-1-and-professional-judgment/.
---------------------------------------------------------------------------

    As discussed in more detail in section II.B of this FC, new Sec.  
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 (Sec.  
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 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. 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 
out-of-pocket costs for all Medicare beneficiaries.
---------------------------------------------------------------------------

    \11\ Tim Courtney and Rachel Stewart, Wakely Consulting Group. 
``2021 Medicare Advantage Advance Notice,'' March 4, 2020 https://www.ahip.org/2021-medicare-advantage-advance-notice/.
---------------------------------------------------------------------------

    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-of-pocket 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

[[Page 22311]]

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 Sec. Sec.  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-of-pocket 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.
---------------------------------------------------------------------------

    \12\ Powers, 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.
---------------------------------------------------------------------------

    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 
Sec. Sec.  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

[[Page 22312]]

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 
Sec.  422.102(f) and how optional supplemental benefits are only 
provided for enrollees who elect to pay the extra premium for that 
coverage under Sec.  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 MedPAC 
\14\ 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.
---------------------------------------------------------------------------

    \13\ Health Management Associates. ``End-Stage Renal Disease and 
Medicare Advantage.'' February 12, 2019. The most recent report is 
available online at: https://www.healthmanagement.com/wp-content/uploads/Health-Management-Associates-ESRD-and-Medicare-Advantage-White-Paper.pdf.
    \14\ MedPAC. 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-Stage-Renal 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.
    \16\ Health Management Associates. ``End-Stage Renal Disease and 
Medicare Advantage.'' February 12, 2019. The most recent report is 
available online at: https://www.healthmanagement.com/wp-content/uploads/Health-Management-Associates-ESRD-and-Medicare-Advantage-White-Paper.pdf.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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-below-actual-esrd-patients-costs-in-large-metropolitan-areas-in-2021.
---------------------------------------------------------------------------

    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

[[Page 22313]]

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-of-pocket 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 Sec. Sec.  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 out-of-pocket expenses of beneficiaries with and without 
diagnoses of ESRD because the MOOP limits will apply to enrollees with 
and without diagnoses of ESRD.
---------------------------------------------------------------------------

    \18\ The Calendar Year 2021 and 2022 Rate Announcements may be 
accessed at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.
---------------------------------------------------------------------------

    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

[[Page 22314]]

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.
---------------------------------------------------------------------------

    \19\ See 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.
    \20\ See 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.
---------------------------------------------------------------------------

    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 Sec.  
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 out-of-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

[[Page 22315]]

moderate modifications based on commenter feedback. We are finalizing a 
modification to the ESRD cost differential definition at Sec.  
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 Sec.  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, Sec.  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 Sec.  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 Sec.  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 in-network 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 
in-network mandatory MOOP limit

[[Page 22316]]

($8,300.00) compared to the illustrative unrounded contract year 2024 
in-network 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 Sec.  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
[GRAPHIC] [TIFF OMITTED] TR14AP22.003


[[Page 22317]]


[GRAPHIC] [TIFF OMITTED] TR14AP22.004

[GRAPHIC] [TIFF OMITTED] TR14AP22.005


[[Page 22318]]


[GRAPHIC] [TIFF OMITTED] TR14AP22.006

BILLING CODE 4120-01-C
    In summary, we are finalizing Sec.  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 Sec.  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 Sec.  
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

[[Page 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 in-network 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 (in-network 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 Sec.  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 Sec.  
422.100(f)(4)(iii) and the ESRD cost transition schedule in Sec.  
422.100(f)(4)(vi), the MOOP limits for 2023 and subsequent years will 
be calculated as follows:
    For contract year 2023 (applying both Sec.  422.100(f)(4)(iv) and 
(vi)(A)):
    <bullet> 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.
    <bullet> 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 Sec.  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)).
    <bullet> 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:
    <bullet> The mandatory and lower MOOP limits are calculated as the 
95th and

[[Page 22320]]

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).
    <bullet> 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 
Sec.  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-of-pocket 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 Sec.  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:
    <bullet> Decreases of $50 or more, in $50 increments; or
    <bullet> Increases of at least $50 and in increments of $50 but 
less than a 10 percent increase.
    In summary, Sec.  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

[[Page 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 
Sec.  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 Sec.  
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 in-network mandatory and lower MOOP 
limits in Table 6 reflect 100 percent of the ESRD cost differential 
based on finalized Sec.  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
[GRAPHIC] [TIFF OMITTED] TR14AP22.007


[[Page 22322]]


[GRAPHIC] [TIFF OMITTED] TR14AP22.008

[GRAPHIC] [TIFF OMITTED] TR14AP22.009


[[Page 22323]]


[GRAPHIC] [TIFF OMITTED] TR14AP22.010

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:
    <bullet> 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 Sec.  422.100(f)(4)(iii).
    <bullet> 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.
    <bullet> 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 Sec.  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 Sec.  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 Sec. Sec.  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-of-pocket 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 Sec.  
422.112. Importantly, the regulations at Sec.  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 
Sec.  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

[[Page 22324]]

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 Sec.  422.564 and, if they believe that benefits have been 
improperly denied, file an appeal under the appeal rules in Sec. Sec.  
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.
---------------------------------------------------------------------------

    \21\ Adam 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-rating-changes-How-Medicare-Advantage-plans-react.
---------------------------------------------------------------------------

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 Sec. Sec.  
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 Sec.  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.
---------------------------------------------------------------------------

    \22\ Advance Notice and Rate Announcement documents are 
available at: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRate Stats/Announcements-and-Documents.
---------------------------------------------------------------------------

    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-of-pocket 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

[[Page 22325]]

on how CMS sets the TBC threshold for contract year 2024 and future 
years, if necessary.
---------------------------------------------------------------------------

    \23\ These HPMS memoranda may be accessed through the HHS 
guidance repository at: HHS Guidance Submissions [verbar] Guidance 
Portal and individuals and organizations may request placement on 
the HPMS listserv at https://hpms.cms.gov/app/ng/home/.
---------------------------------------------------------------------------

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 Sec. Sec.  
422.100(f)(4) and (5) and 422.101(d)(2) and (3) to: (1) Calculate three 
in-network and out-of-network 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 Sec. Sec.  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:
    <bullet> Adding descriptive headings to Sec.  422.100(f)(1)-(9) to 
orient the reader to the content in each paragraph.
    <bullet> Applying the methodology in the amendments to Sec. Sec.  
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.
    <bullet> Revisions in Sec. Sec.  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.
    <bullet> Revising introductory language in Sec.  422.100(f)(4) for 
clarity and to: (1) Retain how MA local plans, as defined in Sec.  
422.2, must have an enrollee in-network 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 in-network MOOP limits apply to PFFS 
plans for all covered basic benefits.
    <bullet> Revising Sec.  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.
    <bullet> Adding Sec.  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.
    <bullet> Revisions in Sec.  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 Sec. Sec.  
422.101(d) and 422.113 because the MOOP types are referenced in those 
sections.
    <bullet> Removing Sec.  422.100(f)(4)(ii)(A)-(C), as this 
information is finalized with clarifications in paragraphs 
(f)(4)(i)(A)-(C).
    <bullet> Revisions in Sec.  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.
    <bullet> Revisions in Sec.  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.
    <bullet> Revisions in Sec.  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).
    <bullet> Revisions in Sec.  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 two-percentile 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.
    <bullet> Revisions in Sec.  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.
    <bullet> Removing Sec.  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).
    <bullet> Removing proposed Sec.  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).
    <bullet> Finalizing the proposed ESRD cost differential transition 
(proposed at Sec.  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.

[[Page 22326]]

    <bullet> Revisions in Sec.  422.100(f)(5) to clarify that the MOOP 
limits specified in paragraph (f)(4) apply to in-network providers.
    <bullet> Revisions in Sec.  422.100(f)(5)(i) to: (1) Clarify that 
the combined MOOP is applied to MA enrollees (rather than 
beneficiaries); and (2) refer to Sec.  422.101(d)(3) to encompass the 
addition of dollar ranges for the total catastrophic (MOOP) limits.
    <bullet> Revisions in Sec.  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.
    <bullet> Finalizing new Sec.  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 Sec. Sec.  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.
    <bullet> Finalizing new Sec.  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.
    <bullet> Revisions in Sec.  422.101(d)(2) to specify the 
requirements related to establishing a catastrophic MOOP amount for MA 
regional plans.
    <bullet> Revisions in Sec.  422.101(d)(2)(i) to require MA regional 
plans to establish a catastrophic enrollee MOOP amount for basic 
benefits that are furnished by in-network providers that is consistent 
with Sec.  422.100(f)(4).
    <bullet> Revisions in Sec.  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.
    <bullet> Revisions in the introductory language of Sec.  
422.101(d)(3) to clarify that the total catastrophic MOOP amount 
encompasses the combined in-network and out-of-network expenditures and 
that this MOOP amount is applied to MA enrollees.
    <bullet> Revisions in Sec.  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.
    <bullet> Revisions in Sec.  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 Sec.  422.100(f) and (j).
    <bullet> Removing proposed Sec.  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 Sec. Sec.  
422.100(f)(6), (j)(1), and 422.113(b)(2)(v) as those sections apply 
certain flexibilities depending on the MOOP type established.
    <bullet> Adding various minor technical and grammatical changes 
from the proposed regulation text at Sec. Sec.  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 
(Sec.  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 
(Sec. Sec.  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 Sec.  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 
Sec. Sec.  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 Sec.  422.100(j) for MA plans and extended to cost plans 
under Sec.  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 Sec.  422.100(k) that MA plans must cover original 
Medicare-covered preventive services (as defined in Sec.  410.152(l)) 
without cost sharing when the services are provided in-network; the 
same restriction is applied to cost plans under Sec.  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 
Sec. Sec.  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 Sec. Sec.  
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

[[Page 22327]]

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 Sec.  
422.100(f).
---------------------------------------------------------------------------

    \24\ 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 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.
    \25\ Chapter 4 of the MMMCM can be accessed at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/mc86c04.pdf.
---------------------------------------------------------------------------

    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 out-of-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 non-discriminatory 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 Sec.  
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 
Sec.  422.100(f)(6) would be in

[[Page 22328]]

addition to other limits on cost sharing that apply to MA plans. CMS 
also proposed, at Sec.  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 Sec.  422.113(b)(2)(v) and (vi).
---------------------------------------------------------------------------

    \26\ After 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.
    \27\ The 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-and-Documents. 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.
---------------------------------------------------------------------------

    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 Sec. Sec.  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 Sec. Sec.  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 Sec.  
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.
---------------------------------------------------------------------------

    \28\ See 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.
---------------------------------------------------------------------------

1. General Non-Discriminatory Cost Sharing Limits (Sec.  422.100(f)(6))
    CMS proposed to codify in Sec.  422.100(f)(6) a set of general 
rules for cost sharing for basic benefits. The term ``basic benefits,'' 
as defined in Sec.  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 Sec.  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 long-standing interpretation and 
implementation of the anti-discrimination 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-
of-network, 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 Sec.  
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 Sec.  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.

[[Page 22329]]

    In proposed Sec.  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:
    <bullet> 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.
    <bullet> 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.
    <bullet> 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 
out-of-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 Sec.  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:

<bullet> Primary Care: Family Practice; General Practice; Internal 
Medicine
<bullet> Physician Specialties: Cardiology; Geriatrics; 
Gastroenterology; Nephrology; Otolaryngology (ENT)
<bullet> Mental Health Specialty Services: Clinical Psychologist; 
Licensed Clinical Social Worker; Psychiatry
<bullet> 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 In-Network 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/post-stabilization 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 Cost-sharing,'' \29\ of the MMCM that cost sharing should 
appear to MA enrollees consistent with MA disclosure requirements at 
Sec.  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

[[Page 22330]]

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 Sec.  422.111, but solicited comment on codifying it.
---------------------------------------------------------------------------

    \29\ Chapter 4, Section 50.1 of the MMMCM can be accessed at 
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/mc86c04.pdf.
---------------------------------------------------------------------------

2. Cost Sharing Limits for Inpatient Hospital Acute and Psychiatric 
Services (Sec.  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 Sec.  422.100 and does not approve that plan benefit package. 
CMS proposed new Sec.  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 Sec.  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 Sec.  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 cross-reference in the proposed regulation text to avoid 
repetitive regulation text.
    Finally, at Sec.  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):
    <bullet> 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.
    <bullet> Intermediate MOOP limit: Cost sharing must not exceed the 
numeric mid-point between the cost sharing limits for the mandatory and 
lower MOOP limits.
    <bullet> 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-for-Service cost sharing as long as the total 
cost sharing for the inpatient benefit does not exceed the MOOP limit 
or cost

[[Page 22331]]

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 Sec.  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 Sec.  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 Sec.  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 (Sec.  
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.
---------------------------------------------------------------------------

    \30\ Section 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.
---------------------------------------------------------------------------

a. Range of Cost Sharing Limits for Certain Outpatient and Professional 
Services (Sec.  422.100(f)(6)(iii))
    CMS proposed to modify the regulation at Sec.  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 Sec.  
422.100(c)(1)) offered on an in-network 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 Sec.  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 Sec.  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

[[Page 22332]]

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 Sec. Sec.  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\
---------------------------------------------------------------------------

    \31\ Loewenstein 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.
---------------------------------------------------------------------------

b. Emergency/Post-Stabilization Services and Urgently Needed Services 
(Sec.  422.113(b)(2)(v) and (vi))
    Currently, Sec.  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 post-stabilization 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/post-stabilization 
services costs for enrollees that is the lower of--
    <bullet> The cost sharing established by the MA plan if the 
emergency/post-stabilization services were provided through the MA 
organization; or
    <bullet> A maximum cost sharing limit permitted per visit that 
corresponds to the MA plan MOOP limit as follows:
    [cir] $115 for MA plans with a mandatory MOOP limit.
    [cir] $130 for MA plans with an intermediate MOOP limit.
    [cir] $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/post-stabilization 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 Sec.  
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 Sec.  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 Sec.  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/post-stabilization services in 
future rulemaking based on emerging trends.
c. Services No Greater Than Original Medicare (Sec.  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 Sec. Sec.  
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.

[[Page 22333]]

We proposed at Sec.  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 per-item 
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 Sec.  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 Sec. Sec.  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 Sec.  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 Sec.  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 (Sec.  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 Sec. Sec.  422.254(b)(4), 422.100(f)(2), and

[[Page 22334]]

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 Sec.  422.100(j)(2) required that total cost sharing for 
all basic benefits covered by an MA plan, excluding out-of-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 Sec.  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 Sec.  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 Sec.  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-of-network 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,

[[Page 22335]]

as finalized, CMS will use Medicare FFS data projections (the 
definition is codified in Sec.  422.100(f)(4)(i) as discussed in 
section II.A. of this FC) to calculate cost sharing limits for service 
categories subject to Sec.  422.100(f)(6) and (j)(1); this is 
explicitly addressed in Sec.  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 (Sec.  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-of-network 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 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.
    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 Sec. Sec.  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 Sec.  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 Sec.  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.

[[Page 22336]]

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 Sec.  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.
---------------------------------------------------------------------------

    \32\ As 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/.
---------------------------------------------------------------------------

    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 Sec.  
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 Sec.  422.100(f)(9) instead of in Sec.  
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 (Sec.  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 Sec.  
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 higher-cost 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 Sec.  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 Sec.  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 Sec.  
422.100(f)(6)(i), (f)(6)(iii), and (j)(1). The specific cost sharing 
standards finalized at Sec.  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

[[Page 22337]]

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 Sec.  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 in-network and out-of-network benefits (for example, 
certain categories of benefits in Sec.  422.100(f)(6)(iii) and (iv) and 
specific services and categories in Sec.  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 Sec.  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 
Sec. Sec.  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, Sec.  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 Sec.  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

[[Page 22338]]

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 Sec.  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 Sec. Sec.  
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 Sec.  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 Sec.  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 Sec.  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 
Sec.  422.100(f)(7)(iii) for contract year 2024 or another future year.
---------------------------------------------------------------------------

    \33\ Call Letters communicating CMS policy for contract years 
prior to 2021 may be accessed here: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.
---------------------------------------------------------------------------

    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 Sec.  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 Sec.  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

[[Page 22339]]

included on the chart continue to be subject to paragraph Sec.  
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 Sec.  422.100(f)(6)(i) 
applies.
---------------------------------------------------------------------------

    \34\ See Table 5: CY 2021 In-Network Service Category Cost 
Sharing Requirements from the HPMS memorandum titled ``Final 
Contract Year 2021 Part C Benefits Review and Evaluation,'' issued 
April 8, 2020.
---------------------------------------------------------------------------

    As finalized, Sec.  422.100(f)(6)(i) imposes limits on the cost 
sharing that may be charged to enrollees for out-of-network 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 Sec.  
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 Sec.  422.100(f)(6)(iii)(C) (finalized with 
clarifying additions at Sec.  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 Sec.  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 Sec. Sec.  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 Sec.  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 Sec.  422.100(f)(4) 
and (f)(5) and Sec.  422.101(d)(2) and (d)(3) and the inpatient 
hospital acute and psychiatric service category cost sharing limits in 
Sec.  422.100(f)(6)(iv); (2) calculating the copayment values that are 
actuarially equivalent to the coinsurance limits set for service 
categories in Sec.  422.100(f)(6)(i), for professional services in 
Sec.  422.100(f)(6)(iii), and for the benefits for which MA cost 
sharing may not exceed cost sharing under original Medicare in Sec.  
422.100(j)(1); (3) evaluating MA organization compliance with 
Sec. Sec.  422.100(f)(6) and (j); and (4) developing the projections 
and calculations used in applying Sec.  422.100(f)(8) for transitioning 
current (contract year 2022) copayment limits to the copayment limits 
produced by the methodology adopted in Sec.  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 Sec.  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 Sec.  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-of-pocket costs and utilization based on the Medicare 
FFS data projections (as defined in Sec.  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 In-Network 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

[[Page 22340]]

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.
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    \35\ See 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/asop-no-1-and-professional-judgment/.
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    In addition to complying with Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  
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

[[Page 22341]]

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 Sec.  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 Sec.  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, Sec.  
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, Sec.  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, Sec.  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 in-network 
benefits that are not otherwise addressed in Sec. Sec.  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 Sec.  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 
Sec.  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,

[[Page 22342]]

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.
[GRAPHIC] [TIFF OMITTED] TR14AP22.011

    Consistent with Sec.  422.100(f)(7), we may calculate actuarially 
equivalent copayment limits for the other DME service categories and 
other categories subject to Sec.  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 Sec.  
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

[[Page 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 Sec.  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 Sec.  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 Sec.  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

[[Page 22344]]

amount) when complying with Sec.  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 
Sec.  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-of-network 
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 Sec.  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-of-network 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 Sec.  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

[[Page 22345]]

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 Sec.  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 Sec.  
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-for-service 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 
plan-specific 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 Sec.  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.
---------------------------------------------------------------------------

    \36\ The 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/MedicareAdvtgSpecRateStats/Bid-Forms-Instructions.
---------------------------------------------------------------------------

    Because the analyses performed by MA organizations must use 
generally accepted actuarial principles and practices pursuant to Sec.  
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 Sec.  422.100(f)(6)(i), (iii), and (j)(1). As a 
result, the documentation must demonstrate:
    <bullet> 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 Sec.  422.100(f)(6)(i) and (j)(1));
    <bullet> 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 Sec.  422.100(f)(6)(i) and (j)(1)); and
    <bullet> How the cost sharing does not exceed, as applicable, an 
actuarially

[[Page 22346]]

equivalent amount to the 50 percent estimated total MA plan financial 
liability requirement (established at Sec.  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 Sec.  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.
[GRAPHIC] [TIFF OMITTED] TR14AP22.012

    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 Sec.  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 Sec.  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 Sec.  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

[[Page 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 Sec.  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 Sec.  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 Sec.  
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, 
Sec.  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 Sec.  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 Sec.  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 Sec. Sec.  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 Sec.  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 Sec.  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 (Sec.  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

[[Page 22348]]

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 
Sec.  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 Sec.  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 
Sec.  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

[[Page 22349]]

described using the following provider specialty types to calculate a 
copayment limit for the ``physician specialist'' and ``primary care 
physician'' service categories:

<bullet> Physician Specialist: Cardiology; Geriatrics; 
Gastroenterology; Nephrology; and Otolaryngology (ENT)
<bullet> 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 Sec.  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:
---------------------------------------------------------------------------

    \37\ See 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.

<bullet> Physician Specialist: Cardiology; Gastroenterology; 
Nephrology; Otolaryngology (ENT)
<bullet> 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 Sec.  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.

[[Page 22350]]

[GRAPHIC] [TIFF OMITTED] TR14AP22.013

    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 Sec.  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 Sec.  422.100(f)(7), we are consolidating and 
clarifying the data and requirements CMS uses to calculate copayment 
limits for service categories subject to Sec.  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 Sec.  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

[[Page 22351]]

that is available at the time of the necessary analyses and projections 
and appropriate for that use. Per Sec.  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 Sec.  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 
Sec.  422.100(f)(7)(i) and (ii), CMS intends to only issue and maintain 
copayment limits for service categories subject to Sec.  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 Sec.  
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

[[Page 22352]]

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-of-pocket 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.
---------------------------------------------------------------------------

    \38\ Loewenstein 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.
---------------------------------------------------------------------------

    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 Sec.  422.100(f)(6)(iii). We expect that a multiyear 
implementation schedule could be helpful to: (1)

[[Page 22353]]

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 Sec.  422.100(f)(6)(iii) is in Table 13, which includes the 
coinsurance limits used for contract year 2022 to provide context.
[GRAPHIC] [TIFF OMITTED] TR14AP22.014

    To implement the multiyear transition in Table 13 to the proposed 
coinsurance limits, CMS is finalizing additional paragraphs at Sec.  
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:
    <bullet> 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.
    <bullet> 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.
    <bullet> 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, Sec.  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 Sec.  
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

[[Page 22354]]

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 Sec.  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 Sec.  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 Sec.  
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:
    <bullet> 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 
Sec. Sec.  422.100(f)(6)(iii) and (j)(1) that apply in 2026.
    <bullet> 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 Sec. Sec.  
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:
    <bullet> For the mandatory MOOP limit: The copayment limit set for 
contract year 2022 for the mandatory MOOP

[[Page 22355]]

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.
    <bullet> 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.
    <bullet> 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 
Sec.  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 
Sec.  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:
    <bullet> Contract Year 2023: 25 percent.
    <bullet> Contract Year 2024: 50 percent.
    <bullet> Contract Year 2025: 75 percent.
    This means that for each year and service category subject to Sec.  
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:
    <bullet> For the mandatory and lower MOOP limits: The respective 
copayment limits set for 2022 plus 25 percent of the actuarially 
equivalent copayment differential.
    <bullet> 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 Sec.  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 Sec.  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 Sec.  422.100(f)(6)(i), (iii), and (j)(1). In this FC, we 
apply Sec.  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 
Sec.  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

[[Page 22356]]

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 In-Network 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 Sec.  
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 Sec.  
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 Sec.  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.
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    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 Sec.  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 Sec.  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 Sec.  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--
    <bullet> 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
    <bullet> In-network benefits subject to Sec.  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 Sec.  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 
Sec.  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 Sec.  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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    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.
[GRAPHIC] [TIFF OMITTED] TR14AP22.020

    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

[[Page 22363]]

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 Sec.  
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 
non-renew 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.
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    \39\ See pages 159-161 of the CY 2020 draft Call Letter at: 
https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2020Part2.pdf.
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    To provide additional transparency regarding how Sec.  
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:
    <bullet> 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
    <bullet> Updated analyses of actuarially acceptable approaches to 
calculate an actuarially equivalent value to the applicable cost 
sharing standard in Sec.  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:
    <bullet> 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 Sec.  422.100(f)(6)(ii)).
    <bullet> 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 Sec.  
422.100(f)(6)(ii)).
    <bullet> 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 
Sec.  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.
    <bullet> 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 Sec.  422.100(f)(7)(iii), which provides for an 
opportunity for public notice and comment.
    By applying the requirements in Sec.  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 Sec.  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 Sec.  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 Sec.  422.256(a). The TBC 
threshold for

[[Page 22364]]

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 Sec.  
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.
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    \40\ See the HPMS memorandum titled ``Final Contract Year 2021 
Part C Benefits Review and Evaluation,'' issued April 8, 2020.
    \41\ See the HPMS memorandum titled ``Final Contract Year 2022 
Part C Benefits Review and Evaluation,'' issued May 20, 2021.
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    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 
(Sec.  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 (Sec.  422.100(j)(1)). Therefore, cost sharing for 
these services must comply with Sec.  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 Sec.  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 Sec.  422.113 and cost 
sharing requirements for emergency services in section II.B.5.d. of 
this FC and to Sec.  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.
---------------------------------------------------------------------------

    \42\ Milliman. 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-Advantage-plans-react.
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    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

[[Page 22365]]

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 Sec.  
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 Sec.  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.

[[Page 22366]]

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 Sec.  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 
Sec.  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.
---------------------------------------------------------------------------

    \43\ See page 202 of the CY 2019 Final Call Letter at: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2019.pdf.
---------------------------------------------------------------------------

    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 Sec.  422.564 and, if they believe that benefits have been 
improperly denied, file an appeal under the rules in Sec. Sec.  422.562 
through 422.619.
---------------------------------------------------------------------------

    \44\ The online Medicare Compliant Form may be accessed and 
submitted at: https://www.medicare.gov/medicarecomplaintform/home.aspx.
---------------------------------------------------------------------------

    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 
Sec.  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 Sec.  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).

[[Page 22367]]

    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 
in-network 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 (Sec.  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 Sec.  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 Sec.  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 Sec.  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)

[[Page 22368]]

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 Sec.  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 Sec.  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 Sec.  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 Sec.  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

[[Page 22369]]

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 Sec.  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 Sec.  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 Sec.  422.100(f)(6)(iv) and the data described in Sec.  
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 Sec.  
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 Sec.  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 Sec.  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

[[Page 22370]]

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 Sec.  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 Sec.  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 Sec.  
422.100(f)(8) is only applicable to service categories subject to Sec.  
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 
Sec. Sec.  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

[[Page 22371]]

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 (Sec.  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

[[Page 22372]]

costs into MOOP and cost sharing limits based exactly on OACT's 
projection of ESRD enrollment.
---------------------------------------------------------------------------

    \45\ See 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.
    \46\ See 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.
---------------------------------------------------------------------------

    For 2021, CMS set the voluntary and mandatory MOOP limits by 
applying the standard in current Sec. Sec.  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 Sec. Sec.  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 non-discriminatory 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 Sec.  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 
Sec.  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 Sec.  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\
---------------------------------------------------------------------------

    \47\ See the HPMS memorandum titled ``Final Contract Year 2022 
Part C Benefits Review and Evaluation,'' issued May 20, 2021.
---------------------------------------------------------------------------

    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 Sec.  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 Sec.  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

[[Page 22373]]

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 Sec.  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.
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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, Sec.  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 
(Sec.  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 life-threatening 
or not and regardless of the final diagnosis, if the beneficiary

[[Page 22376]]

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.
---------------------------------------------------------------------------

    \48\ Centers 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.
---------------------------------------------------------------------------

    Response: We agree with the commenters that excessive cost sharing 
rates discriminate against enrollees who need those services. CMS has a 
long-standing 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 Sec.  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 out-of-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-of-pocket 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 Sec.  
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

[[Page 22377]]

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 Sec.  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 Sec.  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 Sec.  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 Sec.  
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 Sec. Sec.  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.
---------------------------------------------------------------------------

    \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-health-benefits-annual-survey-archives/.
    \51\ Kaiser Family Foundation. The Cost of Care with Marketplace 
Coverage. Published February 11, 2015. Retrieved from https://www.kff.org/health-costs/issue-brief/the-cost-of-care-with-marketplace-coverage/.
    \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-in-marketplace-plans-2016/.
---------------------------------------------------------------------------

    We developed the transition schedule finalized in Sec.  
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 Sec.  
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 Sec.  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 
Sec.  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

[[Page 22378]]

Sharing Limits) for comparison purposes.
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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 Sec.  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 
Sec.  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 
in-network 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 
Sec.  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/post-stabilization 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 Sec.  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

[[Page 22380]]

1854(a)(6)(B)(iii) of the Act and Sec.  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 out-of-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/post-stabilization 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 post-
stabilization 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, Sec.  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 Sec.  
422.113(c)(2)(iii), to improve or resolve the enrollee's condition. We 
also direct readers to section 1852 of the Act and Sec.  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 post-
stabilization 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 post-stabilization care services received as 
an admitted inpatient in the hospital as subject to the dollar limits 
proposed in Sec.  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 Sec.  422.100(f)(6)(iv). MA plans must 
limit charges to enrollees for post-stabilization 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 Sec.  422.113(c)(2)(iv). Limiting post-
stabilization 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 Sec.  422.113(c)(2)(iv). As a result, we are 
finalizing the cost sharing limits proposed for emergency services 
under Sec.  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 Sec.  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 post-stabilization 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 Sec.  
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 post-stabilization 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 Sec.  422.113(b)(2)(v), and complete non-
substantive formatting changes to ensure consistency in the regulation 
text in paragraphs (b)(2)(v)(1), (2), (3), and (4). We are not revising 
Sec.  422.113(c)(2)(iv) and therefore continue current policy that for 
purposes of cost sharing, post-

[[Page 22381]]

stabilization care services begin upon inpatient admission; the cost 
sharing limits finalized at Sec.  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 Sec.  422.100(f)(6)(iii) but are subject to the cost 
sharing limits set under Sec.  422.100(f)(6)(i).
e. Services No Greater Than Original Medicare (Sec.  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 Sec.  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 Sec.  
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 
Sec.  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 Sec.  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 re-designated as paragraphs 
(j)(1)(i)(A)-(E) in this FC.
---------------------------------------------------------------------------

    \53\ 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 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.
    \54\ Chapter 4 of the MMMCM can be accessed at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/mc86c04.pdf.
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    We are finalizing Sec.  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 Sec.  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 in-network basic benefits that are professional services 
specified in Sec.  422.100(f)(6)(iii) and is codified at Sec.  
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 Sec.  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 
Sec.  422.100(f)(4)(i)) for the applicable year and service category 
and, where

[[Page 22382]]

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 Sec.  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 Sec.  
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 Sec.  
422.100(j). The copayment values in Table 28 also reflect the 
requirements in new Sec.  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

[[Page 22383]]

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 Sec.  
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 Sec.  
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.
---------------------------------------------------------------------------

    \55\ Loewenstein 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.
---------------------------------------------------------------------------

    Based on the potentially disruptive changes from updating contract 
year 2022 copayment limits to actuarially equivalent values for service 
categories subject to Sec.  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 
Sec.  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 Sec.  
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 Sec.  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

[[Page 22384]]

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 Sec.  422.100(f)(8)(i), the actuarially 
equivalent copayment values for service categories subject to Sec.  
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 multi-year transition for copayment limits to the 
copayment limits calculated for these services.
    CMS may calculate copayment limits for service categories subject 
to Sec.  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 Sec.  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 Sec.  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 Sec.  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 one-eighth of the projected Part A deductible per day for days 
21-100 of skilled

[[Page 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:
    <bullet> Skilled nursing care: Codifies specific cost sharing 
limits for days 1-20 in Sec.  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).
    <bullet> 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 Sec.  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 Sec.  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

[[Page 22386]]

[GRAPHIC] [TIFF OMITTED] TR14AP22.042


[[Page 22387]]


[GRAPHIC] [TIFF OMITTED] TR14AP22.028

    Tables 25A and 28 contain final contract year 2023 copayment limits 
for only two of the DME service categories (specifically, the DME 
``diabetic shoes or inserts'' and ``diabetes monitoring supplies'' 
service categories). CMS is

[[Page 22388]]

not calculating a copayment limit for the other DME service categories 
listed in Sec.  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 Sec.  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 Sec.  
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 Sec.  
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 Sec.  
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 Sec.  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.
[GRAPHIC] [TIFF OMITTED] TR14AP22.029


[[Page 22389]]


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 Sec.  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).
---------------------------------------------------------------------------

    \56\ Loewenstein 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.
---------------------------------------------------------------------------

    As also discussed in section II.B.5.b. of this FC, CMS is 
finalizing new Sec.  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 
Sec.  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 
Sec.  422.100(j)(2) and proposed to be re-designated 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 cost-prohibitive 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 Sec.  
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 over-utilization 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

[[Page 22390]]

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 Sec.  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 
anti-discrimination provisions in section 1852(b)(1) of the Act and 
Sec.  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.
---------------------------------------------------------------------------

    \57\ Call Letters communicating CMS policy for contract years 
prior to 2021 may be accessed here: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Announcements-and-Documents.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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 Sec.  
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 Sec.  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 Sec.  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 Sec.  
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

[[Page 22391]]

limits for service categories subject to Sec.  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 (Sec.  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 re-
designation to Sec.  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 Sec.  
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 Sec.  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 Sec.  
422.100(j)(1)(i)(C)(1) (that is an updated designation from Sec.  
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 Sec.  
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

[[Page 22392]]

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 Sec.  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 Sec.  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 
Sec.  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 Sec.  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 Sec.  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 In-Network 
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 Sec.  422.100(f)(6)(ii)) as finalized 
in paragraph (f)(6)(i) (for the lower and intermediate MOOP limits) and 
Sec.  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 Sec.  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.

[[Page 22393]]

    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 Sec.  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, Sec.  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

[[Page 22394]]

Sec.  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 Sec.  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 Sec.  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 long-
standing 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, Sec.  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 speech-language 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

[[Page 22395]]

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 Sec.  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 Sec.  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 Sec.  422.100(f)(8)(ii)(A) and application of the 
rounding rules in Sec.  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 (Sec.  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 Sec.  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

[[Page 22396]]

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 Sec.  
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 Sec.  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, Sec.  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 Sec.  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, Sec.  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 
Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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

[[Page 22397]]

(at Sec.  422.100(f)(6)(iv)) for inpatient scenarios and (at Sec.  
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.
---------------------------------------------------------------------------

    \59\ Except in the case of special supplemental benefit for the 
chronically ill (SSBCI) offered in accordance with Sec.  422.102(f), 
in which CMS may waive uniformity requirements in connection with 
providing SSBCI to eligible chronically ill 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 Sec.  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 Sec.  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 Sec.  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 Sec.  
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 Sec.  
422.100(f)(6)(iii) for physical therapy and in Sec.  
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 Sec.  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 Sec.  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.

[[Page 22398]]

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 Sec.  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 service-specific 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 Sec.  422.100(j)(2), regardless of whether they are 
affirmatively evaluated as part of bid review or in connection with 
other reviews.
---------------------------------------------------------------------------

    \60\ For 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.
[GRAPHIC] [TIFF OMITTED] TR14AP22.030


[[Page 22399]]


    CMS will, as described in new Sec.  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 Sec.  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.
---------------------------------------------------------------------------

    \61\ See Table 4: Illustrative Comparison of Service-Level 
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.
---------------------------------------------------------------------------

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 Sec.  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 Sec. Sec.  
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 
Sec.  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 Sec. Sec.  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 Sec.  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

[[Page 22400]]

[GRAPHIC] [TIFF OMITTED] TR14AP22.031


[[Page 22401]]


[GRAPHIC] [TIFF OMITTED] TR14AP22.032

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 Sec. Sec.  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 Sec. Sec.  
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 Sec. Sec.  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 Sec. Sec.  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 long-standing 
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 Sec.  422.100(f)(6), (j)(1), or Sec.  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 Sec.  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 Sec. Sec.  
422.100(f)(6), 422.100(j)(1) and (2), and 422.113(b)(2) are being 
finalized substantially as proposed with

[[Page 22402]]

the following modifications from the proposal:
    <bullet> The methodology for calculating cost sharing limits in the 
amendments to Sec. Sec.  422.100(f), (j), and 422.113(b)(2)(vi) and the 
specific cost sharing limits in Sec.  422.113(b)(2)(v) are applicable 
beginning on or after January 1, 2023 instead of January 1, 2022.
    <bullet> Adding descriptive headings to paragraphs in Sec.  
422.100(f)(6) and (j)(1)-(2) to orient the reader to the content in 
each paragraph.
    <bullet> Revising Sec.  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.
    <bullet> Revising introductory language in Sec.  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 Sec. Sec.  422.100(j) and 422.113(b)(2), to encompass the 
cost sharing requirements that apply in those sections; (3) clarify 
that Sec.  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).
    <bullet> Consolidating the requirements in Sec.  
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.
    <bullet> Adding language to Sec.  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.
    <bullet> Revising Sec.  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.
    <bullet> Moving the rule for rounding inpatient hospital acute and 
psychiatric and skilled nursing facility cost sharing limits from Sec.  
422.100(f)(6)(ii)(A) to Sec.  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.
    <bullet> 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 Sec.  422.100(f)(6)(ii)(C).
    <bullet> Revising Sec.  422.100(f)(6)(iii)(A) to refer to paragraph 
(f)(6)(iii) (instead of paragraph (f)(6)(ii)).
    <bullet> 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 Sec.  
422.100(f)(7)(i)(A).
    <bullet> Finalizing new language at Sec.  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.
    <bullet> Revising and adding new paragraphs at Sec.  
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.
    <bullet> Revising Sec.  422.100(f)(6)(iv)(A) to add a reference to 
new paragraph (f)(7).
    <bullet> Revising Sec.  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.
    <bullet> Revising Sec.  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.
    <bullet> Revising Sec.  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.
    <bullet> Revising Sec.  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.
    <bullet> Revising Sec.  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).
    <bullet> Revising Sec.  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)

[[Page 22403]]

avoid repeating the rule moved to paragraph (f)(6)(iv)(D).
    <bullet> Also, as discussed in section II.A. of this FC, adding 
Sec.  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 Sec. Sec.  422.100(f)(4), 
(f)(5), (f)(6), (f)(7)(ii), (f)(8) and (j) and in 422.101(d)(2) and 
(3).
    <bullet> Adding Sec.  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.
    <bullet> Adding Sec.  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).
    <bullet> Adding Sec.  422.100(f)(7)(i)(C) to clarify that CMS will 
apply generally accepted actuarial principles and practices in 
evaluating MA organization compliance with Sec.  422.100(f)(6) and (j).
    <bullet> Adding Sec.  422.100(f)(7)(ii) to adopt standards for 
whether and how CMS will calculate actuarially equivalent copayment 
limits for basic benefits subject to Sec.  422.100(f)(6)(i), 
(f)(6)(iii), and (j)(1).
    <bullet> Adding Sec.  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.
    <bullet> Adding Sec.  422.100(f)(7)(ii)(B) to describe how CMS may 
use MA encounter data in addition to the Medicare FFS cost data 
projections.
    <bullet> Adding Sec.  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.
    <bullet> Adding Sec.  422.100(f)(7)(ii)(D) to provide for applying 
the actuarially equivalent copayment transition in paragraph (f)(8) for 
calculating copayment limits.
    <bullet> Adding Sec.  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.
    <bullet> Finalizing Sec.  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 Sec. Sec.  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.
    <bullet> Adding Sec.  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.
    <bullet> Adding Sec.  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.
    <bullet> Redesignating the text at Sec.  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).
    <bullet> Reorganizing the regulation text in paragraph (j)(1) and 
clarifying the description of the benefit in paragraph (j)(1)(i)(A) 
(proposed in Sec.  422.100(j)(1)(i)).
    <bullet> Revising Sec.  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).
    <bullet> Moving the regulatory text in proposed Sec.  
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.
    <bullet> Moving the regulatory text in proposed Sec.  
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.
    <bullet> Moving the regulatory text in proposed Sec.  
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)).
    <bullet> Moving the regulatory text in proposed Sec.  
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.
    <bullet> Adding Sec.  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)).
    <bullet> Adding Sec.  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.
    <bullet> Revising Sec.  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

[[Page 22404]]

Medicare on a per member per month actuarially equivalent basis.
    <bullet> Revising Sec.  422.100(j)(2)(i) to generally simplify and 
clarify regulation text.
    <bullet> Revising Sec.  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.
    <bullet> Revising Sec.  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.
    <bullet> Revising Sec.  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)).
    <bullet> Removing references to post-stabilization services costs 
in Sec.  422.113(b)(2)(v).
    <bullet> Revising Sec.  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.
    <bullet> Revising Sec.  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.
    <bullet> Revising Sec.  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.
    <bullet> Adding Sec.  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.
    <bullet> Adding various minor technical and grammatical changes 
from the proposed regulation text at Sec. Sec.  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 (Sec.  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 (Sec.  
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 Sec. Sec.  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 Sec.  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 Sec.  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:
    <bullet> 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 Sec.  422.100(f)(6) and (j).
    <bullet> Apply specific minimum and maximum thresholds to the

[[Page 22405]]

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.
    <bullet> 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 Sec.  
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 (Sec. Sec.  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 
(Sec. Sec.  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.
---------------------------------------------------------------------------

    \63\ The CMS-R-262 PRA package may be accessed at: https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing-Items/CMS-R-262.
---------------------------------------------------------------------------

    This FC also updates certain longstanding requirements and modifies 
the way that MOOP limits and cost sharing limits have been set by 
adopting

[[Page 22406]]

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 PRA-related 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.<SUP>65 66</SUP> 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.
---------------------------------------------------------------------------

    \64\ 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.
    \65\ 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.
    \66\ These HPMS memoranda may be accessed through the HHS 
guidance repository at: HHS Guidance Submissions [verbar] Guidance 
Portal and individuals and organizations may request placement on 
the HPMS listserv at https://hpms.cms.gov/app/ng/home/.
---------------------------------------------------------------------------

    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

[[Page 22407]]

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

[[Page 22408]]

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.
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    \67\ This information is publicly available and updated at the 
following website: https://www.cms.gov/research-statistics-data-and-systemsstatistics-trends-and-reportsmcradvpartdenroldatamonthly/contract-summary-2021-04.
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    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 x $114.24). Therefore, we estimate that the maximum total cost 
of reviewing this entire FC is $1.8 million ($900 x 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 (Sec. Sec.  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 (Sec. Sec.  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:
    <bullet> 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.
    <bullet> 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.
    <bullet> 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.
    <bullet> 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.
    <bullet> 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

[[Page 22409]]

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 low-income 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.
[GRAPHIC] [TIFF OMITTED] TR14AP22.033

    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 long-standing 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.

[[Page 22410]]

    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, Sec.  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, Sec.  422.520 requires that the 
payment is governed by a mutually agreed upon contract between the 
provider and the plan. CMS is prohibited from requiring MA plans to 
contract with a particular 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 Out-of-Pocket (MOOP) Limits for 
Medicare Parts A and B Services (Sec. Sec.  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 
(Sec. Sec.  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

[[Page 22411]]

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.

[[Page 22412]]

    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.
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    \68\ The 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-and-Documents.
    \69\ The 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-medicare-advantage-program.
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    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--
    <bullet> The rate of transition for Medicare beneficiaries with 
diagnoses of ESRD into the MA program;
    <bullet> 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
    <bullet> 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 long-standing 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

[[Page 22413]]

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--
    <bullet> Result in beneficiary concern;
    <bullet> Potentially affect the ``total beneficiary cost''; and
    <bullet> 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 (Sec. Sec.  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:
    <bullet> Timing of this FC.
    <bullet> Potential for enrollee disruption and impacts of further 
delays in integrating ESRD costs.
    <bullet> 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

[[Page 22414]]

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 in-network 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

[[Page 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 Sec.  
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, high-quality 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.
[GRAPHIC] [TIFF OMITTED] TR14AP22.034


[[Page 22416]]


[GRAPHIC] [TIFF OMITTED] TR14AP22.035

2. Service Category Cost Sharing Limits for Medicare Parts A and B 
Services and Per Member Per Month Actuarial Equivalence Cost Sharing 
(Sec. Sec.  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:
    <bullet> Range of Cost Sharing Limits for Certain Outpatient and 
Professional Services (Sec.  422.100(f)(6)(iii)).
    <bullet> Emergency/Post-Stabilization Services and Urgently Needed 
Services (Sec.  422.113(b)(2)(v) and (vi)).
    <bullet> Services No Greater Than Original Medicare (Sec.  
422.100(j)(1))
    We considered alternatives due to all of the following:
    <bullet> Timing of this FC.
    <bullet> Potential for enrollee disruption.
    <bullet> 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 Sec. Sec.  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:
    <bullet> Table 33: Physical therapy and speech-language pathology.
    <bullet> Table 34: Partial hospitalization.
    <bullet> Table 35: Emergency services.
    <bullet> Table 36: Part B drugs--chemotherapy/radiation drugs.
    <bullet> 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 Sec.  
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 Sec. Sec.  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

[[Page 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 Sec.  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 Sec.  
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 
Sec. Sec.  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 speech-language 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 Sec. Sec.  
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

[[Page 22418]]

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 Sec.  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 Sec.  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 Sec.  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.
[GRAPHIC] [TIFF OMITTED] TR14AP22.036

    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

[[Page 22419]]

cost sharing standards. (This is similar to the approach we finalized 
in Sec.  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 Sec. Sec.  422.100(f)(6)(iii), 
(j)(1), and 422.113(b)(2)(v) by factoring in the differential as 
follows:
    <bullet> Contract Year 2023: 20 percent
    <bullet> Contract Year 2024: 40 percent
    <bullet> Contract Year 2025: 60 percent
    <bullet> Contract Year 2026: 80 percent
    <bullet> 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 
speech-language 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 Sec.  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

[[Page 22420]]

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 Sec.  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 Sec.  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 Sec.  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

[[Page 22421]]

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 Sec.  
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 Sec.  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 Sec. Sec.  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

[[Page 22422]]

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[GRAPHIC] [TIFF OMITTED] TR14AP22.038

[GRAPHIC] [TIFF OMITTED] TR14AP22.039

[GRAPHIC] [TIFF OMITTED] TR14AP22.040


[[Page 22423]]


[GRAPHIC] [TIFF OMITTED] TR14AP22.041

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

0
1. The authority citation for part 422 continues to read as follows:

    Authority:  42 U.S.C. 1302 and 1395hh.
* * * * *

0
2. Section 422.100 is amended by--
0
a. Adding paragraph headings for paragraphs (f)(1) through (3);
0
b. Revising paragraphs (f)(4) through (6);
0
c. Adding paragraphs (f)(7), (8), and (9); and
0
d. Revising paragraph (j).
    The revisions and additions read as follows:


Sec.  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 Sec.  422.2) must have 
an enrollee in-network maximum out-of-pocket (MOOP) amount for basic 
benefits that is no greater than the annual limit calculated by CMS 
using Medicare Fee-for-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.

[[Page 22424]]

    (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 Sec. Sec.  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 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.
    (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 in-network 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 Sec.  
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 out-of-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 Sec.  
422.113(b)(2), which are in addition to any other limits and rules 
applicable to MA cost sharing, including the requirement in Sec.  
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 Sec.  
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

[[Page 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 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) 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

[[Page 22426]]

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 Sec.  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 Sec. Sec.  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

[[Page 22427]]

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.
* * * * *

0
3. Amend Sec.  422.101 by revising paragraphs (d)(2) and (3) to read as 
follows:


Sec.  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 Sec.  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 in-network 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 in-network 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 
Sec.  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 Sec.  422.100(f)(4)(iv) and (v)) by 1.5 for the 
relevant year, then applying the rounding rules in Sec.  
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

[[Page 22428]]

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 Sec. Sec.  422.100(f)(6), 
(j)(1), and 422.113(b)(2)(v).
* * * * *

0
4. Section 422.113 is amended by--
0
a. Revising paragraph (b)(2)(v); and
0
b. Adding paragraph (b)(2)(vi).
    The revision and addition read as follows:


Sec.  422.113  Special rules for ambulance services, emergency and 
urgently needed services, and maintenance and post-stabilization 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 Sec.  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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